#703190 v4
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#703190 v4
THIS NOTE HAS BEEN ACQUIRED FOR  INVESTMENT AND NEITHER THIS NOTE NOR THE SHARES
OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER
APPLICABLE  CANADIAN OR U.S.  FEDERAL OR APPLICABLE STATE SECURITIES LAWS. THESE
SHARES MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH APPLICABLE RULES
OF THE CANADIAN VENTURE EXCHANGE, THE ALBERTA SECURITIES COMMISSION AND U.S.
FEDERAL AND APPLICABLE STATE SECURITIES LAWS.

                           CONVERTIBLE PROMISSORY NOTE


April 3, 2001                    Houston, Texas                      $180,000.00

     FOR  VALUE  RECEIVED,  the  undersigned,   Carpatsky  Petroleum,   Inc.,  a
corporation organized under the laws of the Province of Alberta,  Canada (herein
called  "Maker"),  promises to pay to the order of Pease Oil and Gas Company,  a
corporation  organized  under  the laws of the State of  Nevada  (herein  called
"Payee",  which term herein in every instance shall refer to any owner or holder
of  this  Note)  the sum of One  Hundred  Eighty  Thousand  and  no/100  dollars
($180,000.00), without interest, such principal being payable in lawful money of
the United  States of America  at the  office of Payee in Grand  Junction,  Mesa
County,  Colorado,  or at such other place as Payee may  designate  hereafter in
writing.

     The principal balance hereof remaining unpaid shall not bear interest.

     All past due  principal  of this Note shall bear  interest at the lesser of
(1) 2% above the annual  rate which  equals the  floating  commercial  loan rate
publicly announced from time to time by Wells Fargo Bank West N.A. as its "prime
rate," or (2) the maximum  lawful rate of interest  permitted by the  applicable
usury laws,  now or hereafter  enacted,  which  interest rate (herein called the
"Maximum  Rate")  shall  change when and as said laws shall change to the extent
permitted  by said laws,  effective  on the day such  change in said laws become
effective,  from the date the  payment  thereof  shall have become due until the
same have been fully  discharged  by  payment,  and all such past due  principal
shall be immediately due and payable.

     The principal amount  outstanding  under this Note shall be repaid to Payee
in eight equal quarterly  installments of $22,500 each (a "Quarterly  Payment"),
on the first day of June,  September,  December  and March,  commencing  June 1,
2001,   with  all   remaining   principal  due  on  or  before  March  1,  2003.
Notwithstanding the immediately  preceding sentence, if at any time prior to the
payment in full of this Note,  Maker  receives  capital  from the closing of any
debt or equity funding  transaction of any kind, then within five days after the
closing of such  funding  transaction  Maker shall make a  principal  payment (a
"Funding Payment") to Payee equal to the gross amount of capital raised by Maker
times a fraction, the numerator of which is $90,000 and the denominator of which
is  $1,000,000,  but in no event  shall  any such  Funding  Payment  exceed  the
outstanding  principal  amount  due on this Note as of the date of  closing  the
funding transaction.  The amount of any Funding Payment shall be applied against
the  Quarterly  Payments  due  hereunder,  in the inverse  order of  approaching
maturities.

     So long as any principal amount is outstanding under this Note, Maker shall
furnish  Payee  with (1)  notice 15 days  prior to the  closing  of any  funding
transaction  as  described  in  the  immediately  preceding  paragraph  and  (2)
unaudited  quarterly  statements  of  income or loss,  cash  flow and  financial
position  (in each case within 45 days after the end of the first  three  fiscal
quarters of each fiscal year of Maker) and an annual audited statement of profit
or loss, cash flow, and financial position (within 90 days after the end of each
fiscal year of Maker).

     Maker may prepay  this Note in whole or in part at any time  without  being
required to pay any penalty herein for such privilege.

