COMPROMISE SETTLEMENT AGREEMENT
                               AND MUTUAL RELEASE

1.  Parties.  This  Compromise  Settlement  Agreement  and Mutual  Release  (the
"Release) is dated this 20th day of December, 1999 (the "Effective Date") and is
by and between  Power  Exploration,  Inc., a Nevada  corporation  ("Power")  and
Trident III, L.L.C., a Cayman Islands, West Indies exempted company ("Trident").
Power and  Trident  represent,  covenant,  agree to, and accept the  statements,
terms and conditions hereof as evidenced by their respective signatures below.

2. Recitals. The alleged facts and circumstances giving rise to this Release are
as set forth hereinbelow.

         2.1.  Power and Trident  executed a document  entitled  Loan  Agreement
("Power  Loan  Agreement")  dated to be  effective  October 21, 1998. A true and
correct copy of the unexecuted  Power Loan  Agreement is attached  hereto marked
Exhibit "A" and  incorporated  herein by reference  for all  purposes  (with the
executed Power Loan Agreement  being  identical to the document  attached hereto
marked Exhibit "A" but for the inclusion of signatures).

         2.2. In  connection  with the Power Loan  Agreement,  Power and Trident
executed a document  entitled 10%  Promissory  Note  ("Power  Note") dated to be
effective October 21, 1998. A true and correct copy of the unexecuted Power Note
is attached hereto as Exhibit "B" and  incorporated  herein by reference for all
purposes (with the executed Power Note being identical to the document  attached
at Exhibit "B" but for the  inclusion of  signatures).  Pursuant to the terms of
the Power  Note,  Power  promised  to pay to  Trident  the  principal  amount of
$250,000 bearing interest and payable as therein provided.

         2.3. On or about March 15, 1999,  Power and Trident executed a document
entitled Agreement To Extend Repayment Obligation ("Power Modification"). A true
and correct copy of the Power Modification is attached hereto marked Exhibit "C"
and  incorporated  herein by reference for all purposes (with the executed Power
Note  being  identical  to the  document  attached  at  Exhibit  "C" but for the
inclusion of signatures). Pursuant to the terms of the Power Modification, Power
and Trident agreed to modify the repayment terms of the Power Note.

         2.4. In  connection  with the Power Loan  Agreement,  Power and Trident
executed a document  entitled Security  Agreement  ("Power Security  Agreement")
dated  to be  effective  October  21,  1998.  A true  and  correct  copy  of the
unexecuted  Power Security  Agreement is attached  hereto marked Exhibit "D" and
incorporated  herein by  reference  for all purposes  (with the  executed  Power
Security  Agreement being identical to the document  attached at Exhibit "D" but
for the inclusion of  signatures).  Pursuant to the terms of the Power  Security
Agreement,  Power  granted to Trident a security  interest in certain  assets as
more fully described therein.


                                       27

<PAGE>



         2.5.  Power and Trident  wish to settle the matters  pertaining  to the
Power  Loan  Agreement,  Power  Note,  Power  Modification  and  Power  Security
Agreement and have reached an agreement to that effect as set forth herein.

3.  Consideration.  Consideration for this Release is the mutual promises herein
and  each act done by  Power  and  Trident  pursuant  hereto,  the  receipt  and
sufficiency of which is acknowledged by Power and Trident, and the following:

         a) The  issuance to Trident of 279,861  shares of Power  common  stock,
         restricted  under Rule 144, by certificate in the form attached  hereto
         at Exhibit "E" and  incorporated  herein by reference  for all purposes
         ("Power Restricted Stock"), the delivery and receipt of which is hereby
         acknowledged;  b) The agreement by Power to register the 279,861 shares
         of Power Restricted stock,  restricted under Rule 144, at the time that
         Power next  files a SEC  Registration  Statement;  and c) If any of the
         stock acquired  hereunder is not registered,  is held by the holder for
         the time required  under Rule 144 and the legend is then removed,  then
         Trident  agrees,  with regard to the stock acquired  hereunder,  not to
         sell more than 1% of the outstanding shares of Power every 90 days.

