ASSET SALE AGREEMENT
                                 MAIN PASS BLOCK 299

    THIS AGREEMENT, dated May 2, 1990, between:

    CHEVRON U.S.A. INC., a Pennsylvania corporation with its principal place of
    business in Louisiana at 935 Gravier Street, New Orleans, Louisiana 70112
    ("Seller); and

    FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP, a Delaware limited
    partnership ("Freeport"), with its principal place of business in Louisiana
    at 1615 Poydras Street, New Orleans, Louisiana 70112, referred to herein as
    "Buyer",

                                 W I T N E S S E T H:

    That Seller desires to sell to Buyer and Buyer desires to purchase from
Seller on the terms set forth in this Agreement those certain oil and gas
interests and associated assets identified in Exhibits "A" and "B" attached
hereto and made a part hereof.  Accordingly, Seller and Buyer agree as
follows:

1.  SALE AND PURCHASE OF ASSETS

    1.1  ASSETS TO BE SOLD.  Seller shall sell, transfer, and assign, or cause
         others to sell, transfer and assign to Buyer, and Buyer shall purchase
         and receive the following, to-wit:

         1.1.1     All of Seller's right, title and interests in and to the
                   Segregated Lease, as defined in Exhibit "A".  Seller reserves
                   all other rights in the "Lease" (as identified in
                   Exhibit "A"), such other rights being the "Retained Lease".

         1.1.2     All of Seller's right, title and interest in and to the
                   materials, equipment, services and contract rights described
                   in Exhibit "B" ("Physical Assets").

         The Segregated Lease and Physical Assets are hereinafter collectively
         referred to as "the Assets".  Such transfer of interests will be made
         and be effective at Closing.

    1.2  INSTRUMENTS.  Except as may be otherwise noted in this Agreement, the
         Assets to be conveyed by Seller to Buyer Pursuant to Section 1.1
         shall be conveyed by instruments in form and substance similar to
         Exhibits "F-1" and "F-2," provided that the Physical Assets shall
         be conveyed on an "as is" basis.  Seller shall execute such other
         Bills of Sale as may be required by Buyer for the Physical Assets.
         The interests to be conveyed by Buyer to Seller shall be conveyed
         by an instrument in form and substance similar to Exhibit "F-3" or
         "F-4", as applicable.

    1.3  SELLER'S ELECTION TO EFFECT IRC Section 1031 EXCHANGE.  In the event
         Seller so elects, Buyer agrees to attempt in good faith to
         accommodate Seller in effecting a tax-deferred exchange of the
         properties identified in Section 1.1.1, at the value referred to in
         Section 2.1.1, under Internal Revenue Code Section 1031, as
         amended. Seller shall have the right to elect this tax-deferred
         exchange at any time prior to the date of Closing. If Seller elects
         to effect a tax-deferred exchange, Buyer agrees to execute
         additional escrow instructions, documents, agreements, or
         instruments to effect the exchange, provided that Buyer shall incur
         no additional costs, expenses, fees, taxes (including any state or
         local sales, use or transfer taxes) or liabilities as a result of
         or connected with the exchange. Further, in the event Seller elects
         to effect a tax-deferred exchange, such transaction shall be
         subject to the terms and provisions of Section 7.3 hereof and of an
         agreement similar in form and substance to that attached hereto as
         Exhibit "F-5."

<PAGE>


         In connection with any such exchange, Buyer does not warrant or
         represent that any such property selected by Seller will be
         suitable for Sellers purpose nor that such exchange will qualify
         for tax deferred treatment under Internal Revenue Code Section
         1031. Seller will indemnify Buyer for any costs, expenses, fees,
         taxes or liabilities arising from or in connection with any such
         exchange, and for any claims made by any third party relating to
         such exchange.

2.  TERMS OF SALE

    2.1  PRICE.  As consideration for the sale of the Assets, Buyer shall pay
         to Seller or its designee the following amounts:

         2.1.1     For the Segregated Lease, One Hundred Thirty-Seven Million
                   United States dollars ($137,000,000).

         2.1.2     For the Physical Assets, the amounts set forth in said
                   Exhibit "B" (as adjusted for the costs and expenses incurred
                   up to the Closing).

         The amounts set forth in Sections 2.1.1 shall be paid at Closing by
         wire transfer in Federal Funds to a bank account to be designated
         by Seller. An invoice with supplier's documentation for the items
         identified in Section 2.1.2 will be forwarded to Freeport under
         separate cover within thirty (30) days after Closing. This invoice
         will contain payment instructions and information as to the status
         and condition of the materials and equipment being transferred.

    2.2  ASSUMPTION OF OBLIGATIONS AND LIABILITIES.  As additional
         consideration for the sale of the Assets, Buyer shall assume all
         obligations and liabilities relating to the ownership or use of the
         Assets, including but by no means limited to the payment of
         Production Payments, overriding royalty payments or the Final
         Payment (if applicable) owing to Seller hereunder, and reclamation
         and the plugging and abandonment of all wells drilled on the
         Segregated Lease (but not including wells heretofore drilled
         through the Segregated Lease to depths deeper than a subsea depth
         of 1,900 feet), whether now or hereafter located on the Segregated
         Lease.  Buyer shall also assume all accounting and reporting duties
         and obligations associated with use and ownership of the Assets
         subsequent to the Closing. Such reclamation and plugging and
         abandonment shall be performed in a good and workmanlike manner and
         in accordance with the rules and regulations of the Minerals
         Management Service and all other applicable laws.  The sale will be
         made subject to, and Buyer assumes all rights and obligations
         arising under and in accordance with, the terms of the Segregated
         Lease, and the agreements listed on Exhibit "A" hereto which affect
         the Segregated Lease.  Buyer shall assume and be responsible for
         all obligations of Seller accruing under such agreements after the
         Closing, to the extent such agreements apply to the Segregated
         Lease.

    2.3  INDEMNIFICATION BY BUYER.  Buyer shall defend and indemnify Seller, and
         shall save and hold Seller (and Sellers assignee under an exchange
         agreement) free and harmless, from and against any and all liabilities,
         penalties, fines, losses, injuries including death, demands, damages,
         claims and causes of action, of any nature whatsoever, arising directly
         or indirectly from or in connection with:

         2.3.1     Seller's #11 well, previously drilled within the Segregated
                   Lease and which Seller represents was properly plugged and
                   abandoned by Seller;

         2.3.2     Buyer's ownership or use of the Segregated Lease, or
                   operations conducted or caused to be conducted by or on
                   behalf of Buyer on, in, under or adjacent to the Segregated
                   Lease for the exploration for or development and production,
                   gathering, transportation, processing or treatment of oil or
                   gas or sulphur or any other mineral or substance from or
                   allocable to the Segregated Lease,

                                      2
<PAGE>


              except to the extent that such liabilities, losses, injuries
              including death, demands, damages, claims and causes of action are
              finally established, in a ruling from a court of competent
              jurisdiction not subject to appeal, to be the result of Seller's
              (or, pursuant to an exchange agreement, Seller's assignee's)
              negligence or other legal fault.

