THIS STOCK  PURCHASE  WARRANT AND THE SHARES  ISSUABLE  HEREUNDER  HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY STATE, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE  TRANSFERRED WITHOUT AN
EFFECTIVE  REGISTRATION  THEREOF UNDER SUCH ACT AND APPLICALBE  STATE SECURITIES
LAWS OR PURSUANT TO APPLICABLE EXEMPTIONS FROM SUCH LAWS.


                             STOCK PURCHASE WARRANT


         THIS STOCK PURCHASE WARRANT ("Warrant")  CERTIFIES THAT, for the agreed
upon  value of $1.00  and for  other  good and  valuable  consideration,  Impact
International,  L.L.C.,  an Oklahoma  limited  liability  company  ("Impact"  or
"Holder")  is entitled to  purchase  the number of fully paid and  nonassessable
shares (the  "Shares") of common stock  ("Common  Stock") of Tidelands Oil & Gas
Corporation  (the  "Company")  at the  Exercise  Price per Share  (the  "Warrant
Price") as defined  below,  all as set forth herein and as adjusted  pursuant to
Article 2 of this  Warrant,  subject  to the  provisions  and upon the terms and
conditions  set forth in this  Warrant.  This Warrant is issued  pursuant to the
terms of the Purchase and Sale Agreement (the "Purchase Agreement"), dated as of
the date  hereof,  between  the  Company  and  Impact.  The  amount  and kind of
securities  receivable  pursuant to the rights granted  hereunder are subject to
adjustment pursuant to the provisions contained in this Warrant.

         This Warrant is subject to the following provisions:

                                   ARTICLE 1.
                                    EXERCISE
                                    --------

         1.1 Method of Exercise. Holder may exercise this Warrant in whole or in
part at any time and from time to time after the date hereof up to and including
April ____,  2005(the  "Expiration  Date").  Holder may exercise this Warrant by
delivering a duly executed Notice of Exercise in substantially the form attached
as  Appendix 1 to the  principal  office of the  Company.  Holder  shall pay, in
consideration  for exercise of the Warrants an amount equal to the Warrant Price
in effect on the date of such  exercise  multiplied by the number of Shares with
respect to which the Warrant is being exercised payable by certified funds or as
permitted in Section 1.2.

         1.2 Net Issue Exercise.  Notwithstanding  any provisions  herein to the
contrary,  if the Market  Value of one share of Common Stock is greater than the
Warrant  Price  (at the date of  calculation  as set  forth  below),  in lieu of
exercising  this Warrant for cash,  the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender  of this Warrant at the  principal  office of the Company
together  with the  properly  endorsed  Notice of  Exercise  and  notice of such
election in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:


                                       1
<PAGE>

                                  X = Y (A - B)
                                      ---------
                                           A

         Where    X        = the net  number of  shares  of  Common  Stock to be
                           issued to the Holder.

                  Y        = the  number of shares of Common  Stock  purchasable
                           under  the  Warrant  or,  if  only a  portion  of the
                           Warrant  is  being  exercised,  the  portion  of  the
                           Warrant   being   canceled   (at  the  date  of  such
                           calculation)

                  A        = the  Market  Value of one  share  of the  Company's
                           Common Stock (at the date of such calculation)

                  B        =  Warrant  Price  (as  adjusted  to the date of such
                           calculation)

         1.3 Share Coverage and Exercise  Price.  The number of Shares for which
this Warrant may be exercised,  subject to adjustment herein, initially shall be
6,830,000,  representing  19% of the issued and outstanding  Common Stock of the
Company on the date  hereof.  The  initial  Warrant  Price shall be equal to the
average of the closing price of the Common Stock on the over the counter market,
averaged over a period of the ten (10)  business days  following the date of the
execution  of this  Warrant;  provided  that for any  date on  which no  trading
occurred, the closing price shall be deemed to be the closing price for the most
recent previous date on which trading  occurred,  and further  provided that the
purchase price shall not exceed $0.35 per share.

         1.4 Market  Value.  The  Market  Value of any  security  shall mean the
average  of the  closing  prices  of such  security's  sales  on all  securities
exchanges on which such  security  may at the time be listed,  or, if there have
been no sales on any such  exchange  on any day,  the average of the highest bid
and lowest asked prices on all such  exchanges at the end of such day, or, if on
any day such security is not so listed,  the average of the  representative  bid
and asked prices quoted in the NASDAQ System as of 4:00 p.m., New York time, or,
if on any day such security is not quoted in the NASDAQ  System,  the average of
the  highest  bid  and  lowest   asked  prices  on  such  day  in  the  domestic
over-the-counter   market  as  reported  by  the  National   Quotation   Bureau,
Incorporated,  or any similar successor organization, in each such case averaged
over a period of 21 days  consisting  of the day as of which  "Market  Value" is
being  determined and the 20 consecutive  business days prior to such day. If at
any time such security is not listed on any securities exchange or quoted in the
NASDAQ System or the  over-the-counter  market,  the "Market  Price" will be the
fair market value thereof determined by an experienced and qualified independent
appraiser, selected by the Company with the approval of the Holder.

