LEASE AGREEMENT

BASIC LEASE PROVISIONS


ITEM 1.  DATE THIS LEASE AGREEMENT MADE AND ENTERED INTO: 1ST DAY OF JULY, 1998.
         (BETWEEN)

ITEM 2.  "LANDLORD"    NAME                  AMERICAN NATIONAL INSURANCE COMPANY
                       ADDRESS               c/o Falcon Group Development
                                             2525 South Shore Blvd., Suite 200
                                             League City, Texas 77539

                       ADDRESS FOR           SAME AS ABOVE
                       PAYMENT &
                       NOTICES

         (AND)         NAME                  TITAN RESOURCES, INC.
         "TENANT"      ADDRESS               2525 South Shore Blvd., Suite 309
                                             League City, Texas 77573

                       ADDRESS FOR           SAME AS ABOVE
                       BILLINGS & NOTICES

ITEM 3.  BUILDING NAME:                      MARINA ONE
                                             ----------
         BUILDING ADDRESS:                   2525 South Shore Blvd.
                                             League City, Texas 77573

ITEM 4.  TENANT'S PREMISES FLOOR: THIRD              SUITE NO. 309
         TENANT'S NET RENTABLE AREA: 4,811 SQ. FT.   NET USABLE AREA: 4,183 SQ.
                                                                      FT.
         (SEE "EXHIBIT B" FOR AREA DEFINITIONS)      PARKING SPACES: 19

ITEM 5.  TOTAL NET RENTABLE AREA OF BUILDING: 119,249 SQ. FT.
         TENANT'S BUILDING EXPENSE PERCENTAGE: 4.0% (SEE ARTICLE 2)

<TABLE>
<CAPTION>
<S>      <C>                     <C>              <C>                <C>
ITEM 6.  RENT (SEE ARTICLE 2)    TOTAL PER YEAR   TOTAL PER MONTH    PER SQ. FT./YEAR
         A. BASIC RENT            $ 78,178.75       $ 6,514.90          $ 16.25

         B. PROJECTED BUILDING OPERATING EXPENSE: (INCLUDED IN BASIC RENT)  $ 1997 BASE YEAR
         C. INITIAL RENT-PARKING SPACES:          $     0.00
         D. TOTAL INITIAL RENT:                   $ 6,514.90
         E. AFTER HOURS HEAT, VENTILATING, AND AIR CONDITIONING CHARGE:  $25 PER HOUR PER
              ZONE W/2 HOUR MIN.

ITEM 7.  TARGET COMMENCEMENT DATE: AUGUST 1, 1998  TERM: THIRTY-SIX (36) MONTHS
                                                   RENEWAL OPTION(S): ONE(1) THREE (3) YEAR
                                                                         OPTION AT F.M.V.

ITEM 8.  SECURITY DEPOSIT:  $ 6,514.90; PAYABLE ON LEASE EXECUTION.

ITEM 9.  BROKER(S): THE COLE-GROSS COMPANY ON LANDLORD'S BEHALF
                    S.E. COVINGTON AND COMPANY, INC. ON TENANT'S BEHALF

ITEM 10. PERMITTED USE: GENERAL OFFICE

ITEM 11. SPACE PLAN APPROVAL DATE: __________________ (SEE "EXHIBIT E")

TABLE OF CONTENTS                                 Page
-----------------                                 ----
ARTICLE 1   TERM AND POSSESSION......................2
ARTICLE 2   RENT.....................................2
ARTICLE 3   SECURITY DEPOSIT.........................3
ARTICLE 4   OCCUPANCY AND USE........................4
ARTICLE 5   UTILITIES AND SERVICES...................4
ARTICLE 6   REPAIRS, MAINTENANCE, ALTERATIONS,
            AND IMPROVEMENTS.........................4
ARTICLE 7   INSURANCE, FIRE AND CASUALTY.............5
ARTICLE 8   CONDEMNATION.............................6
ARTICLE 9   LIENS....................................6
ARTICLE 10  TAXES ON TENANT'S PROPERTY...............6
ARTICLE 11  SUBLETTING AND ASSIGNING.................6
ARTICLE 12  TRANSFERS BY LANDLORD....................6
ARTICLE 13  DEFAULT..................................7
ARTICLE 14  NOTICES..................................7
ARTICLE 15  MISCELLANEOUS PROVISIONS.................8

EXHIBIT A-1   FLOOR PLAN........................................ MADE PART OF "LEASE AGREEMENT"
EXHIBIT A-2   DESCRIPTION OF LAND............................... MADE PART OF "LEASE AGREEMENT"
EXHIBIT B     AREA DEFINITIONS.................................. MADE PART OF "LEASE AGREEMENT"
EXHIBIT C     RULES AND REGULATIONS............................. MADE PART OF "LEASE AGREEMENT"
EXHIBIT D     BUILDING SERVICES AND CLEANING SPECIFICATIONS..... MADE PART OF "LEASE AGREEMENT"
EXHIBIT E     AGREEMENT FOR CONSTRUCTION........................ MADE PART OF "LEASE AGREEMENT"
EXHIBIT F     PARKING AGREEMENT................................. MADE PART OF "LEASE AGREEMENT"
EXHIBIT G     ACCEPTANCE OF PREMISES MEMORANDUM................. MADE PART OF "LEASE AGREEMENT"
EXHIBIT H     SPECIAL PROVISIONS................................ MADE PART OF "LEASE AGREEMENT"
EXHIBIT I     OPERATING EXPENSES................................ MADE PART OF "LEASE AGREEMENT"
EXHIBIT J     UNCONDITIONAL GUARANTY............................ MADE PART OF "LEASE AGREEMENT"
</TABLE>

                            LEASE AGREEMENT - PAGE 1
                              TITAN RESOURCES, INC.
<PAGE>
LEASE OF PREMISES

In  consideration  of the mutual  covenants  herein,  Landlord  hereby leases to
Tenant  and Tenant  hereby  hires  from  Landlord,  subject to all the terms and
conditions hereinafter set forth, those certain premises (hereinafter called the
"Premises")  set forth in Items 3 and 4 of the Basic Lease  Provisions and shown
on the  drawings  attached  hereto and made a part hereof as  "Exhibit  A-1" the
office building in which the Premises are located,  the land on which the office
bis situated  (described in the attached  "Exhibit A-2"), the parking garage and
all improvements and  appurtenances to the bth garage and the land, are referred
to collectively herein as the "Building".

ARTICLE 1:  TERM AND POSSESSION

SECTION 1.   COMMENCEMENT  AND  EXPIRATION.  The Term of this Lease shall be the
period of time  specified  iIte 7 of the Basic  Lease  Provisions,  adjusted  as
provided below. The Term shall commence on the Target Commencement Date shown in
Item 7 of the Basic Lease Provisions or such later date as the Premises shall be
tendered to Tenant as set forth  below,  or such  earlier  date as Tenant  takes
possession  or  commences  use  of  the  Premises  for  any  purpose,  including
construction,  and shall expire,  without  notice to Tenant,  on the  Expiration
Date.  If the Lease  commences on any day other than the first day of a calendar
month,  the  term of the  Lease  shall be  extended  by that  part of one  month
necessary to cause the  expiration  of the term to be the last day of a calendar
month.   The  dates  of  commencement   ("Commencement   Date")  and  expiration
("Expiration  Date"),  shall be confirmed by Landlord and Tenant by execution of
an "Acceptance of Premises Memorandum" attached hereto as "Exhibit G" and made a
part hereof.

SECTION 2.   CONSTRUCTION OF LEASE SPACE  IMPROVEMENTS AND POSSESSION.  Landlord
will perform or cause to be performed  the "Building  Standard  Work" and "Above
Standard  Work" as defined in "Exhibit E," in accordance  with the terms of said
"Exhibit E",  subject to events and delays beyond its control for which Landlord
will not be lto  Tenant  in any  way.  Landlord  may,  subject  to the  terms of
"Exhibit  E,"  perform  or cause to be  performed  "Nonstandard  Work" if any is
required by Tenant's  Construction  Plans.  Landlord will tender the Premises to
Tenant by providing  fifteen  days  written  notice of the day on which its work
will be  completed.  Upon  delivery  of  possession  of the  Premises to Tenant,
Landlord and Tenant shall  execute the  above-mentioned  Acceptance  of Premises
Memorandum,  which,  besides fixing the Commencement  Dand Expiration Date, will
contain  acknowledgments  that  Tenant  has  accepted  the  Premises  and  their
condition,  and that the  Premises  and the  Building  are  satisfactory  in all
respects  except for minor  "punch  list" items agreed to in writing by Landlord
and Tenant,  which Landlord will promptly remedy.  If Tenant takes possession of
the  Premises,  Tenant sbe deemed to have  accepted the Premises even though the
Acceptance of Premises Memorandum may not have been executed.

In the event Tenant requires  "Non-Standard Work" in the Premises, as defined in
"Exhibit  E," and  Landlord  does not perform or cause the  performance  of that
work,  Landlord's notice of tender of the Premises shall specify both the day on
which  possession  may actually be taken and the day on which  possession  could
have been taken if  Landlord  had  performed  or caused the  performance  of the
"Non-Standard Work." The Commencement Date in such a case shall be the don which
possession  could have been taken if Landlord had  performed  the  "Non-Standard
Work."

SECTION  3.   SURRENDER  OF  THE  PREMISES.   Upon  the  expiration  or  earlier
termination of this Lease,  or uexercis by Landlord of its right to re-enter the
Premises without terminating this Lease, Tenant shall immediately  surrender the
Premises  and  all  keys  to  the  Premises  to  Landlord,   together  with  all
alterations,  improvements and other property as provided  elsewhere  herein, in
good order,  condition and repair,  except for ordinary  wear and tear;  failing
this  Landlord may restore the Premises to such  condition at Tenant's  expense.
Tenant shall,  at its expense,  promptly repair any damage caused bremova of its
property,  and shall restore the Premises to the condition existing prior to the
installation of the items removed. Upon the expiration or earlier termination of
the Lease,  Tenant will,  at the option of Landlord,  execute a Release of Lease
and Waiver of Claim, in recordable form,  containing Tenant's release of all its
interest in the Premises.

SECTION 4.   HOLDING  OVER.  In the event Tenant,  or any party  claiming  under
Tenant,  retains  possession  oth  Premises  after  the  expiration  or  earlier
termination of this Lease, such possession shall be an unlawful detainer, and no
tenancy or interest  shall result from such  possession;  such parties  shall be
subject to immediate  eviction  and removal,  and Tenant or any such party shall
pay Landlord as rent for the period of such hold-over an amount equal to one and
one half times the total market rent during the time of  hold-over,  such amount
to be  determined  by Landlord  at its sole d Tenant  shall also pay any and all
damages sustained by Landlord as a result of such hold-over.  Tenant will vacate
the Premises and deliver same to Landlord  immediately  upon Tenant's receipt of
notice from Landlord to so vacate.  The rent during such hold-over  period shall
be payable to Landlord on demand.  No holding  over by Tenant,  whether  with or
without cof Landlord, shall operate to extend this Lease.

ARTICLE 2: RENT

SECTION 1.   BASIC RENT.  Tenant  shall pay as Basic Rent for the  premises  the
annual  sum shown in Item 6(a) of the Basic  Lease  Provisions.  The Basic  Rent
shall be  payable  at the  office  of the  Building  Manager  in  equal  monthly
installments in advance,  without deduction  commencing on the Commencement Date
(subject to the  provisions  of Section  2.02 D. hereof) and  continuing  on the
first day of each calendar month thereafter. If the term of this Lease commences
oda other  than the first day of a  calendar  month,  the rent for such  partial
month shall be prorated in the proportion  that the number of days this Lease is
in effect during such partial month bears to the number of days in that calendar
month.

SECTION 2.  ADDITIONAL RENT.

A.   DEFINITIONS.  For purposes of this Section 2.02, the following  definitions
     shall apply:

     1.   "Additional  Rent"  shall  mean the amount of  Tenant's  Proportionate
          Share of Building Operating Expenses for a particular calendar year or
          portion thereof.

