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                               SECURITY AGREEMENT


         THIS SECURITY AGREEMENT (this "Agreement") is made and entered into as
of July 23, 2001, by SEVEN SEAS PETROLEUM INC., a Cayman Islands exempted
company limited by shares (the "Debtor"), having its principal office at 5555
San Felipe, Suite 1700, Houston, Texas 77056, in favor of CHESAPEAKE ENERGY
CORPORATION, an Oklahoma corporation having an office at 6100 North Western,
Oklahoma City, Oklahoma 73118 ("Chesapeake") as collateral agent for: (a) itself
as "Lender" under that certain Note Purchase and Loan Agreement dated July 9,
2001; and (b) United States Trust Company of New York (the "Trustee") as trustee
under that certain Indenture dated July 23, 2001 between the Pledgor and the
Trustee (the "Secured Party").

                                  WITNESSETH:

         WHEREAS, the Debtor is liable to Chesapeake under that certain CEC Note
of even date herewith in the original principal amount of TWENTY-TWO MILLION
FIVE HUNDRED THOUSAND DOLLARS ($22,500,000.00) (the "CEC Note") in connection
with that certain Note Purchase and Loan Agreement dated July 9, 2001 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Loan Agreement") between the Debtor and Chesapeake; and

         WHEREAS, the Debtor is liable to the holders of the Debtor's 12% Series
A Senior Secured Notes due 2004 (the "Series A Notes") and the Debtor's 12%
Series B Senior Secured Notes due on the earlier of funding of the Series A
Notes or 2004 (the "Series B Notes") in the aggregate principal amount of
TWENTY-TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($22,500,000.00) (the
"Securities") in connection with that certain Indenture dated July 23, 2001
between the Debtor and the Trustee (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Indenture") pursuant
to which the Trustee acts as trustee for the benefit of the holders of the
Series A Notes and the Series B Notes (the "Holders"); and

         WHEREAS, as a material condition precedent to Chesapeake entering into
the Loan Agreement and the Trustee entering into the Indenture, the Debtor has
agreed to secure payment of the CEC Note, the Series A Notes, the Series B Notes
and all other obligations of the Debtor to Chesapeake, the Holders, the Trustee
and the Secured Party by granting the Secured Party a lien, security interest
and pledge covering certain assets of the Debtor.

         NOW, THEREFORE, (i) in order to comply with the terms and conditions of
the Loan Agreement and the Indenture; (ii) for and in consideration of the
premises and the agreements herein contained; and (iii) for other good and
valuable consideration, the receipt and sufficiency of all of which are hereby
acknowledged, the Debtor hereby agrees with the Secured Party for the benefit of
Chesapeake, the Holders and the Trustee as follows:

1. Definitions. Unless otherwise defined herein, all terms used herein which are
defined in the Oklahoma Uniform Commercial Code ("UCC") will have the same
meanings herein unless the

SEVEN SEAS PETROLEUM INC.
SECURITY AGREEMENT

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context otherwise requires. As used in this Agreement, the following terms will
have the meanings indicated:

         1.1      Accounts. All accounts, accounts receivable, contract rights,
                  notes, drafts, acceptances and all other forms of obligations
                  and receivables in favor of the Debtor owed or owing by any
                  party or entity to the Debtor including, but not limited to,
                  deposits or other sums credited by or due to the Debtor by any
                  bank, escrow agent, financial institution, securities firm or
                  other depository, now owned or hereafter acquired. In
                  addition, the term "Accounts" will have the same meaning (to
                  the extent not inconsistent with the foregoing definition) as
                  defined in the UCC.

         1.2      Deeds of Mortgage Over Shares. Those certain deeds of mortgage
                  over shares pursuant to which the Debtor has pledged to the
                  Secured Party all of the Debtor's right, title and interest in
                  and to all of the capital stock and equity in the subsidiaries
                  of the Debtor and all dividends, distributions, proceeds and
                  products thereof or therefrom.

