Exhibit 4.2
Commitment Warrant (Swartz)

                               Document is Copied.

THIS WARRANT AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
OR ANY  STATE  SECURITIES  LAW,  AND  MAY  NOT BE  SOLD,  TRANSFERRED,  PLEDGED,
HYPOTHECATED  OR OTHERWISE  DISPOSED OF OR EXERCISED  UNLESS (i) A  REGISTRATION
STATEMENT  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES LAWS SHALL
HAVE  BECOME   EFFECTIVE  WITH  REGARD  THERETO,   OR  (ii)  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

AN INVESTMENT IN THESE SECURITIES  INVOLVES A HIGH DEGREE OF RISK.  HOLDERS MUST
RELY ON THEIR  OWN  ANALYSIS  OF THE  INVESTMENT  AND  ASSESSMENT  OF THE  RISKS
INVOLVED.

Warrant to Purchase

1,500,000 shares
---------
                        Warrant to Purchase Common Stock
                                       of
                         TIDELANDS OIL & GAS CORPORATION

         THIS CERTIFIES that Swartz Private Equity, LLC or any subsequent holder
hereof pursuant to Section 8 hereof  ("Holder"),  has the right to purchase from
TIDELANDS OIL & GAS CORPORATION,  a Nevada  corporation  (the "Company"),  up to
1,500,000  fully paid and  nonassessable  shares of the Company's  common stock,
$0.001 par value per share ("Common  Stock"),  subject to adjustment as provided
herein, at a price equal to the Exercise Price as defined in Section 3 below, at
any time  beginning on the Date of Issuance  (defined  below) and ending at 5:00
p.m.,  New York, New York time the date that is ten (10) years after the Date of
Issuance (the "Exercise Period").

         Holder  agrees with the Company  that this  Warrant to Purchase  Common
Stock of the Company (this  "Warrant") is issued and all rights  hereunder shall
be held subject to all of the  conditions,  limitations and provisions set forth
herein.

         1.       Date of Issuance and Term.
                  --------------------------

         This  Warrant  shall be deemed to be issued on September 7, 2000 ("Date
of  Issuance").  The term of this  Warrant  is ten (10)  years  from the Date of
Issuance.

         Of  this  Warrant  to  purchase  one  million  five  hundred   thousand
(1,500,000) shares of Common Stock of the Company, the Warrant is exercisable as
to five hundred  thousand  (500,000) shares of Common Stock of the Company after
the fifteen  (15)  business  day document  review  period (the "Review  Period")
referenced in the Equity Line Letter of Agreement dated on or about September 7,
2000, between Holder and Company (the "Letter of Agreement") has ended, shall be
further  exercisable as to an additional five hundred thousand  (500,000) shares
of Common  Stock of the  Company  upon the  execution  by the Company and Swartz
Private  Equity,  LLC of an  Investment  Agreement,  pursuant  to the  Letter of
Agreement  ("Investment  Agreement") and shall be further  exercisable as to the
remaining five hundred thousand  (500,000) shares of Common Stock of the Company
upon the  earlier of (i) the date of  effectiveness  of  Company's  registration
statement (the "Registration  Statement") to be filed pursuant to the Investment
Agreement and related documents, or (ii) March 7, 2001.

<PAGE>

         Anything  in  this  Warrant  to the  contrary  notwithstanding,  if the
Company  delivers  written notice to Swartz Private Equity,  LLC, at 200 Roswell
Summit, Suite 285, 1080 Holcomb Bridge Road, Roswell, GA 30076; Telephone: (770)
640-8130,  Facsimile:  (770)  640-7150  (or such  other  address  and  number as
requested by the Holder),  prior to the expiration of the Review Period that the
legal documents for the transaction are  unacceptable  and the Company wishes to
terminate the transaction (a "Company Termination Notice"),  Holder shall return
this Warrant to the Company and all of Holder's  rights under this Warrant shall
be null  and  void and of no  effect,  provided  that,  if the  Company  has not
delivered a Company  Termination Notice to Swartz Private Equity,  LLC, prior to
the expiration of the Review Period, ownership of this Warrant shall irrevocably
vest to the  Holder,  regardless  of  whether  a Company  Termination  Notice is
delivered anytime thereafter.

