[LETTERHEAD OF FORTUNE NATURAL RESOURCES CORPORATION]


November 3, 1998



Mr. Dewey A. Stringer, III
Petro-Guard Company, Inc.
Petro-Guard Production LLC
5858 Westheimer, Suite 400
Houston, TX 77057

Dear Dewey:

      This  letter of intent is  intended  to set forth the  understandings  and
agreements which have been reached between Fortune Natural Resources Corporation
("Fortune")  and  Dewey  A.  Stringer,   III,  Petro-Guard  Company,  Inc.,  and
Petro-Guard Production LLC (the later two entities are hereinafter  collectively
referred  to  as  "Petro-Guard")  pursuant  to  which  Petro-Guard  and  Fortune
contemplate  entering into a transaction,  more fully discussed  below, in which
Petro-Guard and all its assets,  subject to existing and disclosed  liabilities,
will be acquired through a merger with Fortune.

      Through our mutual  discussions,  we have agreed that in consideration for
the acquisition of Petro-Guard and the assets owned individually by Mr. Stringer
listed on Exhibit "A" hereto,  Fortune will,  at the closing of the  transaction
contemplated herein.

     1.   Fortune  will issue to the  shareholders  of record of common stock of
          Petro-Guard three million shares of the $.01 par value common stock of
          Fortune (the  "Fortune  Stock") in exchange for 100% of the  ownership
          and voting rights of Petro-Guard and 100% of Mr.  Stringer's  interest
          in such other assets.

     2.   The  consideration  payable by Fortune herein is conditional  upon Mr.
          Stringer  withdrawing no more than $2,000,000 in cash from Petro-Guard
          prior to closing this transaction.

     3.   The  Fortune  Stock  will be issued by Fortune  pursuant  to a private
          placement  upon  the  approval  of this  transaction  by the  board of
          directors of Fortune.

     4.   Upon closing,  Fortune agrees to file a Registration  Statement  under
          the Securities Act of 1933 to register all shares issued.

     5.   Prior to the  closing  of the  transaction  contemplated  hereby,  Mr.
          Stringer  and John  Jackson  shall  enter into  "lock-up"  agreements,
          whereby  their  ability to trade the Fortune Stock shall be restricted
          upon  mutually-acceptable  terms and for not more than two years.  All
          such stock shall bear  appropriate  legend  regarding the terms of the
          lock-up agreement.

     6.   Additionally,  Mr.  Stringer  will enter  into a  mutually  acceptable
          voting agreement with Fortune, in a customary form,  providing for him
          to vote a declining  percentage of his shares in  accordance  with the
          directions  of the board of  directors  of Fortune  each year for five
          years.


<PAGE>


Mr. Dewey Stringer
November 3, 1998
Page 2 of 3

      The parties hereto  contemplate  that,  following their mutual approval of
this letter,  they will, in good faith,  enter into a period of  completing  any
final due diligence  reviews and will commence the drafting and  preparation  of
the  documents,  agreements  and  applications  necessary for carrying out their
mutual  intent  hereunder.  Each party will bear and pay its costs and  expenses
which may be incurred in connection with this transaction and the preparation of
the documents and agreements associated with it.

      The definitive  merger  agreement  covering the  transaction  contemplated
hereby will include standard forms of representations and warranties appropriate
for transactions of a similar nature,  including, but not limited to, disclosure
of all material liabilities and good title to the assets of Petro-Guard.

      The  parties  contemplate  that this  transaction  will also  require  the
approval of the  shareholders of Fortune  pursuant to a proxy statement  calling
for a meeting of shareholders  for the issuance of the Fortune Stock.  Once such
approval  has been  obtained,  Fortune  shall use its best  efforts to  promptly
obtain a listing of the Fortune Shares on the American Stock Exchange.

      The parties  contemplate  that each will move forward in good faith toward
conducting  their respective  remaining due diligence,  preparing the definitive
merger  agreement  and other  necessary  closing  documents,  and  obtaining all
necessary  approvals.  Upon approval of the transaction  contemplated  hereby by
Fortune's  board of directors,  the parties will enter into a definitive  merger
agreement  and  associated   closing  documents.   Immediately   thereafter  the
transaction shall be closed and the Fortune Shares and other consideration shall
be distributed to the  shareholders of the Petro-Guard  common stock. As quickly
thereafter as possible,  Fortune shall file the proposed registration  statement
referred to herein with the Securities  and Exchange  Commission and the listing
agreement referred to herein with the American Stock Exchange.

      Each  party  agrees  to  maintain  the  confidentiality  of  any  and  all
documentation,  records,  data, and all other information provided by one to the
other in the course of completing the transaction  contemplated hereby.  Neither
party shall  disclose any portion of such  information to any third party except
for  those  individuals  who have a need to know  such  information  or with the
express written consent of the other. Each party further agrees to disclose only
such portion of such information to such of its employees,  officers, directors,
and  consultants as are necessary to carry out such party's due diligence and to
carry forward the  transaction  contemplated  hereby.  Each party agrees that it
will neither use nor allow to be used any portion of information  learned during
the course hereof for any purpose other than the  good-faith  consideration  and
pursuit of this transaction.

      Petro-Guard recognizes that Fortune is publicly held and agrees to refrain
from, and to instruct its owners, officers, directors, employees and consultants
to refrain from, engaging in any transaction in the  publicly-traded  securities
of Fortune.  Each party further agrees that,  considering  Fortune is a publicly
held  corporation,  an event may occur which would  require  Fortune to disclose
information  regarding  the merger  during the course of this  transaction.  The
parties  agree  that,  notwithstanding  anything  else  contained  herein to the
contrary,  Fortune may make such disclosure as is required under applicable law,
rule, or regulation. Should Fortune determine that it is required to make such a
disclosure,  it agrees to use its best  efforts to advise  Petro-Guard  thereof,
including the matters requiring disclosure, prior to making such disclosure.


<PAGE>

Mr. Dewey Stringer
November 3, 1998
Page 3 of 3


      The parties  understand  that the merger  agreement will be the definitive
agreement and hereby  stipulate that this letter is not intended to be and shall
not be  construed  as a binding  agreement  between  the parties  regarding  the
transaction  contemplated hereby,  except that this letter shall be binding with
regard to the  provisions  concerning  confidentiality,  above.  Except for such
specific provisions,  neither party hereto shall be bound to any of the terms or
provisions  herein  set  forth  until  the  formal  agreements  reflecting  this
transaction are prepared and are duly approved by each party's  respective board
of directors and shareholders,  as necessary.  The parties will each continue to
operate their business and  operations  from the date hereof through the closing
of the  transaction  contemplated  hereby in a reasonable and prudent manner and
that there is no other  material  adverse loss or decline in the value,  use, or
contemplated benefit of their respective assets or any portion thereof.

      If this letter correctly sets forth our discussions to date,  please date,
sign, and return one copy of it to the undersigned immediately.

Very truly yours,


/s/ Tyrone J. Fairbanks
---------------------------------
Tyrone J. Fairbanks
President and CEO

TJF:mjk



AGREED AND ACCEPTED
this 4th day of November, 1998


DEWEY A. STRINGER, III


By: /s/ Dewey A. Stringer, III
---------------------------------                             



PETRO-GUARD COMPANY, INC.


By: /s/ Dewey A. Stringer, III                              
---------------------------------


PETRO-GUARD PRODUCTION LLC


By: /s/ Dewey A. Stringer, III                              
---------------------------------