     2.   "Building Expense  Percentage" shall mean the percentage  specified in
          Item 5 of the Basic Lease  Provisions.  This percentage was determined
          by dividing Net Rentable Area in the Premises,  as specified in Item 4
          of the Basic Lease  Provisions,  by the total Net Rentable Area in the
          Building.

     3.   "Tenant's Proportionate Share of Building Operating Expenses" shall be
          the dollar  amount equal to the product of Tenant's  Building  Expense
          Percentage times the Building Operating Expense Variance.

     4.   "The Building  Operating  Expense Variance" is that dollar amount that
          the  Building  Operating  Expenses  exceed the  product  of  Projected
          Building  Operating  Expense times Total Net Rentable Area of Building
          (Item 6b and 5 respectively of Basic Lease Provisions).

                            LEASE AGREEMENT - PAGE 2
                              TITAN RESOURCES, INC.
<PAGE>
     5.   "Building  Operating  Expenses"  shall mean all of  Landlord's  direct
          costs and expenses paid or incurred in operating and  maintaining  the
          Building  for  a  particular  calendar  year  or  portion  thereof  as
          determined  by  Landlord  in  accordance   with   generally   accepted
          accounting  principles,  including  all  additional  direct  costs and
          expenses of operation and  maintenance  of the Building which Landlord
          determines that it would have paid or incurred during such year if the
          Building  had  been  one-hundred  percent  (100%)  occupied.  Building
          Operating  Expenses  shall  include  by way of  illustration  but  not
          limitation; all general real estate taxes and all special assessments,
          costs and expenses of contesting the validity or amount of real estate
          taxes; insurance premiums;  water, sewer, electrical and other utility
          charges;  service  and other  charges  incurred in the  operation  and
          maintenance   oth   elevators   and  the  heating,   ventilation   and
          air-conditioning system; cleaning and other janitorial services; tools
          and supplies;  repair costs;  landscape  maintenance  costs;  security
          services; licenses, permit and inspection fees; management fees not to
          exceed 5% of total gross income; wages and related benefits payable to
          employees  engaged in the  maintenance  and operation of the Building;
          and, in general, all other costs and expenses which would generally be
          regarded as operating  and  maintenance  costs and expenses  including
          those which would  normally be  amortized  over a period not to exceed
          five (5) years.

          If Landlord  shall install a labor-saving  device or other  equipment,
          which  improves  the  operating  efficiency  of any system  within the
          Building (such as an energy  management  computer  system) and thereby
          reduces Building Operating Expenses, then Landlord may add to Building
          Operating  Expenses  in  each  year  during  the  useful  life of such
          installed  device  or  equipment  as  determined  in  accordance  with
          applicable  regulations of the Internal  Revenue  Service or generally
          accepted accounting principles,  together with interest at the rate of
          10% per annum on the unamortized  balance thereof,  provided,  however
          that the amount of such  allowance  and interest  shall not exceed the
          annual  cost or  expense  reduction  attributed  by  Landlord  to such
          installed device or equipment,  and further provided, that in no event
          shall such  allowance and interest shall not exceed the annual cost or
          expense  reduction  attributed by Landlord to such installed device or
          equipment, and further provided, that in no event shall such allowance
          and interest increase Tenant's Additional Rent over what it would have
          been if such  labor-saving  device  or  other  equipment  had not been
          installed.

          For the  purposes  of this  Article,  payments  made by tenants of the
          Building, either to third parties or to Landlord, under agreements for
          direct reimbursement for services (e.g., separately metered utilities,
          separately  contracted  janitorial  services,  property taxes directly
          reimbursed  to  Landlord,  etc.) shall not be  included  in  "Building
          Operating  Expenses." However,  for each category of expense for which
          one or more  tenants of the  Building  makes such  payments,  Tenant's
          Building  Expense  Percentage  shall be adjusted by excluding from the
          denominator  thereof, the New Rentable Area of all tenants making such
          payments (for instance,  if tenants  leasing a total of 10% of the Net
          Rentable Area of the Building pay their own electricity bills under an
          arrangement for separate metering, the Building Expense Percentage for
          each tenant not making such payment will increase  proportionally with
          respect to that category of expense).

          If Tenant makes any such payment,  Building  Operating  Expenses,  for
          purposes of this  Article,  shall  exclude the category of expense for
          which such  payment is made,  but only to the extent that the category
          of expense includes  payments made or charges incurred with respect to
          space  actually  leased to other tenants (for example,  if Tenant pays
          its own  electricity,  Building  Operating  Expenses  for  purposes of
          determining   Tenant's   Additional   Rent  shall  only   include  the
          electricity expense associated with space not actually leased to other
          tenants).

B.   PAYMENT OBLIGATION.  In addition to the Basic Rent specified in this Lease,
     Tenant shall pay to Landlord as Additional  Rent for the Premises,  in each
     calendar year or partial  calendar  year during the term of this Lease,  an
     amount equal to Tenant's Proportionate Share of Building Operating Expenses
     for such calendar year.

     1.   Payment  of  Tenant's   Proportionate   Share  of  Building  Operating
          Expenses.  Tenant's Proportionate Share of Building Operating Expenses
          for each  calendar year shall be estimated  annually by Landlord,  and
          written  notice  thereof shall be given to Tenant at least thirty (30)
          days prior to the beginning of each calendar year. Tenant shall pay to
          Landlord each month, at the same time the Basic Rent is due, an amount
          equal to one-twe (1/12) of the estimated annual Additional Rent due.

     2.   Revisions in Estimated  Additional  Rent.  If real estate taxes or the
          cost of utility or janitorial  sduring a calendar  year,  Landlord may
          revise the estimated Additional Rent during such year by giving Tenant
          written  notice to that  effect,  and  thereafter  Tenant shall pay to
          Landlord,  in each of the  remaining  months of such  year,  an amount
          equal to the amount of such increase in the estimated  Additional Rent
          divided by the number of months remaining in such year.

     3.   Adjustments to Actual  Additional Rent.  Within ninety (90) days after
          the end of each calendar year,  Lshall prepare and deliver to Tenant a
          statement  showing Tenant's actual  Additional Rent. Within t(30) days
          after  receipt of the  aforementioned  statement,  Tenant shall pay to
          Landlord, or Landlord shall credit the next Additional Rent payment or
          payments due from Tenant,  as the case may be, the difference  between
          Tenant's actual  Additional  Rent for the preceding  calendar year and
          the estimated Additional Rent paid by Tenant during such year.

          TENANT  SHALL HAVE THE RIGHT TO REVIEW  LANDLORD'S  BOOKS AND  RECORDS
          RELATING TO OPERATING EFOR ANY CALENDAR YEAR DURING THE TERM HEREOF AT
          ANY TIME WITHIN TEN (10) DAYS AFTER RECEIPT BY TENANT OF THE STATEMENT
          OF OPERATING  EXPENSES FOR THE PRECEDING  CALENDAR YEAR.  TENANT SHALL
          CONDUCT  SUCH REVIEW AT ITS OWN EXPENSE AND SHALL  PERFORM SUCH REVIEW
          IN A MANNER THAT DOES NOT  UNREASONABLY  INTERFERE WITH THE CONDUCT OF
          LANDLORD'S  BUSINESS.  IN THE EVENT SUCH REVIEW  REVEALS THAT TENANT'S
          SHARE OF  OPERATING  EXPENSES  HAS  BEEN  OVERSTATED,  LANDLORD  SHALL
          PROMPTLY  REIMBURSE  TO TENANT  THE  AMOUNT OF SUCH  OVERPAYMENT  WITH
          FORTY-FIVE (45) DAYS NOTICE THEREOF FROM TENANT TO LANDLORD.

C.   RENT. The Basic-Rent,  the Additional  Rent, and all other sums required to
     be paid by Tenant hereunder, including any sums due under the Agreement for
     Construction,   are  sometimes  collectively  referred  to  as,  and  shall
     constitute,  "Rent".  Rent shall be paid by Tenant when due,  without prior
     demand therefor, without deduction or set-off.

     In the event any  installment  of rent under  this Lease  shall not be paid
     when due, a "Late  Charge" of five cents  ($.05) per each dollar so overdue
     may be  charged  by  Landlord,  for the  purpose  of  defraying  Landlord's
     administrative expenses incident to the handling of such overdue payments.

D.   DEPOSIT - First  Month's  Rent.  Tenant  shall  deposit with  Landlord,  on
     execution  of this  Lease,  a sum  equal to one  full  month's  total  rent
     installment as set forth in Item 6(d) of the Basic Lease Provisions,  which
     shall be credited to the first  installment(s) of Basic Rent and Additional
     Rent due hereunder.

ARTICLE 3: SECURITY DEPOSIT

Tenant  has paid or will pay  Landlord  the sum set forth in Item 8 of the Basic
Lease Provisions as sfor tperformanc of the terms hereof by Tenant. Tenant shall
not be entitled to interest thereon. If Tenant defaults wrespec to any provision
of this Lease,  Landlord may, but shall not be required to, use, apply or retain
all or any part of this  deposit for the payment of any rent or any other sum in

                            LEASE AGREEMENT - PAGE 3
                              TITAN RESOURCES, INC.
<PAGE>
default,  or for the payment of any other amount which  Landlord mspen or become
obligated to spend by reason of Tenant's default,  or to compensate Landlord for
any other  loss or  damage  which  Landlord  may  suffer  by reason of  Tenant's
default,  including,  without limitation,  costs and attorneys' fees incurred by
Landlord to recover  possession of the Premises.  If any portion of said deposit
is so used or applied,  Tenant shall,  upon demand  therefor,  deposit cash with
Landlord in an amount  sufficient  trestor the security  deposit to its original
amount and Tenant's failure to do so shall  constitute a default hby Tenant.  If
Tenant shall fully and  faithfully  perform every  provision of this Lease to be
performed by it, the security  deposit shall be returned to Tenant within thirty
(30) days after the Expiration Date.

ARTICLE 4: OCCUPANCY AND USE

SECTION 1.  USE OF PREMISES.  The Premises  shall be used solely for the purpose
specified in Item 10 of the Basic Lease Provisions.  Tenant will not use, occupy
or  permit  the use or  occupancy  of the  Premises  for any  purpose  which is,
directly or indirectly, forbidden by law, ordinance or governmental or municipal
regulation  or order,  or which may be dangerous to life,  limb or property;  or
permit the  maintenance of any public or private  nuisance;  or do or permit any
other thing which may disturb  the quiet  enjoyment  of any other  tenant of the
Building;  or keep any substance or carry on or permit any operation which might
emit offensive odors or conditions  into other portions of the Building;  or use
any apparatus which might make undue noise or set up vibrations in the Building;
or  permit  anything  to be done  which  would  increase  the fire and  extended
coverage  insurance  rate on the  Building  or  contents,  and if  there  is any
increase  in such rate by reason of acts of Tenant,  then  Tenant  agrees to pay
such increase  promptly upon demand  therefor by Landlord.  Payment by Tenant of
any  such  rate  increase  shall  not be a waiver  of  Tenant's  duty to  comply
herewith.

SECTION  2.   RULES AND  REGULATIONS.  Such  reasonable  rules  and  regulations
applying  to all tenants in the  Building as may be adopted by Landlord  for the
safety, care and cleanliness of, and preservation of good order in, the Premises
and the Building, are hereby made a part hereof and Tenant agrees to comply with
all such rules and  regulations.  Landlord  shall have the right at all times to
change such rules and regulations or to amend them in any reasonable manner. All
changes and  amendments  will be sent by Landlord to Tenant in writing and shall
be thereafter carried out and observed by Tenant (See "Exhibit C" attached).

SECTION 3.  SIGNS. Tenant shall not inscribe, paint, affix or display any signs,
advertisements  or  notices  on or in  the  Building,  except  for  such  tenant
identification  information  as Landlord  permits to be included or shown on the
directory  board in the main lobby and  adjacent to the access doors or doors to
the Premises.