         Notwithstanding anything to the contrary herein, the applicable portion
of this Warrant shall not be  exercisable  during any time that, and only to the
extent  that,  the number of shares of Common  Stock to be issued to Holder upon
such exercise,  when added to the number of shares of Common Stock, if any, that
the Holder otherwise beneficially owns at the time of such exercise, would equal
or exceed  4.99% of the number of shares of Common  Stock then  outstanding,  as
determined  in  accordance  with  Section  13(d) of the Exchange Act (the "4.99%
Limitation").  The  4.99%  Limitation  shall be  conclusively  satisfied  if the
applicable  Exercise Notice includes a signed  representation by the Holder that
the  issuance of the shares in such  Exercise  Notice will not violate the 4.99%
Limitation,  and  the  Company  shall  not be  entitled  to  require  additional
documentation of such satisfaction.

         2.       Exercise.
                  --------

         (a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser  number of full shares of Common Stock covered
hereby (the "Warrant Shares") upon surrender of this Warrant,  with the Exercise
Form  attached  hereto as Exhibit A (the  "Exercise  Form") duly  completed  and
executed,  together  with the full  Exercise  Price (as defined  below) for each
share of Common  Stock as to which this Warrant is  exercised,  at the office of
the Company,  Attention:  Michael R. Ward,  President & CEO, Tidelands Oil & Gas
Corporation,  13330  Leopard  Street,  Suite 26,  Corpus  Christi,  Texas  78410
Telephone: (361) 241-2244, Facsimile: (361) 241-5292, or at such other office or
agency as the Company may  designate  in writing,  by  overnight  mail,  with an
advance copy of the Exercise Form sent to the Company and its Transfer  Agent by
facsimile (such surrender and payment of the Exercise Price  hereinafter  called
the "Exercise of this Warrant").

         (b) Date of Exercise.  The "Date of  Exercise" of the Warrant  shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise  Form are  received by the Company as soon as  practicable  thereafter.
Alternatively,  the Date of Exercise  shall be defined as the date the  original
Exercise Form is received by the Company,  if Holder has not sent advance notice
by facsimile.

         (c) Delivery of Shares of Common Stock Upon Exercise. Upon any exercise
of this Warrant,  the Company shall use its reasonable  best efforts to deliver,
or  shall  cause  its  transfer  agent  to  deliver,   a  stock  certificate  or
certificates  representing  the number of shares of Common Stock into which this
Warrant was exercised, within three (3) trading days of the date that all of the
following  have been  received by the Company:  (i) the original  completed  and
executed  Exercise Form, (ii) the original  Warrant and (iii) the Exercise Price
(if applicable)(collectively, the "Receipt Date"). Such stock certificates shall
not contain a legend restricting  transfer if a registration  statement covering
the  resale  of such  shares  of  Common  Stock is in effect at the time of such
exercise  or if such  shares  of  Common  Stock  may be  resold  pursuant  to an
exemption  from  registration,  including  but not limited to Rule 144 under the
Securities Act of 1933. Shares of Common Stock which may be qualified for public
resale under Rule 144 will have their restrictive  legends removed in accordance
with Rule 144(k). Any request for removal of legend before the expiration of the
two year holding period must be handled  through an NASD licensed broker dealer.
The Company will cooperate fully in connection with any  broker/dealer  Rule 144
sale.

<PAGE>

         (d) Economic Loss Due to Late Delivery of Shares.  If the Company fails
for any  reason to  deliver  the  requisite  number  of  shares of Common  Stock
(unlegended,  if so required by the terms of this Warrant)(the "Warrant Shares")
to a Holder upon an exercise of this Warrant  within  fifteen (15) business days
of the Receipt Date (the "Late Delivery  Deadline"),  the Company shall pay such
Holder (in addition to any other  remedies  available to Holder) an amount equal
to  ("Non-Delivery  Payment") the number of Warrant Shares for which delivery is
late, multiplied by the difference of:

(x) the highest closing price for the Company's Common Stock for any trading day
                  during  the  period  beginning  on and  including  the Date of
                  Exercise  and  ending on the  earlier of (i) the date that the
                  Investor receives from the Company  certificates  (unlegended,
                  if so required by the terms of this Warrant)  representing the
                  Warrant Shares of Common Stock  issuable in  conjunction  with
                  such Exercise, or (ii) the date that the Investor receives the
                  full amount of the Non-Delivery Payment, whichever is earlier,

minus

(y) the Exercise Price per share (which, in the case  of  a  Cashless  Exercise,
                  shall be  deemed  to equal  zero),  or,  if the  Investor  has
                  received the Warrant Shares (unlegended, if so required by the
                  terms of this  Warrant)  from the Company prior to the payment
                  of the Non-Delivery  Payment,  the lowest closing price of the
                  Company's   Common   Stock  for  the  five  (5)  trading  days
                  immediately  preceding  the date that such Warrant  Shares are
                  delivered to the Holder.

