<PAGE>   1


                        NOTE PURCHASE AND LOAN AGREEMENT


                                       FOR


                           SEVEN SEAS PETROLEUM INC.,
               A CAYMAN ISLANDS EXEMPTED COMPANY LIMITED BY SHARES













                                  JULY 9, 2001












                           COMMERCIAL LAW GROUP, P.C.
                            ATTORNEYS AND COUNSELORS
   2725 Oklahoma Tower o 210 Park Avenue o Oklahoma City, Oklahoma 73102-5604
              Telephone (405) 232-3001 o Telecopier (405) 232-5553




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                                TABLE OF CONTENTS


<Table>
<Caption>
                                                                                                               Page
<S>                                                                                                              <C>
1.       Purchase; Authorization..................................................................................1

2.       Closing..................................................................................................1

3.       Corporation's Representations and Warranties.  ..........................................................2

         3.1      Organization and Standing.......................................................................2
         3.2      Subsidiaries....................................................................................2
         3.3      Corporate Power.................................................................................3
         3.4      Investments.....................................................................................3
         3.5      Minute Books....................................................................................4
         3.6      Capitalization..................................................................................4
         3.7      Subsidiary Capitalization.......................................................................4
         3.8      No Violation....................................................................................5
         3.9      Validity........................................................................................5
         3.10     SEC Documents...................................................................................6
         3.11     Financial Statements............................................................................6
         3.12     Absence of Undisclosed Liabilities..............................................................7
         3.13     Absence of Certain Changes......................................................................7
         3.14     Contracts, Leases, and Other Agreements.........................................................8
         3.15     ERISA...........................................................................................8
         3.16     Arrangements with Related Parties...............................................................9
         3.17     Taxes...........................................................................................9
         3.18     Insurance.  ....................................................................................9
         3.19     Litigation.....................................................................................10
         3.20     Consents.......................................................................................10
         3.21     Title to Properties; Liens and Encumbrances....................................................10
         3.22     Compliance with Law and Other Instruments......................................................11
         3.23     Registration Rights............................................................................11
         3.24     Federal Reserve Regulations....................................................................11
         3.25     Reserve Information............................................................................11
         3.26     Securities Classes.............................................................................12
         3.27     Solicitation...................................................................................12
         3.28     Registration Requirements......................................................................12
         3.29     Certificates...................................................................................12
         3.30     Full Disclosure................................................................................12
         3.31     Acknowledgment.................................................................................13

4.       Lender's Representations and Warranties.................................................................13

         4.1      Authorization; Power...........................................................................13
         4.2      Investment Representations.....................................................................13
</Table>



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<Table>
<S>                                                                                                             <C>
                  4.2.1    Economic Risk.........................................................................13
                  4.2.2    Acquisition for Own Account...........................................................13
                  4.2.3    Protection............................................................................14
                  4.2.4    Corporation Information...............................................................14
                  4.2.5    Residence.............................................................................14

5.       Lender's Conditions.....................................................................................14

         5.1      Representations and Warranties Correct.........................................................14
         5.2      Performance....................................................................................14
         5.3      Compliance Certificate.........................................................................15
         5.4      Omnibus Certificate............................................................................15
         5.5      Adverse Events.................................................................................15
         5.6      Legal Opinion..................................................................................15
         5.7      Comfort Letter.................................................................................20
         5.8      Legal Investment...............................................................................20
         5.9      Qualifications.................................................................................20
         5.10     Due Diligence..................................................................................20
         5.11     Expenses.......................................................................................20
         5.12     Purchase of Series B Notes.....................................................................21
         5.13     Proceedings and Documents......................................................................21
         5.14     Collateral Perfection and Put Option...........................................................21
         5.15     Amendments of Articles.........................................................................21

6.       Corporation's Conditions................................................................................21

         6.1      Representations and Warranties True............................................................21
         6.2      Performance of Obligations.....................................................................21
         6.3      Payment........................................................................................21
         6.4      Consents, Permits and Waivers..................................................................22
         6.5      Fairness Opinion...............................................................................22
         6.6      Certain Collateral Agreements..................................................................22

7.       Affirmative Covenants...................................................................................22

         7.1      Financial Statements and Information...........................................................22

                  7.1.1    SEC Filings...........................................................................22
                  7.1.2    Compliance Certificate................................................................22
                  7.1.3    Budget................................................................................22
                  7.1.4    Auditors Reports......................................................................23
                  7.1.5    Third Party Information...............................................................23
                  7.1.6    Litigation............................................................................23
                  7.1.7    Material Adverse Developments.........................................................23
                  7.1.8    Other Information.....................................................................24
</Table>



                                      -ii-
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<Table>
<S>                                                                                                             <C>
         7.2      Accounting.....................................................................................24
         7.3      Insurance......................................................................................24
         7.4      Payment of Taxes...............................................................................24
         7.5      Compliance With Laws...........................................................................24
         7.6      Corporate Existence; Property and Operations...................................................25
         7.7      Inspection and Other Rights....................................................................25
         7.8      Use of Proceeds.  .............................................................................25
         7.9      Escrow of Interest Payment.....................................................................25
         7.10     Charter Amendments.............................................................................26
         7.11     Exemption Maintenance..........................................................................26
         7.12     Pipeline Operation.............................................................................26
         7.13     Dormant Subsidiaries...........................................................................26
         7.14     Production Proceeds............................................................................26

