BERMUDA

                                  1961: No. 179


                     THE COASTAL CARIBBEAN OILS AND MINERALS
                               COMPANY ACT, 1961.


                                                            [15th January, 1962)


      WHEREAS Butterfield,  Dill and Company Limited has presented a petition to
the  Legislature  setting  forth that it is  desirous  of forming a joint  stock
company to be called  "Coastal  Caribbean  Oils and  Minerals  Limited"  for the
purposes  therein  expressed  and that the  petitioner is desirous of having the
said Company incorporated by an Act of the Legislature limiting the liability of
the  shareholders  to the amount unpaid on their  respective  shares and praying
that an Act may he passed to enable the said Company to become  incorporated and
to confer on the said Company  certain  powers  necessary for the carrying on of
its business, and it is deemed expedient to pass an Act for such purposes:

      Be  it,  therefore,  enacted  by the  Governor,  Legislative  Council  and
Assembly of the Bermudas or Somers Islands as follows:

     1.   (1) If within six months after the passing of this Act a memorandum of
association  is  signed  and  filed in  accordance  with the  provisions  of the
Companies Act, 1948, the persons who shall sign such  memorandum and the persons
who  shall  thereafter  become  shareholders  in  the  Company  shall  he a body
corporate  under the name of "Coastal  Caribbean  Oils & Minerals Ltd." with the
exclusive  right to use that name in these  Islands  and under that name to have
perpetual  succession  with power to sue and liability to be sued in all courts,
and to have and use a common  seal,  with  power to renew or change  the same at
pleasure,  and the Company may thereafter carry on its business under the powers
conferred by and in accordance with the provisions of this Act, of the Companies
Act, 1923, of the Companies Act, 1948, and of the Exempted  Companies Act, 1950,
in so far as they are not in conflict with any of the provisions of this Act.

          (2) If the persons referred to  in the foregoing  subsection  become a
body corporate  under the provisions of the said  subsection then the succeeding
sections of this Act shall have effect in relation to that body corporate, which
body corporate is in the said succeeding sections referred to as "the Company".


<PAGE>

     2.   Upon the filing of the memorandum of association the Registrar-General
shall furnish to the Company a certificate stating the date when such memorandum
was filed in his office.

     3.   (1)  The capital of  the Company shall be such  sum not less than five
thousand pounds as the Company may from time to time determine.

          (2)  The capital of the Company shall be  divided into shares of a par
value of not less than one shilling.

          (3)  Subject to the  provisions contained in  the Companies Act, 1948,
with respect to the allotment of shares by  provisional  directors,  the Company
shall have power to divide its shares into several classes and to attach thereto
respectively any preferential, deferred, qualified or special rights, privileges
or conditions.

          (4)  Without prejudice to the generality of the provisions of the last
preceding subsection, the Company shall have power to issue and allot preference
shares  which  are,  or at the  option  of the  Company,  are to be liable to be
redeemed.

          (5)  The redemption  or  preference  shares  under  the last preceding
subsection may be effected upon such terms and in such manner as may be provided
by the bye-laws of the Company.

          (6)  The redemption of  preference shares by  the Company shall not be
taken as reducing the amount of the Company's share capital.

          (7)  Where  the Company has  redeemed any  preference  shares it shall
have power to issue shares up to the nominal amount of the shares redeemed as if
those shares had never been issued.

          (8)  Without  prejudice  to  the   generality  of  the  provisions  of
subsection  (3) of this section and  notwithstanding  the  provisions of section
thirteen of the Company's  Act,  1923, the Company shall have power to issue and
allot shares which do not carry any voting rights.

     4.   The Company shall have the following powers -

           (a)    to buy, exchange, contract for, lease and in any and all other
                  ways  acquire,  take,  hold  and own,  and to deal  in,  sell,
                  mortgage, lease, or otherwise dispose of lands, mining claims,
                  mineral rights,  oil wells,  gas lands, oil and gas royalties,
                  and other real property outside these Islands,  and rights and
                  interest  in and to real  property,  and to  manage,  operate,
                  maintain,  improve and develop the said  properties,  and each
                  and all of them;


<PAGE>

           (b)    to buy,  exchange,  contract for, lease and in any and all the
                  other ways acquire, take, hold and own, and to sell, mortgage,
                  lease,  and otherwise  dispose of, outside these Islands,  all
                  rights of way,  easements,  franchises,  and  rights  inherent
                  thereto,  or  deriving  therefrom,  and to deal in any  manner
                  therewith;