Power and Trident  acknowledge  that they will not be entitled to any additional
consideration  for the  execution  of this Release  other than as expressly  set
forth and  provided for herein.  By their  signatures  below,  Power and Trident
acknowledge the receipt and sufficiency of the  consideration  evidenced by this
Release,  including,   without  limitation,   Trident's  receipt  of  the  Power
Restricted Stock.

4. No Pending Claims.  Trident  warrants and represents that there are no claims
against  Trident  or Power or any party in any way  related  thereto,  which are
either pending, threatened or of which Trident or Power are otherwise aware. The
parties  hereto  hereby  agree that any  warrants  or  options  issued to either
Trident,  its  affiliates,   or  any  individuals  related  thereto  are  hereby
extinguished.   Trident   acknowledges   that  Power  is   relying   upon  these
representations and that these  representations are a material inducement to the
execution of this Release by Power.

5. Mutual Releases. In consideration of the agreements and compromises set forth
herein, Power and Trident each agree, covenant and represent as follows:


                                      28

<PAGE>



         5.1. Power hereby releases, acquits and forever discharges Trident, and
its respective current and former  stockholders,  successors,  assigns,  agents,
directors,   officers,   employees,   representatives,   attorneys,   divisions,
subsidiaries,   affiliates   (and  agents,   directors,   officers,   employees,
representatives  and attorneys of such divisions,  subsidiaries and affiliates),
administrators,  predecessors-in-  interest and  successors-in-interest,  of and
from any and all claims, demands,  actions and causes of action of whatever kind
or character  which Power may now have,  whether  known or unknown,  asserted or
unasserted, arising out of or connected in any way with the relationship between
Power and  Trident  including  the  Power  Loan  Agreement,  Power  Note,  Power
Modification  and Power Security  Agreement and any and all other matters,  from
the  beginning  of time until the date  hereof,  excluding  enforcement  of this
release.

         5.2.  Except for the  obligation of Power set forth herein at paragraph
3b, Trident  hereby  releases,  acquits and forever  discharges  Power,  and its
respective  current  and  former  stockholders,   successors,  assigns,  agents,
directors,   officers,   employees,   representatives,   attorneys,   divisions,
subsidiaries,   affiliates   (and  agents,   directors,   officers,   employees,
representatives  and attorneys of such divisions,  subsidiaries and affiliates),
administrators, predecessors-in-interest and successors-in-interest, of and from
any and all claims,  demands,  actions and causes of action of whatever  kind or
character  which  Trident may now have,  whether  known or unknown,  asserted or
unasserted, arising out of or connected in any way with the relationship between
Power and  Trident  including  the  Power  Loan  Agreement,  Power  Note,  Power
Modification and Power Security Agreement and any and all other matters from the
beginning  of time until the date  hereof,  and  excluding  enforcement  of this
release.

6.  Settlement of a Disputed  Obligation.  The  agreements  being made herein by
Power  and  Trident  are  merely  to settle  disputed  claims  and are not to be
construed as an  admission  of any fault or liability by Power or Trident,  such
being hereby specifically and expressly denied by Power and Trident.

7.  Authorization.  The making and  performance  of this  Release  has been duly
authorized and is approved by Power and Trident.  This Release  constitutes  the
legal,  valid and binding  obligation of Power and Trident and is enforceable in
accordance with its terms.  In addition,  the undersigned are duly authorized by
the  respective  parties  to  execute  this  Release  in  their   representative
capacities by all necessary proceedings.

8.  Representation  of Ownership.  Power and Trident  and/or their  subsidiaries
represent  and covenant  that they are the owners of any and all claims at issue
herein or in any way  relating  to or  involving  the  subject  matter set forth
herein.

9. Review and  Understanding.  Power and Trident have  reviewed this Release and
they (a) understand fully the terms of this Release and its consequences and (b)
have had this Release reviewed by competent legal counsel of their choice.

COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE

                                       29

<PAGE>



10. No Other  Representations.  Execution  of this  Release  is not  based  upon
reliance by Power or Trident upon any representation, understanding or agreement
that is not expressly set forth herein,  and neither Power nor Trident have made
any  representations to each other which are not expressly set forth herein; and
further, but not in limitation of the foregoing,  neither Power nor Trident have
made any  representations  which affect the  consideration  or any condition for
which the Release is executed  which has not been  expressly  embodied and fully
set forth herein.