     If  Maker  shall  file a  voluntary  petition  in  bankruptcy,  or shall be
adjudicated  a  bankrupt  or  insolvent,  or shall file any  petition  or answer
seeking for Maker any arrangement, composition,  readjustment, or similar relief
under any present or future statute, law or regulation, or shall file any answer
admitting the material allegations of a petition filed against Maker in any such
proceeding,  or shall seek or consent to or acquiesce in the  appointment of any
trustee or receiver,  on all or any substantial part of the properties of Maker,
or if a decree or order by a court having  jurisdiction  in the  premises  shall
have  been  entered  adjudging  Maker to be  bankrupt  or  insolvent  under  the
bankruptcy  laws or any  applicable law of the Province of Alberta,  Canada,  or
appointing  a receiver or trustee or assignee in  bankruptcy  or  insolvency  of
Maker  or any of  Maker's  properties,  and such  decree  or  order  shall  have
continued  undischarged  or unstayed for a period of 30 days,  or if Maker shall
make an assignment  for the benefit of creditors,  or if Maker shall fail to pay
this Note or any installment  hereof,  whether principal or interest,  when due,
then Payee shall have the option,  to the extent permitted by applicable law, to
declare this Note due and payable, whereupon the entire unpaid principal balance
of this Note and all accrued  unpaid  interest  hereon  thereupon  at once shall
mature and become due and payable without presentment, demand, protest or notice
of any kind (including, but not limited to, notice of intention to accelerate or
notice of acceleration), all of which hereby are expressly waived by Maker.

     Maker hereby waives grace, demand,  presentment for payment,  notice of any
kind  (including,  but not limited to,  notice of  dishonor,  notice of protest,
notice of intention to accelerate and notice of  acceleration)  and diligence in
collecting and bringing suit against Maker, and agrees (i) to all extensions and
partial  payments,  with or without notice,  before or after maturity,  and (ii)
that it will not be  necessary  for Payee,  in order to enforce  payment of this
Note, to first institute or exhaust Payee's remedies against Maker.

     In the event of default  hereunder  and this Note is placed in the hands of
an attorney for  collection  (whether or not suit is filed),  or if this Note is
collected  by  suit or  legal  proceedings  or  through  the  probate  court  or
bankruptcy  proceedings,  Maker agrees to pay all reasonable attorneys' fees and
all expenses of collection and costs of court.

     If  any  provision  in  this  Note  shall  be  held  invalid,   illegal  or
unenforceable in any jurisdiction,  the validity,  legality or enforceability of
any  defective  provisions  shall not be in any way  affected or impaired in any
other jurisdiction,  nor shall the invalid,  illegal or unenforceable  provision
affect or impair any other provision of this Note.

     No delay or failure of the holder of this Note in the exercise of any right
or remedy  provided  for  hereunder  shall be  deemed a waiver of such  right or
remedy by the holder  hereof,  and no exercise  of any right or remedy  shall be
deemed a waiver of any other right or remedy that the holder may have.

     It is  the  intention  of  the  parties  hereto  to  comply  strictly  with
applicable usury laws, if any, accordingly, notwithstanding any provision to the
contrary in this Note, in no event shall this Note or such documents  require or
permit the payment, taking, reserving,  receiving, collection or charging of any
sums constituting interest under applicable laws which exceed the maximum amount
permitted by such laws.  If any such excess  interest is called for,  contracted
for, charged, taken, reserved, or received in connection with the loan evidenced
by this note, or in any  communication by Payee or any other person to Maker, or
in the event all or part of the principal or interest hereof shall be prepaid or
accelerated,  so that  under  any of  such  circumstances  or  under  any  other
circumstance  whatsoever the amount of interest contracted for, charged,  taken,
reserved,  or received on the amount of principal actually outstanding from time
to time under this note shall exceed the maximum amount of interest permitted by
applicable  usury laws, then in any such event it is agreed as follows:  (i) the
provisions of this paragraph shall govern and control,  (ii) the Maker shall not
be obligated to pay the amount of such  interest to the extent such  interest is
in excess of the maximum amount of interest  permitted by applicable usury laws,
(iii)  any  such  excess  which  is or has been  received  notwithstanding  this
paragraph shall be credited against the then unpaid principal balance hereof or,
if this  note  has been or would  be paid in full by such  credit,  refunded  to
Maker, and (iv) the provisions of this note and any communication to Maker shall
immediately be deemed  reformed and such excess  interest  reduced,  without the
necessity of executing any other  document,  to the maximum  lawful rate allowed
under   applicable  laws  as  now  or  hereafter   construed  by  courts  having
jurisdiction hereof or thereof. Without limiting the foregoing, all calculations
of the rate of interest contracted for, charged,  collected, taken, reserved, or
received in connection  herewith  which are made for the purpose of  determining
whether  such rate  exceeds the maximum  lawful rate shall be made to the extent
permitted by applicable laws by amortizing,  prorating, allocating and spreading
during  the  period  of the full  term of the  loan,  including  all  prior  and
subsequent  renewals and  extensions,  all interest at any time  contracted for,
charged,  taken,  collected,  reserved, or received. The terms of this paragraph
shall be deemed to be  incorporated  in every loan  document  and  communication
relating to this Note.