SECTION 4.   ACCESS.  Landlord  or its  authorized  agents  shall at any and all
reasonable  times have the right to enter the  Premises to inspect the same,  to
supply  janitorial  service or any other  service to be  provided  by Lto Tenant
hereunder,  to show the Premises to prospective purchasers or tenants, to alter,
improve or repair the Premises or any other portion of the Building, all without
being deemed guilty of an eviction of Tenant and without abatement oRent and may
for  that  purpose  erect  scaffolding  and  other  necessary  structures  where
reasonably  required by the character of the work to be performed,  provided the
business  of  Tenant  shall  be  interfered  with  as  little  as is  reasonably
practicable.  Tenant  hereby  waives  any claim for  damages  for any  injury or
inconvenience to or interference with Tenant's  business,  any loss of occupancy
or quiet enjoyment of the Premises,  and any other loss occasioned thereby.  For
each of the aforesaid  purposes,  Landlord  shall at all times have and retain a
key with which to unlock all of the doors in, upon and athe Premises,  excluding
Tenant's  vaults  and  safes.  Landlord  shall have the right to use any and all
means which Landlord may deem proper to open any door(s) in an emergency without
liability  therefor.  LANDLORD SHALL HAVE THE RIGHT TO SHOW TSPAC TO PROSPECTIVE
TENANTS DURING THE LAST SIX (6) MONTHS OF THE LEASE TERM.

SECTION 5.  QUIET POSSESSION.  Upon Tenant's paying the Rent reserved  hereunder
and observing and performing all of the covenants,  conditions and provisions on
Tenant's  part to be observed  and  performed  hereunder.  Tenant shall have the
quiet  possession of the Premises for the entire Term hereof,  subject to all of
the provisions of this Lease.

ARTICLE 5: UTILITIES AND SERVICES

SECTION  1.   SERVICES  TO BE  PROVIDED.  Provided  Tenant  is  not  in  default
hereunder,  Landlord agrees to furnish or cause to be furnished to the Premises,
the utilities and services  specified and hereby made a part hereof,  subject to
the  conditions  and in  accordance  with the  standards  set forth  herein (See
"Exhibit D" attached).

SECTION 2.  ADDITIONAL SERVICES. Landlord may impose a reasonable charge for any
utilities and swithou limitation, air conditioning, electric current, and water,
provided  by Landlord by reason of any  substantial  use of the  Premises at any
time other than the hours set forth  above or for any use beyond  what  Landlord
agrees  herein  to  furnish  or  because  of  special  electrical,  cooling  and
ventilating needs created by Tenant's hybrid telephone equipment,  computers and
other similar equipment or uses. See Item 6.e. of the Basic Lease Provisions.

SECTION 3.  TENANT'S  OBLIGATION.  Tenant agrees to cooperate fully at all times
with Landlord and to abide by all  regulations and  requirements  which Landlord
may  prescribe for the use of the above  utilities and services.  Any failure to
pay any  excess  costs as  described  above  shall  constitute  a breach  of the
obligation  to pay Rent under this Lease and shall  entitle the  Landlord to the
rights herein granted for such breach.

SECTION 4.  SERVICE  INTERRUPTION.  Landlord shall not be liable for, and Tenant
shall not be entitled  tabatemen or  reduction  of Rent by reason of  Landlord's
failure to furnish any of the foregoing  services when such failure is caused by
accident,  breakage,  repairs,  strikes,  lockouts or other labor disturbance or
labor dispute of any  character,  governmental  regulation,  moratorium or other
governmental  action,  inability by exercise of  reasonable  diligence to obtain
electricity,  water or fuel, or by any other cause beyond Landlord's  reasonable
control,  nor shall  any such  failure,  stoppage  or  interruption  of any such
service be  construed  as an  eviction  of Tenant,  or relieve  Tenant  from the
obligation  to perform any  covenant or  agreement  herein.  In the event of any
failure,   stoppage  or  interruption  thereof,   however,  Landlord  shall  use
reasonable diligence to resume service promptly.

NOTWITHSTANDING  THE  FOREGOING,  IN THE  EVENT OF ANY SUCH  INTERRUPTION  WHICH
CONTINUES FOR MORE THAN TEN (10) CONSECUTIVE  BUSINESS DAYS (EXCLUDING A NATURAL
DISASTER),  THEN RENT SHALL ABATE  RETROACTIVELY  FOR THAT PERIOD. TO THE EXTENT
THAT THE  LEASED  PREMISES  ARE  RENDERED  UNTENABLE  AS THE  RESULT OF ANY SUCH
INTERRUPTION  FOR A POF MORE THAN THIRTY (30) DAYS,  THEN TENANT  SHALL HAVE THE
RIGHT TO TERMINATE  THIS LEASE ANY TIME  THEREAFTER  PRIOR TO RESUMPTION OF SUCH
SERVICES WITH A TEN (10) DAY PRIOR WRITTEN NOTICE.

SECTION  5.   MODIFICATIONS.   Notwithstanding  anything  herein  above  to  the
contrary,  Landlord  reserves the right from time to time to make reasonable and
nondiscriminatory  modifications  to  the  above  standards  for  utilities  and
services.

                            LEASE AGREEMENT - PAGE 4
                              TITAN RESOURCES, INC.
<PAGE>
ARTICLE 6: REPAIRS, MAINTENANCE, ALTERATIONS AND IMPROVEMENTS

SECTION 1.  REPAIRS AND MAINTENANCE OF THE BUILDING.  Landlord shall provide for
the cleaning and  maintenance  of the public  portions of the  Building.  Unless
otherwise  expressly  stipulated herein.  Landlord shall not be required to make
any  improvements or repairs of any kind or character on the Premises during the
term of this Lease,  except repairs to the exterior walls,  corridors,  windows,
roof and other  structural  elements  and  equipment of the  Building,  and such
additional  maintenance  as may be necessary  because of damage by persons other
than Tenant, its agents, employees, invitees or visitors.

SECTION 2. IMPROVEMENTS AND ALTERATIONS.

A.   Landlord's sole construction obligation under this Lease is as set forth in
     the  Agreement  for  Construction   attached  hereto  as  "Exhibit  E"  and
     incorporated herein by this reference.

B.   Landlord  shall  have  the  right at any time to  change  the  arrangement,
     location and/or size of entrances or passageways,  doors and doorways,  and
     corridors, elevators, stairs, toilets or other public parts of the Building
     and,  upon giving Tenant  reasonable  notice  thereof,  to change the name,
     number or designation by which the Building is commonly known.

C.   Tenant shall not make any  alterations,  additions or  improvements  to the
     Premises   without  the  prior  written  consent  of  Landlord.   All  such
     alterations,  additions or improvements (except movable furniture and trade
     fixtures)  shall become the  property of Landlord and shall be  surrendered
     with  the  Premises,  as a part  thereof,  at  the  expiration  or  earlier
     termination of the Lease, the same shall be made by Tenant at Tenant's sole
     cost and expense.  Any contractor or person making such  improvements  must
     first be approved in writing by Landlord.

SECTION 3.  LANDLORD'S  OPTION TO REPAIR.  Landlord may at its option and at the
cost and  expense of Tenant,  repair or replace any damage or injury done to the
Building or any part  thereof,  caused by Tenant,  Tenant's  agents,  employees,
licensees,  invitees or visitors. Tenant shall pay the cost thereof, which shall
include  Landlord's  administrative  fee of 20%, to  Landlord on demand.  Tenant
further  agrees to maintain and keep the interior of the Premises in good repair
and  condition  at Tenant's  expense.  Tenant  agrees not to commit or allow any
waste or damage to be committed on any portion of the Premises.

ARTICLE 7:  INSURANCE, FIRE AND CASUALTY

SECTION 1.  SUBSTANTIAL  DESTRUCTION OF THE BUILDING OR THE PREMISES.  If either
the  Building  or the  Premises  should be  substantially  destroyed  or damaged
(which, as used herein,  means destruction or material damage to at least 50% of
the Building or the Premises) by fire or other casualty,  then either party may,
at its option,  terminate  this Lease by giving  written  notice  thereof to the
other party  within  thirty (30) days after the date of such  casualty.  In such
eRent shall be  apportioned  to and shall cease as of the date of such casualty.
If neither party exercises this option, then the Premises shall be reconstructed
and restored, at Landlord's expense, to substantially the same condition as they
were  prior  to  the  casualty,  provided  however,  the  Landlord's  obligation
hereunder  shall be limited  to the  reconstruction  of such of the Lease  Space
Improvements  as were  originally  required to be made by Landlord at Landlord's
expense in  accordance  with  "Exhibit E." In the event of such  reconstruction,
Rent shall be abated from the date of casualty until  substantial  completion of
the  reconstruction  repairs;  and this Lease  shall  continue in full force and
effect for the balance of the term.

SECTION 2.   PARTIAL  DESTRUCTION  OF THE  PREMISES.  If the Premises  should be
damaged by fire or other casualty, but not substantially destroyed or damaged to
the extent  provided in Section  7.01,  then such  damaged  part of the Premises
shall be reconstructed and restored, at Landlord's expense, to substantially the
same condition as it was prior to the casualty; provided however, the Landlord's
obligation hereunder shall be limited to the reconstruction of such of the Lease
Space  Improvements  as were  originally  required  to be made  by  Landlord  at
Landlord's  expense in accordance with "Exhibit E". In such event, if the damage
prevents  Tenant from  carrying on its  business in the  Premises in whole or in
part, Rent shall be abated in the proportion  which the approximate  area of the
damaged  part  bears  to the  total  area in the  Premises  from the date of the
casualty until substantial  completion of the reconstruction  repairs;  and this
Lease  shall  continue  in full force and  effect  for the  balance of the term.
Landlord  shall use  reasonable  diligence  in  completing  such  reconstruction
repairs, but in the event Landlord fails to complete the same within one hundred
eighty  (180) days from the date of the  casualty,  Tenant  may,  at its option,
terminate this Lease upon giving Landlord sixty (60) days written notice to that
effect,  whereupon  both parties shall be released from all further  obligations
and  liability  hereunder.  Nothing  herein shall require the Landlord to expend
more  repairs,  restoration  or  replacement  than the proceeds of the insurance
therefor received by Landlord.

SECTION 3. TENANT'S RESPONSIBILITIES.

A.   If the Building or the Premises  shall be damaged by fire or other casualty
     resulting from the fault or negligence of Tenant, or the agents, employees,
     licensees or invitees of Tenant (except as set forth in Section 7.06), such
     damage  shall  be  repaired  by and at the  expense  of  Tenant  under  the
     direction and  supervision  of Landlord,  and Rent shall  continue  without
     abatement.

B.   Except for that portion,  if any, of Landlord's gross negligence or willful
     misconduct not waived by Tenant,  Tenant  covenants that Landlord shall not
     be liable for any damage or  liability  of any kind or for any ito odeat of
     persons  or damage to  property  of Tenant or any other  person  during the
     Term, including  consequential loss or damage, from any cause whatsoever by
     reason of the construction,  use, occupancy or enjoyment of the Premises by
     Tenant or any person  therein or holding  under Tenant or by or through the
     acts or omissions of other  tenants of tBuildin or Landlord.  Tenant hereby
     agrees, as part of the material  consideration for this Lease, to indemnify
     and save Landlord  harmless  from all claims,  action,  demands,  costs and
     expenses and liability whatsoever, including reasonable attorneys' fees, on
     account  of any such  real or  claimed  damage or  liability,  and from all
     liens,  claims and demands occurring in, on or at the Premises,  or arising
     out of the  construction,  use,  occupancy or enjoyment of the Premises and
     its  facilities,  or any repairs or alterations  which Tenant may make upon
     the Premises.

SECTION 4.  TENANT'S INSURANCE.  Tenant covenants and agrees that from and after
the date of delivery of the Premises from Landlord to Tenant,  Tenant will carry
and maintain, at its sole cost and expense, the following types of insurance, in
the amounts specified and in the form hereinafter provided, as follows:

A.   Public  Liability and Property Damage.  General Public Liability  Insurance
     covering the Premises and Tenant's use thereof  against claims for personal
     injury  or death  and  property  damage  occurring  upon,  in or about  the
     Premises, such insurance to afford protection to the limit of not less than
     $500,000 in respect of injury or death to any number of persons arising out
     of any one occurrence,  and such insurance  against property  damage.  This
     insurance  coverage  shall extend to any liability of Tenant arising out of
     the indemnities provided for in Sections 7.03 and 7.04.