    2.4  INDEMNIFICATION BY SELLER.  Seller shall save and hold Buyer free and
         harmless from and against any and all liabilities, penalties,
         fines, losses, injuries including death, demands, damages, claims
         and causes of action, of any nature whatsoever, arising directly or
         indirectly from or in connection with Seller's ownership or use of
         the Retained Lease, or operations conducted or caused to be
         conducted by or on behalf of Seller on, in, or under the Retained
         Lease for the exploration for or development and production,
         gathering, transportation, processing or treatment of oil or gas or
         sulphur or any other mineral or substance from or allocable to the
         Retained Lease, except to the extent that such liabilities, losses,
         injuries including death, demands, damages, claims and causes of
         action are finally established, in a ruling from a court of
         competent jurisdiction not subject to appeal, to be the result of
         Buyer's negligence or other legal fault.

    2.5  CLOSING. The Closing of the transactions contemplated herein and the
         transfer of the Assets shall occur on or before June 1, 1990 (unless
         additional time is required to satisfy the conditions precedent to
         Closing, as provided in Section 7 hereof), at Chevron's office at 935
         Gravier Street, New Orleans, Louisiana, at 10:00 a.m., local time, or
         such other date, time, and place as Seller and Buyer may agree in
         writing.

3.  INTERESTS TO BE GRANTED TO BUYER BY SELLER

    3.1  PRODUCTION PAYMENT.

         3.1.1     Buyer shall grant, transfer, assign and convey to Seller a
                   "Production Payment" with regard to Buyer's oil production
                   from or attributable to the Segregated Lease (or any
                   extension, renewal or replacement of the Segregated Lease
                   acquired hereafter by Buyer or a parent, subsidiary or
                   affiliate of Buyer). Said Production Payment shall be
                   conveyed by an instrument in form and substance similar
                   either to Exhibit "F-3" or Exhibit "F-4" hereto, as
                   applicable pursuant to Section 3.2 or 3.3, and is to be
                   calculated on a calendar year basis, in accordance with
                   Exhibits "C" and "D" attached hereto. Buyer shall pay such
                   Production Payment to Seller on or before a date thirty (30)
                   days after the end of the calendar year to which such payment
                   applies, or on or before a date sixty (60) days after the
                   discontinuation of Production Payments as provided in
                   Section 3.2 hereof.

         3.1.2     Concurrently with any such payment made pursuant to Section
                   3.1.1, Buyer shall furnish Seller a statement which shall
                   include information and data supporting and verifying the
                   amount of the Production Payment being tendered. Said
                   payment and said statement shall be sent to the following
                   address:

                        Chevron U.S.A. Inc.
                        P.  0. Box J, Section 724E
                        Concord, CA 94524

         3.1.3     If Buyer does not make such a payment as required by Section
                   3.1.1 by the date such payment is due, the amount owed to
                   Seller shall accrue interest from the due date at the prime
                   interest rate posted from time to time by Chase Manhattan
                   Bank, New York, New York, or by such other bank as the
                   parties may hereafter mutually select in writing, plus two
                   percent (2%).

                                      3
<PAGE>



    3.2  OVERRIDING ROYALTY INTEREST - NO EXCHANGE.

         3.2.1     This Section 3.2 shall apply only in the event Seller elects
                   not to effect a tax-deferred exchange as provided in
                   Section 1.3.

         3.2.2     After cumulative oil production from or allocable to the
                   Segregated Lease produced, saved or used equals or exceeds
                   36 million stock tank barrels of oil, measured at Buyer's
                   production facility platform located on or adjacent to the
                   Segregated Lease (the ability to produce and save such
                   volumes of oil not being guaranteed by Buyer), or after a
                   date twenty (20) years from the date of first such oil
                   production, whichever occurs first, Seller's Production
                   Payment as provided for in Section 3.1.1 above shall convert
                   to an overriding royalty of 25% of the value of oil and gas
                   production thereafter produced and saved or used from or
                   allocable to the Segregated Lease. Such conversion shall be
                   set forth in an instrument similar in form and substance to
                   that attached hereto as Exhibit "F-3." Notwithstanding
                   anything foregoing in this Section 3.2 to the contrary, said
                   overriding royalty shall be calculated, determined and paid
                   on the same volumes of production on which the lessors
                   royalty is calculated, determined and paid; provided, this
                   25% overriding royalty due in any one month shall never
                   exceed 50% of the "net operating revenue" for such month. For
                   purposes of this Section 3.2, "net operating revenue" is
                   defined as gross value realized by the Buyer on production
                   saved and sold or used in the calendar month, less the
                   lessor's royalty and normal operating expenses as outlined in
                   Exhibit "E" attached hereto (excluding major workover
                   expenses (i.e., well work requiring a drilling or workover
                   rig), plugging and abandoning costs, and other expenditures
                   of a capital nature). Said overriding royalty shall be
                   calculated on the same basis as the lessors royalties as
                   provided for in the Segregated Lease and, based on such
                   calculation, shall be paid concurrently with payment of
                   royalties under the lease covering the Segregated Lease.
                   Additionally, said overriding royalty shall bear its
                   proportionate share of present or future severance, windfall
                   profits, excise or similar taxes. Any adjustments to the
                   overriding royalties so paid required by the 50% of net
                   operating revenue limitation set forth above shall be based
                   on accrued expenses in accordance with generally accepted
                   accounting principles adjusted to actual expenses in
                   succeeding months and as consistently applied. Resulting
                   adjustments to the 25% overriding royalty interest payment
                   shall be made during such succeeding month or by direct
                   payment (after confirmation of the appropriate adjustments)
                   to the party due such payment.


    3.3  OVERRIDING ROYALTY INTEREST AND FINAL PAYMENT - EXCHANGE.

         3.3.1     This Section 3.3 shall apply only if Seller elects to effect
                   a tax-deferred exchange as provided in Section ?.

         3.3.2     After a date twenty (20) years from the date of first oil
                   production from or allocable to the Segregated Lease,
                   Seller's Production Payment as provided for in Section ?
                   above shall convert to an overriding royalty of 25% of the
                   value of oil and gas production thereafter produced and saved
                   or used from or allocable to the Segregated Lease. Such
                   conversion shall be set forth in an instrument similar in
                   form and substance to that attached hereto as Exhibit "F-4."
                   Notwithstanding anything foregoing in this Section 3.3 to the
                   contrary, said overriding royalty shall be calculated,
                   determined and paid on the same volumes of production on
                   which the lessor's royalty is calculated, determined and
                   paid; provided, this 25% overriding royalty due in any one
                   month shall never exceed 50% of the "net operating revenue"
                   for such month. For purposes of this Section ?, "net
                   operating revenue" is defined as gross value realized by
                   the Buyer on production saved and sold or used in the
                   calendar month, less the lessor's royalty and normal
                   operating expenses as outlined in Exhibit 'E' attached
                   hereto (excluding major workover expenses (i.e., well work
                   requiring a drilling or workover rig), plugging and
                   abandoning costs, and other expenditures of a capital
                   nature).


                                      4
<PAGE>


                   Said overriding royalty shall be calculated on the same basis
                   as the lessor's royalties as provided for in the
                   Segregated Lease and, based on such calculation, shall be
                   paid concurrently with payment of royalties under the lease
                   covering the Segregated Lease. Additionally, said overriding
                   royalty shall bear its proportionate share of present or
                   future severance, windfall profits, excise or similar taxes.
                   Any adjustments to the overriding royalties so paid required
                   by the 50% of net operating revenue limitation set forth
                   above shall be based on accrued expenses in accordance with
                   generally accepted accounting principles adjusted to actual
                   expenses in succeeding months and as consistently applied.
                   Resulting adjustments to the 25% overriding royalty interest
                   payment shall be made during such succeeding month or by
                   direct payment ( after confirmation of the appropriate
                   adjustments) to the party due such payment.