         1.3      Default. The occurrence of any of the events specified as
                  events of "Default" under the terms of the Loan Agreement, the
                  Indenture or any of the other Financing Documents or any
                  breach or default of any of the provisions this Agreement.

         1.4      Equipment. All furniture, fixtures, machinery, tools,
                  equipment, apparatus, utensils, appliances, inventory and
                  supplies now owned or hereafter acquired by the Debtor and all
                  documents of title, insurance policies and proceeds relating
                  thereto. In addition, the term "Equipment" will have the same
                  meaning (to the extent not inconsistent with the foregoing
                  definition) as defined in the UCC.

         1.5      Escrow and Deposit Accounts. All escrow and depository
                  accounts of the Debtor and all credits, funds and entitlements
                  therein, including, without limitation: (a) that certain
                  Escrow Account No. 3228207 with Southwest Bank of Texas, N.A.
                  pursuant to which Fifteen Million Dollars ($15,000,000.00) of
                  the funds advanced under the CEC Note and the Series B Notes
                  is held in escrow to fund the costs and expenses in preparing,
                  drilling, testing and completing the Sub-Thrust Test Well (as
                  defined in the Loan Agreement); (b) that certain Escrow
                  Account No. 3228215 with Southwest Bank of Texas, N.A.
                  pursuant to which the Debtor deposits monthly an amount equal
                  to one-sixth (1/6th) of the next semi-annual interest payment
                  due on the Debtor's senior notes under the Existing Indenture
                  (as defined in the Loan Agreement); and (c) all deposit
                  accounts of the Debtor and all deposit accounts relating to
                  amounts due from the sale, production or processing of oil,
                  gas or other petroleum products of the Debtor or any of its
                  subsidiaries including, without limitation, Deposit Account
                  No. 9159611 with Southwest Bank of Texas, N.A., Deposit
                  Account No. 159611 with Southwest Bank of Texas, N.A., Deposit
                  Account No. 172391 with Southwest Bank of Texas, N.A., Deposit
                  Account No. 323241 with Southwest Bank of Texas, N.A., Deposit
                  Account No. 323349 with Southwest Bank of Texas, N.A., Deposit
                  Account No. 323276 with Southwest Bank of Texas, N.A.,

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                  Deposit Account No. 323462 with Southwest Bank of Texas, N.A.
                  and Deposit Account No. 503276347 with Fidelity Investments
                  (the "Deposit Accounts").

         1.6      Financing Documents. The Loan Agreement, the Indenture, this
                  Agreement, the CEC Note, the Series A Notes, the Series B
                  Notes, the Escrow and Deposit Account agreements, the Deeds of
                  Mortgage Over Shares, and all other documents and instruments
                  executed and delivered by the Debtor or any other person or
                  entity in connection with the extensions of credit
                  contemplated by the Loan Agreement and the Indenture, all
                  instruments issued pursuant to the foregoing documents and all
                  extensions, renewals, modifications and amendments thereof.

         1.7      Inventory. All personal property now owned or hereafter
                  acquired by the Debtor which is produced, stored, held for
                  sale or used or consumed in Debtor's business. In addition,
                  the term "Inventory" will have the same meaning (to the extent
                  not inconsistent with the foregoing definition) as defined in
                  the UCC.

2. Security Interest. The Debtor hereby grants to the Secured Party a security
interest in, an assignment of, a general lien upon and a right of set-off
against the following described property (the "Property"):

         2.1      all of the Debtor's Accounts of any kind whether now existing
                  or hereafter arising; all Escrow and Deposit Accounts; all
                  chattel papers, documents and instruments relating to the
                  Accounts and the Escrow and Deposit Accounts; and all rights
                  now or hereafter existing in and to all security agreements,
                  leases, and other contracts securing or otherwise relating to
                  any Accounts, Escrow and Deposit Accounts or any such chattel
                  papers, documents and instruments;