                  Non-Delivery  Payments  shall  be  payable,  in  cash  or cash
                  equivalent, within five (5) business days of the Late Delivery
                  Deadline.

          (e) Liquidated Damages.  The parties hereto acknowledge and agree that
the sums payable as Non-Delivery  Payments shall give rise to liquidated damages
and not penalties.  The parties further  acknowledge that (i) the amount of loss
or damages  likely to be incurred by the Holder is  incapable or is difficult to
precisely estimate,  (ii) the amounts specified bear a reasonable proportion and
are not plainly or grossly  disproportionate  to the probable  loss likely to be
incurred  by the  Investor,  and (iii) the parties  are  sophisticated  business
parties and have been represented by sophisticated  and able legal and financial
counsel and negotiated this Agreement at arm's length.

         (f)  Cancellation  of Warrant.  This Warrant shall be canceled upon the
Exercise of this Warrant,  and, as soon as practical after the Date of Exercise,
Holder  shall be  entitled  to  receive  Common  Stock for the  number of shares
purchased  upon  such  Exercise  of this  Warrant,  and if this  Warrant  is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant)  representing  any unexercised  portion of this
Warrant in addition to such Common Stock.

<PAGE>

         (g) Holder of Record.  Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant,  irrespective  of
the date of delivery of the Common  Stock  purchased  upon the  Exercise of this
Warrant.  Nothing in this Warrant shall be construed as  conferring  upon Holder
any rights as a stockholder of the Company.

         3.       Payment of Warrant Exercise Price.
                  ---------------------------------

         The Exercise Price per share  ("Exercise  Price") shall initially equal
(the "Initial Exercise Price") the lowest Closing Price for the five (5) trading
days immediately  preceding  September 7, 2000,  which is $0.375.  If the lowest
Closing  Price of the  Company's  Common  Stock  for the five (5)  trading  days
immediately preceding the date, if any, that Swartz Private Equity, LLC executes
an Investment Agreement pursuant to the Letter of Agreement (the "Closing Market
Price") is less than the Initial  Exercise  Price,  the Exercise  Price shall be
reset to equal the  Closing  Market  Price,  or, if the Date of Exercise is more
than six (6) months  after the Date of  Issuance,  the  Exercise  Price shall be
reset to equal the lesser of (i) the Exercise Price then in effect,  or (ii) the
"Lowest Reset Price," as that term is defined below. The Company shall calculate
a "Reset Price" on each six-month anniversary date of the Date of Issuance which
shall equal the lowest Closing Price of the Company's  Common Stock for the five
(5)  trading  days  ending on such six-  month  anniversary  date of the Date of
Issuance. The "Lowest Reset Price" shall equal the lowest Reset Price determined
on any six-month  anniversary date of the Date of Issuance preceding the Date of
Exercise, taking into account, as appropriate,  any adjustments made pursuant to
Section 5 hereof.

         For purposes  hereof,  the term "Closing  Price" shall mean the closing
price on the Nasdaq Small Cap Market,  the National Market System  ("NMS"),  the
New York Stock Exchange, or the O.T.C. Bulletin Board, or if no longer traded on
the Nasdaq Small Cap Market,  the National Market System  ("NMS"),  the New York
Stock Exchange,  or the O.T.C.  Bulletin Board,  the "Closing Price" shall equal
the  closing  price  on  the  principal  national  securities  exchange  or  the
over-the-counter  system on which the  Common  Stock is so  traded  and,  if not
available,  the  mean of the  high  and low  prices  on the  principal  national
securities exchange on which the Common Stock is so traded.