11. Binding Effect.  This Release shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns, heirs, and legal
representatives,  but shall not be binding  upon any party  until  signed by all
parties.  It is  expressly  understood  and  agreed  that the terms  hereof  are
contractual in nature,  including  those set forth in the provisions  designated
"Recitals," and are not mere recitals,  that the agreements herein contained and
the  consideration  transferred  hereby are to buy peace, and the  consideration
transferred  and  conveyed  hereby  shall not be  construed  as an  admission of
liability by any of the parties to this Release.

12.  Modification.  No  modification  or  amendment  of this  Release  shall  be
effective unless such  modification or amendment is in writing and signed by all
parties hereto.

13.  Gender and Number.  Throughout  this  Release,  the  singular  number shall
include the plural,  the plural shall include the  singular,  and the use of any
gender shall be applicable to all genders.

14.  Governing Law. The  interpretation,  construction,  and performance of this
Release  shall be  governed  by the laws of the State of Texas,  without  giving
effect to  conflict  of laws  principles,  and this  Release is  performable  in
Tarrant County, Texas.

15.  Headings.  The headings of this Release have been included only for ease of
reference  for the subject  covered by each  provision and are not to be used in
construing this Release or in ascertaining its meaning.

16. Severability.  If any portion of this Release shall be held to be invalid or
inoperative,  then, so far as is reasonable and possible,  the remainder of this
Release shall be considered valid and operative, and no effect shall be given to
the intent manifested by the portion held invalid or inoperative.

17.  Execution of Necessary  Documents.  Power and Trident further  covenant and
agree to execute any and all documents necessary to effectuate the provisions of
this  Release  and to  cooperate  fully  with  each  other in  carrying  out the
provisions of this Release.


COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE

                                       30

<PAGE>



18.  Survival.  Each and every  provision  of this  Release  shall  survive  the
execution hereof.

19. Entire Agreement.  This Agreement and the Purchase Agreement executed by the
parties  hereto of even date herewith and  incorporated  herein by reference for
all  purposes  constitute  the entire  agreement  between  Power and Trident and
supersede all prior and contemporaneous agreements, understandings, negotiations
and   discussions,   whether   oral  or  written.   There  are  no   warranties,
representations,  or other  agreements  between the parties hereto in connection
with the subject matter hereof, except as specifically set forth herein.

20. Attorneys' Fees. In the event of any litigation  concerning any controversy,
claim or dispute  between  Power and Trident  arising out of or relating to this
Release or the breach hereof, or the interpretation hereof, the prevailing party
shall  be  entitled  to  recover  from the  losing  party  reasonable  expenses,
attorneys'  fees, and costs incurred therein or in the enforcement or collection
of any judgment or award  rendered  therein.  The  "prevailing  party" means the
party determined by the court to have most nearly prevailed,  even if such party
did not prevail in all matters,  and is not necessarily the one in whose favor a
judgment is rendered.

21. Broadest Nature. Power and Trident warrant that this Release is to be of the
broadest  nature  and is to be  dispositive  of all  matters  between  Power and
Trident with respect to the Power Loan Agreement, Power Note, Power Modification
and Power  Security  Agreement  and all matters at issue in each,  directly  and
indirectly.   Further,  Trident  warrants  that  it  has  not  recorded  in  any
jurisdiction  with any entity the Power  Security  Agreement nor any document in
any way related thereto including, without limitation, any UCC-1 forms.

22. Joint  Preparation.  This Release was prepared jointly by the parties hereto
and not by any one to the exclusion of the other.

IN WITNESS WHEREOF, the parties have caused this Release to be duly executed and
delivered as of the Effective Date.

Power Exploration, Inc.                              Trident III, L.L.C.


By: /s/Joe Bill Bennett                            By: /s/Jeffrey W. Tomz
   -----------------------------------                ----------------
Printed Name:Joe Bill Bennett                      Printed Name: Jeffrey W. Tomz
Title: President                                   Title: Director



         COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL RELEASE

                                       31