         2.2      all of the Debtor's Equipment in all of its forms, whether now
                  owned or hereafter acquired and wherever located; all parts
                  thereof and all accessions or additions thereto, whether now
                  owned or hereafter acquired;

         2.3      all of the Debtor's general intangibles of any kind whether
                  now existing or hereafter arising (herein called the "General
                  Intangibles"); all chattel papers, documents and instruments
                  relating to the General Intangibles; and all rights now or
                  hereafter existing in and to all security agreements, leases,
                  licenses, permits, patents, trademarks, copyrights,
                  distribution agreements and contracts securing or otherwise
                  relating to any General Intangibles or any such chattel
                  papers, documents and instruments and all of the Debtor's lien
                  rights against other persons whether statutory, contractual or
                  by common law;

         2.4      all of the Debtor's Inventory in all of its forms, whether now
                  owned or hereafter acquired and wherever located, and all
                  accessions or additions thereto and products thereof, whether
                  now owned or hereafter acquired;


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         2.5      without in any way limiting or modifying the foregoing in any
                  respect, all of the Debtor's goods, chattels, business
                  records, contracts, contract rights, advertising agreements,
                  tax refunds, documents of title, fixtures, insurance policies
                  and proceeds, patents, trademarks, service marks, logos, trade
                  names, copyrights and applications therefor, licenses,
                  licensing fees, permits, approvals, consents, certificates,
                  stock, surveys, engineering reports, tools, landscaping,
                  machinery, furniture, furnishings, business machines,
                  appliances, vehicles, trailers, rolling stock, deposits,
                  security deposits, money, securities, claims, demands, causes
                  of action, refunds, rebates, income and all other tangible and
                  intangible real, personal or mixed property whether now owned
                  or hereafter acquired;

         2.6      any additional properties or assets from time to time
                  delivered to or deposited with the Secured Party as security
                  for the Secured Indebtedness or otherwise pursuant to the
                  terms of this Agreement; and

         2.7      all proceeds, products, additions to, replacements of,
                  substitutions for and accessions of any and all of the items
                  described in subparagraphs 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6 in
                  this paragraph 2.

3. Secured Indebtedness. The security interest granted hereby in the Property is
given to secure the Debtor's payment of: (a) the CEC Note, the Series A Notes
and the Series B Notes (collectively, the "Notes") together with interest
thereon; (b) any and all other or additional obligations of the Debtor to
Chesapeake, the Holders, the Trustee or the Secured Party; (c) all extensions,
renewals, amendments, modifications, substitutions and changes in form to any of
the Notes; (d) all costs and expenses incurred in connection with the collection
of any of the Notes and any other obligations and enforcement of the Financing
Documents and the Secured Party's rights under this Agreement and all other
Financing Documents, including attorneys' fees and expenses; (e) all advances
made by the Secured Party to protect the security hereof, including advances
made for or on account of levies, insurance, repairs, taxes and for maintenance
or recovery of the Property, together with interest thereon at the rate
specified in the Note; (f) any and all other indebtedness, liabilities and
obligations of the Debtor to Chesapeake, the Holders, the Trustee or the Secured
Party whether now owing or hereafter incurred; and (g) performance of the
agreements herein set forth (the foregoing items (a) through (g) are
collectively referred to herein as the "Secured Indebtedness"). This Agreement
secures the prompt and complete payment and performance when due (whether at
stated maturity, by acceleration, by repurchase or otherwise) of all Secured
Indebtedness of the Debtor under the Financing Documents (including, without
limitation, any other obligations accruing after the date of any filing by
Debtor or any of its subsidiaries of any petition in bankruptcy or the
commencement of any bankruptcy, insolvency or similar proceeding).

4. Debtor's Representations and Covenants. The Debtor hereby warrants,
represents and agrees as follows:

         4.1      Principal Place of Business. The Debtor's chief executive
                  office and principal place of business is 5555 San Felipe,
                  Suite 1700, Houston, Texas 77056. The Debtor does not have any
                  other offices or places of business.


