FIRST AMENDMENT TO SECURITY AGREEMENT


     THIS   FIRST   AMENDMENT  TO  SECURITY   AGREEMENT   ("First
Amendment")  dated  January 15, 1999, is made between  XCL  Land,
Ltd.  ("Borrower") and _________________________ ("Lender"),  who
agree as follows:

     Recitals

     WHEREAS,  the  Borrower  and the Lender  entered  into  that
certain  Security Agreement dated November 6, 1998 (the "Security
Agreement") in order to secure the full and punctual payment  and
performance of the indebtedness described therein; and

     WHEREAS,   the   parties  hereto  desire  to   correct   the
description of the Collateral and to express the intention of the
parties with respect to future changes in the description of  the
Collateral.

          NOW,  THEREFORE,  in  consideration  of  the  foregoing
premises  and other good and valuable consideration, the  receipt
and  sufficiency  of  which is hereby acknowledged,  the  parties
hereto agree as follows:

     Section  1.        Amendments  to  Security  Agreement.  The
Security Agreement is hereby amended as follows:

          (1)     The following new definition of "New Funds"  is
added to the Security Agreement after the definition of "Lien":

          "New  Funds"  means  new  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.

          (2)      The definition of "Permitted Liens" is  hereby
deleted  in  its  entirety  and in its  place  the  following  is
substituted:

          "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 (as defined  in
     the  Subscription Agreement) or other provider  of  New
     Funds to Borrower (provided that the liens in favor  of
     such  other persons do not cause the percentage  stated
     in  Sections 2(A)(1) and 2(A)(2) hereof to be less than
     the  percentage of total New Funds provided by  Lender)
     and (ii) any other Liens permitted by Lender in writing
     to  be  created or assumed or to exist with respect  to
     the Collateral.

          (3)      The phrase "(collectively the "Indebtedness")"
is  hereby  inserted immediately after the phrase  "unliquidated,
now  existing or hereafter arising" in Section 2A of the Security
Agreement.

          (4)      The  reference to "_____%" in Section  2(A)(1)
and  2(A)(2)  is  hereby  deleted  and  the  phrase  "_____%"  is
substituted in its place.

          (5)      The  following language is hereby inserted  at
the end of Section 3 of the Security Agreement:

          "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."

          (6)      The  last two sentences of Section 11  of  the
Security  Agreement are deleted and the following  new  sentences
are substituted in their place:

          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.
          Lender understands and agrees, however,  that
          Borrower  has granted a security interest  in
          all   of  its  Partnership  Interest  in  the
          Partnership (other than the percentage of its
          Partnership Interest covered hereby) to those
          persons   or  entities  who  have  previously
          purchased Units or provided other New  Funds.
          Lender  further agrees and acknowledges  that
          in  the event that additional Units are  sold
          or  additional  New  Funds  are  provided  to
          Borrower  after  the date hereof  by  persons
          other  than Lender and secured by partnership
          interests   in  L.M.  Holding,  Lender   will
          immediately upon demand by Borrower  (one  or
          more  times, as appropriate) execute  further
          amendments  to  this  Agreement  releasing  a
          percentage   of  the  Borrower's  Partnership
          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     of     $6,200,000     principal
          outstanding).

     Section  2.        Effect of Amendment. Except as  expressly
amended hereby, the Security Agreement shall remain in full force
and  effect.  Nothing in this First Amendment releases any right,
claim,  lien, security interests or entitlement of Lender created
by  or contained in the Security Agreement, nor releases Borrower
from any covenant, warranty or obligation created by or contained
in the Security Agreement.

     Section  3.        Ratification of Security  Agreement.  The
Security  Agreement  is hereby ratified, adopted,  confirmed  and
renewed.   All  representations,  warranties  and  covenants   of
Borrower  in  the Security Agreement are hereby repeated,  remade
and  incorporated herein by this reference for the benefit of the
Lender,  on  and  as of the date hereof.  In furtherance  of  the
foregoing,  Borrower  hereby  regrants  to  Lender  a  continuing
security  interest  in and to all right, title  and  interest  of
Borrower whether now owned or hereafter acquired, in and  to  the
Collateral in order to secure the prompt and complete payment and
performance  of  the  Indebtedness (as defined  in  the  Security
Agreement as amended by this First Amendment).

     Section  4.        No Novation. All of the liens, privileges
and priorities existing under the Security Agreement are renewed,
extended and carried forward, nothing contained herein shall  (i)
be  construed  as  a novation of the Security Agreement  or  (ii)
release,  cancel,  terminate or otherwise impair  the  status  or
priority  of  the  security interests  created  by  the  Security
Agreement.

     Section 5.       Titles of Sections.  All titles or headings
to  sections of this First Amendment 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 6.       Governing Law.  This First Amendment  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 7.       Successors and Assigns.  All covenants  and
agreements  made by or on behalf of the Borrower  in  this  First
Amendment shall bind Borrower's successors and assigns and  shall
inure  to  the  benefit  of the Lender  and  its  successors  and
assigns.

     Section 8.       Counterparts.  This First Amendment 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:                    BORROWER:

                              XCL LAND, LTD.


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


_________________________
Name:____________________
        (Please Print)
                              LENDER:

                              ___________________________________


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


_________________________
Name:____________________
        (Please Print)