                            LEASE AGREEMENT - PAGE 5
                              TITAN RESOURCES, INC.
<PAGE>
B.   Tenant   Improvements  and  Property.   Insurance  covering  all  leasehold
     improvements, heating, ventilating and air conditioning equipment installed
     by reason of Tenant's  "Non-Standard Work"; fixtures installed by or at the
     expense of Tenant; and personal property in, on or upon the Premises, in an
     amount no less than 100% of the freplacemen cost thereof.

Tenant shall obtain a written obligation from each insurance company issuing the
insurance  required to be maintained by Tenant pursuant to Section 7.04 (A.) and
(B.) hereof to notify Landlord at least thirty (30) days prior tth expiration or
cancellation of such insurance.  Such policies or duly executed  certificates of
insurance  shall be promptly  delivered  to Landlord and  renewals  thereof,  as
required,  shall be  delivered  to  Landlord  at least  thirty (30) days pto the
expiration of the respective policies.

SECTION 5.   LANDLORD'S  INSURANCE.  Landlord shall at all times during the Term
maintain in effect a policy or  policies  of  insurance  covering  the  Building
(excluding  property  required  to be  insured  by  Tenant)  in such  amounts as
Landlord may from time to time determine,  providing  protection  against perils
included within the standard Texas from of fire and extended coverage  insurance
policy,  together  with  insurance  against  sprinkler  damage,   vandalism  and
malicious  mischief,  and such  other  risks as  Landlord  may from time to time
determine and with any such deductibles as Landlord may fto time determine.

Any  insurance  provided for in this Section 7.05 may be effected by a policy or
policies  of  blanket  insurance,  covering  additional  terms or  locations  or
assureds,  provided  that  the  requirements  of this  Paragraph  are  otherwise
satisfied.  Tenant shall have no rights in any policy or policies  maintained by
Landlord and shall not, by reason of payment by Tenant,  as part of the Building
Operating  Expenses,  of its  prorata  share of the  Landlord's  premium for the
insurance, be entitled to be a named insured thereunder.

SECTION 6.  WAIVER OF  SUBROGATION.  Landlord and Tenant hereby waive any rights
each may have  against  tother on  account of any loss or damage  occasioned  to
Landlord or Tenant, as the case may be, their respective property, the Premises,
its contents or to the other  portion of the  Building  arising from any risk to
the extent the party suffering damage receives the proceeds of fire and extended
coverage insurance,  the parties hereto each, on behalf of trespectiv  insurance
companies  insuring the property of either  Landlord or Tenant  against any such
loss,  waive any  right of  subrogation  that it may have  against  Landlord  or
Tenant,  so long as additional  premiums,  if charged,  are paid by Landlord and
Tenant.

ARTICLE 8: CONDEMNATION

In the event the Building, or any portion thereof necessary, in the sole opinion
of Landlord,  to the continued efficient and/or economically feasible use of the
Building shall be taken or condemned in whole or in part for public purposes, or
sold to a condemning  authority to prevent  taking,  then the term of this Lease
shall,  at the option of the Landlord,  forthwith  cease and terminate,  and the
Landlord  shall  receive the entire award for land and  buildings.  Tenant shall
have the right to recover from such authority,  but not from Landlord, or out of
the proceeds  otherwise  payable to Landlord,  only any  compensation  as may be
awarded to Tenant on account of moving and relocation  expenses and depreciation
to and removal of Tenant's physical property.

ARTICLE 9: LIENS

Tenant  shall  keep the  Premises  free from any liens  arising  out of any work
performed,  materials for  obligations  incurred by or for Tenant.  In the event
that Tenant shall not, within ten (10) days following the imposition of any such
lien,  cause the same to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided herein and
by law, the right but not the obligation,  to cause the same to be released bsuc
means as it shall deem proper, including payment of or defense against the claim
giving rise to such lien. All sums paid by Landlord and all expenses incurred by
it in connection  therewith shall create automatically an obligation of Tto pay,
on demand, an equivalent amount together with interest at 10% per annum as Rent.
No work which Landlord permits Tenant to perform on the Premises shall be deemed
to be for the  immediate  use and benefit of Landlord  so that no  mechanics  or
other lien  shall be allowed  against  the estate of  Landlord  by reason of its
consent to such work.

ARTICLE 10: TAXES ON TENANT'S PROPERTY

Tenant shall be liable for and shall pay,  prior to their  becoming  delinquent,
any and all taxes and assessments  levied against any personal property or trade
or other  fixtures  placed by Tenant in or about  the  Premises,  including  any
additional  real estate  taxes or  assessments  which may be levied  against the
Building  by  reason  of  Tenant's  requirements  for  "Above-Standard  Work" or
"Non-Standard Work" in the Premises.

ARTICLE 11: SUBLETTING AND ASSIGNING

SECTION 1.  RESPONSIBILITIES. Tenant shall not assign this Lease, or allow it to
be assigned, in whole or in part, by operation of law or otherwise,  or mortgage
or pledge the same,  or sublet the Premises,  or any part  thereof,  without the
prior written consent of Landlord,  and in no event shall any such assignment or
sublease  ever release  Tenant from any  obligation or liability  hereunder.  No
assignee or sublessee of the Premises or any portion  thereof may assign or sthe
Premises or any portion thereof.

SECTION 2.   CONDITIONS OF SUBLEASE.  If the Tenant  desires to assign or sublet
all or any part of the Premises, it shall so notify Landlord at least sixty (60)
days in advance of the date on which Tenant  desires to make such  assignment or
sublease.  Tenant shall provide Landlord with a copy of the proposed  assignment
or sublease,  and such  information  as Landlord  might request  concerning  the
proposed  sublessee or assignee to allow Landlord to make informed  judgments as
to the financial condition,  reputation,  operations and general desirability of
the proposed subtenant(s) or assignee.  Within thirty (30) days after Landlord's
receipt  of  Tenant's  proposed   assignment  or  sublease,   and  all  required
information  concerning the proposed  subtenant(s)  or assignee,  Landlord shall
have the option to:

A.   Cancel the Lease as to the  Premises  or  portion  thereof  proposed  to be
     assigned or sublet; or

B.   Consent to the proposed assignment or sublease, in which event, however, if
     the rent due and  payable  by any  assignee  or  sublessee  under  any such
     permitted  assignment  or sublease  (or a  combination  of the rent payable
     under such assignment or sublease plus any bonus or any other consideration
     therefor or any payment, thereto) exceeds the Rent payable under this Lease
     for such space, Tenant shall pay to Landlord all such excess rent and other
     excess  consideration  within ten (10) days  following  receipt  thereof by
     Tenant, or

C.   Refuse its consent to the proposed  assignment or sublease but allow Tenant
     to  continue  in the  search  for an  assignee  or  sublessee  that  may be
     acceptable to Landlord,  which option shall be deemed to be elected  unless
     Landlord gives Tenant written notice providing otherwise.

D.   Notwithstanding  the  foregoing,  Tenant  shall have the right to assign or
     sublease the Lease Premises  without  Landlord's  consent (i) to any parent
     company,  subsidiary or affiliated company of Tenant,  (ii) any corporation
     into  or with  which  Tenant  may be  merged  or  consolidated,  (iii)  any
     partnership or other entity, the majority the beneficial ownership of which
     shall be owned by  Tenant  or the  majority  shareholders  of Tenant or any
     corporation  described  herein,  or  any  trust,  the  majority  beneficial
     interest  of which  shall be owned by  members of the  immediate  family of
     Tenant,  providing  the  occupancy  resulting  from such  transfer  will be
     consistent  with the general  character of the  business  carried on by the
     assignee or sublessee.

                            LEASE AGREEMENT - PAGE 6
                              TITAN RESOURCES, INC.
<PAGE>
ARTICLE 12: TRANSFERS BY LANDLORD

SECTION  1.   SALE OF THE  BUILDING.  In the  event of a sale or  conveyance  by
Landlord of the Building,  the same shall  operate to release  Landlord from any
and all liability under this Lease arising after the date of such sale. Tenant's
right to quiet  possession  of the  Premises  shall not be  disturbed so long as
Tenant shall pay the Rent and observe and perform all of the  provisions of this
Lease to be observed and  performed by Tenant,  unless this Lease is  terminated
pursuant to specific  provisions  relating thereto or contained  herein.  If any
security  deposit has been made by Tenant,  Landlord may transfer  such security
deposit to the purchaser,  and thereupon  Landlord shall be discharged  from any
further liability in reference thereto.

SECTION 2.  SUBORDINATION AND ATTORNMENT.

A.   Upon written  request or notice by Landlord,  Tenant agrees to  subordinate
     its rights under this Lease to any Lease to any Lease  wherein  Landlord is
     the  Tenant and to the lien of any first  mortgage  or first deed of trust,
     regardless of whether such lease, first mortgage or first deed of trust now
     exists  or may  hereafter  be  created  wregar  to all or any  part  of the
     Building,  and to any and all  advances  to be made  thereunder  and to the
     interest   thereon  and  all   modifications,   consolidations,   renewals,
     replacements and extensions thereof,  provided the Lessor,  first mortgagee
     or first  trustee  agrees to recognize  the Lease of Tenant in the event of
     default under the Lease or foreclosure if Tenant is not in default.  Tenant
     also agrees that any Lessor,  first mortgagee or first trustee may elect to
     have this Lease  prior to any lease or lien of its first  mortgage or first
     deed of trust,  and in the event of such election and upon  notification by
     such lessor,  first  mortgagee  or first  trustee to Tenant to that effect,
     this Lease shall be deemed prior to lien to sLease first  mortgage or first
     deed of trust,  whether this Lease is dated prior to or  subsequent  to the
     date of said Lmortgag or first deed of trust.

B.   Tenant shall, in the event of the sale or assignment of Landlord's interest
     in the Premises (except in a sale-leaseback  financing transaction),  or in
     the event of any  proceedings  brought  for the  foreclosure  of, or in the
     event of the  exercise  of the power of sale under,  any first  mortgage or
     first  deed  of  trust  covering  the  Premises,  or in  the  event  of the
     termination of any lease in a sale-leaseback  transaction  wherein Landlord
     is the lessee,  attorn to and recognize such purchaser or assignee or first
     mortgagee as Landlord under this Lease first.

C.   Tenant agrees that, upon the request of Landlord, or any such lessor, first
     mortgagee or trustee, Tenant shall execute and deliver whatever instruments
     may be  required  for such  purposes  and to carry  out the  intent of this
     Section and in the event  Tenant  fails to do so within ten (10) days after
     demand in writing  Tenant  does  hereby  make  constitute  and  irrevocably
     appoint Landlord as its  attorney-in-fact  complete with an interest in its
     name place and stead so to sign and deliver such instruments as if the same
     had been signed and delivered by Tenant first.

ARTICLE 13: DEFAULT

SECTION 1.   DEFAULTS BY TENANT.  The  occurrence of any of the following  shall
constitute a material default and breach of this Lease by Tenant.

A.   Any failure by Tenant to pay the Rent or to make any other payment required
     to be made by Tenant  hereunder  no notice  being  required  for default in
     payment;

B.   Any failure by Tenant to observe and  perform any other  provision  of this
     Lease to be observed or performed  by Tenant  where such failure  continues
     for twenty (20) days after written notice to Tenant:

C.   Tenant admits in writing that it cannot meet its obligations as they become
     due; is declared insolvent  according to any law; or assignment of Tenant's
     property is made for the benefit of creditors;  or a receiver or Trustee is
     appointed for Tenant or its property;  or the interest of Tenant under this
     Lease is levied on under execution or other legal process;  or any petition
     is filed by or against Tenant to declare Tenant bankrupt or to delay reduce
     or modify Tenant's debts or obligations;  or any petition is filed or other
     action taken to reorganize or modify Tenant capital  structure if Tenant be
     a corporation or other entity  (provided that no such levy execution  legal
     process or petition filed against Tenant shall  constitute a breach of this
     Lease  if  Tenant  shall   vigorously   contest  the  same  by  appropriate
     proceedings  and shall  remove or vacate the same  within  thirty (30) days
     from the date of its creation service or filing).