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         4.2      Location of Property. The Property of the Debtor and is
                  located in the States of Oklahoma and Texas, and the Debtor
                  will not move the Property or locate any of the Property in
                  any other state without the prior written consent of the
                  Secured Party and the prior execution and filing of all
                  financing statements required by the Secured Party. None of
                  the Property, except for existing fixtures, will be affixed to
                  any real property.

         4.3      Business Purpose. The Property is to be used by the Debtor
                  primarily in or for business operations.

         4.4      Title. The Debtor has absolute title to the Property free and
                  clear of all liens, encumbrances and security interests except
                  for the security interest hereby granted to the Secured Party
                  and such other rights, if any, of the Secured Party, and the
                  Debtor warrants and will defend the same unto the Secured
                  Party against the claims and demands of all persons and
                  parties whomsoever.

         4.5      Transfers. Without the prior written consent of the Secured
                  Party, the Debtor agrees that the Debtor will not: (a) except
                  for Inventory sold and Equipment sold, exchanged or replaced
                  in the ordinary course of the Debtor's business, sell,
                  exchange, lease or in any manner dispose of any of the
                  Property (excluding, prior to Default, the Deposit Accounts)
                  or any interest therein; or (b) permit any lien, encumbrance
                  or security interest to attach thereto except those
                  contemplated herein.

         4.6      Maintenance of Property. The Debtor will use the utmost care
                  to maintain the Property in good condition and repair, but
                  will not suffer any lien, charge or encumbrance to attach
                  thereto, whether by reason of repairs, taxes, assessments or
                  otherwise. The Debtor will not use or permit the Property to
                  be used in violation of any law, statute or ordinance. The
                  Debtor will not, in any event, permit anything to be done that
                  may impair the value of the Property or the security intended
                  to be afforded by this Agreement.

         4.7      Insurance. The Debtor will insure the insurable Property with
                  companies acceptable to the Secured Party against such
                  casualties and in such amounts as the Secured Party will
                  require. All insurance policies will be written for the
                  benefit of the Debtor and the Secured Party as their interests
                  may appear, and such policies or certificates evidencing the
                  same will be furnished to the Secured Party. If the Debtor
                  fails to pay the premiums for any such insurance, the Secured
                  Party may do so for the Debtor's account, adding the amount
                  thereof to the other amounts secured hereby; however, the
                  Secured Party is under no obligation and has no duty to pay
                  such premiums. After the occurrence of an event of Default:
                  (a) the Debtor hereby assigns to the Secured Party any return
                  or unearned premiums which may be due on cancellation of any
                  such insurance policies for any reason whatsoever and directs
                  the insurers to pay the Secured Party any amount so due; (b)
                  the Secured Party is hereby appointed the Debtor's
                  attorney-in-fact to endorse any draft or check which may be
                  payable to the Debtor in order to collect such returned or
                  unearned premiums or the proceeds


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SECURITY AGREEMENT
                                      - 5 -

<PAGE>   6

                  of such insurance; and (c) the Secured Party may cancel any
                  insurance on the Property, or any part thereof after
                  repossession. Any balance of insurance proceeds remaining
                  after payment in full of the Secured Indebtedness will be paid
                  to the Debtor.

         4.8      Secured Party's Security Interest. This Agreement creates a
                  valid and binding security interest in the Property securing
                  the Secured Indebtedness. All filings and other actions
                  necessary or appropriate (other than notation on any
                  certificate of title or title registration) to perfect or
                  protect such security interest will be or have been duly
                  taken. No further or subsequent filing, recording,
                  registration or other public notice of such security interest
                  (other than notation on any certificate of title or title
                  registration) is necessary in any office or jurisdiction in
                  order to perfect such security interest or to continue,
                  preserve or protect such security interest except for
                  continuation statements.