           (c)    to buy, exchange, contract for, lease and in any and all other
                  ways  acquire,  take,  hold and own  personal  property of any
                  nature and  description  outside  these  Islands  and to sell,
                  mortgage, lease and otherwise dispose of the same;

           (d)    to engage in any kind of  manufacturing  business  and to buy,
                  examine, contract for, lease, construct and otherwise acquire,
                  take, hold and own,  mortgage,  lease or otherwise dispose of,
                  manufacturing  plants,  and  to  manage,  operate,   maintain,
                  improve and develop the same outside these Islands;

           (e)    to buy,  exchange,  construct,  contract for; lease and in any
                  and all other ways acquire,  take, hold and own refineries for
                  the  treatment of petroleum  and other mineral oils and gases;
                  tanks  and  other  facilities  for the  storage  thereof;  and
                  manufacturing  plants, works, pipe lines and appurtenances for
                  the production,  distribution and sale of petroleum,  oil, gas
                  and of any and all  refinements and  by-products  thereof;  to
                  prospect  for oil; to drill wells and to develop the same;  to
                  transport  oil and its  products;  to  refine  crude  oil;  to
                  improve, maintain, operate and develop, and to sell, mortgage,
                  lease or otherwise dispose of said properties,  and to sell or
                  otherwise  dispose of such petroleum,  oil and all refinements
                  and by-products thereof;

           (f)    to enter into, maintain,  operate  or  carry  on  in  all  its
                  branches the business of  mining and  of drilling,  boring and
                  exploring for,  producing,  transporting,  refining, treating,
                  distilling, manufacturing,  handling,  and dealing in,  buying
                  and selling petroleum, oil,  natural gas, asphaltum,  bitumen,
                  bituminous rock, and any and all other mineral and hydrocarbon
                  substances, and any and all products or  by-products which may
                  be derived from said  substances or  either of them;  and  for
                  such,  or any of such  purposes,  to  buy,  exchange, contract
                  for, lease, and in any  and all other  ways to acquire,  take,
                  hold and own,  and  to sell,  mortgage,  lease  and  otherwise
                  dispose  of, and to  construct,  manage, maintain, deal in and
                  operate mines, refineries,  tanks,  machinery,  steam, sailing
                  and  other  vessels  or  watercraft  of  any  kind,  type  and
                  description,  and  otherwise   deal  in,  operate,  establish,
                  promote,  carry on,  conduct  and  manage  any  and  all other
                  property and  appliances  that  may  in  any  wise  be  deemed
                  advisable in connection  with the  business of  the Company or
                  any branch  thereof,  or  that may be deemed convenient at any
                  time by the Company;

           (g)    to buy,  exchange,  construct,  contract for, lease and in any
                  and all other ways acquire,  take, hold and own pipe lines and
                  telegraph and telephone  lines useful or necessary for its own
                  business,  and to improve,  maintain and operate same,  and to
                  sell, mortgage, lease or otherwise dispose of the same outside
                  these Islands;


<PAGE>

           (h)    to  do   engineering   and   contracting   in  the  designing,
                  construction,  improvement,  extension, maintenance and repair
                  of oil or gas plants,  including  pipe lines,  tanks and other
                  appliances   thereto   appertaining;   also  in  the  opening,
                  developing and operating of petroleum, gas and oil wells, both
                  for the Company and others;

           (i)    to  manufacture,  buy, sell and otherwise  deal in gas and oil
                  machinery  and  appliances  outside  these  Islands;  and also
                  lumber,  stone,  brick,  steel,  iron and other  materials  in
                  connection   with  the   building,   erection,   construction,
                  development, improvement, extension, maintenance and repair of
                  the assets aforesaid enumerated,  both for the Company and for
                  others;

           (j)    to purchase,  exchange,  or otherwise acquire,  take, hold and
                  own,  and to sell,  mortgage,  lease or  otherwise  dispose of
                  water  rights  and  water  supplies   outside  these  Islands,
                  together  with the  necessary  pipe lines,  reservoirs,  dams,
                  ditches  and  appurtenances  useful or  necessary  for its own
                  business and to manage, operate, maintain,  improve, extend or
                  develop such water supplies;

           (k)    to buy, exchange,  contract for,  construct,  lease and in any
                  and all other ways acquire;  take,  hold and own, and to sell,
                  mortgage,  lease and otherwise dispose of transportation lines
                  by  land,  air or  water,  useful  or  necessary  for  its own
                  business, and to manage,  operate,  maintain,  improve, extend
                  and to develop the same;

