CONVEYANCE AGREEMENT

     Recording  Requested  by  and When Recorded Return to: Fulbright & Jaworski
L.L.P.,  300  Convent  St.,  Suite  2200, San Antonio, Texas, Attn: Christian G.
Herff.

                              CONVEYANCE AGREEMENT

     This  Conveyance  Agreement  (this "Conveyance"), effective as of 4:58 P.M.
Eastern  Time  on September 30, 2004 (the "Effective Date"), is from PENN OCTANE
CORPORATION,  a  Delaware corporation (herein called "Grantor"), and in favor of
RIO VISTA OPERATING PARTNERSHIP L.P., whose mailing address is 820 Gessner Road,
Suite  1285,  Houston,  TX  77024  (herein  called  "Grantee").

                                    ARTICLE I

                                 GRANTING CLAUSE

     1.1  GRANTING  CLAUSES.  Grantor  hereby  contributes,  conveys,  assigns,
transfers, delivers, and sets over unto Grantee, its successors and assigns, all
right,  title, interests and estate of Grantor in and to the following described
property,  to-wit:

     ALL  OF  THE  ASSETS  SET  FORTH  ON  SCHEDULE  A  ATTACHED  HERETO

     The  property  described  in  this  Section 1.1 shall be referred to herein
collectively  as  the  "Subject  Property".

     TO  HAVE  AND  TO  HOLD  the  Subject  Property,  subject  to the terms and
conditions  hereof,  unto  Grantee,  its  successors  and  assigns,  forever.

                                   ARTICLE II

                      ENCUMBRANCES AND WARRANTY DISCLAIMERS

     2.1  PERMITTED ENCUMBRANCES. This Conveyance is made and accepted expressly
subject  to  (a)  all  liens,  charges,  encumbrances,  contracts,  agreements,
instruments,  obligations, defects, restrictions, security interests, options or
preferential  rights  to  purchase,  adverse  claims,  reservations, exceptions,
easements,  rights-of-way,  conditions,  leases,  other  matters  affecting  the
Subject  Property  or  to  which  it  is  subject; and (b) to all matters that a
current  on  the  ground  survey  or  visual  inspection  would  reflect.

     2.2  CONTRIBUTION  AGREEMENT.  This Conveyance is expressly made subject to
the terms and conditions of that certain Contribution, Conveyance and Assumption
Agreement  dated  as of September 16, 2004, among Grantor, Grantee and the other
parties  thereto  (the  "Contribution  Agreement").  All  capitalized terms used
herein  shall  have  the  meanings  given  to  such  terms  in  the Contribution
Agreement, unless otherwise defined herein. Nothing contained in this Conveyance
shall  in  any way affect the provisions set forth in the Contribution Agreement
nor  shall  this  Conveyance expand or contract any rights or remedies under the
Contribution  Agreement. This Conveyance is intended only to effect the transfer
of the Subject Property to Grantee as provided for in the Contribution Agreement
and  shall  be  governed entirely in accordance with the terms and conditions of
the Contribution Agreement. In the event of a conflict between the terms of this
Conveyance  and  the  terms  of  the  Contribution  Agreement,  the terms of the
Contribution  Agreement  shall  prevail.

     2.3  DISCLAIMER  OF  WARRANTIES;  SUBROGATION. Except as expressly provided
herein  or  in  the  Contribution  Agreement,  this  Conveyance  is made, and is
accepted  by  Grantee, without warranty of title, express, implied or statutory,
and without recourse, but with full substitution and subrogation of Grantee, and
all  persons  claiming by, through, and under Grantee, to the extent assignable,
in  and  to all covenants and warranties by the predecessors in title of Grantor
and  with  full  subrogation of all rights accruing under applicable statutes of
limitation  or  prescription  and  all  rights of action of warranty against all
former owners of the Subject Property. Except as expressly provided herein or in
the  Contribution  Agreement,  any  covenants  implied  by  statute  or  by  the


                                      D-1
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use  of  the  words  "convey",  "sell", "assign", "transfer", "deliver", or "set
over"  or  any  of  them  or any other words used in this Conveyance, are hereby
expressly  disclaimed,  waived  and  negated.