         3.3.3     If, prior to a date twenty (20) years from the date of first
                   oil production from or allocable to the Segregated Lease, oil
                   production from or allocable to the Segregated Lease equals
                   or exceeds 36 million stock tank barrels, as measured at
                   Buyer's production facility platform located on or adjacent
                   to the Segregated Lease, then Section 3.3.2 shall be
                   inapplicable, and Section 3.3.4 shall apply .

         3.3.4     After cumulative oil production from or allocable to the
                   Segregated Lease produced, saved or used equals or exceeds
                   36 million stock tank barrels of oil, measured at Buyer's
                   production facility platform located on or adjacent to the
                   Segregated Lease (the ability to produce and save such
                   volumes of oil not being guaranteed by Buyer, and the date
                   of such point in time being referred to as the "Final Payment
                   Determination Date"), Seller's Production Payment or
                   overriding royalty, as applicable, shall terminate, and in
                   lieu thereof the "Final Payment," as defined hereafter, from
                   Buyer to Seller shall be due. Within thirty (30) days after
                   the Final Payment Determination Date, the parties hereto
                   shall meet and agree on the total cumulative recoverable oil
                   reserves ("Recoverable Reserves") which will be produced and
                   saved from or attributable to the Segregated Lease during its
                   economically productive life. If the parties cannot agree on
                   the Recoverable Reserves within ten (10) days after their
                   initial meeting on the matter, then DeGolyer and MacNaughton,
                   or another mutually acceptable consultant, shall conclusively
                   determine such Recoverable Reserves, with Seller and Buyer
                   equally sharing the fees and expenses of such determination.
                   Following determination of Recoverable Reserves, the parties
                   shall determine Seller's "Final Payment" due from Buyer. The
                   Final Payment shall be calculated as set forth in Exhibit
                   "G," attached hereto and made a part hereof. Once the Final
                   Payment has been made by Buyer to Seller, Seller shall have
                   no further interest in the Segregated Lease or the production
                   therefrom.

    3.4  MANNER OF DEVELOPMENT AND PRODUCTION.  The parties recognize the
         unique nature, risks and rewards of the simultaneous exploitation
         of sulphur and oil and gas reserves from the same geologic trap.
         Buyer shall have the exclusive right to determine the manner of
         development and production of the Segregated Lease and Buyer's
         sulphur lease.

4.  TAXES

    PAYMENT OF TAXES.  All ad valorem, property, and other similar forms of
    taxes for 1990 allocable to the Assets, which have been paid by Seller
    or which have accrued on or before the Closing, shall be prorated
    between Seller and Buyer as of the Closing. Buyer shall be responsible
    for all oil and gas production taxes, and any other similar taxes
    applicable to oil and gas production occurring on and after the Closing,
    except as otherwise provided for in this Agreement. Buyer shall be
    responsible for all sales, use and similar taxes arising out of the sale
    of the Assets. Buyer shall provide Seller with an offshore exemption
    certificate or any other documentation if required under applicable law.
    Buyer shall hold harmless and shall indemnify Seller for any sales or
    use taxes

                                      5
<PAGE>


    assessed against Seller by any taxing authority in respect of this sale,
    including the amounts of any penalties, interest and attorneys' fees.

    The parties expect that this purchase and sale will constitute an
    isolated or occasional sale and will not be subject to sales or use tax
    with any of the taxing authorities having jurisdiction over this
    transaction, and as such, no sales tax will be collected by Seller from
    Buyer at the date of Closing. Seller agrees to cooperate with Buyer in
    demonstrating that the requirements for an isolated or occasional sale
    or any other sales tax exemption have been met.

5.  REPRESENTATIONS AND WARRANTIES

    5.1  SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
         warrants:

         5.1.1     Seller is a corporation duly organized and validly existing,
                   in good standing, under the laws of the Commonwealth of
                   Pennsylvania. Seller has the corporate power and authority to
                   own its property and to carry on its business as now
                   conducted and to enter into and to carry out the terms of
                   this Agreement.

         5.1.2     The execution and delivery of this Agreement and the
                   consummation of the transactions contemplated hereby have
                   been duly authorized by all necessary corporate action on
                   behalf of Seller and Seller is not subject to any charter,
                   by-law, lien, or encumbrance of any kind, agreement,
                   instrument, order, or decree of any court or governmental
                   body (other than any governmental approval required) which
                   would prevent consummation of the transactions contemplated
                   by this Agreement.

         5.1.3     The Segregated Lease is not subject to any preferential right
                   to purchase or right of first refusal in favor of any third
                   party.

         5.1.4     Seller's operations on the Segregated Lease have been
                   conducted as a prudent operator and in accord with all
                   applicable rules or regulations of governmental bodies.

         5.1.5     Seller has the right to assign the Physical Assets, except as
                   to contract rights of which it has previously advised Buyer.

         5.1.6     Seller has incurred no liability, contingent or otherwise,
                   for brokers' or finders' fees in respect of this transaction
                   for  which Buyer shall have any responsibility whatsoever.

         5.1.7     No suit, action or other proceeding is pending or threatened
                   before any court or governmental agency which might result in
                   impairment or loss of Seller's title to any part of the
                   Assets or the value thereof or which might hinder or impede
                   the operation of the Assets, and Seller shall promptly
                   notify Buyer of any such proceeding arising or threatened
                   prior to the Closing.

         5.1.8     Seller shall use its best efforts to take or cause to be
                   taken all such actions as may be necessary and advisable to
                   consummate and make effective the sale of the Assets and
                   the other transactions contemplated by this Agreement and
                   to assure that as of the date of the Closing it will not be
                   under any material corporate, legal or contractual
                   restriction that would prohibit or delay the timely
                   consummation of such transactions.

         5.1.9     The assignment of the Segregated Lease shall be made without
                   any warranty of title of any kind, express or implied,
                   except that Seller shall warrant and defend good and
                   defensible title to the Segregated Lease unto Buyer against
                   every person whomsoever lawfully claiming or to claim the
                   Segregated Lease, or a portion thereof by, through or under
                   Seller, but not

                                      6
<PAGE>


                   otherwise, and such assignment shall be made with full
                   substitution and subrogation of Buyer in and to all covenants
                   and warranties by others heretofore given.

         5.1.10    Seller shall warrant title to the Physical Assets solely to
                   the extent delivery and acceptance (actual or constructive)
                   of any such Physical Assets by Seller have occurred, and to
                   the extent Seller has rights and entitlements to receive
                   Physical Assets under the existing service contracts and
                   purchase orders pertinent to such Physical Assets.

         EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PHYSICAL ASSETS
         ARE TO BE SOLD AS IS, AND SELLER MAKES NO WARRANTY, EXPRESS OR
         IMPLIED IN FACT OR BY LAW WHETHER OF OPERATING CONDITION, SAFETY,
         COMPLIANCE WITH GOVERNMENT REGULATIONS, MERCHANTABILITY, FITNESS FOR
         ANY PARTICULAR PURPOSES, CONDITION OR OTHERWISE, CONCERNING ANY OF
         THE PHYSICAL ASSETS.  ALL WELLS, PERSONAL PROPERTY, MACHINERY,
         EQUIPMENT AND FACILITIES THEREIN, THEREON AND APPURTENANT THERETO
         ARE TO BE CONVEYED BY SELLER AND ACCEPTED BY BUYER PRECISELY AND
         ONLY "AS IS, WHERE IS."  SELLER DOES NOT WARRANT THE PHYSICAL ASSETS
         FREE FROM REDHIBITORY VICES OR DEFECTS.

