<PAGE>

                                                                    Exhibit 10.2

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE MAY NOT BE PLEDGED, SOLD,
OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF
PROVIDES INFORMATION SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
PLEDGE, SALE, OFFER, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE
FEDERAL OR STATE LAWS.

                                PROMISSORY NOTE


U.S. $5,000,000                                                    July 11, 2000


     1.   Promise to Pay; Interest Rate.  On September 1, 2003 (the "Maturity
          -----------------------------
Date"), for value received, the undersigned, Miller Exploration Company, a
Delaware corporation (the "Company"), promises to pay to the order of Guardian
Energy Management Corp., a Michigan corporation or any of its assigns which
holds this Note ("Payee"), the principal sum of U.S. FIVE MILLION DOLLARS
($5,000,000), without interest (except as provided below).  Upon the failure to
make any payment when due of principal, the failure of the stockholders of the
Company to approve the issuance of the Conversion Shares (as hereinafter
defined) at the meeting of stockholders of the Company contemplated by Section 9
hereof, or the occurrence and continuation of any Event of Default (as
hereinafter defined) under any instrument evidencing, relating to, or securing
payment of this Note, the principal balance of this Note and any accrued, unpaid
past-due interest shall bear interest from the date hereof until the payment in
full of all principal and interest outstanding from time to time under this Note
at a rate per annum which from day to day shall equal (i) the Maximum Rate (as
hereinafter defined), or (ii) (a) for a period of 365 days from the date hereof,
at the sum of the Prime Rate plus ten percent (10%) per annum, (b) for the
period of 365 days thereafter, at the sum of the Prime Rate plus twelve percent
(12%) per annum, and (c) thereafter at the sum of the Prime Rate plus fifteen
percent (15%) per annum, whichever is lower.  "Prime Rate" shall mean the annual
rate of interest published daily in the Wall Street Journal as the "Prime Rate."
Subject to provisions set forth in Sections 7 and 8 hereof, all payments of
principal made by the Company hereunder, shall be made in immediately available
funds, in lawful money of the United States of America at such location as is
directed by Payee without set-off, deduction or counterclaim, or at Payee's
option and subject to the provisions of the following paragraph, by the issuance
of warrants ("Principal Warrants") exercisable for the purchase of shares of the
Company's common stock, par value $.01 per share ("Common Stock").  Principal
Warrants shall be exercisable for a number of shares of Common Stock equal to
the amount of the principal payment divided by the lower of: (a) the weighted
average of the closing prices of the Common Stock on the NASDAQ National Market
System or other principal exchange or quotation system on which the Common Stock
is then traded or listed (in each case as reported by the Wall Street Journal)
for the thirty consecutive trading days ending on the trading day immediately
prior to the date on which such Principal Warrant is issued; or (b) one dollar
and twenty-five cents ($1.25) per share. Subject to the provisions of the
following paragraph and Sections 7 and 8 hereof, payments of interest hereunder,
if any, shall be paid by the
<PAGE>

Company, at the Company's option, either in immediately available funds or by
the issuance of warrants ("Interest Warrants," and together with the Principal
Warrants, the "Payment Warrants') exercisable for the purchase of shares of
Common Stock. Interest Warrants shall be exercisable for a number of shares of
Common Stock equal to the remainder of the subject amount of interest divided by
the lower of: (a) the weighted average of the closing prices of the Common Stock
on the NASDAQ National Market System or other principal exchange or quotation
system on which the Common Stock is then traded or listed (in each case as
reported by the Wall Street Journal) for the thirty consecutive trading days
ending on the trading day immediately prior to the date on which such Interest
Warrant is issued; or (b) one dollar and twenty-five cents ($1.25) per share.
Interest hereunder, if any, shall accrue and be payable on December __ and June
__ of each year following the date hereof. The per share exercise price for any
Principal Warrants or Interest Warrants issued hereunder shall be $.01 per
share.