         4.9      Inspection of Property. The Secured Party may from time to
                  time, upon request, inspect the Property and all of the
                  Debtor's records concerning the Accounts, the Escrow and
                  Deposit Accounts, the Equipment, the General Intangibles, the
                  Inventory and other Property.

         4.10     Further Assurances. The Debtor will from time to time sign,
                  execute, deliver and file, alone or with the Secured Party,
                  any financing statements, security agreements, account control
                  agreements or other documents; procure any instruments or
                  documents as may be reasonably requested by the Secured Party;
                  and take all further action that may be necessary or
                  desirable, or that the Secured Party may request, to confirm,
                  perfect, preserve and protect the security interests intended
                  to be granted hereby without the signature of the Debtor
                  either in the Secured Party's name or in the name of the
                  Debtor and as agent and attorney-in-fact for the Debtor. In
                  addition, the Debtor hereby authorizes the Secured Party to
                  file financing statements, security agreements and other
                  documents without the signature of the Debtor. The Debtor will
                  do all such additional and further acts or things, give such
                  assurances and execute such documents or instruments as the
                  Secured Party requires to vest more completely in and assure
                  to the Secured Party its rights under this Agreement
                  including, without limiting the generality of the foregoing,
                  (i) marking conspicuously each chattel paper included in the
                  Property with a legend and, at the request of the Secured
                  Party, each of its records pertaining to the Property with a
                  legend, in form and substance satisfactory to the Secured
                  Party, indicating that such chattel paper or Property is
                  subject to the security interest granted by this Agreement and
                  (ii) if any Account, General Intangible or related right is
                  evidenced by a note, chattel paper or other instrument,
                  transferring, delivering, and assigning to Secured Party such
                  note, chattel paper or other instrument duly endorsed and
                  accompanied by duly executed instruments of transfer and
                  assignment, all in form and substance satisfactory to the
                  Secured Party, to be held by the Secured Party as collateral
                  under this Agreement.


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                                      - 6 -

<PAGE>   7

         4.11     Filing Reproductions. At the option of the Secured Party, a
                  carbon, photographic or other reproduction of this Agreement
                  or of a financing statement covering the Property will be
                  sufficient as a financing statement and may be filed as a
                  financing statement.

         4.12     Financing Statement Filings; Notifications. The Debtor will
                  immediately notify the Secured Party of any condition or event
                  that may change the proper location for the filing of any
                  financing statements or other public notice or recordings for
                  the purpose of perfecting a security interest in the Property.
                  Without limiting the generality of the foregoing, the Debtor
                  will: (a) immediately notify the Secured Party of any change
                  to a jurisdiction other than the State of Texas in the
                  location of the Debtor's chief executive office or chief place
                  of business; (b) notify the Secured Party monthly of any
                  change in the location any of the Property to another state;
                  (c) prior to any of the Property becoming so related to any
                  particular real estate so as to become a fixture on such real
                  estate, notify the Secured Party of the description of such
                  real estate and the name of the record owner thereof; and (d)
                  immediately notify the Secured Party of any change in the
                  Debtor's name, identity or company structure. In any notice
                  furnished pursuant to this paragraph 4.12, the Debtor will
                  expressly state that the notice is required by this Agreement
                  and contains facts that will or may require additional filings
                  of financing statements or other notices for the purpose of
                  continuing perfection of the Secured Party's security
                  interest in the Property.

         4.13     Production Proceeds. The Debtor will and will cause each of
                  the Debtor's subsidiaries to cause all proceeds (in whatever
                  form received) from the sale, production or processing of oil,
                  gas or other petroleum products (including any amounts under
                  the Concession Agreements) to be deposited directly into one
                  or more of the Deposit Accounts and will provide the Secured
                  Party with copies of all monthly account statements for each
                  of the Deposit Accounts when and as received by the Debtor
                  and/or its subsidiaries. The Debtor does not and will not have
                  or maintain any deposit or other banking, security or other
                  accounts other than the Deposit Accounts.