    5.2  BUYER'S REPRESENTATIONS AND WARRANTIES.  Buyer represents and warrants:

         5.2.1     Freeport is a limited partnership validly existing, in good
                   standing, under the laws of the State of Delaware and has the
                   power and authority to own its property and to carry on its
                   business as now conducted and to enter into and to carry out
                   the terms of this Agreement. Freeport Administrative
                   Managing General Partner is Freeport-McMoRan Inc., a
                   corporation validly existing, in good standing, under the
                   laws of the State of Delaware, and has the power and
                   authority, by virtue of its articles of incorporation,
                   by-laws, articles of partnership or other applicable
                   documents, to enter into this Agreement on behalf of
                   Freeport.

         5.2.2     The execution and delivery of this Agreement and the
                   consummation of the transactions contemplated hereby have
                   been duly authorized by all necessary partnership or
                   corporate action on behalf of Buyer and Buyer is not
                   subject to any articles, charter, by-law, lien or
                   encumbrance of any kind, agreement, instrument, order or
                   decree of any court or governmental body which would
                   prevent consummation of the actions contemplated by this
                   Agreement.

         5.2.3     Buyer is in all respects qualified to own and operate the
                   Segregated Lease under applicable laws, rules, regulations
                   and order of any governmental body or agency having
                   jurisdiction.

         5.2.4     Buyer is not a party to, or in any way obligated under, nor
                   does Buyer have any knowledge of any contract or outstanding
                   claim for the payment of any brokers or finders fee in
                   connection with the origin, negotiation, execution, or
                   performance of this Agreement.

         5.2.5     Buyer shall be fully responsible for compliance with all
                   applicable laws, ordinances, rules and regulations and shall
                   promptly obtain and maintain all permits required by public
                   authorities in connection with the Assets purchased.

         5.2.6     Buyer has made or arranged for others to make an inspection
                   of the Assets. Subject to Seller's foregoing representations
                   and warranties, Buyer accepts all Physical Assets in "as
                   is and where is" condition, with an express acceptance and
                   understanding of the representations and disclaimers
                   contained herein.

         5.2.7     Buyer acknowledges that the Physical Assets have been used or
                   planned for use for oil and gas drilling and producing
                   operations, related oil field operations and possibly the
                   storage

                                      7
<PAGE>



                   and disposal of waste materials incidental to or occurring
                   in connection with such operations, and that Buyer has
                   entered into this Agreement on the basis of Buyer's own
                   investigation of the physical condition of the Physical
                   Assets. Buyer hereby agrees to assume full responsibility
                   for compliance with all obligations or regulations concerning
                   all of such conditions, known or unknown, and further agrees
                   to indemnify Seller for same.


6.  ADDITIONAL COVENANTS

    6.1  APPROVALS AND CONSENTS.

         6.1.1     FORM OF TITLE OF ASSIGNED LEASEHOLD RIGHTS.  The transfer and
                   assignment of the Segregated Lease, in the manner intended by
                   Seller and Buyer hereunder, are subject to the approval by
                   the Minerals Management Service ("MMS"), United States
                   Department of the Interior. It is the intent and desire of
                   the parties that the Segregated Lease will be effectively
                   segregated by the MMS from the Retained Lease, it being
                   contemplated by Seller and Buyer that the Segregated Lease
                   and Retained Lease will become separate and distinct
                   leases and that the anticipated segregation will be
                   approved by the appropriate officer of the MMS
                   simultaneously with, and effective as of the Closing.
                   Seller and Buyer shall work together to obtain such
                   approvals as appropriate, and will attempt to obtain
                   concurrence in such segregation from the Secretary of the
                   Interior ("Secretary"); provided, however, that such
                   approval by the Secretary shall not be a condition
                   precedent to Closing, but rather a condition subsequent to
                   which Section 6.1.3 shall apply if such Secretary's
                   approval is not granted. Seller shall execute and deliver
                   to Buyer such instruments, subject to the provisions of
                   this Agreement, as may be required by the MMS to induce
                   the MMS to segregate the Segregated Lease. It is the
                   intent of the parties hereto that Seller shall retain no
                   obligation or responsibility to operate the Segregated
                   Lease after same has been assigned to Buyer, that Seller
                   shall execute any and all necessary Designations of
                   Operator to a company designated by Buyer and acceptable
                   to the parties; and that such Designations of Operator
                   shall be approved by the appropriate officer of the MMS
                   simultaneously with, and effective as of, the Closing.

         6.1.2     DISAPPROVAL BY MMS.  If the MMS will not, or does not,
                   approve the segregation of the Segregated Lease from the
                   Retained Lean as contemplated in Section 6.1.1, after
                   Seller's and Buyer's good faith attempts to obtain such
                   approval, the parties shall meet and determine whether an
                   alternative means can be found which would provide Buyer
                   with the intended rights in the Segregated Lease, as
                   defined herein, and be acceptable in form and effect to
                   Seller, Buyer and the MMS under its delegated authority.
                   If an alternative which is acceptable to Seller, Buyer and
                   the MMS cannot be found to the contemplated transfer as
                   set forth in Section 6.1.1, within six (6) months after
                   the rejection by the MMS of the contemplated segregating
                   assignment and transfer of the Segregated Lease, this
                   Agreement will terminate without liability or obligation
                   on the part of Seller or Buyer, except for (a) the
                   obligation of Buyer to reassign the Segregated Lease to
                   Seller, (b) the obligation of the Seller to return the
                   purchase price to Buyer, and (c) other settlement of
                   accounts provided for herein, or necessary and appropriate
                   under the circumstances.

         6.1.3     DISAPPROVAL BY SECRETARY.  If the MMS approves the
                   segregation of the Segregated Lease from the Retained
                   Lease as contemplated in Section 6.1.1, and the Secretary
                   does not approve such segregation, after Seller's and
                   Buyer's good faith attempts to obtain such approval, then
                   at Buyer's request the parties shall meet and determine
                   (1) whether the transfer instruments theretofore executed,
                   as interpreted by the Secretary, effect a form of transfer
                   and assignment which is acceptable to the parties under
                   the circumstances, or (2) whether additional documents or
                   agreements need be executed to effect the intended
                   transfer more perfectly, or (3) whether an alternative
                   means can be found which would provide


                                      8
<PAGE>



                   Buyer with the intended rights in the Segregated Lease, as
                   defined herein, and be acceptable in form and effect to
                   Seller, Buyer and the applicable governmental authority
                   (i.e., the MMS or the Secretary). If an alternative which
                   is acceptable to Seller, Buyer and the applicable
                   governmental authority cannot be found to the contemplated
                   transfer as set forth in Section 6.1.1, within six (6)
                   months after the rejection by the Secretary of the
                   contemplated segregating assignment and transfer of the
                   Segregated Lease, this Agreement will terminate without
                   liability or obligation on the part of Seller or Buyer,
                   except for (a) the obligation of Buyer to reassign the
                   Segregated Lease to Seller, (b) the obligation of the
                   Seller to return the purchase price to Buyer, and (c)
                   other settlement of accounts provided for herein, or
                   necessary and appropriate under the circumstances.