                                   ARTICLE III

                                  MISCELLANEOUS

     3.1  FURTHER ASSURANCES. Grantor and Grantee agree to take all such further
actions  and to execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Conveyance. So long
as authorized by applicable law so to do, Grantor agrees to execute, acknowledge
and  deliver  to  Grantee  all  such  other  additional  instruments,  notices,
affidavits,  deeds,  conveyances,  assignments and other documents and to do all
such  other  and  further  acts and things as may be necessary or useful to more
fully and effectively grant, assign, convey, transfer and deliver to Grantee the
Subject  Property  conveyed  hereby  or  intended  so  to  be  conveyed.

     3.2  SUCCESSORS  AND  ASSIGNS;  NO THIRD PARTY BENEFICIARY. This Conveyance
shall  be  binding  upon, and shall inure to the benefit of, Grantor and Grantee
and  their  successors  and  assigns.  The provisions of this Conveyance are not
intended  to  and  do  not create rights in any other person or entity or confer
upon  any  other person or entity any benefits, rights or remedies and no person
or  entity  is  or  is  intended  to  be a third party beneficiary of any of the
provisions  of  this  Conveyance.

     3.3  GOVERNING  LAW.  This  Conveyance  and the legal relations between the
parties  shall be governed by, and construed in accordance with, the laws of the
State  of  Texas, excluding any conflict of law rule which would refer any issue
to the laws of another jurisdiction, except when it is mandatory that the law of
the  jurisdiction  wherein  the  Subject  Property  is  located  shall  apply.

     3.4  HEADINGS;  REFERENCES;  DEFINED  TERMS.  All  Section headings in this
Conveyance are for convenience only and shall not be deemed to control or affect
the meaning or construction of any of the provisions hereof. The words "hereof",
"herein"  and  "hereunder"  and  words  of  similar  import,  when  used in this
Conveyance,  shall  refer  to  this  Conveyance  as  a whole, including, without
limitation,  all  Schedules  and  Exhibits  attached  hereto,  and  not  to  any
particular  provision  of  this  Conveyance.

     3.5  COUNTERPARTS.  This  Conveyance  may  be  executed  in  any  number of
counterparts,  all  of  which together shall constitute one agreement binding on
the  parties  hereto.

     3.6  SEVERABILITY.  If any of the provisions of this Conveyance are held by
any  court  of competent jurisdiction to contravene, or to be invalid under, the
laws  of  any political body having jurisdiction over the subject matter hereof,
such  contravention  or  invalidity  shall  not invalidate the entire agreement.
Instead,  this  Conveyance  shall  be  construed  as  if  it did not contain the
particular  provision  or  provisions  held  to  be  invalid  and  an  equitable
adjustment  shall  be made and necessary provision added so as to give effect to
the  intention  of  the  parties  as expressed in this Conveyance at the time of
execution  of  this  Conveyance.


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     IN  WITNESS  WHEREOF, this Conveyance has been duly executed by the parties
hereto  on  the  dates  of the acknowledgments set forth below, to be effective,
however,  as  of  the  Effective  Date.

                                        GRANTOR:

                                        PENN OCTANE CORPORATION


                                        By:/s/ Richard Shore, Jr.
                                           -----------------------------------
                                            Richard Shore, Jr.,
                                            President

                                        GRANTEE:

                                        RIO VISTA OPERATING PARTNERSHIP L.P.

                                        By: Rio Vista Operating GP LLC,
                                        its General Partner

                                            By: Rio Vista Energy Partners L.P.,
                                            its sole member

                                               By: Rio Vista GP LLC,
                                               its General Partner

                                                   By:/s/ Richard Shore, Jr.
                                                      -------------------------
                                                         Richard Shore, Jr.,
                                                         President


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THE STATE OF CALIFORNIA )
                        )
COUNTY OF SAN FRANCISCO )

     This  instrument  was  acknowledged before me on the 15th day of September,
2004,  by Richard Shore, Jr., President of Penn Octane Corporation, on behalf of
and  in  his  capacity  as  President  of  Penn  Octane  Corporation.

                                           /s/  Barbara  Booth
                                           -------------------------------------
                                           NOTARY  PUBLIC

My Commission Expires: Nov. 12, 2006
                     ---------------



THE STATE OF CALIFORNIA )
                        )
COUNTY OF SAN FRANCISCO )

     This  instrument  was  acknowledged before me on the 15th day of September,
2004,  by Richard Shore, Jr., President of Rio Vista GP LLC, on behalf of and in
his  capacity  as  President  of  Rio  Vista  GP  LLC.


                                           /s/ Barbara Booth
                                           -------------------------------------
                                           NOTARY  PUBLIC

My Commission Expires: Nov. 12, 2006
                     ---------------


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                                   SCHEDULE A


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