         Payment of the Exercise  Price may be made by either of the  following,
or a combination thereof, at the election of Holder:

         (i) Cash Exercise: cash, bank or cashiers check or wire transfer; or

         (ii) Cashless  Exercise:  The Holder, at its option,  may exercise this
Warrant in a cashless  exercise  transaction  under this  subsection (ii) if and
only  if,  on the Date of  Exercise,  there  is not  then in  effect  a  current
registration  statement  that covers the resale of the shares of Common Stock to
be  issued  upon  exercise  of this  Warrant  . In  order to  effect a  Cashless
Exercise, the Holder shall surrender this Warrant at the principal office of the
Company  together with notice of cashless  election,  in which event the Company
shall  issue  Holder a number  of  shares of  Common  Stock  computed  using the
following formula:

                                  X = Y (A-B)/A

where:   X = the number of shares of Common Stock to be issued to Holder.

         Y = the  number of shares of Common  Stock for which  this  Warrant  is
being exercised.

<PAGE>

                  A = the  Market  Price of one (1) share of Common  Stock  (for
                  purposes of this Section  3(ii),  the "Market  Price" shall be
                  defined as the average  Closing  Price of the Common Stock for
                  the five (5)  trading  days prior to the Date of  Exercise  of
                  this Warrant (the "Average Closing Price"), as reported by the
                  O.T.C.  Bulletin  Board,  National  Association  of Securities
                  Dealers  Automated   Quotation  System  ("Nasdaq")  Small  Cap
                  Market,  or if the  Common  Stock is not  traded on the Nasdaq
                  Small  Cap  Market,  the  Average  Closing  Price in any other
                  over-the-counter market; provided, however, that if the Common
                  Stock is listed on a stock exchange, the Market Price shall be
                  the Average  Closing  Price on such  exchange for the five (5)
                  trading days prior to the date of exercise of the Warrants. If
                  the Common Stock is/was not traded during the five (5) trading
                  days prior to the Date of Exercise, then the closing price for
                  the last publicly traded day shall be deemed to be the closing
                  price for any and all (if  applicable)  days  during such five
                  (5) trading day period.

                  B = the Exercise Price.

         For  purposes of Rule 144 and  sub-section  (d)(3)(ii)  thereof,  it is
intended,  understood  and  acknowledged  that the Common  Stock  issuable  upon
exercise of this Warrant in a cashless  exercise  transaction shall be deemed to
have  been  acquired  at the time  this  Warrant  was  issued.  Moreover,  it is
intended,  understood  and  acknowledged  that the holding period for the Common
Stock issuable upon exercise of this Warrant in a cashless exercise  transaction
shall be deemed to have commenced on the date this Warrant was issued.

         4.       Transfer and Registration.
                  -------------------------

         (a) Transfer  Rights.  Subject to the  provisions  of Section 8 of this
Warrant,  this Warrant may be transferred on the books of the Company,  in whole
or in part, in person or by attorney,  upon  surrender of this Warrant  properly
completed  and  endorsed  unless  such  transfer  is  prohibited  by  applicable
securities laws. This Warrant shall be canceled upon such surrender and, as soon
as  practicable  thereafter,  the person to whom such  transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this  Warrant
transferred,  and Holder  shall be  entitled  to receive a new Warrant as to the
portion hereof retained.

         (b)  Registrable  Securities.  In  addition  to any other  registration
rights of the Holder, if the Common Stock issuable upon exercise of this Warrant
is not  registered  for  resale at the time the  Company  proposes  to  register
(including  for  this  purpose  a  registration  effected  by  the  Company  for
stockholders  other  than the  Holders)  any of its Common  Stock  under the Act
(other  than a  registration  relating  solely  for the  sale of  securities  to
participants  in a Company stock plan or a  registration  on Form S4 promulgated
under the Act or any successor or similar form registering stock issuable upon a
reclassification,   upon  a  business  combination   involving  an  exchange  of
securities  or upon an exchange  offer for  securities  of the issuer or another
entity)(a  "Piggyback  Registration  Statement"),  the Company shall cause to be
included in such Piggyback Registration Statement ("Piggyback Registration") all
of the Common Stock  issuable  upon the  exercise of this Warrant  ("Registrable
Securities")  to the extent such  inclusion  does not  violate the  registration
rights of any other  securityholder  of the  Company  granted  prior to the date
hereof.  Nothing herein shall prevent the Company from withdrawing or abandoning
the Piggyback Registration Statement prior to its effectiveness.