    6.2  SERVICE CONTRACTS, PURCHASE ORDERS.  Certain of the service contracts
         and purchase orders entered into by Seller, with respect to the
         Physical Assets listed in Exhibit B, are not assignable by Seller;
         consequently, Buyer and Seller shall work together in good faith to
         the end that Buyer receive the benefit of such service contracts and
         purchase orders, including all warranties, to the extent that such
         affect the materials, equipment and services to be received by Buyer
         pursuant hereto; provided, however, it is not the intent hereof that
         Seller shall undertake any obligation or warranty in lieu of the
         obligations of any vendor or contractor. Seller and Buyer shall
         execute appropriate documentation required by either vendors,
         contractors or Seller to effectuate a substitution of Buyer for
         Seller under such service contracts and purchase orders.


    6.3  OPERATIONS PRIOR TO CLOSING.  After the date of this Agreement and
         prior to the Closing, Seller shall use and maintain the Assets in
         substantially the same manner in which they have been used and
         maintained prior to this Agreement The parties have previously
         agreed and by this Agreement confirm and establish that as of
         February 19, 1990, all obligations, liabilities, duties, rights and
         benefits associated with the physical Assets and their existing
         purchase orders and service contracts as set forth in Exhibit "B"
         shall be assumed by and same shall inure to the benefit of Buyer The
         parties further agree that, if for any reason the Closing under this
         Agreement is not consummated, they will use their good faith efforts
         to release, exchange and balance the costs incurred by the parties
         as a result of the allocation of costs before and after such date,
         by payment to Buyer or Seller (as required), within sixty (60) days
         following the termination of this Agreement, of an agreed-upon
         amount of money, along with execution and delivery of such documents
         as are required.


    6.4  SELLER'S OPERATIONS AFTER CLOSING.  From and after the Closing, Seller
         shall not conduct thereafter any oil and gas exploration and
         development operations on Block 299, Main Pass Area, by drilling or
         producing through the horizons and formations from the surface down
         to a subsea depth of 1900 feet on the Segregated Lease. Accordingly,
         unless otherwise consented to or waived by Buyer, which consent
         shall not be unreasonably withheld, Seller shall conduct all oil and
         gas exploration, development and production operations on the
         Retained Lease below the subsea depth of 1900 feet under the
         Segregated Lease by drilling directional wells from surface
         locations totally outside the area covered by the Segregated Lease
         to bottomhole locations below the subsea depth of 1900 feet under
         the Segregated Lease. Such wells shall not at any point intersect
         the Segregated Lease. If through inadvertence any portion of a well
         drilled by Seller does penetrate the Segregated Lease at any depth,
         then upon discovery of such penetration Seller shall advise Buyer in
         writing, and unless waived by Buyer, Seller shall sidetrack such
         well out of the Segregated Lease and into the Retained Lease. Waiver
         by Buyer of such sidetracking shall not be construed a waiver of
         Seller's indemnity hereunder, but an attempt by Buyer to mitigate
         Seller's damages.


    6.5  ACCESS TO ASSETS.  At all times prior to the Closing, if this Agreement
         shall not have first been terminated, Buyer and the employees and
         agents of Buyer shall have access to the Assets at Buyer's sole
         cost, risk and expense, and during normal business hours. Seller
         shall have the right to regulate reasonably the hours and frequency
         of Buyer's access to the Assets, so as not to interfere unreasonably
         with Seller's other business and so as to allow Seller to have a
         representative present


                                      9
<PAGE>


         (at Seller's option) during Buyer's access. Buyer shall give Seller
         at least forty-eight (48) hours' notice, during normal business hours,
         of Buyer's desire to access the Assets.

    6.6  CASUALTY LOSS.  In the event any Physical Asset, including fixtures and
         improvements, to be sold hereunder is damaged by fire or other calamity
         before Closing, Seller may repair the damage at its cost or, at its
         sole option, either reduce the purchase price by the cost of the
         damage or withdraw the damaged Physical Asset from the sale and
         reduce the purchase price by the undamaged value thereof.

7.  CONDITIONS PRECEDENT TO CLOSING

    7.1  SELLER'S CONDITIONS PRECEDENT.  The obligations of Seller to consummate
         the transactions contemplated by this Agreement are subject to each of
         the following conditions:

         7.1.1     Buyer shall have performed and complied with all terms of
                   this Agreement required to be performed or complied with by
                   Buyer prior to Closing.

         7.1.2     No action or proceeding by or before any governmental
                   authority shall have been instituted or threatened (and
                   not subsequently dismissed, settled or otherwise
                   terminated) which might restrain, prohibit or invalidate
                   any of the transactions contemplated by this Agreement,
                   other than an action or proceeding instituted or
                   threatened by Seller or any of its affiliates.

         7.1.3     Seller shall have executed appropriate amendments to the
                   existing federal unit agreement and unit operating
                   agreement to delete and exclude the Segregated Lease from
                   such unit agreement and unit operating agreement. It is
                   anticipated that such amendments will be approved by the
                   MMS simultaneously with, and effective as of the Closing.
                   The parties intend and desire that the Segregated Lease
                   will be owned by Buyer, subject to the terms and
                   provisions of this Agreement, but not subject to the
                   existing federal unit agreement or any existing operating
                   agreement, and that Seller shall retain no obligation or
                   responsibility to operate the Segregated Lease.

         7.1.4     Pursuant to application therefor by Buyer, and simultaneously
                   with segregation of the Segregated Lease from the Retained
                   Lease, the MMS shall have approved a Suspension of
                   Production or a Suspension of Operations, such that the
                   Segregated Lease can be maintained in force and effect for
                   a period of at least two (2) years, or until actual
                   production of oil and/or gas can be established, whichever
                   occurs first.

         7.1.5     All necessary parties shall have executed instruments, in
                   forms substantially similar to those attached as Exhibits
                   "F-1," "F-2," either "F-3" or "F-4," and "F-5," whereby
                   Seller transfers its right, title and interest in the
                   Assets to Buyer, and whereby Buyer assigns to Seller, the
                   interests contemplated in Sections 3.1.1, 3.2 and/or 3.3.
                   Further, if required by any vendor, contractor or either
                   party hereto, all necessary parties shall execute separate
                   Bills of Sale with respect to Physical Assets.

    7.2  BUYER'S CONDITIONS PRECEDENT.  The obligations of Buyer to consummate
         the transactions contemplated by this Agreement are subject to each of
         the following conditions:

         7.2.1     Seller shall have performed and complied with all terms of
                   this Agreement required to be performed or complied with by
                   Seller prior to Closing.

         7.2.2     Buyer and Chevron Pipe Line Company shall have reached a
                   mutually satisfactory agreement with regard to transportation
                   of the oil produced from or allocable to the Segregated
                   Lease.

                                      10
<PAGE>



         7.2.3     No action or proceeding by or before any governmental
                   authority shall have been instituted or threatened (and not
                   subsequently dismissed, settled, or otherwise terminated)
                   which might restrain, prohibit or invalidate any of the
                   transactions contemplated by this Agreement, other than an
                   action or proceeding instituted or threatened by Buyer or any
                   of its affiliates.