8.       Corporation's Negative Covenants........................................................................27

         8.1      Dividends......................................................................................27
         8.2      Redemptions....................................................................................27
         8.3      Mergers........................................................................................27
         8.4      Sale of Assets.................................................................................27
         8.5      Liquidations...................................................................................27
         8.6      Charter Amendments.............................................................................27
         8.7      Affiliate Transactions.........................................................................27
         8.8      Investments....................................................................................28
         8.9      Capital Expenditures...........................................................................28
         8.10     Loans..........................................................................................28
         8.11     Other Business.................................................................................28
         8.12     Subsidiaries...................................................................................28
         8.13     Indebtedness...................................................................................28
         8.14     Related Agreements.  ..........................................................................28
         8.15     Restrictive Agreements.........................................................................29
         8.16     Liens..........................................................................................29
         8.17     Transactions...................................................................................29
         8.18     Participating Preferred Stock..................................................................29
         8.19     Debt Prepayment................................................................................29
         8.20     No Excess Working Capital to Subsidiaries......................................................29

9.       Related Agreements......................................................................................29

10.      Payment or Exchange of Series B Notes...................................................................29

11.      Default.................................................................................................30

         11.1     Nonpayment of CEC Note.........................................................................30
         11.2     Breach of Agreement............................................................................30
         11.3     Representations and Warranties.................................................................30
</Table>




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<Table>
<S>                                                                                                             <C>
         11.4     Material Agreements............................................................................30
         11.5     Indebtedness...................................................................................30
         11.6     Insolvency.....................................................................................30
         11.7     Bankruptcy.....................................................................................31
         11.8     Receivership...................................................................................31
         11.9     Judgment.......................................................................................31
         11.10    Concession Contracts...........................................................................31
         11.11    Indentures.....................................................................................31
         11.12    Change of Control..............................................................................31
         11.13    Opportunity to Cure............................................................................32

12.      Remedies................................................................................................32

         12.1     Exercise Remedy................................................................................32
         12.2     Selective Enforcement..........................................................................32
         12.3     Waiver of Default..............................................................................32

13.      Agent Appointment; Jurisdiction.........................................................................32

14.      Indemnification.........................................................................................33

         14.1     Procedure......................................................................................34
         14.2     Environmental and Governmental.  ..............................................................34
         14.3     Other Remedies.................................................................................35

15.      Effectiveness of Agreement and Termination..............................................................35

16.      Miscellaneous...........................................................................................35

         16.1     Fees and Expenses..............................................................................35
         16.2     Consent to Amendments; Waivers.................................................................35
         16.3     Representations and Warranties.................................................................36
         16.4     Successors and Assigns.........................................................................36
         16.5     Severability...................................................................................36
         16.6     Construction; Currency.........................................................................36
         16.7     Notices........................................................................................36
         16.8     Governing Law..................................................................................36
         16.9     Exhibits and Schedules.........................................................................37
         16.10    Exchange of Certificates.......................................................................37
         16.11    Confidentiality................................................................................37
         16.12    Public Announcements...........................................................................37
         16.13    Final Agreement................................................................................38
         16.14    Execution in Counterparts......................................................................38
         16.15    ACKNOWLEDGMENTS AND ADMISSIONS.................................................................38
         16.16    JOINT ACKNOWLEDGMENT...........................................................................38
         16.17    WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC....................................................38
</Table>




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                            SEVEN SEAS PETROLEUM INC.
                        NOTE PURCHASE AND LOAN AGREEMENT

                  THIS AGREEMENT is entered into effective July 9, 2001, between
SEVEN SEAS PETROLEUM INC., a Cayman Islands exempted company limited by shares
(the "Corporation") and all of the Subsidiaries of the Corporation (as defined
in paragraph 3.2) and CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation
(the "Lender").

                                    RECITALS

         A. In order to raise additional funds to implement the Corporation's
business plan, the Corporation desires to: (i) issue the Corporation's 12%
Senior Secured Note due 2004 in the amount of TWENTY-TWO MILLION FIVE HUNDRED
THOUSAND DOLLARS ($22,500,000.00) (the "CEC Note") coupled with detachable
Warrants to purchase twelve million six hundred twelve thousand one hundred
forty (12,612,140) shares (the "Warrants") of the Corporation's ordinary shares,
par value $0.001 per share (the "Common Stock"); and (ii) issue the
Corporation's 12% Series B Senior Secured Notes due on the earlier of
consummation of the Rights Offering (as hereinafter defined) or November 7, 2004
in the amount of TWENTY TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($22,500,000.00) (the "Series B Notes").

         B. The Lender desires to purchase from the Corporation and the
Corporation desires to issue and sell to the Lender: (a) the CEC Note in the
principal amount of TWENTY-TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($22,500,000.00); and (b) Warrants to purchase twelve million six hundred twelve
thousand one hundred forty (12,612,140) shares (as adjusted) of Common Stock,
for an aggregate purchase price of TWENTY-TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($22,500,000.00).

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

1. Purchase; Authorization. Subject to the terms and conditions set forth
herein, the Lender agrees to purchase from the Corporation and the Corporation
hereby agrees to issue and sell to the Lender, the CEC Note in the principal
amount of Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000.00) and
the Warrants for an aggregate purchase price of Twenty-Two Million Five Hundred
Thousand Dollars ($22,500,000.00). Prior to the Closing (as hereinafter
defined), the Corporation will: (a) duly authorize the issuance of the CEC Note
and the Warrants to the Lender; and (b) duly authorize and reserve the shares of
Common Stock to be issued on the exercise of the Warrants (the "Warrant
Shares").