     The provisions of the preceding paragraph notwithstanding, in no event
shall the Company issue Payment Warrants as payment of principal and/or interest
on the Note which are exercisable for more than two million one hundred fifty-
seven thousand seven hundred and sixty-seven (2,157,767) shares of Common Stock.

     The term "Maximum Rate" as used herein means the maximum rate of interest
permitted under applicable law.  The term "applicable law," as used in this
Note, shall mean the applicable laws of the State of Delaware or applicable laws
of the United States, whichever laws allow the greater rate of interest, as such
laws now exist or may be changed or amended or come into effect in the future.

     2.   Subordination.  Payee agrees that all indebtedness and obligations of
          -------------
the Company to Payee evidenced by this Note, including, without limitation, all
obligations for the payment of principal, interest, penalties, fees, costs,
expenses and indemnities (the "Subordinated Obligations"), shall be and hereby
are subordinated in right of payment and claim in favor of the indebtedness and
obligations of the Company, not to exceed fourteen million United Stated dollars
(US $14,000,000) in principal amount, under that certain credit agreement dated
as of February 9, 1998, as amended from time to time, by and between the Company
and Bank of Montreal, Houston Agency and any successor or replacement credit
facilities or borrowings of the Company that do not by their terms provide that
they are subordinate to or pari passu with this Note (the "Senior Obligations").
Except pursuant to the provisions set forth in Section 8, until the Senior
Obligations have been paid in full and all obligations of the Company with
respect thereto have terminated, Payee agrees that it will not request, demand,
accept, or receive (by set-off or other manner), and the Company agrees that it
will not pay or deliver to Payee, whether by payment, prepayment, set-off or
otherwise, any payment amount, credit, reduction of all or any part of the
amounts owing under the Subordinated Obligations; provided, however, that
nothing in this Section 2 shall be interpreted to prohibit the Company or Payee
from exercising their respective rights to convert the amounts owing under this
Note or the Payment Warrants, if any, into shares of the Company's common stock,
par value $0.01 per share (the "Common Stock") pursuant to the provisions of
Section 7 hereof.  The Company covenants and agrees with Payer that it shall not
extend maturity of its Senior Obligations beyond September 1, 2003.

                                      -2-
<PAGE>

     3.   Events of Default.  The entire unpaid principal balance of, and all
          -----------------
accrued interest on, this Note shall immediately be due and payable at the
option of Payee (or with respect to clause (c) automatically without notice of
any kind) upon the occurrence and continuation of any one or more events of
default ("Event of Default").  For purpose of this Note, the term "Event of
Default" shall mean:  (a) a failure by the undersigned to pay when due any
installment of principal or interest under this Note or any other costs due
hereunder; (b) there shall have been any breach of a representation or warranty
or any material breach of any covenant or agreement set forth in this Note or
the other Transaction Documents on the part of the Company, which breach shall
not have been cured within twenty (20) days following receipt by the Company of
written notice of such breach; (c) the Company shall generally fail to pay its
debts as such debts become due, shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of its
creditors; or any proceeding shall be instituted by or against the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of thirty (30) days or any of the
actions sought in such proceeding (including, without limitation, the entry of
an order for relief against it or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property) shall occur, or the Company shall take any action to authorize any of
the actions set forth above in this clause (c).

     The term "Transaction Documents" as used herein means the collective
reference to the Securities Purchase Agreement dated as of the date hereof (the
"Securities Purchase Agreement") by and between the Company and Payee, and each
other agreement, document and instrument required to be executed in accordance
therewith, including, without limitation (as each such term is defined in the
Securities Purchase Agreement) (i) the Voting Agreement, (ii) the Warrants,
(iii) the Registration Rights Agreement and (iv) this Note.

     4.   Application of Payments.  Each payment received by the Payee shall be
          -----------------------
applied first to the payment of any costs due hereunder, then to any accrued
interest due hereunder and then to the reduction of the unpaid principal balance
thereof.