         7.2.4     All necessary parties shall have executed instruments, in
                   forms substantially similar to those attached as Exhibits
                   "F-1," "F-2," either "F-3" or "F-4," and "F-5," whereby
                   Seller transfers its right, title and interest in the
                   Assets to Buyer, and whereby Buyer assigns to Seller, the
                   interests contemplated in Sections 3.1.1, 3.2 and/or 3.3.
                   Further, if required by any vendor, contractor or either
                   party hereto, all necessary parties shall execute separate
                   Bills of Sale with respect to Physical Assets.


    7.3  EFFECTS OF TAX-DEFERRED EXCHANGE.  If Seller elects to effect a
         tax-deferred exchange pursuant to Section 1.3, Buyer and Seller agree
         to cooperate and execute additional assignments as prudently
         required to effect the exchange, and in such event Seller shall
         guarantee the performance of any intermediary corporation used as a
         part of such exchange transaction. The parties contemplate execution
         of a direct assignment from Seller to Buyer in the form attached
         hereto as Exhibit "F-1", at the direction of the intermediary
         corporation as set forth in Exhibit "F-5," which assignment shall be
         filed for approval by the MMS and the Secretary of the Interior as
         set forth in Section 6.1.1.


8.  MISCELLANEOUS

    8.1  PAYMENT OF EXPENSES AND FEES.  Buyer and Seller shall each bear its own
         costs and expenses, including but not limited to attorney's fees
         incurred in connection with the transactions contemplated in this
         Agreement; provided, however; Buyer shall pay all recording fees or
         transfer taxes in connection with the recording of any instrument of
         transfer of Assets from Seller to Buyer hereunder.

    8.2  NORM.  Any assignment of the Physical Assets shall contain the
         following provision:

         8.2.1     It is expressly recognized and acknowledged that naturally
                   occurring radioactive material ("NORM") is normally
                   associated with oil and gas producing operations, and as a
                   result the Physical Assets transferred herein may be
                   contaminated by NORM in that certain of the Physical
                   Assets have previously been used in oil and gas producing
                   operations. Accordingly, Buyer shall comply with
                   applicable federal and applicable state laws and
                   regulations governing NORM and governing Physical Assets
                   contaminated by or containing NORM.

         8.2.2     The Physical Assets herein transferred which have previously
                   been used in oil and gas producing operations shall be
                   used only in connection with oil and gas producing
                   activities, and shall not be subsequently transferred for
                   unrestricted use unless the concentrations of NORM
                   associated therewith are below the levels specified as
                   allowable for unrestricted transfer as set forth in the
                   Louisiana Radiation Regulations and subsequent amendments
                   thereto, as adopted by the Louisiana Department of
                   Environmental Quality.

         8.2.3     Buyer shall comply with all provisions of the Louisiana
                   Radiation Regulations and all subsequent amendments
                   thereto to the extent that the regulations are applicable
                   to the Physical Assets herein transferred.

         8.2.4     Buyer shall include the provisions of this Section 8.2 in any
                   subsequent sale or assignment of the Physical Assets herein
                   transferred which have previously been used in oil and gas
                   producing operations.


    8.3  TRANSPORTATION OF OIL.  Subject to partial reimbursement by Seller of
         certain costs as provided herein, and except as may be negotiated
         between Buyer and the purchaser of the oil produced and saved from


                                      11
<PAGE>



         the Segregated Lease, Buyer shall be responsible for all costs
         associated with transporting oil from or attributable to the
         Segregated Lease to the designated sales point.  If such oil is
         transported through the common carrier pipeline system owned and
         operated by Chevron Pipe Line Company ("CPL") from Main Pass 299B to
         Main Pass 69 to the outermost flange of the Empire Terminal located
         in Plaquemines Parish, Louisiana, then Buyer or the purchaser of
         such oil will bear any and all costs and expenses associated with
         the metering and transportation of production through such system to
         the outermost flange of the Empire Terminal, including but not
         limited to the following:

         8.3.1     Costs of pipeline installation, tie-in and maintenance
                   associated with Buyer's connection of its production to
                   Chevron Pipe Line Company's facilities on Seller's Main
                   Pass 299B platform, it being understood and agreed that
                   any plans or drawings for such installation or tie-in, and
                   the actual work ultimately performed, shall be subject to
                   Seller's prior review and approval, and subject to such
                   further notice, oversight and considerations of safety as
                   customarily apply under such circumstances; and

         8.3.2     Transportation charges and terminal exit fees associated with
                   transport of oil from or attributable to the Segregated Lease
                   through Chevron Pipe Line Company's common carrier pipeline
                   system from Main Pass 299B platform to Main Pass 69 into and
                   through Chevron Pipe Line Company's Empire Terminal. Seller,
                   however, agrees to reimburse Buyer for a certain portion of
                   transportation charges and exit fees, in the manner and in
                   the amounts set forth in Exhibit "H" attached hereto.

         The parties understand and agree that Buyer, separately and
         independently of this transaction, shall make its own arrangements
         with Chevron Pipe Line Company for metering, transportation and
         delivery of production through the said system and for tying into
         said system.


    8.4  PIPELINE ACCESS.

         8.4.1     For purposes of this Section 8.4, the terms "sweet crude oil"
                   and "sour crude oil" are used to describe oil produced
                   from the Retained Lease and from the Segregated Lease,
                   respectively The parties do not intend to indicate any
                   particular characteristics of either oil, the terms being
                   merely a convenient means of relative comparison and
                   reference.

         8.4.2     If requested by Chevron Pipe Line Company ("CPL"), Seller
                   will notify CPL in writing that Seller has no objection to
                   CPL's use of the existing 10-inch O.D. pipeline from Main
                   Pass 299B platform to Main Pass 69 for transportation of
                   the sour crude oil to be produced from the Segregated
                   Lease. Further, Seller agrees to provide Buyer with such
                   platform space on Main Pass 299B platform as is reasonably
                   required for the tie-in of production to CPL's pipeline
                   system, subject to such mutually agreeable terms and
                   conditions as customarily apply under such circumstances.

         8.4.3     The parties contemplate that sweet crude oil produced and
                   saved from the Retained Lease and other leases in the
                   area, and sour crude oil produced and saved from the
                   Segregated Lease, will be transported by CPL in separate
                   pipelines from platforms on Main Pass Block 299 to Main
                   Pass 69, and that the sour crude oil will be "batched"
                   from Main Pass 69 to the Empire Terminal. The parties
                   further understand and acknowledge CPL's role in the
                   determination of which facilities shall be used for
                   transportation of crude oil.


