SECURITY AGREEMENT

      THIS SECURITY AGREEMENT ("Agreement") dated March  15,
1999, is made between XCL Land, Ltd. ("Borrower") and Robert
R. Durkee, Jr. ("Lender"), who agree as follows:

                          Recitals

           A.      The Borrower is or will be indebted  unto
the  Lender  for a loan made or to be made and evidenced  by
that  certain  Promissory Note by Borrower  payable  to  the
order of Lender dated of even date herewith (the "Note").

           B.      In  order to secure the full and punctual
payment  and  performance  of the  Indebtedness  as  defined
herein, the Borrower has agreed to execute and deliver  this
Agreement  and  to  pledge, deliver and grant  a  continuing
security  interest  in and to the Collateral  (as  hereafter
defined).

                          AGREEMENT

      NOW, THEREFORE, in consideration of the premises,  the
Borrower and the Lender agree as follows:

     Section 1.   Definitions.

          A.     The terms "Agreement," "Borrower," "Lender"
and "Note" shall have the meanings indicated above.

           B.      As  used in this Agreement, the following
terms shall have the following meaning:

           "Event of Default" shall have the meaning defined
in the Note.

           "General Intangibles" has the meaning given to it
in the UCC.

            "Lien"  shall  mean  any  interest  in  property
securing  an  obligation owed to, or a claim  by,  a  Person
other  than the owner of the property, whether such interest
is   based  on  jurisprudence,  statute  or  contract,   and
including  but not limited to the lien or security  interest
arising  from  a  mortgage,  encumbrance,  pledge,  security
agreement,  conditional sale or trust receipt  or  a  lease,
consignment  or  bailment for security  purposes.  The  term
"Lien"     shall    include    reservations,     exceptions,
encroachments, easements, servitudes, usufructs,  rights-of-
way,  covenants, conditions, restrictions, leases and  other
title  exceptions and encumbrances affecting  property.  For
the purposes of this Agreement, the Borrower shall be deemed
to  be  the  owner of any property which it has  accrued  or
holds  subject  to  a conditional sale agreement,  financing
lease  or other arrangement pursuant to which title  to  the
property has been retained by or vested in some other Person
for security purposes.

          "New Funds" means funds advanced to Borrower on or
after  November  6, 1998 through the purchase  of  Units  or
otherwise  up to the aggregate outstanding principal  amount
of $6,200,000.

          "Permitted Liens" means (i) the Security Interests
and  any  other  Liens  created, assumed  or  existing  with
respect to the Collateral in favor of Lender or in favor  of
any  other purchaser of Units or other provider of New Funds
to  Borrower and (ii) any other Liens permitted by Lender in
writing  to  be created or assumed or to exist with  respect
the Collateral.

            "Person"   means  any  individual,  corporation,
partnership,   joint  venture,  association,   joint   stock
company,  trust, unincorporated organization, government  or
any  agency or political subdivision thereof, or  any  other
form of entity.

           "Proceeds" has the meaning giving to  it  in  the
UCC.

           "Security Interests" means the security interests
in the Collateral and Proceeds granted hereunder in favor of
Lender securing the Indebtedness.

            "Subscription  Agreement"  means  that   certain
Subscription Agreement dated March 15, 1999 by  and  between
Borrower,   Lender   and  XCL  Ltd.   and   any   subsequent
subscription  agreements for additional Units  entered  into
between the same parties.

            "UCC"   means   the  Uniform  Commercial   Code,
Commercial  Laws  - Secured Transactions (Louisiana  Revised
Statutes 10:9-101 through :9-605) in the State of Louisiana,
as  amended from time to time; provided that if by reason of
mandatory provisions of law, the perfection or the effect of
perfection  or non-perfection of the Security  Interests  in
any Collateral is governed by the Uniform Commercial Code as
in  effect  in  a  jurisdiction other than Louisiana,  "UCC"
means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof  relating
to    such   perfection   or   effect   of   perfection   or
non-perfection.

            "Units"   has   the  meaning  defined   in   the
Subscription Agreement.