5. Secured Party's Expenditures. If the Debtor fails to make any expenditure or
pay any sum necessary to (a) keep and maintain the Property in good repair, (b)
discharge any lien, encumbrance, levy, security interest or other charge on the
Property or (c) maintain insurance upon the Property as required hereby, the
Secured Party may but will not be required to make any expenditure for such
purpose or purposes and all sums so expended will be payable on demand, will
bear interest at the rate specified in the CEC Note and all such sums and
interest will additionally be secured hereby. The Debtor will pay all costs of
filing any financing, continuation or termination statements with respect to the
security interest granted hereby in the Property.

6. Power of Attorney. The Secured Party is hereby fully authorized and empowered
(without the necessity of any further consent or authorization from the Debtor),
the rights herein are expressly granted to the Secured Party, and the Debtor
hereby constitutes, appoints and makes the Secured Party the Debtor's true and
lawful attorney-in-fact and agent for the Debtor and in the Debtor's name,


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<PAGE>   8

place and stead with full power of substitution, in the Secured Party's name or
the Debtor's name or otherwise, for the Secured Party's sole use and for the
benefit of Chesapeake, the Holders, the Trustee and the Secured Party, but at
the Debtor's cost and expense, to exercise, without notice, all or any of the
following powers at any time with respect to all or any of the Property after
the occurrence of any Default under this Agreement or any of the other Financing
Documents which has not been timely cured: (a) to notify account debtors or the
obligors on the Accounts, the General Intangibles and the related rights and the
depositories of the Escrow and Deposit Accounts to make and deliver payments to
the Secured Party; (b) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due by virtue thereof and otherwise deal
with proceeds; (c) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, documents and other negotiable and non-negotiable
instruments and chattel paper taken or received by the Secured Party in
connection therewith; (d) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto; (e) to sell, transfer, assign or
otherwise deal in or with the same or the proceeds or avails thereof or the
relative goods, as fully and effectively as if the Secured Party were the
absolute owner thereof; and (f) to extend the time of payment of any or all
thereof and to grant waivers and make any allowance or other adjustment with
reference thereto; provided, however, the Secured Party will be under no
obligation or duty to exercise any of the powers hereby conferred upon it and
will be without liability for any act or failure to act in connection with the
collection of, or the preservation of any rights under, any Property.

7. Default; Remedies. On the occurrence of any event of Default or if the Debtor
fails to keep, observe, comply with and perform all of the obligations and
undertakings under this Agreement or any of the other Financing Documents or
fails to pay any principal or interest on any of the Notes when due, then, and
in any such event, Chesapeake and/or the Trustee may, at their respective
options and without notice to any party, declare all or any portion of the
Secured Indebtedness to be immediately due and payable and the Secured Party may
proceed to enforce payment of the same, to exercise any or all rights and
remedies provided herein, in the other Financing Documents, and by the UCC and
otherwise available at law or in equity. Whenever the Debtor is in Default, the
Debtor on demand by the Secured Party, will assemble the Property and make it
available to the Secured Party at a place reasonably convenient to the parties
hereto and will provide the Secured Party with a list of the Inventory and the
exact location thereof. All remedies hereunder are cumulative, and any
indulgence or waiver by the Secured Party will not be construed as an
abandonment of any other right hereunder or of the power to enforce the same or
another right at a later time. Whether the Secured Party elects to exercise any
other rights or remedies under this Agreement or applicable law, the Secured
Party will be entitled to have a receiver appointed to take possession of the
Property without notice, which notice the Debtor hereby waives, notwithstanding
anything contained in this Agreement or any law heretofore or hereafter enacted.