         1.5  Delivery of  Certificate  and New Warrant.  Promptly  after Holder
exercises this Warrant, the Company shall deliver to Holder certificates for the
Shares  acquired  and, if this Warrant has not been fully  exercised and has not
expired, a new Warrant representing the Shares not so acquired.


                                       2
<PAGE>

         1.6  Replacement  of  Warrants.   On  receipt  of  evidence  reasonably
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this Warrant and, in the case of loss,  theft or destruction,  on delivery of an
indemnity  agreement  reasonably  satisfactory in form and amount to the Company
or, in the case of mutilation,  on surrender and  cancellation  of this Warrant,
the Company at its expense shall execute and deliver in lieu of this Warrant,  a
new warrant of like tenor.

         1.7 Repurchase on Sale, Merger, or Consolidation of the Company.

                  1.7.1   Acquisition.   For  the   purpose  of  this   Warrant,
"Acquisition"   means  any  sale,  license,  or  other  disposition  of  all  or
substantially  all  of  the  assets  of  the  Company,  or  any  reorganization,
consolidation,  or merger of the  Company  where the  holders  of the  Company's
securities  before  the  transaction  beneficially  own  less  than  50%  of the
outstanding voting securities of the surviving entity after the transaction.

                  1.7.2   Assumption  of  Warrant.   Upon  the  closing  of  any
Acquisition,  the successor entity shall assume the obligations of this Warrant,
and  this  Warrant  shall be  exercisable  for the same  securities,  cash,  and
property  as would be  payable  for the Shares  issuable  upon  exercise  of the
unexercised  portion of this Warrant as if such Shares were  outstanding  on the
record date for the Acquisition and subsequent closing.  The Warrant Price shall
be adjusted accordingly.

                  1.7.3 Purchase Right.  Notwithstanding  the foregoing,  at the
election of Holder,  the Company shall purchase the unexercised  portion of this
Warrant for cash upon the closing of any  Acquisition for an amount equal to (a)
the fair  market  value of any  consideration  that would have been  received by
Holder in  consideration  of the  Shares had Holder  exercised  the  unexercised
portion of this Warrant  immediately  before the record date for determining the
shareholders  entitled to participate in the proceeds of the  Acquisition,  less
(b) the aggregate Warrant Price of the Shares, but in no event less than zero.

         1.8  Reservation of Shares.  The Company shall reserve,  for so long as
any Warrant remains  outstanding,  a number of authorized and unissued shares of
Common Stock  sufficient to provide for the exercise in full of any and all such
Warrants, and the transfer agent for the Common Stock (the "Transfer Agent"), is
hereby irrevocable  authorized and directed at all times until all such Warrants
have been exercised in full or otherwise surrendered for cancellation to reserve
such number of authorized and unissued shares as necessary for such purpose. The
Company  covenants  and agrees that upon exercise of the Warrants and payment of
the Warrant Price therefor, all shares issuable upon such exercise shall be duly
and validly issued, fully paid and non-assessable, not subject to the preemptive
rights of any shareholder,  and free from all taxes, liens,  security interests,
charges, and other encumbrances with respect to the issuance thereof.

                                   ARTICLE 2.
                            ADJUSTMENT TO THE SHARES
                            ------------------------


                                       3
<PAGE>

         2.1 Stock  Dividends,  Splits,  etc.  If the  Company  declares or pays
dividend on its Common Stock (or the Shares if the Shares are  securities  other
than common stock) payable in Common Stock, or other  securities,  or subdivides
the  outstanding  Common Stock into a greater amount of Common Stock,  then upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder,  the total number and kind of  securities  to which Holder would
have been  entitled  had  Holder  owned the  Shares of record as of the date the
dividend or subdivision occurred.

