CONSULTING AGREEMENT
                              


          THIS CONSULTING AGREEMENT ("Agreement"), effective
as  of  January 1, 1999, by and between XCL Ltd., a Delaware
corporation.,   with  offices  at  110  Rue  Jean   Lafitte,
Lafayette,  Louisiana 70508 (hereinafter the "Company")  and
R. Thomas Fetters, 101 Red Brick Circle, Lafayette, LA 70503
(hereinafter "Consultant").

                    W I T N E S S E T H:
                              
          WHEREAS, Consultant has substantial experience and
ability   in  oil  and  gas  exploration,  development   and
production; and

           WHEREAS,  the  Company and Consultant  desire  to
extend  and  modify  certain terms of a  prior  nonexclusive
consulting  agreement dated June 1, 1997, by  entering  into
this Agreement.

           NOW,  THEREFORE,  the parties to  this  Agreement
hereby agree as follows:

                          ARTICLE I
                              
          Rights and Duties Under Consulting Agreement

           1.1      Term  of Agreement and  Duties.      The
Company  and Consultant agree that for the period commencing
January   1,  1999  and  terminating  December   31,   2000,
Consultant   shall  consult  with  Company   management   in
connection  with  all aspects of the Company's  exploration,
development   and  production  projects,  specifically   the
project   coordination  of  the  Sichuan  Gas  Project   and
evaluation  of other new exploration ventures within  China.
Thereafter, this contract shall continue on a month to month
basis,  until  terminated by either  party  on  thirty  days
written notice.

           1.2     Compensation.     For consulting services
performed  by Consultant during the term of this  Agreement,
the Company shall pay Consultant the sum of $120,000.00,  to
be  paid  in  monthly installments of $5,000.00, subject  to
termination  of  this  Agreement as provided  herein.   This
payment  shall  constitute  full payment  for  all  services
rendered  under  this Agreement, but is in addition  to  the
compensation that Consultant is entitled to as a  member  of
the  Board  of  Directors  of  the  Company.   In  addition,
Consultant  and  the Company may, from time to  time,  enter
into  written agreement whereby Consultant shall be entitled
compensation  as  a  finder's fee  on  certain  specifically
identified projects, and any such compensation shall  be  in
addition to the compensation paid under this agreement.

          1.3     Reimbursement of Expenses.     The Company
shall  reimburse Consultant for all reasonable and necessary
travel,  or  other  related out-of-pocket expenses  actually
incurred  by  him  during  the term  of  this  Agreement  in
carrying out his duties and responsibilities hereunder.

            1.4       Time   Requirements  under  Consulting
Agreement.      Subject to the foregoing, Consultant  agrees
devote   the  reasonable  time  necessary  to  fulfill   his
obligations  hereunder as agreed to from  time  to  time  by
Consultant and the Company.

            1.5       Place  of  Performance  of  Consulting
Services.   Consultant shall perform its services  hereunder
in Lafayette, Louisiana and such other places as the Company
may direct.

           1.6      Indemnification.     The  Company  shall
indemnify Consultant for all liabilities in connection  with
any  proceeding arising from services performed pursuant  to
this  Agreement,  other  than  liability  arising  from  the
Consultants gross negligence or willful misconduct.

           1.7      Confidentiality of  Company's  Business.
Consultant  acknowledges  that  the  Company's  business  is
highly competitive and that the Company's books, records and
documents,  the  Company's technical information  concerning
its  properties  and  prospects, all  comprise  confidential
business  information and trade secrets of the  Company  and
are  valuable, special, and unique proprietary assets of the
Company  ("Confidential Information").   Consultant  further
acknowledges   that  protection  of  Company's  Confidential
Information against unauthorized disclosure and  use  is  of
critical  importance  to  the  company  in  maintaining  its
competitive position.  Accordingly, Consulting hereby agrees
that  he  will not, at any time during or after the term  of
this  Agreement,  make any disclosure  of  any  Confidential
Information, or make any use thereof, except for the benefit
of,   and   on   behalf  of,  the  Company.   However,   the
Consultant's  obligation under this Section  1.7  shall  not
extend to information which is or becomes part of the public
domain  or  is  available to the public  by  publication  or
otherwise  than through the Consultant.  The  provisions  of
this  Section  1.7  shall survive the termination  of   this
Agreement.  Money damages would not be sufficient remedy for
breach  of  this Section 1.7 by Consultant, and the  Company
shall  be  entitled to specific performance  and  injunctive
relief as remedies for such breach or any threatened breach.
Such  remedies  for  a breach of this  Section  1.7  by  the
Consultant,  but  shall  be  in  addition  to  all  remedies
available  at law or in equity to the Company including  the
recovery  of damages from the Consultant.  For the  purposes
of  this  paragraph,  the term Company  shall  also  include
affiliates of the Company.

           1.8      Conflict of Interest.  Consultant agrees
to  use  his  best efforts, skill and abilities so  long  as
Consultant's Services are retained hereunder to promote  the
best  interest of Company and its business.  As part of  the
consideration for the compensation to be paid to  Consultant
hereunder, and as an additional incentive for the Company to
enter  into this Agreement, Company and Consultant agree  to
the  noncompetitive provisions of this Section 1.8.   During
the  term of this Agreement, Consultant agrees that,  unless
prior  written approval of the President of the  Company  is
obtained,  Consultant will not directly  or  indirectly  for
himself  or for others consult, advise, counsel or otherwise
assist  any  customer, supplier, or,  as  to  operations  in
China,  a direct competitor of the Company or any subsidiary
which,  in any manner, would have, or is likely to have,  an
adverse effect upon the Company or any subsidiary.