     Section 2.  Security Interest.

          A.     To secure the full and punctual payment and
performance of the Note in principal, interest, deferral and
delinquency charges as therein stipulated (collectively, the
"Indebtedness"),   the  Borrower  hereby   pledges,   pawns,
transfers  and  grants to the Lender a  continuing  security
interest  in  and  to all of the following property  of  the
Borrower,   whether  now  owned  or  existing  or  hereafter
acquired or arising (collectively the "Collateral"):

           (1)     1.6% of Borrower's now owned or hereafter
acquired  partnership interest (the "Partnership  Interest")
(which  Partnership Interest is currently a general  partner
interest)  in  L.M.  Holding Associates, L.P.,  a  Louisiana
Partnership   in   Commendam  (the   "Partnership"),   which
Partnership was created by that certain Agreement of Limited
Partnership  dated  May 27, 1991, as amended  by  amendments
filed with the Louisiana Secretary of State on February  25,
1993,  August 19, 1994, September 1, 1994, October  7,  1994
and January 8, 1997 (the "Partnership Agreement");

           (2)      1.6%  of  any and all monies  and  other
distributions  (cash or property), allocations  or  payments
made  or  to be made to Borrower pursuant to the Partnership
Agreement or attributable to the Partnership Interest;

          (3)     all General Intangibles related in any way
to the collateral described in clauses 1 or 2 above; and

          (4)     all Proceeds and products of all or any of
the collateral described in clauses 1-3 above.

           B.      The  security interests  are  granted  as
security  only  and  shall not subject  the  Lender  to,  or
transfer  or in any way affect or modify, any obligation  or
liability  of  the  Borrower with  respect  to  any  of  the
Collateral or any transaction in connection therewith.

      Section 3.  Delivery of Collateral if Ever Represented
by  Certificates.   If  the  Partnership  Interest  is  ever
represented  by  a certificate of interest  or  any  similar
document,   the  Borrower  will  immediately  deliver   such
certificate  or document to the Lender or to an  agent  that
Lender  and  all  other  holders of  security  interests  in
Borrower's Partnership Interest have agreed shall  hold  the
certificate or document on their behalf.

      Section 4.  No Liens.  Other than financing statements
or other similar or equivalent documents or instruments with
respect  to the Security Interests and Permitted  Liens,  no
financing statement, mortgage, security agreement or similar
or  equivalent document or instrument covering  all  or  any
part  of  the  Collateral is on file or  of  record  in  any
jurisdiction  in  which such filing or  recording  would  be
effective  to  perfect  a  Lien  on  such  Collateral.    No
Collateral  is in the possession of any Person  (other  than
Borrower)  asserting any claim thereto or security  interest
therein,  except  that  Lender  or  its  designee  may  have
possession  of  Collateral as contemplated  hereby.   Except
with  respect to Permitted Liens, the Liens granted pursuant
to  this Agreement constitute perfected first priority Liens
on the Collateral in favor of the Lender.

       Section  5.   No  Conflict.   The  Borrower  has  not
performed  any  acts  or signed any agreements  which  might
prevent  the Lender from enforcing any of the terms of  this
Agreement  or  which  would limit the  Lender  in  any  such
enforcement.

      Section 6.  Name.  The full name of Borrower is as  it
appears on page 1 of this Agreement.

      Section  7.   Federal  Taxpayer Number.   The  federal
taxpayer  identification number of Borrower is  as  follows:
51-0334575.

       Section  8.   Chief  Executive  Office.   The   chief
executive  office  of  Borrower is  110  Rue  Jean  Lafitte,
Lafayette, Louisiana 70505.

     Section 9.  Location of Collateral.  Borrower will keep
and  maintain all books or records relating to  any  of  the
Collateral at its chief executive office.

      Section  10.   Filing Location.  When a UCC  financing
statement has been filed in the offices of a Louisiana Clerk
of Court of any parish other than Orleans (or in the case of
Orleans  Parish,  with  the  Recorder  of  Mortgages),   the
Security   Interests  shall  constitute  perfected  security
interests  in the Collateral to the extent that  a  security
interest therein may be perfected by filing pursuant to  the
UCC, prior to all other Liens except for the Permitted Liens
and  rights  of  others  therein to  the  extent  that  such
priority is afforded by the UCC.