           (l)    to construct,  acquire, own, maintain and operate and to carry
                  on the  business  of  proprietors  of wharves,  piers,  docks,
                  basins,  warehouses,   harbours,  ports,  works  and  channels
                  including   all   appurtenances,   appliances   and  apparatus
                  necessary and useful in connection therewith;

           (m)    to borrow  money for any of the purposes of the Company and to
                  issue  bonds,  debentures,  debenture  stock,  notes  or other
                  obligations  therefor,  and to  secure  the same by  pledge or
                  mortgage  of the  whole  or any  part of the  property  of the
                  Company   whether  real  or  personal,   or  to  issue  bonds,
                  debentures,  debenture stock, notes and other obligations with
                  any such security;

           (n)    to purchase,  apply for or otherwise acquire and to hold, own,
                  use and  operate  and sell,  lease,  assign,  pledge or in any
                  other  manner  dispose  of and in any  manner  deal  with  and
                  contract with  reference to  concessions in respect of oil and
                  mineral rights and any other concessions;

           (o)    to  acquire  any  personal   property   including   commercial
                  commodities  and  rights  of  any   description,   inventions,
                  patents,  patent rights,  copyrights  and trade marks,  and to
                  hold,  exploit,  sell,  dispose  of,  mortgage,   lease,  let,
                  develop,  grant licenses or rights, to the same as the Company
                  may from time to time determine:


<PAGE>

                         Provided that any such property trade or business shall
                  be outside  these  Islands  but so that no  prohibition  shall
                  prevent the conduct of such business from these Islands or the
                  registration of any patent,  copyright or trade marks in these
                  Islands;

           (p)    to invest the monies of the Company  upon the  security of any
                  real or personal  property  situated outside these Islands and
                  to sell, exchange,  vary or dispose of the same as the Company
                  shall from time to time determine;

           (q)    to acquire  by  purchase  or  otherwise  and hold any  stocks,
                  shares,  bonds,   debentures,   debenture  stock  obligations,
                  mortgages  or  securities  created  or  issued  outside  these
                  Islands and to sell, exchange,  vary or dispose of the same as
                  the Company may from time to time determine;

           (r)    to act as managers or agents in respect of any of the business
                  of the Company;

           (s)    to lend or advance  money to  persons  on  such  terms  as the
                  Company may deem expedient;

           (t)    to borrow or raise or  secure the  payment of  money  in  such
                  manner as the Company may think fit;

           (u)    to  develop,  operate,  and  manage  any  other  undertakings,
                  manufacturing  enterprises  or businesses  falling  within the
                  scope of the powers set forth in this  section as the  Company
                  may from time to time determine;

           (v)    to give  guarantees  with respect to the  liabilities of third
                  parties,  the fidelity of individuals filling or about to fill
                  situations  of trust or  confidence  and such  other  business
                  guarantees as the Company may from time to time determine;

           (w)    to carry out all or any of the foregoing objects as principals
                  or agents,  or in partnership  or  conjunction  with any other
                  firm, association or company, or by means of any subsidiary or
                  auxiliary company in any part of the world.

     5.   The provisions of subsections  (1), (2), (3) and (4) of section twenty
of the Companies Act, 1923,  shall not apply with respect to the Company and the
provisional  directors  or the  directors  may  allot  all or any of the  shares
subscribed  for in the Company to which person or  corporation  as they may from
time to time  determine,  without  regard to the  nationality  of the  person or
corporation to whom any shares may be allotted.

     6.   Notwithstanding  anything  contained in the Companies Act,  1923,  the
Company  shall not be required  to record in its  register  of  shareholders  or
elsewhere the  nationality  or occupation of the transferee of any shares of the
capital stock of the Company,  the amount paid for the shares transferred or the
date of the  acquisition  of any  shares,  nor shall the  Company be required to
allot specific share numbers or to record the same relating to the shares in its
capital stock;


<PAGE>

     Provided that nothing in this Act  contained  shall be construed  to exempt
the Company or any person or persons  from the payment of any stamp duty payable
under any Act of the Legislature of these Islands.

     7.   Nothing in the Act  contained  shall be construed to affect the rights
of Her Majesty,  Her heirs and successors or of any body politic or corporate or
of any other  person or persons  except such as are  mentioned  in this Act, and
those claiming by, from or under them.