D.   The  abandonment  of the Premises by Tenant which shall mean that Tenant is
     absent  from  Premises  for ten (10)  consecutive  days while  Tenant is in
     default in the payment of any sum to be paid by Tenant hereunder.

SECTION 2.   REMEDIES OF  LANDLORD.  In the event of any such default by Tenant,
Landlord  at its  option,  may have  one or more of the  following  remedies  in
addition to all other rights and remedies provided at law or in equity:

A.   Landlord may terminate this Lease and without further notice  repossess the
     Premises  and be entitled to recover as damages a sum of money equal to the
     total of (1) the cost of  recovering  the  Premises,  (2) the  unpaid  Rent
     earned at the time of termination,  plus interest thereon,  (3) the balance
     of the Rent for the  remainder  of the  term,  (4) costs of  reletting  and
     refurbishing, and (5) any other sum of money and damages owned by Tenant to
     Landlord;

B.   Landlord may  immediately  terminate  Tenants  right of  possession  of the
     Premises,  but not terminate tLease and without notice or demand enter upon
     the Premises or any part thereof and take absolute  possession of the same,
     change  the  locks,  and,  at  Landlord's  option,  Landlord  may relet the
     Premises or any part  thereof for such terms and such rents as Landlord may
     reasonably  elect. In the event Landlord shall elect to so relet, then Rent
     received by Landlord from such  reletting  shall be applied  first,  to the
     payment of any  indebtedness  other than Rent due hereunder  from Tenant to
     Landlord  second to the  payment  of any cost of such  reletting  including
     without limitation  refurbishing costs and leasing commissions and third to
     the payment of Rent due and unpaid  hereunder  and Tenant shall satisfy and
     pay any deficiency upon demand  therefor from time to time.  Tenant further
     agrees that Landlord may file suite to recover any sums due under the terms
     of this Article and that no recovery of any portion due Landlord  hereunder
     shall be any defense to any  subsequent  action  brought for any amount not
     theretofore  reduced to judgment  in favor of  Landlord.  Reletting  of the
     Premises  shall not be  construed as an election on the part of Landlord to
     terminate  this  Lease  and  notwithstanding  any  such  reletting  without
     termination  Landlord may at any time  thereafter  elect to terminate  this
     Lease for such previous breach.

SECTION 3.  DEFAULTS BY  LANDLORD.  Except as  otherwise  provided in this Lease
Landlord  shall be in default under this Lease if Landlord  fails to perform any
of its obligations  hereunder and said failure  continues for a period of thirty
(30) days after  written  notice  thereof  from Tenant to Landlord  (unless such
failure  cannot  reasonably be cured within Thirty (30) days and Landlord  shall
have  commenced to cure said failure  within said Thirty (30) days and continues
diligently  to pursue the curing of the same.) If  Landlord  shall be in default
under this Lease and if as a consequence  of such default Tenant shall recover a
money judgment against Landlord such judgment shall be satisfied only out of the
right title ainteres of Landlord in the Building as the same may then

                            LEASE AGREEMENT - PAGE 7
                              TITAN RESOURCES, INC.
<PAGE>
be encumbered and Landlord shall not be liable for any  deficiency.  In no event
shall Tenant have the right to levy  execution  against any property of Landlord
other than its interest in the Building as herein before expressly provided.

ARTICLE 14: NOTICES

All notices  which  Landlord or Tenant may be required or may desire to serve on
the other may be served as an  alternative  to  personal  service by mailing the
same by registered mail postage prepaid  addressed as set forth in Item 2 of the
Basic Lease Provisions or addressed to such other address or addresses as either
Landlord or Tenant may from time to time designate to the other in writing.

ARTICLE 15: MISCELLANEOUS PROVISIONS

SECTION  1.  ATTORNEYS'  FEES.  In the event of any legal  action or  proceeding
brought  by  either  party  against  the  other  arising  out of this  Lease the
prevailing  party shall be entitled to recover  reasonably  attorneys'  fees and
costs  incurred in such action and such amount shall be included in any judgment
rendered in such proceeding.

SECTION 2.   WAIVER.  No waiver by Landlord of any provision of this Lease or of
any  breach  by  Tenant  hereunder  shall be  deemed to be a wavier of any other
provision hereof or of any subsequent  breach by Tenant of the same or any other
provision.  Landlords  consent  to or  approval  of any act by Tenant  requiring
Landlords  consent or  approval  shall not be deemed to render  unnecessary  the
obtaining of Landlords  consent to or approval of any  subsequent act of Tenant.
No act or thing done by Landlord or  Landlord's  agents  during the term of this
Lease shall be deemed an aof a surrender of the Premises, unless done in writing
signed  by  Landlord.  The  delivery  of the  keys to any  employee  or agent of
Landlord  shall not operate as a termination  of the Lease or a surrender of the
Premises.  The  acceptance  of any Rent by  Landlord  following a breach of this
Lease by Tenant  shall not  constitute  waiver by Landlord of such breach or any
other  breach  unless  such  waiver is  expressly  stated in  writing  signed by
Landlord.

SECTION 3.   INSOLVENCY OR BANKRUPTCY.  In no event shall this Lease be assigned
or  assignable  by operation of law and in no event shall this Lease be an asset
of Tenant in any  receivership,  bankruptcy,  or insolvency,  or  reorganization
proceeding.

SECTION  4.   CONFLICT OF LAW.  This Lease  shall be  governed by and  construed
pursuant to the laws of the State of Texas.

SECTION 5.   COMMON  FACILITIES;  PARKING.  Tenant shall have the  non-exclusive
right,  in  common  with  others,  to the  use  of  common  entrances,  lobbies,
elevators,  ramps, drives,  stairs and similar access and service ways and other
common  facilities  in and adjacent to the  Building,  subject to such rules and
regulations as may be adopted by the Landlord.
 Tenant shall have
such parking rights as are set forth in the Parking Agreement attached hereto as
"Exhibit F.

SECTION 6.  SUCCESSORS AND ASSIGNS.  Except as otherwise provided in this Lease,
all of the  covenants,  conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties  hereto and their  respective
heirs, personal representatives, successors and assigns.

SECTION 7.   BROKERS.  Tenant warrants that it has had no dealings with any real
estate broker or agent iconnectio with the negotiation of this Lease,  excepting
only the  broker(s)  named in Item 9 of the Basic Lease Pand that it knows of no
other real estate  broker(s)  or agent(s) who is (are) or might be entitled to a
commission in connection with this Lease.  Landlord  covenants and agrees to pay
all real estate commissions due in connection with this Lease to obroker(s)

SECTION 8.  NAME. Tenant shall not, without the written consent of Landlord, use
the name of the  Building  for any  purpose  other  than as the  address  of the
business  to be  conducted  by Tenant in the  premises,  and in no event  sTenan
acquire any rights in or to such names.

SECTION  9.  EXAMINATION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a Lease or otherwise  until execution by and delivery
to both Landlord and Tenant.

SECTION 10.  INTEREST ON TENANTS  OBLIGATIONS;  LATE CHARGE. Any amount due from
Tenant to  Landlord  which is not paid when due shall  bear  interest  at a rate
equal to the lesser of ten percent  (10%) per annum or the  highest  lawful rate
from the date such payment is due until paid,  but the payment of such  interest
shall not excuse or cure the default.

SECTION 11.   TIME.  TIME IS OF THE ESSENCE IN THIS LEASE AND IN EACH AND ALL OF
THE PROVISIONS HEREOF.

SECTION 12. DEFINED TERMS AND MARGINAL  HEADINGS.  The words Landlord and Tenant
as used herein shall  include the plural as well as  singular.  If more than one
person  is named as  Tenant,  the  obligations  of such  persons  are  joint and
several. The headings and titles to the articles of this Lease are not a part of
this Lease and shall have not effect upon the construction or  interpretation of
any part hereof.

SECTION 13.  CORPORATE AUTHORITY. If Tenant executes this Lease as a corporation
each of the  persons  executing  this  Lease on  behalf of  Tenant  does  hereby
personally  covenant and warrant that Tenant is a duly  authorized  and existing
corporation  that Tenant has and is  qualified  to do business in Texas that the
corporation  has full right and ato eLeas and that each person signing on behalf
of the corporation was authorized to do so.

SECTION 14.  RECORDING. This lease shall not be recorded however, Landlord shall
have the  right to  record a short  form or  memorandum  thereof  at  Landlord's
expense at any time during the term hereof.

SECTION 15.  ENTIRE AGREEMENT.  This lease contains all of the agreements of the
parties hereto with respect to any matter covered or mentioned in this Lease and
no prior agreement understanding or representation pertaining to any such matter
shall be effective for any purpose. No provision of this Lease may be amended or
added to except by an agreement in writing signed by the parties hereto or their
respective successors in interest.

                            LEASE AGREEMENT - PAGE 8
                              TITAN RESOURCES, INC.
<PAGE>
     IN WITNESS WHEREOF,  the parties hereto have executed this Lease consisting
of the  foregoing  provisions  and Articles 1 through 15 together  with Exhibits
specified on page 1  incorporated  herein by this reference as of the date first
above written.


                                        TENANT


WITNESS                                 TITAN RESOURCES, INC.

/s/ Daryl L. Allen                      /s/ Mike Barnwell

                                        Title: Chief Executive Officer

                                        Date: 7-25-98




                                        LANDLORD


                                        AMERICAN NATIONAL INSURANCE COMPANY


WITNESS




                                        /s/ Scott F. Brast

                                        Title: Assistant Vice-President

                                        Date:_________________________


                            LEASE AGREEMENT - PAGE 9
                              TITAN RESOURCES, INC.
<PAGE>
                                   EXHIBIT A-1

                                   FLOOR PLAN



                              [FLOOR PLAN DIAGRAM]



                           LEASE AGREEMENT - PAGE 10
                              TITAN RESOURCES, INC.
<PAGE>
                                  "EXHIBIT A2"
                           MARINA ONE OFFICE BUILDING

                          METES AND BOUNDS DESCRIPTION
                          OF A 3.124 ACRE TRACT OF LAND
            OUT OF THE MICHAEL MULDOON TWO LEAGUE GRANT, ABSTRACT 18
                             GALVESTON COUNTY, TEXAS

Being 3.124 acres of land out of the Michael Muldoon Two League Grant,  Abstract
18,  Galveston  County,  Texas;  and being out of and a portion of that  certain
Partial Replat of South Shore Harbour  Subdivision,  Section Two, as recorded in
Volume 18, Page 136 and 137 of the Map Records of Galveston County,  Texas; said
3.124 acre tract of land being more  particularly  described by metes and bounds
as follows:

COMMENCING  at a point for corner at the most  Southerly  corner of said Partial
Replat of Section Two and being in the Northerly  right-of-way line of F.M. 2094
(80-foot right-of-way);

THENCE  North  41(degree)  47' 20" West with the  Westerly  line of said Partial
Replat of Section Two, 1350.42 feet to a point for corner;

THENCE North 03(degree)12' 40" East, 108.85 feet to a point for corner and being
the PLACE OF BEGINNING for the tract herein described;

THENCE North 03(degree)12' 40" East, 485.00 feet to a point for corner;

THENCE South  86(degree)47'  20" East,  114.74 feet to a point for corner in the
centerline of a 100-foot wide Access Easement;

THENCE South 41(degree)47' 20" East with said centerline, 413.13 feet to a point
for corner;

THENCE South 48(degree)12' 40" West, 272.76 feet to a point for corner;

THENCE  North  86(degree)47'  20" West,  213.99 feet to the PLACE OF  BEGINNING;
containing 3.124 acres of land, mor less. (136,061 square feet).


                                   "EXHIBIT B"
                                AREA DEFINITIONS

A.   Net  Usable  Area.  For all  purposes  of the Lease and the  Agreement  for
     Construction ("Exhibit E") "Usabl Area" shall mean:


1.   On a multi-tenant  floor, the area encompassed by the inside surface of all
     exterior walls of the office building,  the corridor side of corridor walls
     and the center line of walls  separating  the Premises  from other lease or
     leasable areas.