     Section 11.  Title.  Borrower has good and merchantable
title  to  the  Collateral, free of Liens  except  Permitted
Liens.  Furthermore, Borrower has not heretofore conveyed or
agreed  to  convey or encumber any Collateral  in  any  way,
except  in  favor  of Lender or other holders  of  Permitted
Liens.

      Section 12.  Incorporation and Existence.  Borrower is
a  corporation duly organized, validly existing and in  good
standing  under  the  laws  of  the  jurisdiction   of   its
organization  and has the corporate power and authority  and
the  legal  right to own and operate the Collateral  and  to
conduct the business in which it is currently engaged.

      Section  13.   No Consents or Approvals.   Except  for
those  filings  and registrations required  to  perfect  the
Liens  created  by  this  Agreement,  the  Borrower  is  not
required   to   obtain  any  order,  consent,  approval   or
authorization  of,  or required to make any  declaration  or
filing  with, any governmental authority or any other Person
in  connection  with  the execution  and  delivery  of  this
Agreement  and the granting and perfection of  the  Security
Interests pursuant to this Agreement.

      Section 14.  Due Execution; Binding Obligation.   This
Agreement has been duly executed and delivered on behalf  of
the  Borrower, and this Agreement constitutes a legal, valid
and  binding  obligation  of Borrower,  enforceable  against
Borrower   in   accordance  with  its   terms,   except   as
enforceability  may  be  limited by  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  or  similar   laws
affecting the enforcement of creditors' rights generally and
except   as   enforceability  may  be  subject  to   general
principles of equity, whether such principles are applied in
a court of equity or at law.

     Section 15.  No Conflicts.  The execution, delivery and
performance  of this Agreement will not (I)  result  in  any
violation of or be in conflict with or constitute a  default
under   any  terms  of  any  agreement,  contract,  statute,
regulation,  law or ordinance; (ii) have a material  adverse
effect  on the Collateral; (iii) materially adversely affect
the  ability  of  Borrower to perform its obligations  under
this  Agreement or the Note, or (iv) result in the  creation
of  any  Lien  upon  any of the properties  or  revenues  of
Borrower other than the Liens in favor of the Lender created
pursuant to this Agreement.

       Section  16.   Voting  Rights.   Notwithstanding  the
security interest granted hereby and whether or not an Event
of Default (as defined in the Note) shall have occurred, the
Borrower  shall  have the exclusive right  to  exercise  all
voting  and  other  rights under the  Partnership  Agreement
until  such  time  (if and when) Lender  forecloses  on  the
Collateral and becomes the owner thereof.

      Section  17.   Notice of Changes.  Borrower  will  not
change    its   name,   corporate   identity   or   taxpayer
identification  number in any manner unless  it  shall  have
given  Lender  at least five (5) days prior  written  notice
thereof.

     Section 18.  Remedies upon Default.