         (c)   Limitation  on   Obligations   to  Register   under  a  Piggyback
Registration.   In  the  case  of  a  Piggyback   Registration  pursuant  to  an
underwritten  public  offering  by  the  Company,  if the  managing  underwriter
determines  and  advises  in  writing  that the  inclusion  in the  registration
statement of all Registrable  Securities proposed to be included would interfere
with the successful marketing of the securities proposed to be registered by the
Company,  then the number of such  Registrable  Securities to be included in the
Piggyback Registration  Statement, to the extent such Registrable Securities may
be included in such Piggyback Registration  Statement,  shall be allocated among
all  Holders  who had  requested  Piggyback  Registration  pursuant to the terms
hereof,  in the proportion that the number of Registrable  Securities which each
such  Holder  seeks  to  register  bears  to the  total  number  of  Registrable
Securities  sought to be included by all  Holders.  If required by the  managing
underwriter of such an  underwritten  public  offering,  the Holders shall enter
into a reasonable agreement limiting the number of Registrable  Securities to be
included  in  such  Piggyback  Registration  Statement  and the  terms,  if any,
regarding the future sale of such Registrable Securities.

         5.       Anti-Dilution Adjustments.
                  -------------------------

         (a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common  Stock,  then Holder,  upon Exercise of this Warrant
after the record date for the  determination of holders of Common Stock entitled
to receive such  dividend,  shall be entitled to receive  upon  Exercise of this
Warrant,  in addition  to the number of shares of Common  Stock as to which this
Warrant is  exercised,  such  additional  shares of Common  Stock as such Holder
would have received had this Warrant been  exercised  immediately  prior to such
record date and the Exercise Price will be proportionately adjusted.

<PAGE>

         (b)      Recapitalization or Reclassification.

                  (i) Stock  Split.  If the  Company  shall at any time effect a
recapitalization,   reclassification   or  other  similar  transaction  of  such
character  that the  shares  of Common  Stock  shall be  changed  into or become
exchangeable  for a larger  number of shares  (a "Stock  Split"),  then upon the
effective date thereof,  the number of shares of Common Stock which Holder shall
be entitled to purchase  upon  Exercise of this  Warrant  shall be  increased in
direct  proportion  to the  increase in the number of shares of Common  Stock by
reason of such  recapitalization,  reclassification or similar transaction,  and
the Exercise Price shall be proportionally decreased.

                  (ii)  Reverse  Stock Split.  If the Company  shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character  that the  shares  of Common  Stock  shall be  changed  into or become
exchangeable for a smaller number of shares (a "Reverse Stock Split"), then upon
the effective  date  thereof,  the number of shares of Common Stock which Holder
shall  be  entitled  to  purchase   upon  Exercise  of  this  Warrant  shall  be
proportionately  decreased  and  the  Exercise  Price  shall  be  proportionally
increased.  The Company shall give Holder the same notice it provides to holders
of Common Stock of any transaction described in this Section 5(b).

         (c)  Distributions.  If the Company shall at any time distribute for no
consideration  to holders of Common  Stock cash,  evidences of  indebtedness  or
other securities or assets (other than cash dividends or  distributions  payable
out of earned  surplus or net profits for the current or preceding  years) then,
in any such case,  Holder  shall be entitled to receive,  upon  Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of  indebtedness  or other  securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination  Date") or, in lieu thereof, if
the Board of  Directors  of the Company  should so determine at the time of such
distribution,  a reduced  Exercise Price  determined by multiplying the Exercise
Price on the  Determination  Date by a fraction,  the  numerator of which is the
result  of such  Exercise  Price  reduced  by the  value  of  such  distribution
applicable  to one share of Common  Stock  (such value to be  determined  by the
Board of  Directors of the Company in its  discretion)  and the  denominator  of
which is such Exercise Price.