     5.   Waivers.  Except as may be otherwise provided herein, the makers,
          -------
signers, sureties and endorsers of this Note severally waive demand,
presentment, notice of dishonor, notice of intent to demand or accelerate
payment hereof, notice of acceleration, diligence in collecting, grace, notice
and protest, and agree to one or more extensions for any period or periods of
time and partial payments, before or after maturity, without prejudice to Payee;
and if this Note shall be collected by legal proceedings or through a probate or
bankruptcy court, or shall be placed in the hands of an attorney for collection
after default or maturity, the undersigned agrees to pay all costs of
collection, including reasonable attorneys' fees.  No delay or omission on the
part of Payee in the exercise of any right or remedy will operate as a waiver
thereof, and no single or partial exercise by Payee of any right or remedy will
preclude other or further exercise thereof or the exercise of any other right or
remedy.

                                      -3-
<PAGE>

     6.   Usury Savings.  All agreements between the undersigned and the Payee,
          -------------
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency or event whatsoever, whether by reason
of demand or acceleration of the maturity hereof or otherwise, shall the amount
contracted for, charged, received, paid or agreed to be paid to the holder
hereof for the use, forbearance, or detention of the funds evidenced hereby or
otherwise, or for the performance or payment of any covenant or obligation
contained in any instrument securing the payment hereof, exceed the maximum
amount permissible under applicable law.  If, from any circumstance whatsoever,
interest would otherwise be payable to the holder hereof in excess of the
maximum lawful amount, the interest payable to the holder hereof shall be
reduced to the maximum amount permitted under applicable law; and if from any
circumstance the holder hereof shall ever receive anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall be applied to the reduction of the
principal hereof and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal hereof, such excess shall be
refunded to the undersigned.  All interest paid or agreed to be paid to the
holder hereof shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period of the loan evidenced
hereby until payment in full of the principal (including the period of any
renewal or extension hereof) so that the interest hereon for such full period
shall not exceed the maximum amount permitted by applicable law.

     7.   Conversion Right.
          ----------------

     (a) General.  Upon the approval of the issuance of the Conversion Shares at
         -------
the meeting of stockholders of the Company contemplated by Section 9 hereof by a
majority of the votes cast with respect to such matter, or by consent in lieu of
such meeting (the "Requisite Stockholder Approval"), all but not less than all
of the principal amount, interest and any other costs due hereunder shall
automatically be converted, without any further action on the part of the
Company or the Payee, into the right to receive a number of shares of Common
Stock equal to the amount so converted divided by $1.35 (the "Conversion
Price").  Upon receipt of the Requisite Stockholder Approval, the Company shall
deliver a duly signed and completed notice of such conversion (the "Conversion
Notice") to the offices of the Payee at the address set forth on the signature
page hereto, accompanied by a written request for immediate delivery to the
Company of the Note.  As promptly as practicable after receipt of the Note, the
Company will execute and deliver to the Payee or, if applicable, any designee of
Payee a certificate or certificates representing the number of full shares of
Common Stock issuable upon conversion (which certificate shall be issued in the
name of Payee or any other person designated by Payee in the applicable
Conversion Notice and executed on behalf of the Company by a duly authorized
officer), together with payment in lieu of any fraction of a share.
Notwithstanding the foregoing, such conversion shall be deemed to have been
effected immediately prior to the close of business on the date the Requisite
Stockholder Approval is received.  All shares of Common Stock issued upon
conversion of this Note (the "Conversion Shares") or upon the exercise of the
Interest Warrants will be validly issued, fully paid and non-assessable and the
issuance of such shares will not be subject to any lien, security interest,
claim, charge, right of another, defect in title and encumbrance of any kind or
character (other than as imposed by the Securities Act of 1933, as amended) or
preemptive right of any other holder of capital stock of the Company.  Holders
of Conversion Shares will not be entitled to receive any dividends payable to
holders of Common Stock as of any record time or date before the close of
business on the Conversion Date.  No fractional shares will be issued upon
conversion of this Note,

                                      -4-
<PAGE>

but, in lieu thereof, an appropriate amount will be paid in cash by the Company
based upon the Conversion Price. The Payee will not be required to pay any taxes
or duties in respect of the issue or delivery of Common Stock on conversion, but
will be required to pay any tax or duty which may be payable in respect of any
transfer involved in the issue or delivery of the Common Stock in a name other
than that of the Payee.