2. Closing. The consummation of the purchase and sale of the CEC Note and the
Warrants to the Lender and the sale of the Series B Notes (the "Closing") will
be held at the offices of Commercial Law Group, P.C., 210 Park Avenue, Suite
2725, Oklahoma City, Oklahoma 73102, on the earlier of: (a) the date all of the
conditions precedent set forth in paragraph 5 of this Agreement have been
performed to the reasonable satisfaction of the Lender or waived in writing by
the Lender;



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
<PAGE>   7




and (b) July 23, 2001, at 10:00 a.m. local time, or at such other time, date and
place as may be agreed to by the Corporation and the Lender (the "Closing
Date"). At the Closing, the Corporation will deliver to the Lender: (y) the CEC
Note in substantially the form at Exhibit "A" attached as a part hereof; and (z)
the Warrants in substantially the form at Exhibit "B" attached as a part hereof,
both duly executed and registered in the name of the Lender or the Lender's
nominee. The Lender will deliver to the Corporation in immediately available
funds the purchase price for the CEC Note and the Warrants to be acquired by the
Lender.

3. Corporation's Representations and Warranties. As an inducement to the Lender
to enter into and perform this Agreement, the Corporation and each of the
Subsidiaries hereby severally represent and warrant to and covenant with the
Lender as follows:

         3.1      Organization and Standing. The Corporation is an exempted
                  company limited by shares duly organized, validly existing and
                  in good standing under the laws of the Cayman Islands and
                  continues in the Cayman Islands with all of the legal and
                  contractual rights and interests the Corporation held as a
                  Yukon, Canada corporation. The Corporation has the requisite
                  power and authority to own all of the Corporation's
                  properties, to conduct the Corporation's business as presently
                  being conducted and to conduct the Corporation's business as
                  it is proposed to be conducted. The Corporation is duly
                  qualified to do business in those jurisdictions listed in
                  Schedule "3.1." The Corporation does not and will not have any
                  material properties or operations elsewhere and the
                  Corporation is not and will not be subject to any material
                  liability or disability in conducting business by reason of
                  any failure to obtain any qualification to do business in any
                  other jurisdiction. The Corporation conducts no business in
                  any jurisdiction except through the Subsidiaries.

         3.2      Subsidiaries. Except for the subsidiaries set forth on
                  Schedule "3.2" attached as a part hereof in which the
                  Corporation directly owns one hundred percent (100%) of the
                  legal and beneficial capital equity (the "Subsidiaries"), the
                  Corporation does not directly or indirectly or through any
                  entity or person own any voting power or capital of any
                  corporation, association, partnership, limited liability
                  company or other business entity. Each Subsidiary is a
                  corporation or other entity duly organized, validly existing
                  and in good standing under the laws of the jurisdiction of its
                  organization listed on Schedule "3.2" and has the requisite
                  power and authority to own all of such Subsidiary's
                  properties, to conduct such Subsidiary's business as presently
                  being conducted and to conduct such Subsidiary's business as
                  it is proposed to be conducted. Each Subsidiary is duly
                  qualified to do business in those jurisdictions listed in
                  Schedule "3.2." No Subsidiary has or will have any material
                  properties or operations in any jurisdiction not listed on
                  Schedule "3.2" and each Subsidiary is not and will not be
                  subject to any material liability or disability in conducting
                  business by reason of failure to obtain any qualification to
                  do any business in any other jurisdiction. As of the Closing
                  Date and until the CEC Note is paid in full, the Subsidiaries
                  listed on Schedule "3.2" as dormant or inactive will remain
                  dormant and inactive and no business will be conducted
                  directly or indirectly by, through or under any such
                  Subsidiaries.




SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -2-
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         3.3      Corporate Power. The Corporation has all requisite power and
                  authority to: (a) enter into this Agreement and each of the
                  agreements and instruments to be executed in connection
                  herewith; (b) issue and sell the CEC Note and the Warrants;
                  (c) issue the Warrant Shares; and (d) carry out and perform
                  its obligations under the terms of this Agreement and any
                  other document to be executed in connection herewith
                  including, without implied limitation, that certain Pledge and
                  Security Agreement, those certain Deed of Mortgage over Shares
                  (or Charge Over Shares to the extent agreed to by the parties)
                  and other collateral documents, each dated on or about the
                  Closing Date between the Corporation and the Lender, as
                  collateral agent, at Exhibit "C" attached as a part hereof
                  (collectively, the "Pledge Agreement"), that certain
                  Shareholder's Rights Agreement dated on or about the Closing
                  Date between the Corporation and the Lender at Exhibit "D"
                  attached as a part hereof (the "Shareholder's Rights
                  Agreement") and that certain Registration Rights Agreement
                  dated on or about the Closing Date between the Corporation and
                  the Lender at Exhibit "E" attached as a part hereof (the
                  "Registration Agreement") and the Collateral Sharing and
                  Agency Agreement dated on or about the Closing Date between
                  Lender and the trustee for the New Indenture at Exhibit "F"
                  attached as a part hereof (the "Collateral Sharing Agreement"
                  and together with the Pledge Agreement, the Shareholder's
                  Rights Agreement, the Registration Agreement and any and all
                  other documents and instruments executed and delivered in
                  connection therewith, the "Related Agreements"). The
                  Corporation has taken all actions necessary to authorize the
                  execution, delivery and performance of this Agreement and the
                  Related Agreements, the consummation of the transactions
                  contemplated hereby and thereby and the issuance and delivery
                  of the CEC Note, the Warrants and the Warrant Shares. This
                  Agreement and the Related Agreements are legal, valid and
                  binding obligations of the Corporation, enforceable against
                  the Corporation in accordance with their terms except as the
                  enforceability thereof may be limited by bankruptcy,
                  insolvency or similar laws affecting creditors' rights
                  generally.