         (d) Notice of Consolidation or Merger and Warrant Exchange. The Company
shall,  prior  to  effecting  a  merger,  consolidation,   exchange  of  shares,
recapitalization,  reorganization,  or other similar event, as a result of which
shares of Common Stock shall be changed  into the same or a different  number of
shares of the same or another  class or classes of stock or  securities or other
assets  of  the  Company  or  another  entity  or  there  is a  sale  of  all or
substantially all the Company's assets (a "Corporate Change"),  obtain a written
agreement  from the  resulting  successor  or acquiring  entity (the  "Resulting
Entity") assuming the Company's  obligations  under this Warrant,  including but
not limited to the Exercise Price reset provisions as provided herein during the
term of the resultant warrants,  and agrees in such written instrument that this
Warrant  shall be  exerciseable  into such class and type of securities or other
assets  of the  Resulting  Entity as  Holder  would  have  received  had  Holder
exercised  this Warrant  immediately  prior to such  Corporate  Change,  and the
Exercise  Price of this  Warrant  shall be  proportionately  increased  (if this
Warrant shall be changed into or become exchangeable for a warrant to purchase a
smaller  number of shares of Common Stock of the  Resulting  Entity) or shall be
proportionately   decreased   (if  this  Warrant  shall  be  changed  or  become
exchangeable for a warrant to purchase a larger number of shares of Common Stock
of the Resulting  Entity);  provided,  however,  that Company may not affect any
Corporate  Change  unless it first  shall have given  thirty (30) days notice to
Holder hereof of any Corporate Change.

         (e)  Exercise  Price  Adjusted.  As  used  in this  Warrant,  the  term
"Exercise  Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b),
(c) or (d) of this Section 5, and  thereafter  shall mean said price as adjusted
from time to time in accordance  with the  provisions  of this Warrant.  No such
adjustment  under this  Section 5 shall be made  unless  such  adjustment  would
change the Exercise Price at the time by $0.01 or more; provided,  however, that
all  adjustments  not so made  shall be  deferred  and made  when the  aggregate
thereof would change the Exercise Price at the time by $0.01 or more.

<PAGE>

         (f) Adjustments:  Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment  made pursuant to this Section 5,
Holder shall,  upon Exercise of this Warrant,  become entitled to receive shares
and/or other  securities  or assets  (other than Common  Stock)  then,  wherever
appropriate,  all references herein to shares of Common Stock shall be deemed to
refer to and  include  such  shares  and/or  other  securities  or  assets;  and
thereafter the number of such shares and/or other  securities or assets shall be
subject  to  adjustment  from time to time in a manner  and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.

         6.       Fractional Interests.
                  --------------------

                  No fractional shares or scrip  representing  fractional shares
shall be issuable  upon the  Exercise of this  Warrant,  but on Exercise of this
Warrant,  Holder may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant,  Holder would be entitled to a fractional  share of
Common  Stock or a right to acquire a  fractional  share of Common  Stock,  such
fractional  share shall be disregarded  and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.

         7.       Reservation of Shares.
                  ---------------------

                  The  Company  shall at all times  reserve  for  issuance  such
number of authorized  and unissued  shares of Common Stock (or other  securities
substituted  therefor as herein above  provided) as shall be sufficient  for the
Exercise  of this  Warrant  and  payment  of the  Exercise  Price.  The  Company
covenants  and agrees  that upon the  Exercise  of this  Warrant,  all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid,  nonassessable  and not  subject  to  preemptive  rights,  rights of first
refusal or similar rights of any person or entity.

         8.       Restrictions on Transfer.
                  ------------------------

                  (a) Registration or Exemption Required.  This Warrant has been
issued in a transaction exempt from the registration  requirements of the Act by
virtue  of  Section  4(2) of the  Act or  Regulation  D and  exempt  from  state
registration  under  applicable  state laws.  The  Warrant and the Common  Stock
issuable upon the Exercise of this Warrant may not be pledged, transferred, sold
or assigned except pursuant to an effective registration statement or unless the
Company has  received an opinion from the  Company's  counsel to the effect that
such registration is not required, or the Holder has furnished to the Company an
opinion of the Holder's counsel, which counsel shall be reasonably  satisfactory
to the  Company,  to the effect  that such  registration  is not  required;  the
transfer  complies  with  any  applicable  state  securities  laws;  and,  if no
registration  covering the resale of the Warrant Shares is effective at the time
the Warrant Shares are issued,  the Holder  consents to a legend being placed on
certificates  for the Warrant Shares  stating that the securities  have not been
registered  under the  Securities  Act and  referring  to such  restrictions  on
transferability and sale.