     (b) Reclassification, Consolidation, Merger or Sale of Assets.  In the
         ---------------------------------------------------------
event that the Company shall be a party to any transaction (including without
limitation (i) any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value), (ii) any combination or subdivision of Common Stock
into a lesser or greater number of shares of Common Stock, (iii) any
consolidation of the Company with, or merger of the Company into, any other
person, (iv) any merger of another person into the Company (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), or (v) any
sale or transfer of all or substantially all of the assets of the Company or any
compulsory share exchange) pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property, then lawful
provision shall be made as part of the terms of such transaction whereby Payee
shall have the right thereafter to convert this Note only into the kind and
amount of securities, cash and other property receivable upon such transaction
by a holder of the number of shares of Common Stock into which this Note could
have been converted immediately prior to such transaction.  The entity formed by
such consolidation or resulting from such merger or which acquires such assets
or which acquires the Company's shares, as the case may be, shall make provision
in its certificate or articles of incorporation or other constituent document to
establish such right.  The above provisions shall similarly apply to successive
transactions of the foregoing type.

     (c) Common Stock Dilutions.  In the event that prior to the issuance of the
         ----------------------
Conversion Shares the Company issues or agrees to issue additional shares of
Common Stock pursuant to a stock split or stock dividend, or dividend or
distribution of rights to purchase stock, then the number of Conversion Shares
and the Conversion Price therefore shall be adjusted proportionately.  For
purposes of this Note, all shares of the Company's stock that are reserved for
issuance (other than shares of stock that are to be issued to the Payee) as of
the date of this Note shall be deemed to have been issued for the purpose of
calculating the number of Conversion Shares and the applicable Conversion Price.
The Company hereby covenants and agrees with Payee that it will not declare or
pay or make any dividend or distribution in cash or property prior to the
issuance of the Conversion Shares.

     (d) Reservation of Shares; Etc.  The Company shall at all times reserve and
         --------------------------
keep available, free from preemptive rights out of its authorized and unissued
stock, solely for the purpose of effecting the conversion of this Note, such
number of shares of its Common Stock as shall from time to time be sufficient to
effect the conversion of all amounts payable under this Note from time to time.
The Company shall from time to time, in accordance with the laws of the State of
Delaware, increase the authorized number of shares of Common Stock if at any
time the number of shares of authorized and unissued Common Stock shall not be
sufficient to permit the conversion of all the amounts payable under this Note
from time to time.

                                      -5-
<PAGE>

     (e) Prior Notice of Certain Events.  In the event:
         ------------------------------

          (i) the Company establishes a record date to determine the holders of
Common Stock who are entitled to (A) receive any dividend or other distribution
(other than a dividend payable in shares of Common Stock), (B) participate in a
redemption or repurchase of the then-outstanding shares of Common Stock, or (C)
vote in connection with any of the transactions identified in clauses (ii),
(iii), (iv) or (v) below; or

          (ii) the Company shall (A) declare any dividend (or any other
distribution) on its Common Stock, other than a dividend payable in shares of
Common Stock or (B) declare or authorize a redemption or repurchase of the then-
outstanding shares of Common Stock; or

          (iii) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants; or

          (iv) of any reclassification of Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par
value), or of any other capital reorganization or of any consolidation or merger
to which the Company is a party, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
other property; or

          (v) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or such event is likely to occur;

then the Company shall cause to be mailed to the Payee, at its address as
provided to the Company from time to time by written notice of Payee, a notice
stating (x)  the date on which a record (if any) is to be taken with respect to
clause (i) above, (y) the date on which any transaction or event contemplated in
any of clauses (i)  through and including clause (v) above is expected to become
effective or the date of the anticipated closing of the public offering, and (z)
the time, if any is fixed, as to when the holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon any such reclassification, reorganization,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up.  Each notice of an event specified in clause (i) above shall be
sent at least five (5) days prior to the record date specified therein and each
notice of an event specified in clauses (ii) through and including (v) above
shall be delivered at least twenty (20) days prior to the proposed closing of
such transaction.