           A.     Sale.  Upon the occurrence of an Event  of
Default,  Lender may exercise all rights of a secured  party
under  the  UCC  and  other applicable  law  (including  the
Uniform  Commercial Code as in effect in another  applicable
jurisdiction)  and, in addition, Lender may,  without  being
required to give any notice, except as herein provided or as
may  be  required by mandatory provisions of law,  sell  the
Collateral  or  any part thereof at public or private  sale,
for  cash, upon credit or for future delivery, and  at  such
price or prices as Lender may deem satisfactory.  Lender may
be  the purchaser of any or all of the Collateral so sold at
any  public  sale  (or,  if  the Collateral  is  of  a  type
customarily  sold in a recognized market or  is  of  a  type
which  is  the subject of widely distributed standard  price
quotations, at any private sale).  Borrower will execute and
deliver such documents and take such other action as  Lender
deems necessary or advisable in order that any such sale may
be  made in compliance with law.  Upon any such sale  Lender
shall have the right to deliver, assign and transfer to  the
purchaser thereof the Collateral so sold.  Each purchaser at
any  such  sale  shall hold the Collateral  so  sold  to  it
absolutely  and free from any claim or right  of  whatsoever
kind,  including  any  equity  or  right  of  redemption  of
Borrower  which may be waived, and Borrower, to  the  extent
permitted  by law, hereby specifically waives all rights  of
redemption, stay or appraisal which it has or may have under
any  law now existing or hereafter adopted.  Borrower agrees
that  ten  (10) days prior written notice of  the  time  and
place  of any sale or other intended disposition of  any  of
the  Collateral constitutes "reasonable notification" within
the  meaning  of  Section 9-504(3) of the UCC,  except  that
shorter  notice or no notice shall be reasonable as  to  any
Collateral  which  is  perishable or  threatens  to  decline
speedily  in  value or is of a type customarily  sold  on  a
recognized  market.  The notice (if any) of such sale  shall
(1) in case of a public sale, state the time and place fixed
for  such sale, and (2) in the case of a private sale, state
the  day  after which such sale may be consulted.  Any  such
public  sale  shall  be held at such time  or  times  within
ordinary  business  hours and at such  place  or  places  as
Lender may fix in the notice or such sale.  At any such sale
the  Collateral may be sold in one lot as an entirety or  in
separate parcels, as Lender may determine.  Lender shall not
be  obligated  to make any such sale pursuant  to  any  such
notice.   Lender may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned
from  time  to  time by announcement at the time  and  place
fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned.  In case of any
sale  of all or any part of the Collateral on credit or  for
future  delivery, the Collateral so sold may be retained  by
Lender  until  the  selling price is paid by  the  purchaser
thereof, but Lender shall not incur any liability in case of
the  failure  of such purchaser to take up and pay  for  the
Collateral  so  sold and, in case of any such failure,  such
Collateral may again be sold upon like notice.

           B.      Foreclosure.  Instead of  exercising  the
power  of sale herein conferred upon it, Lender may  proceed
by  a  suit  or  suits at law or in equity to foreclose  the
Security  Interests and sell the Collateral, or any  portion
thereof, under a judgment or decree of a court or courts  of
competent  jurisdiction.   FOR  THE  PURPOSES  OF  LOUISIANA
EXECUTORY  PROCESS PROCEDURES, BORROWER DOES HEREBY  CONFESS
JUDGMENT  IN  FAVOR  OF LENDER FOR THE FULL  AMOUNT  OF  THE
INDEBTEDNESS.   BORROWER  DOES BY  THESE  PRESENTS  CONSENT,
AGREE AND STIPULATE THAT UPON THE OCCURRENCE OF AN EVENT  OF
DEFAULT IT SHALL BE LAWFUL FOR LENDER, AND THE BORROWER DOES
HEREBY  AUTHORIZE  LENDER, TO CAUSE  ALL  AND  SINGULAR  THE
COLLATERAL TO BE SEIZED AND SOLD UNDER EXECUTORY OR ORDINARY
PROCESS,   AT   LENDER'S  SOLE  OPTION,  WITH   OR   WITHOUT
APPRAISEMENT, APPRAISEMENT BEING HEREBY EXPRESSLY WAIVED, IN
ONE  LOT AS AN ENTIRETY OR IN SEPARATE PARCELS AS LENDER MAY
DETERMINE, TO THE HIGHEST BIDDER, AND OTHERWISE EXERCISE THE
RIGHTS,  POWERS  AND  REMEDIES  AFFORDED  HEREIN  AND  UNDER
APPLICATION LOUISIANA LAW.  ANY AND ALL DECLARATIONS OF FACT
MADE BY AUTHENTIC ACT BEFORE A NOTARY PUBLIC IN THE PRESENCE
OF  TWO WITNESSES BY A PERSON DECLARING THAT SUCH FACTS  LIE
WITHIN HIS KNOWLEDGE SHALL CONSTITUTE AUTHENTIC EVIDENCE  OF
SUCH   FACTS FOR THE PURPOSE OF EXECUTORY PROCESS.  BORROWER
HEREBY  WAIVES  IN  FAVOR  OF LENDER:  (A)  THE  BENEFIT  OF
APPRAISEMENT  AS  PROVIDED  IN  LOUISIANA  CODE   OF   CIVIL
PROCEDURE ARTICLES 2332, 2336, 2723 AND 2724, AND ALL  OTHER
LAWS  CONFERRING  THE SAME; (B) THE DEMAND  AND  THREE  DAYS
DELAY ACCORDED BY LOUISIANA CODE OF CIVIL PROCEDURE ARTICLES
2639  AND  2721;  (C)  THE  NOTICE OF  SEIZURE  REQUIRED  BY
LOUISIANA  CODE OF CIVIL PROCEDURE ARTICLES 2293  AND  2721;
(D) THE THREE DAYS DELAY PROVIDED BY LOUISIANA CODE OF CIVIL
PROCEDURE ARTICLES 2331 AND 2722; AND (E) THE BENEFIT OF THE
OTHER  PROVISIONS  OF  LOUISIANA  CODE  OF  CIVIL  PROCEDURE
ARTICLES  2331,  2722  AND 2723, NOT SPECIFICALLY  MENTIONED
ABOVE.