     Subject to the approval of the Canadian Venture Exchange, at any time prior
to the payment in full of this Note,  Payee by delivery of this Note and written
notice to the Maker may convert  all,  but not less than all,  of the  remaining
outstanding  principal  due  hereunder as of the date of delivery and receipt by
Maker of such notice (the  "Outstanding  Amount") into the number of fully paid,
and  non-assessable  shares (the "Shares") of common stock, no par value, of the
Maker (the "Common  Stock") equal to 100% of the  Outstanding  Amount divided by
the  Conversion  Price . The  Conversion  Price shall be the lesser of (1) $.075
Canadian  per share or (2) the price at which Maker may sell the Common Stock or
any other  securities  convertible  into its  Common  Stock at any time prior to
payment in full of this Note; provided that if a price other than that set forth
in clause (1) or (2) is prescribed by the Canadian  Venture  Exchange as part of
its approval,  then the Conversion Price shall be the price so prescribed by the
Canadian  Venture  Exchange.  Payee  acknowledges  that the Shares have not been
registered  under the applicable  Canadian or U.S.  federal or applicable  state
securities  laws, and may not be issued upon conversion of this Note or exercise
of the option contained herein unless in compliance with applicable rules of the
Canadian Venture Exchange,  the Alberta  Securities  Commission and U.S. federal
and applicable state securities laws. Any shares of Common Stock issued to Payee
under this Note shall have the same  registration  rights  granted to Bellwether
Exploration  Company by Maker  under the  Registration  Rights  Agreement  dated
October 7, 1999 as amended December 10, 1999.

     In the event of a stock split or reverse split, such Conversion Price shall
be  automatically  reduced or  increased  to reflect such stock split or reverse
split. In the event of any capital  reorganization  or  reclassification  of the
capital  stock of the Maker,  any  consolidation  or merger of the Maker with or
into another  corporation,  or any sale,  lease or other  disposition  of all or
substantially  all of the assets of the Maker, that is effected in such a manner
that holders of shares of the Common  Stock are  entitled to receive  securities
and/or  property  (including  cash) with respect to or in exchange for shares of
the Common Stock, the Maker shall, as a condition precedent to such transaction,
cause  effective  provision  to be made so  that  Payee  shall  have  the  right
thereafter  to convert  this Note for the kind and amount of  securities  and/or
other property receivable upon such event by a holder of the number of shares of
the Common Stock for which this Note could have been converted immediately prior
to such event.

     Except to the extent  required by federal law,  this Note shall be governed
by and construed under the laws of the State of Colorado.

     Any check,  draft,  money order or other instrument given in payment of all
or any portion  hereof may be accepted by Payee and handled in collection in the
customary  manner,  but the same  shall  not  constitute  payment  hereunder  or
diminish any rights of Payee  except to the extent that actual cash  proceeds of
such instrument are unconditionally received by Payee.

                            CARPATSKY PETROLEUM, INC.


                            By: /s/ Robert Bensh
                            ------------------------
                            Robert Bensh, President