     8.   Purchase of Assets to Satisfy Note.
          ----------------------------------

     (a) Right to Purchase.  Any provision in this Note to the contrary
         -----------------
notwithstanding, in the event the Company does not receive the Requisite
Stockholder Approval within six (6) months from the date hereof, then the
Company shall promptly notify Payee in writing of such (the "Company Notice")
and Payee shall have the right to purchase from the Company an undivided
interest in (i) all of the Company's current producing and non-producing
properties (the "Reserve Assets") as identified in the latest reserve report
provided by Miller and Lents, Ltd., or (ii) certain of the

                                      -6-
<PAGE>

Company's producing or non-producing properties mutually agreed upon by the
Company and Payee (the "Other Assets," and together with the Reserve Assets, the
"Assets"). Payee must exercise its right to purchase the Assets by giving
written notice (the "Payee Notice") to the Company within sixty (60) days after
receipt of the Company Notice.

     (b) Determination of Purchase Price.  Payee shall have the right to
         -------------------------------
determine the percentage of the undivided interest in the Assets purchased
pursuant hereto, provided that (i) subject to the provisions of clause (ii) of
this Section 8(b), the amount of Assets purchased hereunder shall be limited to
an amount sufficient to satisfy both the borrowing base assigned to such Assets
by the Company's senior lender and the Company's obligations under this Note,
and (ii) in the event Payee elects to purchase less than the undivided
percentage interest in the Assets provided for in clause (i), the purchase price
of the interest purchased shall be an amount equal to a minimum of $500,000 or
some multiple thereof.  The price of the Assets purchased pursuant to this
Section 8 shall be the price reflected in a reserve report as of the date of
receipt of the Payee Notice, at a present value discount of 15% using either (i)
the price deck given such Assets by the lender on the Company's senior credit
facility, or (ii) to the extent applicable, the price at which such Assets are
hedged. The Company shall also provide a reserve report as of the date of
closing on the sale of the Assets hereunder.

     (c) Allocation of Proceeds.  The proceeds of any sale of Assets pursuant
         ----------------------
hereto shall be applied first to any required principal reduction under the
Company's senior credit facility, next to the cancellation of accrued, unpaid
and past due interest under this Note, and finally to satisfaction of principal
outstanding under this Note.

     (d) Terms and Conditions of Sale; Closing.  The terms and conditions of any
         -------------------------------------
sale of Assets hereunder will be as is customary for the sale of similar assets
or properties.  The closing of any sale of Assets hereunder must occur no later
than 60 days from the receipt by the Company of the Payee Notice.  The Company
hereby covenants and agrees that it will take all actions necessary to validly
transfer to Payee the undivided interest of any Assets purchased by Payee
pursuant to this Section 8.

     9.   Stockholder Approval; Proxy Statement.  The Company shall take all
          -------------------------------------
actions necessary or desirable in accordance with its certificate of
incorporation, bylaws, the rules of the NASDAQ National Market and other
applicable laws, rules and regulations to call one or more meetings of its
stockholders (the "Stockholders' Meeting") to be held as promptly as practicable
after the date hereof for obtaining the approval of the stockholders to the
Share Issuance contemplated by the Securities Purchase Agreement.  The Company
and Payee shall consult with each other in connection with the Stockholders'
Meeting.  The Company shall use commercially reasonable efforts to cause its
Board of Directors (a) to recommend to the Company's stockholders approval of
the issuance of the Conversion Shares, (b) not to withdraw, modify or change
such recommendation, (c) to continue to recommend to the stockholders of the
Company the approval of such matters, and (d) to continue to solicit approval
from the stockholders of the Company.