           C.      Effect of Securities Laws.  The  Borrower
recognizes that the Lender may be unable to effect a  public
sale  of  all or part of the Collateral by reason of certain
prohibitions  contained in the Securities Act  of  1933,  as
amended,  and applicable state securities laws  but  may  be
compelled  to  resort  to one or more  private  sales  to  a
restricted  group  of purchasers who will  be  obligated  to
agree,  among other things, to acquire all or a part of  the
Collateral  for their own account, for investment,  and  not
with  a  view to the distribution or resale thereof. If  the
Lender deems it advisable to do so for the foregoing or  for
other  reasons,  the  Lender  is  authorized  to  limit  the
prospective  bidders  on  or  purchasers  of  any   of   the
Collateral to such a restricted group of purchasers and  may
cause  to  be placed on certificates for any or all  of  the
Collateral a legend to the effect that such security has not
been  registered  under  the  Securities  Act  of  1933,  as
amended,  and  may  not be disposed of in violation  of  the
provision  of said act, and to impose such other limitations
or conditions in connection with any such sale as the Lender
deems  necessary or advisable in order to comply  with  said
act  or  any  other securities or other laws.  The  Borrower
acknowledges and agrees that any private sale so made may be
at  prices  and on other terms less favorable to the  seller
than  if  such Collateral were sold at public sale and  that
the  Lender  has  no obligation to delay the  sale  of  such
Collateral  for the period of time necessary to  permit  the
registration  of such Collateral for public sale  under  any
securities laws. The Borrower agrees that a private sale  or
sales made under the foregoing circumstances shall be deemed
to  have  been made in a commercially reasonable manner.  If
any  consent,  approval, or authorization  of  any  federal,
state, municipal or other governmental department, agency or
authority  should  be necessary to effectuate  any  sale  or
other disposition of the Collateral, or any partial sale  or
other  disposition  of  the Collateral,  the  Borrower  will
execute  all applications and other instruments  as  may  be
required  in  connection  with securing  any  such  consent,
approval  or authorization and will otherwise use  its  best
efforts to secure same.

      Section 19.  Limitation on Duty of Lender.  Beyond the
exercise  of  reasonable care in the  custody  thereof,  the
Lender  shall  have  no  duty as to any  Collateral  in  its
possession or control or in the possession or control of any
agent  or bailee or any income thereon. The Lender shall  be
deemed  to have exercised reasonable care in the custody  of
the  Collateral  in  its possession  if  the  Collateral  is
accorded  treatment substantially equal  to  that  which  it
accords  its  own  property, and  shall  not  be  liable  or
responsible for any loss or damage to any of the Collateral,
or for any diminution in the value thereof, by reason of the
act  or  omission  of any broker or other  agent  or  bailee
selected  by the Lender in good faith. The Lender  shall  be
deemed to have exercised reasonable care with respect to any
of the Collateral in its possession if the Lender takes such
action  for  that  purpose as the Borrower shall  reasonably
request  in writing; but no failure to comply with any  such
request  shall, of itself, be deemed a failure  to  exercise
reasonable care.