2.   On a single-tenant floor, the area encompassed by the inside surface of all
     exterior walls, less stairs,  vertical shafts, air handling rooms,  janitor
     closets,  and such other rooms not actually available for the tenant's use.
     Toilet rooms, corridors,  and elevator lobbies,  serving such a floor shall
     be included.

B.   Net Rentable Area. For all purposes of the Lease, "Net Rentable Area" (NRA)
     shall be the sum of:

1.   Net Usable Area;

2.   A  prorated  share of all common  areas on the same  floor as the  Premises
     (including  elevator,   lobby,   corridors,   rest  rooms,  mechanical  and
     electrical rooms, and telephone and janitor closets); and

3.   A prorated  share of other office  building  common areas  (including  e.g.
     ground floor and basement  entrance  lobbies,  tunnel,  central  mechanical
     room, emergency generator room,  engineer's office,  shipping and receiving
     room, fire department room and post office).

C.   Agreement  on Areas.  Net  Rentable and Net Usable Areas shown in the Basic
     Lease  Provisions  have  been  calculated  on the  basis  of the  foregoing
     definitions  and are hereby  agreed to be the stated  areas  regardless  of
     minor variations  resulting from actual  construction and completion of the
     Premises for  occupancy,  so long as such wis done in  accordance  with the
     terms and  provisions in the Lease,  the Agreement  for  Construction,  the
     approved Construction Plans.


                           LEASE AGREEMENT - PAGE 11
                              TITAN RESOURCES, INC.
<PAGE>
                                   "EXHIBIT C"
                              RULES AND REGULATIONS

The  following  standards  shall be  observed  by Tenant for the mutual  safety,
cleanliness  and  convenience of all occupants of the Building.  These rules are
subject to change from time to time, as specified in the Lease.

1.   Tenant  shall not use the  Premises  or the  Building  to sell any items or
     services at retail  price or cost  without  written  approval of  Landlord.
     Stenography, typewriting,  blueprinting,  duplicating services of any kind,
     and similar businesses,  shall not be conducted from or within the Premises
     or Building for the service or  accommodation  of occupants of the Building
     without written consent of the Landlord.

2.   Sidewalks,  halls,  passageways  and stairwells  shall not be obstructed or
     used by Tenant for a purpose  other than ingress and egress to and from the
     premises and Building.

3.   Flammable,  explosive or other hazardous liquids and materials shall not be
     brought on the Premises oint the Building  without prior written consent of
     Landlord.  All  Christmas  decorations  shall  be made of  flame  retardant
     materials.

4.   All  contractors  and  technicians  performing  work for Tenant  within the
     Building shall be referred to Landlord for approval before  performing such
     work. All work,  including,  but not limited to, installation of telephone,
     telegraph equipment, electrical and electronic devices and attachments, and
     all installations  affecting floors, walls, windows, doors, ceilings or any
     other physical feature of the Building, shall not commence prior to written
     approval by Landlord.

5.   Tenant shall not conduct any auction on the Premises nor store goods, wares
     or merchandise on the Premises, except for Tenant's own personal use.

6.   Movement  into  or  out of  the  Building  of  freight,  furniture,  office
     equipment  or other  material  for  dispatch  or  receipt  by Tenant  which
     requires  the use of  stairways  or movement  through  public  corridors or
     lobbies or entrances to the Building shall be done at hours and in a manner
     approved by Landlord for such  purposes from time to time.  only  licensed,
     commercial  movers  shall  be  used  for the  purpose  of  moving  freight,
     furniture or office  equipment to and from the premises and  Building.  All
     hand trucks shall be equipped with rubber tires and rubber side guards.

7.   Requests by Tenant for building  services,  maintenance  or repair shall be
     made in writing to the office of the Building Manager.

8.   Tenant shall not change locks or install  additional locks on doors without
     written  consent  of  Landlord.  Tenant  shall not make or cause to be made
     duplicates  of keys  procured  from  Landlord  without  prior  approval  of
     Landlord.

9.   Tenant shall give prompt  notice to the office of the  Building  Manager of
     any accidents to or defects in plumbing, electrical fixtures or heating and
     cooling  equipment.  Liquids,  or other materials or substances  which will
     cause injury to the plumbing,  shall not be put into the lavatories,  water
     closets or other  plumbing  fixtures,  by Tenant,  its agent,  employees or
     invitees.

10.  Tenant shall not place, install or operate on the Premises,  or in any part
     of the  Building,  any stoves or cooking  equipment  without  prior written
     approval by Landlord.

11.  Large files,  safes,  electronic data processing  equipment and other heavy
     equipment shall not be moved into the Building or installed in the Premises
     without written approval of Landlord.

12.  Tenant shall not lay floor  covering  within the Premises  without  written
     approval of Landlord. The use of cement or other similar adhesive materials
     not easily removed with water is expressly prohibited.

13.  Tenant shall place solid pads under all rolling chairs.

14.  Tenant  agrees to  cooperate  and  assist  Landlord  in the  prevention  of
     canvassing, soliciting, and peddling within the Building.

15.  Nails, screws or picture hangers shall not be driven into the walls or wood
     finish of the room without consent of Landlord.  Animals or birds shall not
     be kept in or about the Premises of the Building.

16.  No sign, advertisement, notice or handbill shall be exhibited, distributed,
     painted or affixed by Tenant on,  about or from any part of the premises or
     the Building without prior written consent of the Landlord.

17.  Landlord  reserves  the right to enforce  security  provisions  which would
     restrict  access to the Building  after  working hours of 7:00 a.m. to 7:00
     p.m. on  weekdays;  7:00 a.m. to 1:00 p.m.  on  Saturday,  Sunday and Legal
     Holidays.

It is  Lessor's  desire to  maintain in the  Building  the  highest  standard of
dignity and good taste consistent with comfort and convenience for Lessees.  Any
action on condition not meeting this high standard  should be reported  directly
to the Lessor.
Your  cooperation  will be mutually  beneficial and sincerely  appreciated.  The
Lessor  reserves the right to make such other and further  reasonable  rules and
regulations as in its judgment may from time to time be needful, for the safety,
care and  cleanliness of the lease  Premises,  and for the  preservation of good
order therein.

                           LEASE AGREEMENT - PAGE 12
                              TITAN RESOURCES, INC.
<PAGE>
                                   "EXHIBIT D"
                  BUILDING SERVICES AND CLEANING SPECIFICATIONS

ELECTRICAL AND UTILITY SERVICE

Heating,  ventilating,  and air-condition  shall be provided during the hours of
8:00 a.m. to 6:00 p.m. on weekdays (except legal  holidays),  and from 9:00 a.m.
to 12:00 p.m. on Saturdays.  Off-hours may be provided at a prearranged  charge.
See Item 6.3 of the Basic Lease Provisions.

CLEANING AND MAINTENANCE

NIGHTLY SERVICES - OFFICES, PUBLIC AREAS

1.   Empty waste receptacles, remove to designated location for removal.

2.   Sweep synthetic  flooring with chemically  treated dry mop, giving complete
     accessibility, and yet creating no dust and clean spillage.

3.   Hand dust clean all  office  furniture,  business  machines,  paneling  and
     window sills.  Spot clean desk tops to remove film,  smudges and marking if
     desks are left free of papers, machinery, etc.

4.   Empty,  wash,  clean,  and polish ash trays.  Empty  debris from sand urns,
     smooth sand, and replace wnecessary

5.   Wash,  clean and disinfect  dispensing area of water fountains and coolers.
     Wash metal housing and shiny metal fixture units.

6.   Wash main  entrance  door glass and side door glass to remove  fingerprints
     and smudges from windows apartitio glass.

7.   Use lights only in areas being cleaned.

8.   Vacuum carpet areas, spot clean spills and smudges caused during the day.

9.   Sweep stairwells and dust handrails.

10.  Police sidewalks at lobby entrance.

11.  Spot clean walls and woodworks.

12.  Clean elevator and tracts. Vacuum carpet.

13.  Take main entrance mats, clean and return to proper location.

14.  Wash, clean telephones and telephone receivers.

15.  Spot mop tile floors as necessary.

NIGHTLY SERVICES - LAVATORIES

1.   Clean and disinfect lavatory floors.

2.   Polish mirrors, bright metal work and enameled surfaces.

3.   Wash and disinfect all basin, bowls, and urinals.

4.   Hand dust,  clean, and disinfect all partitions,  tops of tile ledges,  and
     towel, paper, and sanitary napkin dispensers.

5.   Fill and clean toilet tissue, hand soap, and hand towel dispensers.

WEEKLY

1.   Remove fingerprints,  smudges, and scuff marks from vertical and horizontal
     surfaces within reach. This includes doors, walls, glass partitions, window
     sills, etc.

Anything herein above to the contrary notwithstanding,  it is understood that no
services of the  character  provided for in this  Exhibit  shall be performed on
Saturdays, Sundays, or on Holidays.

                           LEASE AGREEMENT - PAGE 13
                              TITAN RESOURCES, INC.
<PAGE>
                                   "EXHIBIT E"
                           AGREEMENT FOR CONSTRUCTION
                                   Page 1 of 3


AMERICAN  NATIONAL  INSURANCE  COMPANY  (Landlord)  and  TITAN  RESOURCES,  INC.
(Tenant)  simultaneously  with the  execution of this LEASE  AGREEMENT do herein
agree as follows. The Premises are described in the Lease.

LANDLORD  AGREES TO GRANT TENANT AN IMPROVEMENT  ALLOWANCE OF $4.00 PER RENTABLE
SQUARE FOOT ($19,244.00) FOR NEW PAINT, CARPET, AND THE REMOVAL OF ONE WALL. ANY
UNUSED  PORTION OF THIS  ALLOWANCE MAY BE APPLIED TO  ROBLIGATION  DUE UNDER THE
LEASE AGREEMENT.

As  further  inducement,  each to the other,  to enter into the Lease  (which is
hereby  incorporated by reference to the extent the provisions of this Agreement
apply thereto) and in consideration of the mutual covenants herein, Landlord and
Tenant mutually agree as follows:

1.   a.   The  term  "Building  Standard,"  when  applied  to  items  of work or
          material  or  collectively  to  the  construction  to be  provided  by
          Landlord described in Paragraph 3 hereof, shall mean those components,
          assemblies,    installations,    and/or   methods   of   installation,
          fabrication,  or assembly  which are from time to time  designated  by
          Landlord for use  throughout  the  Building for all similar  purposes,
          areas, functions, or processes.

     b.   "Building  Standard  Work"  shall  mean the  provision  of all  labor,
          materials, coordination,  supervision, and planning services necessary
          to install in the Premises those Lease Space Improvements described in
          Paragraph  3  hereof,  up  to  the  quantities  of  such  Improvements
          specified in Paragraph 3.

     c.   "Above   Standard  Work"  shall  mean  the  provision  of  all  labor,
          materials, coordination,  supervision, and planning services necessary
          to install in the Premises, as required by Tenant's Construction Plans
          (described  in Paragraph 2 hereof),  quantities  of Building  Standard
          Lease Space  Improvements  in excess of those specified in Paragraph 3
          hereof.

     d.   "Nonstandard  Work" shall mean the provision of all labor,  materials,
          coordination,  supervision, and planning services necessary to install
          in  the  Premises,   as  required  by  Tenant's   Construction  Plans,
          iassemblies or other improvements that are not Building  Standard,  or
          to install  Building  Standard  Items or materials in a manner that is
          not Building Standard.