         2.2    Reclassification,    Exchange   or   Substitution.    Upon   any
reclassification,  exchange,  substitution,  or other  event  that  results in a
change of the number  and/or class of the  securities  issuable upon exercise of
this  Warrant,  Holder  shall be  entitled  to  receive,  upon  exercise of this
Warrant,  the number and kind of securities  and property that Holder would have
received for the Shares if this Warrant had been  exercised  immediately  before
such reclassification,  exchange,  substitution,  or other event. The Company or
its  successor  shall  promptly  issue  to  Holder  a new  Warrant  for such new
securities or other  property.  The new Warrant  shall  provide for  adjustments
which shall be as nearly  equivalent as may be  practicable  to the  adjustments
provided for in this Article 2 including, without limitation, adjustments to the
Warrant Price and to the number of securities or property issuable upon exercise
of the new Warrant.  The provisions of this Section 2.2 shall similarly apply to
successive reclassifications, exchanges, substitutions, or other events.

         2.3 Adjustments for Combinations,  Etc. If the outstanding Common Stock
is combined or consolidated,  by  reclassification  or otherwise,  into a lesser
number of shares, the Warrant Price shall be proportionately increased.

         2.4 Stock  Issued For Debt.  If,  after the date  hereof,  the  Company
should  issue  any  shares  of  Common  Stock  in  payment  or  satisfaction  of
indebtedness  existing on the date hereof,  the number of shares of Common Stock
issuable  hereunder  shall be  increased  so that the number of shares  issuable
hereunder is equal to nineteen  percent  (19%) of the  outstanding  Common Stock
after giving effect to such issuances,  and the Warrant Price per share shall be
decreased  to an amount  such that the  aggregate  consideration  payable if the
Warrant were fully  exercised  (after giving  effect to the increased  number of
shares) would equal the aggregate consideration which would have been payable if
the Warrant were fully exercised prior to such adjustments.

         2.5 Common Stock Issued at Less Than Warrant Price. If and whenever, on
or after the date of this Warrant,  the Company issues or sells, or is deemed to
have issued or sold,  any shares of its Common  Stock or Options or Warrants for
Shares of Common Stock or rights of conversion for Shares of Common Stock (other
than   Excluded   Stock  and  other  than  as  described  in  Section  2.4)  for
consideration per share less than the Warrant Price in effect  immediately prior
to the time of such issue or sale, then immediately upon such issue or sale, the
Warrant  Price  shall be  reduced to the price  determined  by  multiplying  the
Warrant Price in effect immediately prior to such time by a fraction:

                  (1) the  numerator  of which shall be (x) the number of shares
         of Common  Stock  outstanding  immediately  prior to such issue or sale
         (assuming the exercise of all Options (as defined  below) that are then


                                       4
<PAGE>

         exercisable  and  the  conversion  of all  Convertible  Securities  (as
         defined  below)  that are then  convertible),  plus (y) the  number  of
         shares of Common Stock which the  aggregate  consideration  received by
         the Company for the total number of  additional  shares of Common Stock
         so  issued  or sold  would  purchase  at the  Warrant  Price in  effect
         immediately prior to such issuance; and

                  (2) the  denominator of which shall be the number of shares of
         Common Stock outstanding immediately after such issue or sale (assuming
         the  exercise  of  all  Options  that  are  then  exercisable  and  the
         conversion of all Convertible Securities that are then convertible).

         For  purposes of this  Section 2.4  "Excluded  Stock"  means  shares of
Common Stock (in each case as adjusted for any stock  splits,  stock  dividends,
recapitalizations,  combinations or similar  transactions) issued under existing
stock option plans approved by the shareholders of the Company.

         2.6  No  Impairment.  The  Company  shall  not,  by  amendment  of  its
Certificate of  Incorporation or through a  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed  under this  Warrant by the  Company,  but
shall at all times in good faith assist in carrying out all of the provisions of
this Article 2 and in taking all such action as may be necessary or  appropriate
to protect Holder's rights under this Article against impairment. If the Company
takes  any  action  affecting  the  Shares or its  Common  Stock  other  than as
described above that adversely  affects Holder's rights under this Warrant,  the
Warrant Price shall be adjusted  downward and the number of Shares issuable upon
exercise  of this  Warrant  shall be  adjusted  upward in such a manner that the
aggregate Warrant Price of this Warrant is unchanged.

         2.7  Fractional  Shares.  No  fractional  Shares shall be issuable upon
exercise  or  conversion  of the  Warrant  and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any  exercise  or  conversion  of the  Warrant,  the  Company  shall
eliminate such fractional  share interest by paying Holder an amount computed by
multiplying the fractional interest by the fair market value of a full Share.

         2.8 Certificate as to Adjustments.  Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly  compute such  adjustment,  and
furnish Holder with a certificate of its Chief  Financial  Officer setting forth
such adjustment and the facts upon which such  adjustment is based.  The Company
shall,  upon written  request,  furnish  Holder a certificate  setting forth the
Warrant  Price in effect  upon the date  thereof  and the series of  adjustments
leading to such Warrant Price.