     10.  Amendments, Waivers, Etc.  No provision of this Note may be waived,
          -------------------------
changed, modified or discharged without an agreement in writing signed by the
party against whom enforcement of such waiver, change, modification or discharge
is sought, and then such waiver,

                                      -7-
<PAGE>

change, modification or discharge shall be effective only in the specific
instance and for the specific purpose for which given.

     11.  Successors and Assigns.  This Note and all provisions hereof shall be
          ----------------------
binding upon the Company and all of its successors and assigns, except that the
Company shall not have the right to assign its rights or obligations hereunder
(other than by operation of law) without the prior written consent of Payee.
Payee may not, without the consent of or notice to the Company, sell, transfer
or otherwise assign (with or without recourse to Payee), at any time, any or all
of its rights and obligations under this Note.

     12.  Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF
          --------------------
THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY
OTHER MATTER ARISING IN CONNECTION HEREUNDER.

     13.  Notices.  All notices and other communications provided to the Company
          -------
or the Payee shall be in writing or by facsimile and addressed or delivered to
it at its respective address set forth on the signature page hereto or at such
other address as may be designated by the Company or the Payee, as the case may
be, from time to time in a notice complying as to delivery with the terms of
this clause to the other parties.  Any notice, if mailed and properly addressed
with postage prepaid, shall be deemed given when received (except notices sent
by express overnight mail via a reputable carrier shall be deemed given when
receipt is promised by such carrier); any notice, if transmitted by facsimile,
shall be deemed given when transmitted and receipt confirmed; and any notice, if
delivered personally, shall be deemed given when received.

     14.  Headings.  Article, section and paragraph headings are for reference
          --------
only and do not affect the interpretation or meaning of any provisions of this
Note.

     15.  Severability.  The Company intends and believes that each provision in
          ------------
this Note comports with all applicable local, state and Federal laws and
judicial decisions.  However, if any provision or provisions, or if any portion
of any provision or provisions, in this Note is found by a court of law to be in
violation of any applicable local, state or Federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Note to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
all parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable,
that the remainder of this Note shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were not
contained therein, and that the rights, obligations and interests of the Company
and the Payee under the remainder of this Note shall continue to be in full
force and effect.

     16.  Applicable Law.  THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
          --------------
LAW OF THE STATE OF DELAWARE AND THE LAWS OF THE UNITED STATES OF AMERICA
APPLICABLE TO TRANSACTIONS IN THE STATE OF DELAWARE.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -8-
<PAGE>

     EXECUTED as of the date first set forth above.

                                    MILLER EXPLORATION COMPANY


                                    By: /s/ Kelly E. Miller
                                       -----------------------------------
                                            Kelly E. Miller
                                            President


                                NOTICE ADDRESSES
                                ----------------

                                    If to the Company, to

                                    Miller Exploration Company
                                    3104 Logan Valley Road
                                    Traverse City, Michigan 49685
                                    Facsimile: (231) 941-8312
                                    Attention:  Kelly E. Miller

                                    with a copy to

                                    Vinson & Elkins L.L.P.
                                    2001 Ross Avenue
                                    Suite 3700
                                    Dallas, Texas 75201
                                    Facsimile:  (214) 220-7716
                                    Attention:  Mark Early

                                    If to Payee, to

                                    Guardian Energy Management Corp.
                                    2300 Harmon Road
                                    Auburn Hills, Michigan 48326-1714
                                    Facsimile:  (248) 340-2258
                                    Attention:  Vice President - Operations

                                    with a copy to

                                    Guardian Energy Management Corp.
                                    2300 Harmon Road
                                    Auburn Hills, Michigan  48326-1714
                                    Facsimile:  (248) 340-2175
                                    Attention:  Secretary

                                      -9-