                  (b)  Assignment.  If  Holder  can  provide  the  Company  with
reasonably  satisfactory  evidence that the  conditions  of (a) above  regarding
registration  or  exemption  have been  satisfied,  Holder  may sell,  transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall  deliver a written  notice to  Company,  substantially  in the form of the
Assignment  attached  hereto as Exhibit B,  indicating  the person or persons to
whom the Warrant shall be assigned and the  respective  number of warrants to be
assigned to each assignee.  The Company shall effect the  assignment  within ten
(10) days, and shall deliver to the  assignee(s)  designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.

         9.       Benefits of this Warrant.
                  ------------------------

                  Nothing in this Warrant  shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right, remedy or
claim under this  Warrant and this Warrant  shall be for the sole and  exclusive
benefit of the Company and Holder.

<PAGE>

         10.      Applicable Law.
                  --------------

                  This  Warrant is issued  under and shall for all  purposes  be
governed by and construed in  accordance  with the laws of the state of Georgia,
without giving effect to conflict of law provisions thereof.

         11.      Loss of Warrant.
                  ---------------

                  Upon  receipt by the Company of  evidence of the loss,  theft,
destruction  or mutilation of this Warrant,  and (in the case of loss,  theft or
destruction)  of indemnity or security  reasonably  satisfactory to the Company,
and upon surrender and cancellation of this Warrant,  if mutilated,  the Company
shall execute and deliver a new Warrant of like tenor and date.

         12.      Notice or Demands.
                  -----------------

Notices or demands  pursuant to this Warrant to be given or made by Holder to or
on the  Company  shall be  sufficiently  given or made if sent by  certified  or
registered mail, return receipt requested, postage prepaid, and addressed, until
another  address is  designated  in writing by the  Company,  to the address set
forth in Section 2(a) above.  Notices or demands  pursuant to this Warrant to be
given or made by the Company to or on Holder shall be sufficiently given or made
if sent by certified or  registered  mail,  return  receipt  requested,  postage
prepaid,  and  addressed,  to the  address of Holder set forth in the  Company's
records, until another address is designated in writing by Holder.

         IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
____ day of September, 2000.

                                            TIDELANDS OIL & GAS CORPORATION



                                            By: ________________________________
                                                Michael R. Ward, President & CEO


<PAGE>

                                    EXHIBIT A

                            EXERCISE FORM FOR WARRANT

                       TO: TIDELANDS OIL & GAS CORPORATION

         The  undersigned  hereby  irrevocably  exercises  the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of TIDELANDS OIL
& GAS  CORPORATION  a  Nevada  corporation  (the  "Company"),  evidenced  by the
attached  warrant (the  "Warrant"),  and herewith  makes payment of the exercise
price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.

1. The undersigned agrees not to offer,  sell,  transfer or otherwise dispose of
any  of the  Common  Stock  obtained  on  exercise  of the  Warrant,  except  in
accordance with the provisions of Section 8(a) of the Warrant.

2. The undersigned  requests that stock  certificates  for such shares be issued
free of any restrictive legend, if appropriate,  and a warrant  representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:

Dated: _________

_____________________________________________________________________________
                                    Signature

_____________________________________________________________________________
                                   Print Name

_____________________________________________________________________________
                                     Address

_____________________________________________________________________________

NOTICE

The  signature to the  foregoing  Exercise  Form must  correspond to the name as
written  upon the face of the  attached  Warrant  in every  particular,  without
alteration or enlargement or any change whatsoever.

_____________________________________________________________________________



<PAGE>

                                    EXHIBIT B

                                   ASSIGNMENT

                    (To be executed by the registered holder
                        desiring to transfer the Warrant)

FOR  VALUE  RECEIVED,  the  undersigned  holder  of the  attached  warrant  (the
"Warrant") hereby sells,  assigns and transfers unto the person or persons below
named the right to purchase  _______ shares of the Common Stock of TIDELANDS OIL
& GAS CORPORATION, evidenced by the attached Warrant and does hereby irrevocably
constitute  and appoint  _______________________  attorney to transfer  the said
Warrant  on the books of the  Company,  with full power of  substitution  in the
premises.

Dated:                                           ______________________________
                                                           Signature


Fill in for new registration of Warrant:

_________________________________________
                  Name

_________________________________________
                  Address

_________________________________________
Please print name and address of assignee
(including zip code number)

_______________________________________________________________________________

NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

_______________________________________________________________________________