         3.4      Investments. Neither the Corporation nor the Subsidiaries own
                  of record or beneficially any Investment (as hereafter
                  defined) other than Investments in the Subsidiaries and
                  Investments of the type permitted under paragraph 8.8 of this
                  Agreement and Investments disclosed in the Corporation's most
                  recent 10-Q filed with the SEC. For purposes of this Agreement
                  the term "Investment" means: (a) all investments in the form
                  of loans, advances or capital contributions; (b) all
                  guarantees of indebtedness or other obligations of any other
                  person or entity; (c) all purchases (or other acquisitions for
                  consideration) of capitalized assets, indebtedness, capital
                  stock or other securities of any other person or entity; and
                  (d) all other items that would be classified as investments
                  (including, without limitation, purchases of assets outside
                  the ordinary course of business) or advances on a balance
                  sheet prepared in accordance with generally accepted
                  accounting principles in the United States ("GAAP").



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -3-
<PAGE>   9



         3.5      Minute Books. The minute books of the Corporation contain a
                  complete and correct summary in all material respects of all
                  meetings of the Corporation's Board of Directors (the "Board")
                  and the Corporation's shareholders since the inception of the
                  Corporation. The minute books of each Subsidiary contain a
                  complete and correct summary in all material respects of all
                  meetings of the board of directors of such Subsidiary and such
                  Subsidiary's shareholders since the inception of such
                  Subsidiary. The originals or true and correct copies of such
                  minute books have been made available to the Lender.

         3.6      Capitalization. As of the Closing, the Corporation's
                  authorized capital stock will consist of two hundred million
                  (200,000,000) shares, par value $0.001 per share, of which one
                  hundred fifty million (150,000,000) shares are designated as
                  ordinary shares and fifty million (50,000,000) are shares
                  which may be designated by the Board. After consummation of
                  the transactions contemplated by this Agreement and the Rights
                  Offering, the only shares of capital stock issued and
                  outstanding will be 37,836,420 shares of fully paid and
                  non-assessable Common Stock, there will be no shares of any
                  other class of capital stock or equity issued or outstanding
                  and the only shares of Common Stock reserved for issuance or
                  committed to be issued will be: (a) shares issuable upon the
                  exercise of stock options under the Corporation's 1995, 1996
                  and 1997 stock option plans under which options to purchase
                  4,686,934 shares of Common Stock have been granted at exercise
                  prices reflected in Schedule "3.6" attached hereto and made a
                  part hereof and 669,954 shares are available for option
                  grants; (b) 12,612,140 shares issuable upon the exercise of
                  the Warrants; and (c) 12,612,140 shares issuable upon the
                  exercise of warrants (the "RO Warrant Shares") to be issued in
                  connection with the Rights Offering (the "RO Warrants"). As of
                  the Closing, there will be no declared but unpaid dividends or
                  undeclared dividend arrearage on any shares of capital stock
                  of the Corporation. In addition, as of the Closing, except as
                  set forth in this paragraph, there will not exist any stock
                  appreciation rights, phantom stock plans, preemptive rights,
                  conversion rights, options, warrants or agreements granted,
                  issued by or binding on the Corporation for the purchase or
                  acquisition of any shares of its capital stock other than
                  those issued, reserved or committed to be issued pursuant to
                  this Agreement, the Related Agreements and pursuant to that
                  certain rights offering to be made to the Common Stock holders
                  of the Corporation pursuant to which the shareholders of the
                  Corporation will be granted the right to purchase an
                  approximate pro rata share of the Corporation's Series A
                  Senior Secured Notes due 2004 in the aggregate principal
                  amount of Twenty-Two Million Five Hundred Thousand Dollars
                  ($22,500,000.00) (the "Series A Notes") coupled with
                  detachable RO Warrants (the "Rights Offering") all on terms
                  substantially similar to the terms of this Agreement with the
                  proceeds to be used exclusively to refinance the Series B
                  Notes. All outstanding securities of the Corporation were
                  issued in compliance with all Cayman Islands and United States
                  federal and state securities laws.

         3.7      Subsidiary Capitalization. Each Subsidiary's authorized,
                  issued and outstanding capital stock or other equity interests
                  is as set forth on Schedule "3.7" attached as a



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -4-
<PAGE>   10



                  part hereof. The issued and outstanding shares of capital
                  stock or other equity interests of each Subsidiary are as set
                  forth on Schedule "3.7" are owned of record one hundred
                  percent (100%) by the Corporation legally and beneficially. As
                  of the Closing, there will be no declared but unpaid dividends
                  or undeclared dividend arrearage on any shares of capital
                  stock or other equity interests of any of the Subsidiaries. As
                  of the Closing there will not exist any stock appreciation
                  rights, phantom stock plans, preemptive rights, conversion
                  rights, options, warrants or agreements granted, issued by or
                  binding on any Subsidiary for the purchase or acquisition of
                  any shares of such Subsidiary's capital stock or other equity
                  interests. All outstanding securities of each Subsidiary were
                  issued in compliance with all laws of the jurisdiction under
                  which such Subsidiary was formed and United States federal and
                  state securities laws.