8. Secured Party's Duties. The powers conferred upon the Secured Party by this
Agreement are solely to protect the interests of Chesapeake, the Holders, the
Trustee and the Secured Party in the Property and will not impose any duty upon
the Secured Party to exercise any such powers. The Secured Party will be under
no duty whatsoever to make or give any presentment, demand for performance,
notice of nonperformance, protest, notice of protest, notice of dishonor, or
other notice or demand in connection with any of the Property or the Secured
Indebtedness, or to take any steps necessary to preserve any rights against
prior parties. The Secured Party will not be liable for failure


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<PAGE>   9

to collect or realize upon any or all of the Secured Indebtedness or Property,
or for any delay in so doing, nor will the Secured Party be under any duty to
take any action whatsoever with regard thereto.

9. Continuing Agreement. This is a continuing agreement and the grant of a
security interest hereunder will remain in full force and effect and all the
rights, powers and remedies of the Secured Party hereunder will continue to
exist until all of the Secured Indebtedness is paid in full as the same becomes
due and payable and until the Secured Party, upon request of the Debtor, has
executed a written termination statement, reassigned to the Debtor, without
recourse, the Property and all rights conveyed hereby and returned possession of
any Property in the Secured Party's possession to the Debtor.

10. Preservation of Liability. Neither this Agreement nor the exercise by the
Secured Party of (or the failure to so exercise) any right, power or remedy
conferred herein or by law will be construed as relieving any person liable on
the Secured Indebtedness from liability on the Secured Indebtedness and for any
deficiency thereon.

11. Notices. Any notice or demand under this Agreement or in connection with
this Agreement may be given at the addresses set forth in the initial paragraph
of this Agreement or by telefacsimile, but actual notice, however given or
received, will always be effective.

12. Successors and Assigns. The covenants and agreements herein contained by or
on behalf of the Debtor will bind the Debtor, and the Debtor's legal
representatives, successors and assigns and will inure to the benefit of the
Secured Party and the Secured Party's successors and assigns.

13. Invalidity. If any provision hereof will for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability will not affect
any other provision hereof.

14. FINAL AGREEMENT. THE WRITTEN FINANCING DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

15. CHOICE OF LAW. WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW, THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF OKLAHOMA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE AND THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT
THAT TO THE EXTENT THAT THE LAW OF A STATE OR COUNTRY IN WHICH A PORTION OF THE
PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A PORTION OF THE
PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF THE SECURED PARTY,
APPROPRIATELY GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS
RELATING TO THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY


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INTERESTS AND OTHER RIGHTS AND REMEDIES OF THE SECURED PARTY GRANTED HEREIN, THE
LAW OF SUCH STATE OR COUNTRY SHALL APPLY AS TO THAT PORTION OF THE PROPERTY
LOCATED IN (OR WHICH IS OTHERWISE SUBJECT TO THE LAWS OF) SUCH STATE OR COUNTRY.

16. JURISDICTION AND CERTAIN WAIVERS. THE DEBTOR AND THE SECURED PARTY FURTHER
AGREE AS FOLLOWS:

         16.1     EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH, THE DEBTOR AND THE
                  SECURED PARTY AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT
                  OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
                  RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
                  AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS, AND WHETHER
                  ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, WILL BE
                  RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN OKLAHOMA
                  CITY, OKLAHOMA, BUT THE DEBTOR AND THE SECURED PARTY
                  ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
                  HEARD BY A COURT LOCATED OUTSIDE OF OKLAHOMA CITY, OKLAHOMA.
                  THE DEBTOR WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY
                  HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE
                  INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
                  VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.

         16.2     THE DEBTOR AGREES THAT THE SECURED PARTY WILL, IN ITS OWN NAME
                  OR IN THE NAME AND ON BEHALF OF THE TRUSTEE, HAVE THE RIGHT,
                  TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
                  THE DEBTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION
                  REASONABLY SELECTED IN GOOD FAITH TO ENABLE THE SECURED PARTY
                  TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
                  COURT ORDER ENTERED IN FAVOR OF THE SECURED PARTY. THE DEBTOR
                  AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN
                  ANY PROCEEDING BROUGHT BY THE SECURED PARTY TO REALIZE ON SUCH
                  PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
                  FAVOR OF THE SECURED PARTY. THE DEBTOR WAIVES ANY OBJECTION
                  THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
                  SECURED PARTY HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
                  PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
                  LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
                  CONVENIENS.

