ACKNOWLEDGMENT AND AGREEMENT REGARDING SECURITY INTEREST


          ACKNOWLEDGMENT   AND   AGREEMENT   REGARDING   SECURITY
INTEREST  dated  as  of  January 15,  1999  by  J.  Edgar  Monroe
Foundation (1976) (the "Foundation").

          1.      This  Agreement is being executed and delivered
in connection with the sale and purchase of up to an aggregate of
62  units  (the  "Units"),  each  Unit  being  comprised  of  (a)
$100,000  in principal amount of a promissory note of  XCL  Land,
Ltd.  ("Note") and (b) 21,705 warrants ("Warrants")  to  purchase
21,705  shares  of XCL Ltd.'s common stock, par  value  $.01  per
share ("Common Stock") (issuable in one or more tranches) offered
by  XCL  Land, Ltd. and XCL Ltd. to a limited number of qualified
investors (the "Offering").  Half Units may be purchased pursuant
to the Offering.

          2.      Pursuant to Subscription Agreements dated as of
November 6, 1998 by and between XCL Land, Ltd., XCL Ltd. and  the
Foundation,  Estate  of  J.  Edgar  Monroe  (the  "Estate")   and
Construction    Specialists,   Inc.   d/b/a    Con-Spec.,    Inc.
("Contractor")  (collectively, the  "November  1998  Subscription
Agreements"), the Foundation subscribed for and received one  (1)
Unit  and  the  Estate and Construction each subscribed  for  and
received seven (7) Units (the "Initial Units"). Pursuant  to  the
November  1998 Subscription Agreements, the Units had an exercise
price  for  the  Warrants of $3.50 per share.  Pursuant  to  that
certain  Warrant Amendment Agreement by and among XCL  Ltd.,  the
Estate,  Foundation and Construction dated of even date  herewith
(the  "Warrant  Amendment"), XCL Ltd. has agreed,  in  connection
with the subscription for an additional 2.5 Units by each of  the
Estate  and  Construction  on  the date  hereof,  to  reduce  the
exercise  price  of the warrants issued as part  of  the  Initial
Units to $2.00 per share.

          3.      In consideration of XCL Ltd.'s execution of the
Warrant  Amendment to amend the Warrants issued to the Foundation
as  part of the Initial Units even though the Foundation  is  not
subscribing for any additional Units at this time, the Foundation
hereby  acknowledges  that pursuant to  the  Security  Agreements
granted  in  its  favor  in connection  with  the  November  1998
Subscription Agreements, each of XCL Land, Ltd. ("XCL Land")  and
The  Exploration Company of Louisiana, Inc. ("TECLI")  granted  a
security interest in favor of the Foundation in and to 3.2258% of
each  entity's  partnership interest in L.M. Holding  Associates,
L.P.  ("L.M. Holding").  It was the intention of the parties that
those  persons or entities providing new funds to XCL Land on  or
after November 6, 1998, up to the aggregate outstanding principal
amount  of  $6,200,000  (the  "New Funds")  would  hold  security
interests  in  100% of the partnership interest of XCL  Land  and
TECLI  in  L.M. Holding, such security interests to be  allocated
pro  rata  among  the  providers of New  Funds.   The  Foundation
further acknowledges that its security interest will change  from
time to time as it or others purchase additional Units or provide
other New Funds (but only up to $6,200,000 principal outstanding)
to  XCL Land. The Foundation acknowledges and agrees that through
March  19, 1999, a total of 22 Units are outstanding and $100,000
in  New  Funds other than those provided in connection  with  the
sale  of  such Units have been provided to XCL Land; as  of  such
date,  the  Foundation has a security interest in that percentage
of the partnership interests in L.M. Holding that is equal to the
percentage  of  the  New  Funds actually advanced  at  this  time
($2,300,000) that the Foundation's aggregate Unit purchase  price
of  $100,000  represents; and in the event that additional  Units
are  sold  or  additional New Funds are provided to XCL  Land  by
persons  other  than  the Foundation and secured  by  partnership
interests  in L.M. Holding, the Foundation will immediately  upon
demand  by  XCL Land execute (one or more times, as  appropriate)
amendments  to  each  of  the  Security  Agreements  releasing  a
percentage of the partnership interest of L.M. Holding  in  which
it  has  a  security interest sufficient to allocate the security
interests  in the partnership interest of L.M. Holding among  the
Unit  holders  or other providers of New Funds on a proportionate
basis (provided that no reduction in such security interest  need
be  made  with  respect to amounts of New Funds in excess  of  an
aggregate outstanding principal amount of $6,200,000).

           IN  WITNESS WHEREOF, the Foundation has executed  this
Agreement effective on the date first above written.

                              J. EDGAR MONROE FOUNDATION (1976)


                              By:________________________________
                                 Robert J. Monroe, President





STATE OF LOUISIANA

PARISH OF ORLEANS



          On  this  _____  day of January, 1999, before  me,  the
undersigned, a Notary Public of said State, duly commissioned and
sworn,  personally appeared ROBERT J. MONROE, known to me  to  be
the  President  of  the  corporation  that  executed  the  within
instrument,  and  acknowledged to me that  the  said  corporation
executed the same.

          IN  WITNESS  WHEREOF, I have hereunto set my  hand  and
affixed  my  official seal the day and year in  this  certificate
first above written.





                              ___________________________________
                                        NOTARY PUBLIC