2.   a.   Landlord's  designated  space  planner,  at no  cost to  Tenant,  will
          prepare a Space Plan fPremise showing, regardless of the quantities of
          such items,  the  location of all  Building  Standard  partitions  and
          doors. Tenant will cooperate with Landlord's space planner, furnishing
          all   reasonable   information   and  material   concerning   Tenant's
          organization,  staffing, growth expectations, physical facility needs,
          equipment  inventory,   etc.,  necessary  for  the  space  planner  to
          efficiently and  expeditiously  arrive at an acceptable  layout of the
          Premises.

     b.   The Space Plan must be approved in writing by both Landlord and Tenant
          on the Space Plan Approval Date (See Item 11; Basic Lease  Provisions)
          and preparation of the  Construction  Plan shall not commence prior to
          such  date.  If, at any time after  approval  of the Space  Plan,  any
          redrawing  of  either  the  Space  Plan or the  Construction  Plans is
          necessitated  by Tenant's  required  changes,  the expense of any such
          redrawing will be charged to Tenant.

     c.   After Space Plan approval,  Landlord's space planner and engineer,  at
          no cost to Tenant,  will prepare  Construction  Plans for all Building
          Standard  Improvements  including completed detail and finish drawings
          for  partitions,   doors,   reflected   ceiling,   telephone  outlets,
          electrical  switches  and  outlets,   and  Building  Standard  heating
          ventilation and air-conditioning equipment and controls.

     d.   Tenant shall be responsible for causing plans for any Nonstandard Work
          to be prepared,  at Tenant's  expense,  by arranging for such planning
          with Landlord's space planner and/or engineer.

     e.   If Tenant shall  arrange for interior  design  services,  whether with
          Landlord's space planner or any other planner or designer, it shall be
          Tenant's responsibility to cause necessary coordination of its agents'
          efforts with Landlord's  agents to ensure that no delays are caused to
          either the planning or  construction of the rStandar or Above Standard
          Work.

     f.   Prior to the  commencement  of  construction,  Landlord  will  furnish
          Tenant a pricing for Above  Standard  Work. The pricing will show, the
          item of work, the quantities of those Building  Standard  improvements
          required  by the  Construction  Plans that are  either  above or below
          those  specified  in  Paragraph  3 hereof.  The  charge to Tenant  for
          quantities  below those allowed  under  Paragraph 3 will be Landlord's
          current  unit  price for each item,  times the number of excess  units
          plus a 10% markup for  materials  stocking and  handling.  Credits due
          Tfor  quantities  below  those  allowed  under  Paragraph  3  will  be
          Landlord's  current list unit price for each item, times the number of
          units not  required,  less a 10% charge  for  materials  stocking  and
          handling.  Landlord  and Tenant  must  approve  the  pricing for Above
          Standard  Work in  writing.  If the pricing  shows a net Tenant  cost,
          Tenant  shall remit to Landlord  the net cost of Above  Standard  Work
          within  five  working  days of  approval of the p If tpricin for Above
          Standard  Work shows a net Tenant  credit,  the credit  shall first be
          applied to the cost of Nonstandard Work required,  if any. If Tenant's
          net credit exceeds the cost of  Nonstandard  Work, the excess cwill be
          applied to the first rental payment(s) due under the Lease.

     g.   At the same time  Landlord  furnishes  Tenant  the  pricing  for Above
          Standard Work  Landlord  will fan estimate of the cost of  Nonstandard
          Work  required,  if any. Where  possible,  this estimate will bbase on
          firm bids for the various  items  required.  Items for which firm bids
          are not available  will be identified  and estimates  will be based on
          the best information available to Landlord, i.e., verbal communication
          with the various contractors required,  Landlord's previous experience
          in installing like items,  quotes from  suppliers,  etc., the estimate
          will include a reasonable  contingency factor and Landlord's markup of
          20% for supervision and  coordination  of Nonstandard  Work.  Landlord
          will  invoice  Tenant  for the exact  cost of the work plus  markup at
          least  ten  working   days   before  the   scheduled   completion   of
          construction;  payment  will be due upon  Tenant's  acceptance  of the
          Premises.

     h.   All sums due Landlord for Above Standard and/or Nonstandard Work shall
          be  considered  Rent  under the terms of the Lease;  nonpayment  shall
          constitute  default  and  entitle  Landlord  to any and  all  remedies
          specified in the Lease.

                           LEASE AGREEMENT - PAGE 14
                              TITAN RESOURCES, INC.
<PAGE>
                           AGREEMENT FOR CONSTRUCTION
                                   Page 2 of 3

3.   Landlord,  at no cost to Tenant,  will install in the Premises the Building
     Standard Lease Space  Improvements  described in this paragraph,  up to the
     quantities of such Improvements specified below:

     a.   PARTITIONS  For  each 12  square  feet of net  rentable  area  leased,
          Landlord will install one (1) linear foot oBuildin Standard partition.
          For the purpose of determining Tenant's partitioning  requirements and
          allowances,  each linear foot of corridor  partitioning  and  demising
          partitioning  shall be counted as one-half (1/2) foot. No subtractions
          will be made for door openings.

          Building Standard interior  partitions are ceiling height, 5/8" gypsum
          board  attached to both sides of 3 5/8" steel studs set 2'  on-center.
          Building  Standard  corridor  partitions  are 10' height,  5/8" gypsum
          board attached to both sides o5/8 steel studs set 2' on-center, with 3
          1/2" batt-type  insulation for sound  attenuation.  Building  Standard
          demising  partitions  (between  tenant space) are ceiling  height 5/8"
          gypsum  battache to both sides of 3 5/8" steel studs set 2' on-center,
          with 3 1/2" batt-type insulation for sound attenuation.

          All  partitions  will be equipped at floor and ceiling lines with wood
          molding.  Building  Standard  partitions are straight walls forming 90
          degree angles with all adjoining surfaces.

     b.   DOORS, FRAMES and HARDWARE

          For each 300 square feet of net rentable  area leased,  Landlord  will
          provide one (1) full height, solid-core wood door. Interior doors will
          be equipped  with ball  knobs,  door  stops,  latch sets,  and hinges.
          Tenant's entrance door will be equipped with lever,  lockset,  hinges,
          door stop, and closer. Tenant will be supplied two keys per lockset.

     c.   PAINTING

          All interior wall surfaces will be textured,  given one primer coat of
          paint and one finish coat of flat antique eggshell white paint.

     d.   WALL COVERING (Common Areas Only)

          Landlord will provide wood mill work,  paneling  and/or other finished
          on all walls in corridors and elevator lobbies.

     e.   CEILING

          Building  Standard ceilings will be 2' x 4' lay-in acoustical tile, on
          an exposed-spline ceiling grid.

     f.   LIGHTING

          The Building  Standard  light  fixture will be a 2' x 4,'  three-tube,
          40-watt,  recessed lay-in, parabolic fixture, with return air troffer.
          For every eight (80) square feet of net rentable  area leased,  Tenant
          will be provided  one  fixture.  One single pole light  switch will be
          provided in each room or area.

     g.   DUPLEX ELECTRICAL OUTLETS

          For each 120 square feet of net rentable  area  leased,  one 110 volt,
          wall mounted duplex electrical outlet will be provided.

     h.   VINYL FLOOR COVERING

          In uncarpeted  areas of the leased space,  1/8" vinyl  asbestos  floor
          covering will be provided.

     i.   CARPET (Tenant Area)

          Building  Standard  carpeting  will be provided  in the leased  space.
          Tenant  may  select  colors  from  the  Building  Standard  selection;
          however, only one color per lease space will be provided.

     j.   FLOOR COVERING (Common Areas)

          Landlord will provide carpet, wood, marble or other floor coverings of
          its choice in elevator lobbies, corridors and common areas.

     k.   DRAPERY

          Landlord  will provide  Building  Standard  draperies for all exterior
          windows. The use of window coverings is not permitted.

     l.   DRINKING FOUNTAIN

          Landlord will provide one drinking fountain per floor.

     m.   HEATING, VENTILATION, and AIR-CONDITIONING

          The  building  will  be  heated  by  electric  resistance  heaters  in
          air-mixing boxes and, at the perimeter,  slot diffusers.  Cooling will
          be provided by a variable  volume system.  Ducting,  supply grills and
          thermostat  controls  will be  provided in  accordance  with plans and
          specifications by the Mechanical Engineer and/or MContractor

4.   Notwithstanding  the date of  commencement  provided  in the  Lease,  it is
     agreed that  Tenant's  oto pay Rent will begin when all  Building  Standard
     construction work has been substantially completed. However, if substantial
     completion has been delayed by:

     a.   Tenant's failure to furnish plans or information required;

     b.   Tenant's request for Nonstandard material, finishes, or installation;

     c.   Tenant's request for changes to approved plans, or

                           LEASE AGREEMENT - PAGE 15
                              TITAN RESOURCES, INC.
<PAGE>
     d.   Actions of Tenant,  or any person,  firm, or  corporation  employed by
          Tenant;   then  the  Commencement  Date  of  the  Lease  and  Tenant's
          obligation to pay Rent shall be the date of commencement  specified in
          the Lease (Item 7 - Basic Lease Provisions).

5.   If Tenant  should desire to enter the Premises or authorize its agent to do
     so prior to the  Commencement  Date of the Lease, to perform  approved work
     not requested of the Landlord, Landlord shall permit such entry if:

     a.   Tenant,  its contractors,  workmen,  mechanics,  or such others as may
          enter,  do not in any  way  disturb  Landlord's  contractor,  workmen,
          mechanics,  or other agents in the  performance  of their work. If, in
          Landlord's  reasonable judgment,  entry of Tenant or any of its agents
          would cause,  has caused or is causing  disturbance to Landlord or its
          agents, then Landlord may, without notice, refuse admittance to Tenant
          or its agents.

     b.   Tenant,  its contractors or other agents provide  Landlord  sufficient
          evidence  that  it  (they)  is  (are)  covered  under  such  Workmen's
          Compensation,  public  liability,  and  property  damage  insurance as
          Landlord may reasonably request for its protection.


     Landlord  shall  not be  liable  for any  injury,  loss or damage to any of
     Tenant's  installations or decorations made prior to the Commencement  Date
     of the Lease.  Landlord is not responsible for the function and maintenance
     of Nonstandard equipment, cabinets, or fixtures not installed by Landlord.

                           LEASE AGREEMENT - PAGE 16
                              TITAN RESOURCES, INC.
<PAGE>
                           AGREEMENT FOR CONSTRUCTION
                                   Page 3 of 3

6.   LANDLORD'S REPRESENTATIVE FOR COORDINATION OF CONSTRUCTION WILL BE:

Name:     JACK MOSS - FALCON GROUP

Address:  2525 SOUTH SHORE BLVD., SUITE 200
          LEAGUE CITY, TEXAS 77573

Phone:    713-334-3346

TENANT'S REPRESENTATIVE FOR COORDINATION OF CONSTRUCTION WILL BE:

Name:     MIKE BARNWELL

Address:  1120 NASA RD 1 #510
          HOUSTON, TEXAS 77058

Phone:    281-335-8787

                           LEASE AGREEMENT - PAGE 17
                              TITAN RESOURCES, INC.
<PAGE>
                           AGREEMENT FOR CONSTRUCTION
                                    EXHIBIT A
                                   FLOOR PLAN


                                       N/A


                           LEASE AGREEMENT - PAGE 18
                              TITAN RESOURCES, INC.
<PAGE>
                                   "EXHIBIT F"
                                PARKING AGREEMENT

BUILDING: MARINA ONE OFFICE BLDG.                                  SUITE NO. 309

LANDLORD: AMERICAN NATIONAL INSURANCE COMPANY

TENANT:   TITAN RESOURCES, INC.

So long as the Lease of which this  Agreement  is a part shall remain in effect,
Tenant or persons  designated  by Tenant hereby rents on a  non-exclusive  basis
except as provided for herein up to * parking  spaces on the "Premises" in areas
designated  for  parking  and  as  classified  herein.  *Four  (4)  open  and/or
covered/non-reserved car parks per 1,000 rentable square feet of Tenant's Leased
Premises.

Tenant shall pay as rent for parking  spaces,  at the same times and in the same
manner as Basic Rent is dunde the Lease;  the rate for such parking  spaces from
lime to time designated by Landlord as standard for the Building.

Tenant shall pay initially for parking  space(s)  rented the sum of $ -0- ** per
month.

Tenant may validate  visitor  parking,  by such method or methods as Landlord or
the  garage  operator  may  approve,  at the  validation  rate from time to time
generally  applicable to visitor parking,  Landlord  expressly reserves trigh to
redesignate  parking areas and to modify the parking structure for other uses or
to any extent.