         3.8      No Violation. The execution, delivery, consummation and
                  performance of this Agreement, the CEC Note, the Warrants and
                  the Related Agreements and the transactions contemplated
                  thereby will not (with or without notice, the passage of time
                  or both): (a) conflict with or result in a breach of any
                  provision of the Memorandum of Association or Articles of
                  Association of the Corporation or the formation or governing
                  documents of any Subsidiary; (b) result in a default, give
                  rise in any third party of the right to exercise any
                  termination, cancellation, acceleration or any other remedy,
                  or require any consent or approval under the terms, conditions
                  or provisions of any note, bond, mortgage, indenture, loan,
                  hedging arrangement, license, agreement, lease or other
                  instrument or obligation which is binding on the Corporation,
                  any Subsidiary or any of their assets and is material to the
                  Corporation and the Subsidiaries taken as a whole; (c) violate
                  any law, judgment, order, writ, injunction, decree, statute,
                  rule or regulation of any court, administrative agency,
                  bureau, board, commission, office, authority, department or
                  other governmental entity applicable to the Corporation, any
                  Subsidiary or any of their assets which, singly or in the
                  aggregate, would have a Material Adverse Effect (as
                  hereinafter defined); (d) violate the listing rules of the
                  American Stock Exchange ("AMEX") or adversely impact the
                  Corporation's listing agreement with AMEX; or (e) require the
                  Corporation or any of the Subsidiaries to guarantee any
                  indebtedness or grant a lien or encumbrance on any of their
                  respective assets except as provided herein to secure the
                  obligations hereunder. Neither the Corporation nor any of the
                  Subsidiaries has violated any foreign, federal, state or local
                  law or regulation relating to the protection of human health
                  and safety, the environment or hazardous or toxic substances
                  or wastes, pollutants or contaminants, any provisions of the
                  Employee Retirement Income Security Act of 1974, as amended,
                  or any provisions of the Foreign Corrupt Practices Act or the
                  rules or regulations promulgated thereunder, except for such
                  violations which, singly or in the aggregate, would not have a
                  Material Adverse Effect.

         3.9      Validity. The Warrants and the Warrant Shares when issued in
                  accordance with the terms of this Agreement and the Related
                  Agreements, will be duly and validly issued, fully paid,
                  non-assessable and free and clear of all liens, claims and
                  encumbrances.



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -5-
<PAGE>   11



                  The CEC Note, the Warrants, this Agreement and the Related
                  Agreements have been duly authorized and, on the Closing Date,
                  will have been validly executed and delivered by the
                  Corporation and this Agreement has been duly authorized,
                  executed and delivered by each of the Subsidiaries. The CEC
                  Note, the Warrants, this Agreement and the Related Agreements
                  will be valid and binding obligations and agreements of the
                  Corporation enforceable against the Corporation in accordance
                  with their respective terms, except as the enforceability
                  thereof may be limited by bankruptcy, insolvency or similar
                  laws affecting creditors' rights generally. This Agreement
                  will be a valid and binding obligation and agreement of each
                  of the Subsidiaries enforceable against each Subsidiary in
                  accordance with its terms, except as the enforceability
                  thereof may be limited by bankruptcy, insolvency or similar
                  laws affecting creditors' rights generally. On the Closing
                  Date, to the extent applicable thereto, the CEC Note, the
                  Warrants, this Agreement and the Related Agreements will
                  conform in all material respects to the rules and regulations
                  of the Securities and Exchange Commission (the "SEC").

         3.10     SEC Documents. The Lender has had or will have available to
                  the Lender a true, correct and complete copy of each report,
                  schedule, registration statement and definitive proxy
                  statement filed by the Corporation with the SEC since December
                  31, 1997 and prior to the Closing Date (the "SEC Documents"),
                  which are all the documents (other than preliminary material)
                  that the Corporation was or will be required to file with the
                  SEC since December 31, 1997. Except as set forth in Schedule
                  "3.10" attached hereto as a part hereof, as of their
                  respective dates, the SEC Documents complied or will comply in
                  all material respects with the requirements of the Securities
                  Act of 1933, as amended (the "Securities Act"), or the
                  Securities Exchange Act of 1934, as amended (the "Exchange
                  Act"), as the case may be, and the rules and regulations of
                  the SEC thereunder applicable to such SEC Documents, and none
                  of the SEC Documents contained as of their respective dates
                  any untrue statement of a material fact or omitted or will
                  omit to state a material fact required to be stated therein or
                  necessary to make the statements therein, in light of the
                  circumstances under which they were made, not misleading.

         3.11     Financial Statements. The financial statements of the
                  Corporation included in the SEC Documents (the "Financial
                  Statements") have been prepared in accordance with the
                  applicable published rules and regulations of the SEC with
                  respect thereto and in accordance with GAAP applied on a
                  consistent basis during the periods involved (except as may be
                  indicated in the notes thereto or, in the case of unaudited
                  statements, as permitted by Rule 10-01 of Regulation S-X of
                  the SEC) and fairly present in all material respects, in
                  accordance with applicable requirements of GAAP (in the case
                  of unaudited statements, subject to normal, recurring
                  adjustments), the consolidated financial position of the
                  Corporation and the Subsidiaries as of their respective dates
                  and the consolidated results of operations and the
                  consolidated cash flows of the Corporation and the
                  Subsidiaries for the periods presented therein. The unaudited
                  financials statements of each of the Subsidiaries which have
                  been provided to the Lender are correct and complete and
                  fairly reflect the financial condition of


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -6-
<PAGE>   12



                  each of the Subsidiaries as of the date thereof and have been
                  prepared in conformity with accounting principles applied on a
                  basis consistent with that of preceding periods.