      Consultant understands that the foregoing restrictions
may  limit  Consultant's ability to  engage  in  a  business
similar to the Company's business during the period provided
for  above,  but acknowledges that Consultant  will  receive
sufficiently high remuneration and other benefits  from  the
Company hereunder to justify such restrictions.  The Company
shall  be entitled to enforce the provisions of this Section
1.8 by resorting to appropriate legal and equitable action.

      It is expressly understood and agreed that the Company
and  Consultant consider the restrictions contained in  this
Section  1.8 to be reasonable and necessary for the purposes
of  preserving and protecting the goodwill and  Confidential
Information  and  proprietary information  of  the  Company.
Nevertheless, if any of the aforesaid restrictions are found
by  a  court having jurisdiction to be unreasonable, or over
broad   as   to  geographic  area  or  time,  or   otherwise
unenforceable,  the  parties  intend  for  the  restrictions
therein set forth to be modified by such court so as  to  be
reasonable and enforceable and, as so modified by the court,
to be fully enforced.

          1.9     Independent Contractor:

          (i)     The parties hereby agree that the services
          rendered by Consultant in the fulfillment  of  the
          terms  and obligations of this Agreement shall  be
          as   an  independent  contractor  and  not  as  an
          employee, and with respect thereto, Consultant  is
          not  entitled  to  the benefits  provided  by  the
          Company  to  its  employees  including,  but   not
          limited  to, group insurance and participation  in
          the  Company s employee benefit and pension  plan.
          Further,  Consultant is not an agent, partner,  or
          joint  venture  of the Company.  Consultant  shall
          not represent himself to third persons to be other
          than an independent contractor of the Company, nor
          shall he permit himself to offer or offer or agree
          to  incur or assume any obligations or commitments
          in  the  name  of the Company or for  the  Company
          without    the    prior   written   consent    and
          authorization of the Company.  Consultant warrants
          that  the  services to be provided hereunder  will
          not  cause  of conflict with any other  duties  or
          obligations   of  Consultant  to  third   parties.
          Consultant shall not subcontract or assign any  of
          the   work  to  be  performed  hereunder   without
          obtaining  the  prior  written  consent   of   the
          Company,   provided,  however,  nothing  contained
          herein    shall    prohibit    Consultant     from
          incorporating and rendering services hereunder  as
          a corporation.
          
          (ii)      Consultant  shall  be  responsible   for
          payment of all taxes including Federal, State  and
          local   taxes  arising  out  of  the  Consultant's
          activities under this Agreement, including by  way
          of  illustration but not limitation,  Federal  and
          State    income   tax,   Social   Security    tax,
          Unemployment Insurance taxes, and any other  taxes
          or business license fees as required.

           1.10     Termination:      This Agreement may  be
terminated  at any time by either party, without cause,  and
without  any liability to the other party, by providing  the
other  party ninety (90) days written notice of termination.
In   case  of  termination  of  this  Agreement  under  this
provision, all compensation under this Agreement shall cease
except  as  to  the  pro rata portion of the  term  of  this
Agreement  that  is  prior  to the  effective  date  of  the
termination.
                              
                         ARTICLE II
                              
                        Miscellaneous
                              
          2.1     Succession.     This Agreement shall inure
to  the  benefit  of and be binding upon  the  Company,  its
successors  and  assigns,  and upon  Consultant.  Consultant
shall  be  prohibited from assigning this Agreement  without
prior written approval of the Company.

           2.2     Notice.     Any notice to be given to the
Company hereunder shall be deemed sufficient if addressed to
the Company in writing and personally delivered or mailed by
certified mail to its office at the address set forth above.
Any  notice  to  be given to Consultant hereunder  shall  be
sufficient  if  addressed to it in  writing  and  personally
delivered  or  mailed by certified mail to its  address  set
forth  above.   Either  party may, by notice  as  aforesaid,
designate a different address for the receipt of notice.

           2.3     Amendment.     This Agreement may not  be
amended  or  supplemented  in  any  respect,  except  by   a
subsequent  written instrument entered into by both  parties
hereto.

            2.5      Severability.      In  the  event   any
provision  of  this Agreement shall be held to  be  illegal,
invalid  or  unenforceable for any reasons, the  illegality,
invalidity, or unenforceablity thereof shall not affect  the
remaining  provisions hereof, but such illegal, invalid,  or
unenforceable  provision shall be fully severable  and  this
Agreement shall be construed and enforced as if the illegal,
invalid,  or unenforceable provision had never been included
herein.

           2.6     Headings.     The titles and headings  of
Articles  and  Sections  are  included  for  convenience  of
reference  only and are not to be considered  in  connection
with  the  construction  or enforcement  of  the  provisions
hereof.

          2.7     Governing Law.     This Agreement shall be
governed  in  all  respects by the  laws  of  the  State  of
Louisiana.

            2.8       Prior  Agreement.      This  Agreement
supersedes  and  replaces  the  Consulting  Agreement  dated
effective  June 1, 1997, in its entirety from the  effective
date of this Agreement forward.

          IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the 1st day of January, 1999.

                                   XCL LTD.


                              By:___________________________
                              Title:________________________


                                  __________________________
                                   R. THOMAS FETTERS