    8.5  CALL ON OIL.  From time to time and at any time, Seller shall have the
         option, but not the obligation, to purchase or designate a purchaser
         financially acceptable to Buyer of the oil produced from or
         attributable to the Segregated Lease. If purchased by Seller or a
         designee, such crude oil would be delivered to a sales point
         designated by Seller or its designee, which sales point shall be on
         CPL's system and shall never be beyond the outermost flange of CPL's
         Empire Terminal located in


                                      12
<PAGE>

         Plaquemines Parish, Louisiana, unless the parties mutually agree
         otherwise. The price to be paid to Buyer shall be the higher of (1)
         fair market value for oil of like gravity and quality, or (2) the
         price offered to Buyer from a bona fide third party in a written
         offer by a third party, non-affiliated purchaser ready and able to
         purchase, which offer Buyer is willing to accept, with comparable
         terms and conditions. Buyer shall notify Seller in writing of any
         such bona fide offer, giving the terms and conditions of such
         acceptable offer.  Upon receiving such notice, Seller shall have ten
         (10) days to elect to purchase such oil on the same terms and
         conditions as contained in the bona fide offer. Further, Seller and
         Buyer agree that in the event Buyer receives at any time and from
         time to time such a bona fide offer from a third party to purchase
         Buyer's crude oil at a price higher than that otherwise provided for
         pursuant to this Section 8.5, Buyer may furnish Seller a copy of
         such offer, and Seller shall have ten (10) days from receipt of such
         offer either to agree to pay said higher price or to release Buyer's
         oil production for sale to such third party in accordance with such
         offer, including the term thereof.  In no event, however, shall
         Seller be obligated to discontinue purchase of such crude oil sooner
         than the first day of the month on or following the thirtieth (30th)
         day following receipt of such bona fide offer. If at any time and
         from time to time Seller is purchasing such crude oil hereunder, the
         purchase of such crude oil by Seller shall be terminable at Seller's
         option with at least ninety (90) days' prior written notice to
         Buyer, such termination to be effective on the first day of the
         calendar month on or following the end of such 90-day notice period,
         or upon the expiration of the term theretofore offered by a third
         party and matched by Seller, whichever is later: If purchased by
         Seller or a designee, Buyer shall be obligated, at its sole cost and
         expense, to deliver the oil to Seller at standard sour crude
         pipeline quality, limited to three percent (3%) sulphur by weight
         and fifty parts per million (50 ppm) hydrogen sulphide.

    8.6  ANTITRUST REVIEW. Seller and Buyer recognize that they have been
         advised that the Federal Trade Commission has granted an early
         termination of the thirty (30) day waiting period required under the
         Hart-Scott-Rodino Antitrust Improvements Act of 1976. Each party
         hereto acknowledges that it has satisfied itself that its
         obligations under the Hart-Scott-Rodino Antitrust Improvements Act
         of 1976 have been fulfilled.

    8.7  GAS CONTRACT.  Gas production from the Segregated Lease has been
         permanently released by Southern Natural Gas Company ("Southern") from
         an Omnibus Contract entered into between Southern and Seller
         effective January 1, 1988. The Omnibus Contract covered gas
         previously sold to Southern under long-term interstate contract
         which were terminated and abandoned under FERC Order No. 490.

    8.8  F.E.R.C. 500.  Any assignment of the Segregated Lease shall be subject
         to the following provision:

         It is understood that interstate pipelines may refuse to transport
         under 18 C.F.R. Part 284 gas produced from the properties hereby
         assigned unless Seller agrees to offer take-or-pay or take-and-pay
         credit to such pipelines, and the parties hereby agree that Seller
         may withhold such an offer at its sole discretion, even if the
         result is to completely bar Buyer's gas from the interests hereby
         assigned from open access transportation in such pipelines.
         Notwithstanding the foregoing, Seller agrees to execute offers of
         credit necessary to render the assigned gas eligible for open access
         transportation if Seller determines, in its sole discretion, that
         such gas is exempt from crediting pursuant to FERC rules and
         regulations or that Seller can otherwise execute such offers of
         credit without risk of adverse economic consequences to Seller. Any
         offers of credit executed by Seller pursuant to this provision shall
         be limited in scope or term as Seller deems necessary.

    8.9  PROVISION OF DATA.  Seller shall have the right to receive from Buyer,
         at no charge to Seller, all basic data and test results obtained in
         the course of drilling, testing, evaluating and producing on, in or
         under the Segregated Lease, to which no proprietary interpretive
         notes, marks or comments have been added and exclusive of any
         proprietary extrapolations derived therefrom ("Data").  Seller shall
         furnish Buyer, at no charge to Buyer, any such Data obtained from
         Seller's test well drilled on and in the

                                      13
<PAGE>


         Segregated Lease, which is reasonably necessary to qualify said well
         as producible under 30 CFR Section 250.11. All such Data which is
         provided by one party to the other party pursuant to the provisions
         of this Section 8.9 shall be maintained by the receiving party on a
         confidential basis in accordance with the provision of Section 8.18.

    8.10 LOCATION AND/OR RELOCATION OF FLOWLINES OR FACILITIES.

         8.10.1    Should any of Buyer's operations require or reasonably
                   necessitate the removal, replacement, modification or
                   relocation of any presently existing flowlines or
                   facilities owned and operated by Seller or an affiliate of
                   Seller; including but not limited to CPL, then such
                   removal, replacement, modification or relocation shall be
                   accomplished at Buyer's sole cost, risk and expense.

         8.10.2    Seller shall not locate any new flowlines or facilities on
                   the surface area extent encompassed by the Segregated
                   Lease without Buyer's prior written consent.

         8.10.3    It is understood that it will be necessary for Buyer to
                   install flowlines and facilities on the surface area
                   encompassed by the Retained Lease. Prior to installation
                   of any such flowlines or facilities, Buyer shall consult
                   with Seller in an effort to minimize interference with
                   Seller's current and future operations. Seller shall not
                   unreasonably withhold consent to such installations, it
                   being understood that final approval for any such
                   installations is vested in the MMS.

    8.11 PUBLICITY.  Except as modified by Section 8.18, Seller and Buyer shall
         jointly coordinate the timing and substance of any press releases or
         publicity concerning the transactions contemplated by this Agreement.

    8.12 ASSIGNMENT.  Buyer or Seller may not assign this Agreement or delegate
         any duties hereunder without the prior written consent of the other,
         which consent shall not be unreasonably withheld. Such assignment or
         delegation shall not relieve the assigning party of liability for
         the performance of its duties and obligations hereunder, and any
         such assignment shall contain the express assumption by the assignee
         of all duties and obligations incumbent on its assignor pursuant to
         this Agreement, the performance of which such assignor guarantees.
         The terms and conditions of this Agreement shall be real rights
         attached to and appendages running with the interests in the
         Segregated Lease and Physical Assets covered and affected by this
         Agreement, and shall be binding upon and inure to the benefit of the
         parties hereto, their respective successors and assigns, and their
         successors and assigns.

         The following shall not be considered a violation of this Section 8.12:

         8.12.1    The assignment by Freeport of an undivided one-fourth (1/4th)
                   interest in this Agreement to IMC Fertilizer, Inc., a
                   Delaware corporation ("IMC"), and the assignment by
                   Freeport of an undivided one-sixth (1/6th) interest in
                   this Agreement to Felmont Oil Corporation, a Delaware
                   corporation ("Felmont"). In the event of such assignments,
                   Freeport, IMC and Felmont shall assume, solidarily with
                   each other, all obligations and liabilities provided for
                   in Section 2.2 hereof except as may be otherwise provided
                   with respect to Section 2.3 hereof and such parties,
                   severally and to the extent of their respective interests,
                   shall defend and indemnify Seller in accordance with the
                   provisions of Section 2.3 hereof.

         8.12.2    The designation and appointment of Freeport as operator and
                   of Freeport-McMoRan Oil & Gas Company as acting operator.

         8.12.3    The assignment by Buyer or Seller to an affiliate or
                   subsidiary, or the execution of a mortgage, deed of trust,
                   financing statement or other instrument for borrowing
                   purposes,

                                      14
<PAGE>


                   provided that any such instrument for financing purposes
                   shall be subordinate to the terms and provisions of this
                   Agreement.