A condition of any parking  shall be  compliance by the parker with garage rules
and  regulations,   including  any  sticker  or  other   identification   system
established by Landlord. The following rules and regulations are in effect until
notice is given to Tenant of any change,  Landlord  reserves the right to modify
and/or adopt such other reasonable and non- discriminatory rules and regulations
for the garage as it deems  necessary  for the  operation  of the  gLandlor  may
refuse to permit any person who  violates  the rules to park in the garage,  and
any violation of the rules shall subject the car to removal.

                              RULES AND REGULATIONS

1.   Cars must be parked entirely within the stall lines painted on the floor.

2.   All directional signs and arrows must be observed.

3.   The speed limit shall be 5 miles per hour.

4.   Parking is prohibited:

     a.   in areas not striped for parking

     b.   in aisles

     c.   where "no parking" signs are posted

     d.   on ramps

     e.   in cross-hatched areas

     f.   in such other areas as may be  designated  by  Landlord or  Landlord's
          agent(s).

5.   Parking stickers or any other device or form of identification  supplied by
     Landlord   shall   remain  the  property  of  Landlord  and  shall  not  be
     transferable. There will be a replacement charge payable by Tenant equal to
     the amount  posted from time to time by Landlord  for loss of any  magnetic
     parking card, parking sticker, or any other entry or control device.

6.   Garage  managers  or  attendants  are not  authorized  to make or allow any
     exceptions to these Rules and Regulations.

7.   Every parker is required to park and lock his own car.  All  responsibility
     for damage to cars or persons or theft is assumed by the parker.

Failure to promptly pay the rent required hereunder or persistent failure on the
part of  Tenant  or  Tenant's  designated  parkers  to  observe  the  rules  and
regulations  above shall give Landlord the right to terminate  Tenant's right to
use the parking  structure.  No such  termination  shall create any liability on
Landlord or be deemed to interfere  with Tenant's  right to quiet  possession of
its Premises.

                        ** PARKING CLASS - RATE STRUCTURE


Designation         Class             Type          Rate/Month        Allocation
-----------         -----             ----          ----------        ----------
    A          Named - Dedicated     Covered           -$0-               N/A
    B           Open - Reserved      Covered           -$0-               N/A
    C                Open           Open and/or     -No Charge-            19
                                    Covered/Non-
                                     Reserved

                           LEASE AGREEMENT - PAGE 19
                              TITAN RESOURCES, INC.
<PAGE>
                                   "EXHIBIT G"
                        ACCEPTANCE OF PREMISES MEMORANDUM

This  Memorandum  is an  amendment  to the Lease for space in MARINA  ONE OFFICE
BUILDING,  dated the 1st, day of July, 1998, between AMERICAN NATIONAL INSURANCE
COMPANY as Landlord, and TITAN RESOURCES, INC., as Tenant.

Landlord and Tenant hereby agree that:

1.   Except for those  "punch  list" items which  Tenant will submit to Landlord
     within  30 days  hereof,  and which  Landlord  will  remedy  within 30 days
     thereafter,  Landlord has fully  completed the  construction  work required
     under the terms of the Lease and the  Agreement for  Construction  attached
     thereto.

2.   The Premises are  tenantable,  the Landlord has no further  obligation  for
     construction (except as specified above), and Tenant acknowledges that both
     the Building and the Premises are satisfactory in all respects.

3.   The  Commencement  Date of the Lease is hereby  agreed to be the 1st day of
     August, 1998.

4.   The  Expiration  Date of the Lease is  hereby  agreed to be the 31st day of
     July, 2001.

All other terms and conditions of the Lease are hereby ratified and acknowledged
to be unchanged.


AGREED AND EXECUTED THIS 5th DAY OF AUGUST, 1998


TENANT:        TITAN RESOURCES, INC.

BY:            /s/ Mike Barnwell


TITLE:         CFO



LANDLORD:      AMERICAN NATIONAL INSURANCE COMPANY

BY:            /s/ Scott Brast


TITLE:         Scott F. Brast / Assistant Vice President

                           LEASE AGREEMENT - PAGE 20
                              TITAN RESOURCES, INC.
<PAGE>
                                  "EXHIBIT "H"
                               SPECIAL PROVISIONS


1.   Landlord and Tenant agree that Landlord will provide two (2) memberships to
     the  Fitness  Center at South Shore  Harbour  for the  duration of the base
     lease term. This will be provided at no additional cost to Tenant.

2.   Landlord and Tenant agree that Landlord  will provide  Tenant one (1) three
     (3) year renewal oat the then prevailing Fair Market Rental Rate Value.

3.   Landlord and Tenant agree that Tenant will provide a personal Unconditional
     Guaranty  for the  obligations  due during the first  twelve (12) months of
     this Lease Agreement (See Exhibit "J").

                           LEASE AGREEMENT - PAGE 21
                              TITAN RESOURCES, INC.
<PAGE>
                                  "EXHIBIT "I"
                               OPERATING EXPENSES


1.   Notwithstanding  the  foregoing  there  shall be  excluded  from  Operating
     Expenses any costs or expenses attributable to:

     a.   Charges made by Landlord  for  electricity  and other  service sold to
          tenants for which  Landlord is entitled to be reimbursed by tenants as
          an additional  charge or rental over and above the Base Rental payable
          under the  leases  with  such  tenants  other  than  charges  for such
          services  that are  customarily  included in  Operating  Expenses  and
          charged to all tenants on a proportionate basis.

     b.   Costs incurred to provide  services or other benefits to other tenants
          or occupants of a tnot provided or available to Tenant hereunder.

     c.   Costs incurred in improving,  finishing out,  renovating,  decorating,
          painting,  or redecorating space for tenants or other occupants in the
          complex or vacant space held for lease in the complex.

     d.   Depreciation.

     e.   Legal fees, leasing commissions, and costs and disbursements and other
          expenses  incurred in connection  with the leasing of the building and
          outside fees paid in  connection  with  negotiations  or disputes with
          other tenants.

     f.   Repairs or other work occasioned by fire, windstorm or other casualty,
          or by  condemnation,  the costs of which are reimbursed to Landlord by
          insurers, or by governmental authorities in eminent domain.

     g.   Debt service,  interest or other finance  charges unless  specifically
          included above.

     h.   Costs of a capital nature (whether or not in the nature of alterations
          or  replacements)  including but not limited to capital  equipment and
          capital  tools,  all  in  accordance  with  consistent  with  industry
          practices,  consistently  applied unless such capital expense is lower
          than monthly expenses.

     i.   Cost of acquisition of new land or buildings for the complex.

     j.   Costs of remedying original major construction defects.

     k.   The amount,  if any, by which  salaries,  costs and other expenses are
          included in the Operating Expenses that are paid or payable to (i) any
          entity  which is  controlled  by any  partner  of  Landlord,  (ii) any
          principal  of any  partner  of  Landlord,  or  (iii)  any  partner  of
          Landlord, or (iv) in the case of salaries,  any individual who is also
          an employee of any partner of Landlord or any entity controlled by any
          partner of  Landlord  or the  principal  or any  partner  of  Landlord
          exceeds  the amount of the costs,  salaries  and  expenses  that would
          bpayabl to parties  other than the parties set forth above for similar
          services for similar buildings.

                           LEASE AGREEMENT - PAGE 22
                              TITAN RESOURCES, INC.
<PAGE>
                                  "EXHIBIT "J"
                             UNCONDITIONAL GUARANTY

The undersigned,  MIKE BARNWELL,  BRENT NELSON,  STANTON POWELL,  (herein called
"Guarantors"),  for value received and in consideration for and as an inducement
to AMERICAN NATIONAL INSURANCE  COMPANY,  (herein called "Landlord") to make the
Lease  Agreement to which this  Unconditional  Guaranty is attached,  with TITAN
RESOURCES,  INC. (herein called "Tenant") hereby absolutely and  unconditionally
guarantee,  for a period of twelve  (12) months of the  initial  term,  the full
performance and observance of all covenants,  duties and obligations  (including
but not limited to, the obligation to pay rent and other sums) therein  provided
to be  performed  and  observed by Tenant,  Tenant's  successors  and  permitted
assigns;   and  Guarantors   hereby  make  themselves   fully  liable  for  such
performance.  The  Lease  Agreement  hereby  guaranteed  is that  certain  Lease
Agreement  (together with any and all amendments thereto and extensions thereof)
dated the 1st day of Jby and between the above named Landlord and the Tenant, to
which  reference is here made for all purposes.  This Guaranty is  unconditional
and the liability of Guarantor is absolute,  in the same manner as if Guarantors
was nabbed in and signed such Lease Agreement as the Tenant thereunder.

Guarantors agree that bankruptcy,  insolvency, lack of corporate capacity or any
other  disability or impediment  against  enforcement of liability of the Tenant
named in the  Lease  Agreement  shall in no way  impair  or  affect  Guarantors'
liability and obligations hereunder and it shall not be necessary or required in
order to maintain and enforce Guarantors' liabilities and obligations hereunder,
that demand be made upon Tenant or that action  commenced or prosecuted  against
sTenant or that any effort be made to enforce the liability or responsibility of
such  Tenant or any other  party  liable on such  Lease be joined in any  action
brought  against  Guarantors  for  enforcement  of  Guarantors'   liability  and
responsibility  under this  guaranty,  or that  judgment have  theretofore  been
obtained against such Tenant or any other party liable therefore oconnectio with
any such claim.

Guarantors  agree that no waiver by Landlord or forbearance or delay by Landlord
in  asserting or  enforcing  any rights or remedies of Landlord  against or with
respect to such Tenant or any other party who may be or become  responsible  for
performance  of any of such  Tenant's  obligations  or  duties  shall in any way
affect, impair or release Guarantors' liability hereunder.  Likewise, Guarantors
agree that no assignment or subletting of the Lease or of all or any part of the
Leased  Premises  by such  Tenant  shall in any way  impair,  affect or  release
Guarantors' liability hereunder.  Guarantors expressly waives and agrees that no
notice of any  default by Tenant,  or other  notice or demand,  need be given by
Landlord to Guarantors as a condition of  maintaining  or enforcing  Guarantors'
liability and obligations under this Guaranty.  Likewise,  Guarantors agree that
Landlord's  release or  subordination  or failure or delay to enforce or seek to
realize  upon any  security  now or  hereafter  held or acquired by Landlord for
performance  of any of the  obligations  or  duties  of the  Tenant  under or in
connection  with  such  Lease  shall  in  no  way,  impair,  affect  or  release
Guarantors'  liability hereunder,  aLandlord' action (at Landlord's election) in
terminating  such  Lease or in  taking  or  retaking  possession  of the  Leased
Premises as therein provided,  following default by Tenant, shall not release or
impair Guarantors'  liability hereunder,  and that no notice of such termination
or of such entry or re-entry by Landlord need be given to Guarantors.

This Guaranty shall be enforceable  and shall be performed in Galveston  County,
Texas.

No sale,  conveyance,  transfer or other  disposition of the Leased  Premises by
Landlord shall affect, ior release Guarantors' liability hereunder.

Guarantors  further  agrees to indemnify  and hold  Landlord  harmless  from and
against any and all loss, costs, expense and damages (including,  without, court
costs and  attorney's  fees incurred by Landlord) in the event of any default by
Tenant under said Lease.

Guarantors  specifically  waives any notice of  acceptance  of this  Guaranty by
Landlord.

Guarantors  further  acknowledges  and  agrees  that but for the  execution  and
delivery of this Guaranty by  tGuarantors  Landlord  would not have executed and
delivered said Lease.

All terms and provisions hereof shall inure to the benefit of the successors and
assigns of  Landlord,  and shall be binding upon the  successors  and assigns of
Guarantors.

EXECUTED by Guarantors on this the ____ day of July, 1998.

GUARANTOR:        MIKE BARNWELL

                  BY: /s/ MIKE BARNWELL

GUARANTOR:        BRENT NELSON

                  BY: /s/ BRENT NELSON

GUARANTOR:        STANTON POWELL

                  BY: /s/ STANTON P. POWELL

                            LEASE AGREEMENT - PAGE 23
                              TITAN RESOURCES, INC.