         3.12     Absence of Undisclosed Liabilities. As of the Closing, the
                  Corporation and each Subsidiary will not have any material
                  debt, liability or obligation of any nature (whether accrued,
                  absolute, contingent, direct, indirect, perfected, inchoate,
                  unliquidated, due or to become due) arising out of any
                  transactions, series of transactions, action or inaction or
                  facts or conditions existing on or prior to the Closing
                  (regardless of when such liability or obligation is asserted)
                  except: (a) as listed on Schedule "3.12" attached as a part
                  hereof or disclosed in the Corporation's most recent 10-Q
                  filed with the SEC; or (b) clearly and accurately disclosed in
                  and accounted for in the Financial Statements. Except for the
                  foregoing, the Corporation and its officers and directors do
                  not know, and have no reasonable grounds to know, of any basis
                  for the assertion against the Corporation or any Subsidiary of
                  any material liabilities or obligations not clearly and
                  adequately reflected, reserved and disclosed in the Financial
                  Statements or the SEC Documents.

         3.13     Absence of Certain Changes. As of the Closing there will not
                  have occurred since the Corporation's Annual Report on Form
                  10-K for the year ended December 31, 2000: (a) any change,
                  occurrence, condition or development that will or is likely to
                  have a Material Adverse Effect; (b) any dividend,
                  distribution, recapitalization, combination, redemption,
                  subdivision or purchase with respect to any shares of the
                  capital stock of the Corporation or any Subsidiary, except
                  between and among the Corporation and the Subsidiaries; (c)
                  any new indebtedness for borrowed money incurred by the
                  Corporation or any Subsidiary, except between and among the
                  Corporation and the Subsidiaries; (d) any sale, transfer or
                  lease of any of the assets of the Corporation or any
                  Subsidiary, except in the ordinary course of business or as
                  set forth in Schedule "3.13" attached hereto and made a part
                  hereof; (e) any mortgage or pledge of, grant of security
                  interest in or other lien or encumbrance against any of the
                  assets of the Corporation or any Subsidiary; (f) any
                  cancellation, compromise, release or waiver of any material
                  claims, indebtedness or obligations owing to the Corporation
                  or any Subsidiary except (whether pursuant to a contract
                  agreement or otherwise) as a result of payments of such
                  obligations in the ordinary course of business consistent with
                  past practices; (g) any material increase or change, (or offer
                  or promise whether or not legally binding) in any salary,
                  compensation or employee benefits with respect to any employee
                  of the Corporation or any Subsidiary outside the ordinary
                  course; (h) any physical damage, destruction or loss (whether
                  or not covered by insurance) with respect to the properties,
                  business or prospects of the Corporation which will or is
                  likely to have a Material Adverse Effect; (i) any changes in
                  the accounting principles, methods or practices utilized by
                  the Corporation or any of its Subsidiaries (including
                  depreciation or amortization policies or rates); (j) any
                  actual or threatened cancellation, default, termination or
                  dispute under any production sharing contract, Concession
                  Agreements (as hereinafter defined), exploration agreement,
                  transportation license or similar agreement with the



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -7-
<PAGE>   13



                  government of Colombia or Empresa Colombiana de Petroleos
                  ("Ecopetrol") or under any other material agreement, contract
                  or relationship which is binding on the Corporation, any
                  Subsidiary or their assets which would have a Material Adverse
                  Effect; or (11) any action taken by the Corporation or its
                  Subsidiaries with respect to the foregoing.

         3.14     Contracts, Leases, and Other Agreements. Except as set forth
                  in Schedule "3.14" or Schedule "3.15" attached as a part
                  hereof and in the Corporation's most recent 10-K or 10-Q filed
                  with the SEC and except for this Agreement, the Existing
                  Indenture and the New Indenture, the Corporation and the
                  Subsidiaries are not parties to or bound by any material
                  contract, lease, agreement, plan, license, arrangement,
                  obligation or commitment (collectively, the "Contracts"): (a)
                  which is a requirement or output contract; (b) relating to any
                  indebtedness, guaranty, surety or indemnification by or for
                  the Corporation or any Subsidiary; (c) prohibiting the
                  Corporation or any Subsidiary from freely engaging in any
                  business or competing anywhere in the world; or (d) that is
                  otherwise material to the business of the Corporation or any
                  of its Subsidiaries. All Contracts to which the Corporation or
                  any Subsidiary is a party or by which any of their assets are
                  bound are listed in Schedule "3.14" and all Contracts
                  including, without limitation, the Dindal Association Contract
                  issued by Ecopetrol in March 1993, the Rio Seco Association
                  Contract issued by Ecopetrol in August 1995, the Rosablanca
                  Association Contract issued by Ecopetrol in February 1998, the
                  Deep Dindal Association Contract issued by Ecopetrol in April
                  2001 and the Cristales Association Contract issued by
                  Ecopetrol in April 2001 (the "Concession Agreements"), are
                  valid, binding and in full force and effect. There is no
                  material breach, default, or event which, (with notice, lapse
                  of time or both) would constitute a material breach or default
                  by the Corporation, any Subsidiary or any other party to any
                  of the Contracts. Neither the Corporation nor any of its
                  Subsidiaries has received any notice of breach, cancellation,
                  termination or non-renewal of any Contract.