         2.9 Certain Events. If any event occurs of the type contemplated by the
provisions of this Article 2 but not expressly  provided for by such  provisions
(including,  without  limitation,  the  granting of stock  appreciation  rights,
phantom stock rights or other rights with equity  features),  then the Company's
board of directors shall make an appropriate  adjustment in the number of Shares
obtainable  upon  exercise of this  Warrant  and in the  Warrant  Price so as to
protect  the  rights  of the  holders  of the  Warrants;  provided  that no such
adjustment  shall  decrease  the  number  of  Shares   obtainable  as  otherwise
determined pursuant to this Section 2.



                                       5
<PAGE>

         2.10  Purchase  Rights.  If at any time the Company  grants,  issues or
sells any rights to purchase stock,  warrants,  securities or other property pro
rata to the record  holders of any class of Stock (the  "Purchase  Rights") then
the Holder of this Warrant  shall be entitled to obtain,  upon the same terms on
which holders of Common stock are to receive such Purchase Rights, the aggregate
Purchase  Rights which such holder  could have  acquired if such holder had held
the  number of Shares of  acquirable  upon  complete  exercise  of this  Warrant
immediately  before the date on which a record is taken for the grant,  issuance
or sale of such Purchase Rights,  or, if no such record is taken, the date as of
which the record  holders of Common  Stock are to be  determined  for the grant,
issue or sale of such Purchase Rights.

                                   ARTICLE 3.
                  REPRESENTATIONS AND COVENANTS OF THE COMPANY
                  --------------------------------------------

         3.1 Representations  and Warranties.  The Company hereby represents and
warrants to the Holder that all Shares  which may be issued upon the exercise of
the purchase right  represented  by this Warrant,  and all  securities,  if any,
issuable upon conversion of the Shares, shall, upon issuance be duly authorized,
validly  issued,  fully  paid  and  nonassessable,  and  free of any  liens  and
encumbrances  except for  restrictions on transfer  provided for herein or under
applicable federal and state securities laws.

         3.2 Notice of Certain  Events.  If the Company  proposes at any time to
(a) declare any dividend or distribution upon its Common Stock, whether in cash,
property,  stock or other securities and whether or not a regular cash dividend;
(b) offer for  subscription  pro rata to the  holders  of any class or series of
stock any additional shares of stock of any class or series or other rights; (c)
effect any  reclassification  or  recapitalization of Common Stock; (d) merge or
consolidate with or into any other  corporation,  or sell,  lease,  license,  or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up; or (e) offer holders of  registration  rights the opportunity to participate
in an underwritten  public offering of the Company's  securities for cash, then,
in connection  with each such event,  the Company shall give Holder (1) at least
20 days  prior  written  notice of the date on which a record  will be taken for
such dividend,  distribution, or subscription rights (and specifying the date on
which the holders of Common Stock will be entitled  thereto) or for  determining
rights to vote,  if any,  in respect of the  matters  referred to in (c) and (d)
above;  (2) in the case of the matters referred to in (c) and (d) above at least
20 days  prior  written  notice of the date when the same will take  place  (and
specifying  the date on which the  holders of Common  Stock will be  entitled to
exchange their Common Stock for securities or other  property  deliverable  upon
the occurrence of such event;  and (3) in the case of the matter  referred to in
(e)  above,  the same  notice as is given to the  holders  of such  registration
rights.

         3.3 Registration Under Securities Act of 1933, as amended.  The Company
agrees that the Shares shall be entitled to the  registration  rights granted in
the  Registration  Agreement  dated the same date as this Warrant.  In the event
that the  shares are  unable to be  registered  in  response  to a request  made


                                       6
<PAGE>

pursuant to the Registration  Agreement,  the Company shall notify the Holder of
such inability in writing and,  without any further action,  the Expiration Date
of the Warrant  will be extended to the fifth (5th)  anniversary  of the date of
original  issuance  of this  Warrant  (or the  Company  shall  have the right to
repurchase  the Warrant for an amount  equal to the excess of Fair Market  Value
over the Warrant Price,  which right shall be exercisable for a period of thirty
(30) days  following such notice given by the Company in which to give notice of
its intention).