         16.3     THE DEBTOR AND THE SECURED PARTY EACH WAIVE ANY RIGHT
                  TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,


SEVEN SEAS PETROLEUM INC.
SECURITY AGREEMENT
                                     - 10 -

<PAGE>   11

                  WHETHER GROUNDED IN CONTRACT, TORT, OR OTHERWISE ARISING OUT
                  OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
                  RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
                  AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS. INSTEAD,
                  ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
                  TRIAL WITHOUT A JURY.

         16.4     NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE SECURED
                  PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW
                  OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
                  PROCEED AGAINST THE DEBTOR IN ANY OTHER JURISDICTION.

         16.5     THE DEBTOR HEREBY AGREES THAT NEITHER THE SECURED PARTY NOR
                  THE TRUSTEE WILL HAVE ANY LIABILITY TO THE DEBTOR (WHETHER
                  GROUNDED IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED
                  BY THE DEBTOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY
                  WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
                  RELATIONSHIP ESTABLISHED BY THIS AGREEMENT OR ANY OF THE OTHER
                  FINANCING DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING
                  IN CONNECTION THEREWITH, UNTIL IT IS DETERMINED BY A FINAL AND
                  NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE
                  SECURED PARTY OR THE TRUSTEE, AS THE CASE MAY BE, THAT SUCH
                  LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
                  SECURED PARTY OR THE TRUSTEE, AS THE CASE MAY BE, CONSTITUTING
                  GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

         16.6     THE DEBTOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND
                  PRIOR TO THE EXERCISE BY THE SECURED PARTY OF ITS RIGHTS
                  DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
                  PROPERTY WITH OR WITHOUT JUDICIAL PROCESS OR TO REPLEVY,
                  ATTACH OR LEVY UPON THE PROPERTY OR OTHER SECURITY FOR THE
                  SECURED INDEBTEDNESS. THE DEBTOR WAIVES THE POSTING OF ANY
                  BOND OTHERWISE REQUIRED OF THE SECURED PARTY IN CONNECTION
                  WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION
                  OF, REPLEVY, ATTACH OR LEVY UPON PROPERTY OR OTHER SECURITY
                  FOR THE SECURED INDEBTEDNESS, TO ENFORCE ANY JUDGMENT OR OTHER
                  COURT ORDER ENTERED IN FAVOR OF THE SECURED PARTY , OR TO
                  ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER
                  OR PRELIMINARY OR PERMANENT INJUNCTION THIS AGREEMENT OR ANY
                  OTHER AGREEMENT OR DOCUMENT BETWEEN THE DEBTOR AND THE SECURED
                  PARTY.


SEVEN SEAS PETROLEUM INC.
SECURITY AGREEMENT
                                     - 11 -

<PAGE>   12

                  IN WITNESS WHEREOF, this Agreement is executed effective the
date first above written.

                                   SEVEN SEAS PETROLEUM INC., a Cayman
                                   Islands exempted company limited by shares


                                   By /s/ LARRY A. RAY
                                     -------------------------------------------
                                     Larry A. Ray, President

                                   (the "Debtor")


                                   CHESAPEAKE ENERGY CORPORATION, an
                                   Oklahoma corporation, as collateral agent


                                   By /S/ TOM L. WARD
                                     -------------------------------------------
                                   Name   Tom L. Ward
                                       -----------------------------------------
                                   Title  President
                                        ----------------------------------------


                                   (the "Secured Party")


SEVEN SEAS PETROLEUM INC.
SECURITY AGREEMENT
                                     - 12 -