         3.15     ERISA. Except as set forth in Schedule "3.15" attached as a
                  part hereof, neither the Corporation nor any Subsidiary has
                  maintained, sponsored, adopted, made contributions to,
                  obligated itself to make contributions to, agreed to pay any
                  benefits under, or granted rights under or with respect to any
                  employee benefit plan ("Employee Benefit Plan") which
                  includes, without implied limitation, any retirement plan,
                  deferred compensation plan, medical plan, life insurance plan,
                  long-term disability plan, dental plan, personnel policy
                  (including, but not limited to, vacation time, holiday pay,
                  bonus programs, moving expense reimbursement programs and sick
                  leave), excess benefit plan, bonus or incentive plan
                  (including, but not limited to, stock options, restricted
                  stock, stock bonus and deferred bonus plans), salary reduction
                  agreement, change-of-control agreement, employment agreement,
                  consulting agreement, workers compensation law, unemployment
                  compensation law, social security law or any other benefit,
                  program or contract, (whether written, oral, voluntary or
                  pursuant to a collective bargaining agreement), which could
                  give rise to or result in the Corporation or any Subsidiary
                  having any debt, liability, claim or obligation of any kind or
                  nature, whether accrued, absolute, contingent, direct,



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -8-
<PAGE>   14



                  indirect, known or unknown, perfected or inchoate or otherwise
                  and whether or not due or to become due. Correct and complete
                  copies (or descriptions, if oral) of all Employee Benefit
                  Plans have been furnished to the Lender.

         3.16     Arrangements with Related Parties. Except as set forth on
                  Schedule "3.16" attached as a part hereof and in the
                  Corporation's most recent 10-K or 10-Q filed with the SEC and
                  except for the Series B Notes, the Rights Offering and related
                  documents, there are no direct or indirect contracts,
                  arrangements or proposed transactions between the Corporation
                  or any Subsidiary and any Affiliate (as hereafter defined) of
                  the Corporation or any Subsidiary. For purposes of this
                  Agreement the term "Affiliate" means as to any person or
                  entity, any other person or entity controlling, controlled by
                  or under common control with that person or entity (whether
                  such control is direct or indirect). Each executive officer
                  and director of the Corporation or any Subsidiary (together
                  with their immediate family members) is automatically deemed
                  to be an Affiliate of the Corporation and each Subsidiary.

         3.17     Taxes. All foreign (including, without limitation, Canadian,
                  Cayman Islands, Panama and Colombian), and United States
                  federal and state, income, sales, employment and other tax
                  returns and reports (the "Tax Returns") of the Corporation and
                  each Subsidiary required by law to be filed have been timely
                  filed or valid extensions have been obtained. The Tax Returns
                  which have been filed comply with all applicable laws,
                  accurately reflect the results of the Corporation's operations
                  and are true and correct in all respects. All taxes
                  (including, without limitation, all fees, penalties, interest
                  and other governmental charges, the "Taxes") which are due and
                  payable have been timely paid and properly recorded in the
                  appropriate accounting records in a manner consistent with the
                  applicable laws and the Corporation's past practices. There is
                  no pending or known threatened audit of or claim against the
                  Corporation or any Subsidiary which might result in the
                  assessment or payment of additional Taxes in excess of the
                  amounts reflected on the Financial Statements or Tax Returns.
                  The Corporation and the Subsidiaries have not executed any
                  waiver of any statute of limitations related to any assessment
                  of Taxes, filed or joined in any Tax Returns on a unitary,
                  combined or consolidated basis, been required to pay any Taxes
                  attributable to any other member of any group or affiliated
                  corporations that file consolidated returns for federal income
                  tax purposes by reason of Treasury Regulation Section 1.1502-6
                  or any comparable provision of state or local law that
                  provides for joint or several liability, in whole or in part
                  agreed to and are not required to make any adjustments under
                  Section 481(a) of the Internal Revenue Code by reason of a
                  change in accounting method or otherwise consented to have the
                  provisions of Section 341(f)(2) of the Internal Revenue Code
                  apply to any sale of its capital stock or become parties to
                  any tax sharing agreements.

         3.18     Insurance. Schedule "3.18" attached as a part hereof is a
                  true, correct and complete list and description (including
                  policy numbers) of all insurance policies owned by the
                  Corporation and each Subsidiary or otherwise pertaining to
                  their business. The insurance policies are in full force and
                  effect, no default has occurred under any



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -9-
<PAGE>   15



                  policy and no notice of cancellation, intent to cancel, notice
                  of premium increase or any other notice regarding such notices
                  has been received by the Corporation or any Subsidiary. The
                  insurance policies insure the Corporation and the Subsidiaries
                  against all risks and liabilities normally insured against by
                  companies similarly situated to the Corporation and the
                  Subsidiaries. Schedule "3.18" also contains a list of all
                  pending claims with respect to any insurance policy and any
                  instances of a denial, limitation or reservation of coverage
                  by any insurance company.

         3.19     Litigation. Except as set forth on Schedule "3.19" attached as
                  a part hereof, there have been no actions, suits, proceedings
                  or investigations pending or threatened against or affecting
                  the Corporation or any Subsidiary during the last two (2)
                  years before or by any foreign, federal, state, municipal or
                  other governmental court, department, commission, board,
                  agency or instrumentality. None of the matters listed in
                  Schedule "3.19" could reasonably be expected to, alone or in
                  the aggregate, have a material adverse effect on the business,
                  assets, prospects, operations, employee relations, rights,
                  business, prospects, results of operations or condition,
                  financial or otherwise, of the Corporation and the
                  Subsidiaries, taken as a whole (a "Material Adverse Effect").
                  The Corporation and the Subsidiaries: (a) are not operating
                  under, subject to or in default with respect to any material
                  order, writ, injunction or decree of any court or foreign,
                  federal, state, municipal or other governmental department,
                  commission, board, agency or instrumentality, foreign or
                  domestic; (b) are not charged or threatened with a violation,
                  or under investigation with respect to possible violation, of
                  any material provision of any foreign, federal, state or local
                  law or administrative ruling or regulation relating to any of
                  them or their business, affairs, assets, prospects,
                  operations, employee relations or condition, financial or
                  otherwise; and (c) have not received any material complaint
                  from any supplier, customer, client, vendor, well participant,
                  royalty owner, licensor, employee or contractor.