                                   ARTICLE 4.
                                 MISCELLANEOUS.
                                 --------------

         4.1 Term; Notice of Expiration.  This Warrant is exercisable,  in whole
or in part, at any time and from time to time on or before the  Expiration  Date
set forth above.  The Company shall give Holder written notice of Holder's right
to exercise  this Warrant not more than 90 days and not less than 30 days before
the Expiration  Date. If the notice is not so given,  the Expiration  Date shall
automatically  be extended until 30 days after the date the Company delivers the
notice to Holder.

         4.2 Legends.  This Warrant and the Shares (and the securities issuable,
directly  or  indirectly,  upon  conversion  of the  Shares,  if any)  shall  be
imprinted with a legend in substantially the following form:

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
          OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
          TRANSFERRED  WITHOUT AN EFFECTIVE  REGISTRATION  THEREOF UNDER
          SUCH ACT OR  PURSUANT  TO RULE 144 OR AN  OPINION  OF  COUNSEL
          REASONABLY  SATISFACTORY  TO THE  CORPORATION  AND ITS COUNSEL
          THAT SUCH REGISTRATION IS NOT REQUIRED.

         4.3 Compliance with  Securities Laws on Transfer.  This Warrant and the
Shares  issuable  upon  exercise of this Warrant (and the  securities  issuable,
directly  or  indirectly,  upon  conversion  of the  Shares,  if any) may not be
transferred or assigned in whole or in part without  compliance  with applicable
federal  and  state  securities  laws  by  the  transferor  and  the  transferee
(including,  without  limitation,  the  delivery  of  investment  representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company).

         4.4  Transfer  Procedure.  Subject to the  provisions  of Section  4.3,
Holder may  transfer  all or part of this  Warrant or the Shares  issuable  upon
exercise of this Warrant (or the  securities  issuable,  directly or indirectly,
upon conversion of the Shares, if any).

         4.5 Notices.  All notices and other  communications from the Company to
the Holder,  or vice versa,  shall be deemed  delivered and effective when given
personally  or mailed by  first-class  registered  or  certified  mail,  postage
prepaid,  at such address set forth in the LOI or as may have been  furnished to
the Company or the Holder, as the case may be, in writing by the Company or such
holder from time to time.


                                       7
<PAGE>

         4.6 Waiver.  This  Warrant and any term hereof may be changed,  waived,
discharged  or terminated  only by an instrument in writing  signed by the party
against which  enforcement of such change,  waiver,  discharge or termination is
sought.

         4.7  Attorneys  Fees.  In the event of any dispute  between the parties
concerning  the terms and  provisions of this Warrant,  the party  prevailing in
such  dispute  shall be  entitled  to  collect  from the  other  party all costs
incurred in such dispute, including reasonable attorney's fees.

         4.8  Governing  Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Oklahoma,  without giving effect to its
principles regarding conflicts of law.

         DATED  April _____, 2003.


                                           "COMPANY"

                                           TIDELANDS OIL & GAS CORPORATION


                                           By:__________________________________
                                                    NAME:_______________________
                                                    TITLE:______________________

















                                       8
<PAGE>

                                   APPENDIX 1

                               NOTICE OF EXERCISE

         1. The undersigned hereby elects to purchase ____________ shares of the
Common/Preferred  Series  _________  [Strike one] Stock of  TIDELANDS  OIL & GAS
CORPORATION. pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full.

         1. The undersigned  hereby elects to convert the attached  Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is  exercised  with  respect to  ________________  of the Shares  covered by the
Warrant.

         2. Please issue a certificate or certificates  representing said shares
in the name of the undersigned or in such other name as is specified below:



                  ___________________________________
                  (Name)

                  ___________________________________

                  ___________________________________
                  (Address)

         3. The undersigned represents it is acquiring the shares solely for its
own  account and not as a nominee for any other party and not with a view toward
the  resale  or  distribution  thereof  except  in  compliance  with  applicable
securities laws.


                                             ___________________________________
                                             (Signature)

___________________________________
(Date)








                                       9
<PAGE>

                                   APPENDIX 2

                     NOTICE THAT WARRANT IS ABOUT TO EXPIRE


                            _________________, _______

(Name of Holder)

(Address of Holder)

Attn:  Chief Financial Officer

Dear ____________________:


         This is to advise you that the Warrant  issued to you  described  below
will expire on _______________________, 20____.

         Issuer:

         Issue Date:

         Class of Security Issuable:

         Exercise Price per Share:

         Number of Shares Issuable:

         Procedure for Exercise:

         Please  contact  [name of  contact  person at (phone  number)  with any
questions  you may have  concerning  exercise of the Warrant.  This is your only
notice of pending expiration.


                                         _______________________________________
                                         (Name of Issuer)

                                         By:____________________________________


                                         Its:___________________________________









                                       10