      Section  20.  Appointment of Agent.  At  any  time  or
times, in order to comply with any legal requirement in  any
jurisdiction, the Lender may appoint a bank or trust company
or  one  or more other Persons with such power and authority
as  may  be  necessary for the effectual  operation  of  the
provisions hereof and may be specified in the instrument  of
appointment.

     Section 21.  Expenses.  All sums incurred by the Lender
in  enforcing  or protecting any of the rights  or  remedies
under  this Agreement, together with interest thereon  until
paid  at  the  rate equal the then highest rate of  interest
charged on the principal of any of the Indebtedness plus one
percent (1%), shall be additional Indebtedness hereunder and
the  Borrower  agrees  to  pay all  of  the  foregoing  sums
promptly on demand.

      Section 22.  Termination.  Upon the payment in full of
the  Indebtedness,  this  Agreement  shall  terminate.  Upon
request  of  the  Borrower,  the Lender  shall  deliver  the
remaining Collateral (if any) to the Borrower.  Upon request
of Borrower, Lender shall execute and deliver to Borrower at
Borrower's  expense such termination statements as  Borrower
may reasonably request to evidence such termination.

      Section 23.  Notices.  Any notice or demand which,  by
provision of this Agreement, is required or permitted to  be
given  or  served  to the Borrower and the Lender  shall  be
deemed  to have been sufficiently given and served  for  all
purposes if made in accordance with the Note.

     Section 24.  Amendment.  Neither this Agreement nor any
provisions  hereof  may  be changed, waived,  discharged  or
terminated  orally  or  in  any  manner  other  than  by  an
instrument  in  writing  signed by the  party  against  whom
enforcement  of the change, waiver, discharge or termination
is sought.

     Section 25.  Waivers.  No course of dealing on the part
of  the  Lender,  its  officers, employees,  consultants  or
agents,  nor any failure or delay by the Lender with respect
to  exercising any of its rights, powers or privileges under
this Agreement shall operate as a waiver thereof.

       Section  26.   Cumulative  Rights.   The  rights  and
remedies  of  the  Lender  under  this  Agreement  shall  be
cumulative and the exercise or partial exercise of any  such
right or remedy shall not preclude the exercise of any other
right or remedy.

      Section  27.   Titles  of  Sections.   All  titles  or
headings  to  sections of this Agreement are  only  for  the
convenience  of  the parties and shall not be  construed  to
have any effect or meaning with respect to the other content
of such sections, such other content being controlling as to
the agreement between the parties hereto.

      Section  28.   Governing Law.   This  Agreement  is  a
contract  made  under and shall be construed  in  accordance
with  and  governed  by  the laws of the  United  States  of
America and the State of Louisiana.

     Section 29.  Successors and Assigns.  All covenants and
agreements  made  by or on behalf of the  Borrower  in  this
Agreement  shall bind Borrower's successors and assigns  and
shall  inure to the benefit of the Lender and its successors
and assigns.

      Section  30.   Counterparts.  This  Agreement  may  be
executed  in two or more counterparts, and it shall  not  be
necessary  that  the  signatures of all  parties  hereto  be
contained  on  any one counterpart hereof, each  counterpart
shall  be  deemed an original, but all of which  when  taken
together shall constitute one and the same instrument.

      IN  WITNESS WHEREOF, the Borrower and the Lender  have
caused  this  Agreement to be duly executed as of  the  date
first above written.

WITNESSES:                    XCL LAND, LTD.


_________________________  By:_____________________________
Name:____________________  Name:___________________________
                           (Please                    Print)
Title:__________________________


_________________________
Name:____________________
        (Please Print)
                              LENDER:


_________________________     ______________________________
Name:____________________          Robert R. Durkee, Jr.
        (Please Print)


_________________________
Name:____________________
        (Please Print)