    8.13 RIGHT TO AUDIT.  Seller shall have the right to question the
         appropriateness of the payments made to Seller by Buyer pursuant to
         Section 3 hereof and of charges for partial reimbursement of
         transportation costs incurred by Buyer pursuant to Section 8.3.2
         hereof including without limitation the figures on which such
         payments or charges were based, the amounts deducted therefrom, and
         the calculation thereof.  Seller shall have the right, either itself
         or by an accounting firm of Seller's choosing, to audit Buyer's
         books and records to confirm or question the correctness of such
         payments or charges, together with subsequent adjustments thereto,
         during normal business hours and with no less than thirty (30) days'
         prior written notice to Buyer. It is provided, however, that any
         payment, charge or adjustment shall be considered correct and
         appropriate if not challenged by Seller in writing within two (2)
         years after the date the payment or invoice for the charge was
         received by Seller, or within two (2) years after Seller's receipt
         of notice of a payment adjustment, as applicable. All statements and
         records shall be maintained for two (2) years after payments have
         been made.

         Buyer shall have the right to audit Seller's books and records,
         within the above time frame, to confirm the accuracy and
         appropriateness of those costs estimated on Exhibit "B" and billed
         to Buyer in accordance with Section 2.1.2 of this Agreement.

    8.14 CONFLICT OF INTEREST.  Buyer and Seller, for themselves and their
         directors, employees and agents, acknowledge that they are familiar
         with and will comply with each other's Conflict of Interest
         policies. Each party shall promptly notify the other party of any
         violation of this Section 8.14, and any consideration received by a
         party as a result of such violation shall be paid over or credited
         to the other party. Each party, or its designated representative(s),
         may audit, for reasonable cause, any pertinent records of the other
         party for the sole purpose of determining whether there has been
         compliance with this Section 8.14.

    8.15 TERM. This Agreement shall remain in force and effect for so long as
         the Segregated Lease, or any extension, renewal or replacement
         thereof remains in effect, and as long thereafter as necessary to
         achieve full performance of all obligations assumed by the Buyer and
         Seller hereunder.

    8.16 ENTIRE AGREEMENT.  As used herein, the term "this Agreement" includes
         not only this Asset Sale Agreement but also all exhibits referred to
         herein, which exhibits are hereby incorporated by reference for all
         purposes. This Agreement constitutes the entire agreement between
         Seller and Buyer with respect to the transactions contemplated
         herein, and supersedes all prior oral or written agreements,
         commitments, understandings, or information otherwise furnished by
         Seller to Buyer with respect to such matters; provided, however,
         that certain Agreement of Indemnity dated as. of the date of
         Closing, by and between Chevron U.S.A. Inc. and Freeport-McMoRan
         Inc. is not merged herein and survives the execution hereof. No
         amendment shall be binding unless in writing and signed by
         representatives of both parties. Headings used in this Agreement are
         only for convenience of reference and shall not be used to define
         the meaning of any provision. This Agreement is for the benefit of
         Seller and Buyer only and not for the benefit of any other party.

    8.17 SURVIVAL.  The terms and provisions of this Agreement shall survive any
         assignment, pledge or delegation of any right, duty or obligation
         covered and affected hereby.

    8.18 CONFIDENTIALITY . The contents of this Agreement, and any notes,
         summaries, compilations, analyses or other material derived from
         this Agreement, are confidential, and neither party shall release
         any of such contents, notes, summaries, compilations, analyses or
         other material to a third party without first obtaining the express
         written consent of the other party hereto, except that this
         prohibition shall not apply to disclosures:

                                      15
<PAGE>


         8.18.1    To any parent corporation, any subsidiary of any parent
                   corporation of or any subsidiary of either party hereto, or
                   to any banking, accounting, engineering or other
                   consultant firms to any party hereto, provided that any
                   such recipient shall have first agreed in writing to be
                   bound by the provisions of this Section 8.18;

         8.18.2    Required by law (including the rules and regulations of the
                   appropriate stock exchange);

         8.18.3    Of information that is already in the public domain through
                   no fault of the party then disclosing it;

         8.18.4    Of information which either Buyer or Seller may have or
                   hereafter lawfully may obtain from any party or parties who
                   are legally entitled to such data.

         The parties furthermore agree that a party may disclose any of such
         information to courts, governmental bodies or agencies or stock
         exchanges if the disclosing party believes in good faith that such
         disclosure is required by applicable law, regulation or regulatory
         body policy. The parties acknowledge that the press release or
         publicity under Section 8.11 will render this Section 8.18 moot as
         to the content thereof.

    8.19 NOTICES. All notices and consents to be given hereunder shall be in
         writing and shall be deemed to have been duly given if delivered
         personally telexed with receipt acknowledged, mailed by registered
         mail, or delivered by a recognized commercial courier to the party
         at the address set forth on the first page of this Agreement or such
         other address as any party shall have designated by ten days' notice
         to the other parties.

    8.20 GOVERNING LAW. This Agreement shall be governed by the law of the State
         of Louisiana, without regard to rules concerning conflicts of law.

    IN WITNESS WHEREOF, this Agreement is executed on the date first above
written.

WITNESSES:                                   CHEVRON U.S.A. INC., Seller


/s/ Gordon R. Cain                           By:  /s/ F. Robin
- -----------------------------------               --------------------------
                                                          F. Robin
/s/ Brian P. Roberts                               Regional Vice-President
- -----------------------------------


                                             FREEPORT-McMoRan RESOURCE PARTNERS,
                                             LIMITED PARTNERSHIP, Buyer

/s/ Robert M. Wohleber                       By:  /s/ Rene L. Latiolais
- -----------------------------------               --------------------------
                                                       Rene L. Latiolais
/s/ John F. Gateshall                                 Senior Vice-President
- -----------------------------------


                                      16
<PAGE>


STATE OF LOUISIANA

PARISH OF ORLEANS

    On this 2nd day of May, 1990, before me appeared F. ROBIN, to me
personally known, who being by me duly sworn, did say that he is the Regional
Vice-President of CHEVRON U.S.A. INC., a Pennsylvania corporation, and that
the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in behalf of said
corporation by authority of its Board of Directors, and said appearer
acknowledged that he executed the same as the free act and deed of said
corporation.

    IN WITNESS WHEREOF, I have hereunto set my official hand and seal on the
date hereinabove written.

                                           /s/ signed but illegible
                                           ----------------------------------
                                               Notary Public in and for
                                               Orleans Parish, Louisiana

My Commission expires at death.


STATE OF LOUISIANA

PARISH OF ORLEANS

    On this 2nd day of May, 1990, before me appeared RENE' L. LATIOLAIS, to
me personally known, who being by me duly sworn did say that he is the Senior
Vice-President of Freeport-McMoRan Inc., a Delaware corporation, as
Administrative Managing General Partner of FREEPORT-McMoRan RESOURCE
PARTNERS, LIMITED PARTNERSHIP, a Delaware limited partnership, and that the
foregoing instrument was signed on behalf of and as duly authorized by, said
limited partnership acting through the aforesaid corporation with the
authority of its Board of Directors, and said appearer acknowledged said
instrument to be the free act and deed of said partnership.

    IN WITNESS WHEREOF, I have hereunto set my official hand and seal on the
date hereinabove written.

                                           /s/ Henry J. Berthelot
                                           ----------------------------------
                                                Notary Public in and for
                                               Jefferson Parish, Louisiana

My Commission expires at death.


                                      17