         3.20     Consents. All consents, approvals, qualifications, orders,
                  authorizations or filings with respect to or required in
                  connection with the Corporation's execution, delivery and
                  performance of the CEC Note, the Warrants, this Agreement and
                  the Related Agreements have been obtained and evidence thereof
                  provided to the Lender.

         3.21     Title to Properties; Liens and Encumbrances. The Corporation
                  and each Subsidiary have defensible title to all of their
                  properties and assets free and clear of all mortgages, liens
                  and encumbrances, except liens for current taxes not yet due
                  and minor liens and encumbrances which do not materially
                  impair the operations of the Corporation and the Subsidiaries.
                  With respect to properties and assets they hold under the
                  Concession Agreements or leases, the Corporation and the
                  Subsidiaries are in compliance with such agreements and leases
                  and hold a valid license or leasehold interest thereunder free
                  of all liens, claims or encumbrances, and to the best
                  knowledge of the Corporation, all other parties to the
                  Concession Agreements and leases are in compliance with the
                  material terms thereof. The Corporation's and the
                  Subsidiaries' properties and assets are in good condition and
                  repair in all material


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -10-
<PAGE>   16



                  aspects. The Corporation and each of the Subsidiaries have
                  defensible title to and the right to use all assets necessary
                  to conduct their businesses as presently conducted or as
                  proposed to be conducted free and clear of any liens, claims
                  and encumbrances.

         3.22     Compliance with Law and Other Instruments. The Corporation and
                  the Subsidiaries: (a) are in full compliance (and not in
                  violation of) any applicable articles or certificate of
                  incorporation, bylaws, mortgage, indenture, contract,
                  agreement, instrument, judgment, decree, order, statute, rule
                  or regulation, except to the extent such failure to comply or
                  violation would not have a Material Adverse Effect; (b) have
                  or can reasonably be expected to obtain all material
                  franchises, permits, licenses and approvals necessary to
                  conduct their business as presently conducted and as proposed
                  to be conducted; and (c) have no knowledge of any change to
                  any law, statute, rule or regulation which could adversely
                  affect the Corporation, any Subsidiary or their business as
                  presently conducted or as proposed to be conducted.

         3.23     Registration Rights. Except pursuant to the Registration
                  Agreement, the RO Warrants to be issued in the Rights Offering
                  and the other agreements listed in Schedule "3.23" attached
                  hereto as a part hereof, there are no contracts, agreements or
                  understandings between the Corporation and any person granting
                  such person the right to require the Corporation to file a
                  registration statement under the Securities Act with respect
                  to any securities of the Corporation or to require the
                  Corporation to include such securities with the Warrant Shares
                  to be registered pursuant to the Registration Agreement.

         3.24     Federal Reserve Regulations. Neither the Corporation nor any
                  of the Subsidiaries nor any agent thereof acting on the behalf
                  of any of them has taken, and none of them will take, any
                  action that might cause this Agreement or the issuance or sale
                  of the CEC Note and Warrants to violate Regulation G (12
                  C.F.R. Part 207), Regulation T (12 C.F.R. Part 220),
                  Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R.
                  Part 224) of the Board of Governors of the Federal Reserve
                  System.

         3.25     Reserve Information. The information which was supplied by the
                  Corporation to Ryder Scott Company Petroleum Consultants (the
                  "Reserve Engineer"), being independent petroleum engineers,
                  for purposes of evaluating the oil and gas reserves of the
                  Corporation and the Subsidiaries as of December 31, 2000,
                  including, without limitation, production, costs of operation
                  and development, current prices for production, agreements
                  relating to current and future operations and sales of
                  production, was true and correct in all material respects on
                  the dates such estimates were made and such information was
                  supplied and was prepared in accordance with customary
                  industry practices, as indicated in the letter of the Reserve
                  Engineer dated February 21, 2001 (the "Reserve Letter"). The
                  Reserve Engineer was, as of the date of the Reserve Letter and
                  is, as of the date hereof, independent with respect to the
                  Corporation and the Subsidiaries. Other than normal production
                  of the reserves and product price fluctuations and except as
                  set forth in Schedule "3.25" attached hereto as a part hereof,
                  the Corporation is not aware of any facts or circumstances
                  that



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -11-
<PAGE>   17



                  would result in a material adverse change in the reserves, or
                  the present value of future net cash flows therefrom, as
                  reflected in the Reserve Letter and the reserve reports
                  referenced therein. Estimates of such reserves and present
                  values as described in the Reserve Letter and the reserve
                  reports referenced therein comply in all material respects to
                  the applicable requirements of Regulation S-X and Industry
                  Guide 2 under the Securities Act.

         3.26     Securities Classes. When the CEC Note is issued and delivered
                  pursuant to this Agreement, the CEC Note will not be of the
                  same class (within the meaning of Rule 144A under the
                  Securities Act) as any security of the Corporation or the
                  Subsidiaries that is listed on a national securities exchange
                  registered under Section 6 of the Exchange Act or that is
                  quoted in a United States automated inter-dealer quotation
                  system.

         3.27     Solicitation. No form of general solicitation or general
                  advertising (as defined in Regulation D under the Securities
                  Act) was used by the Corporation, the Subsidiaries or any of
                  their respective representatives in connection with the offer
                  and sale of the CEC Note or the Warrants including, without
                  limitation, articles, notices or other communications
                  published in any newspaper, magazine or similar medium or
                  broadcast over television or radio, or any seminar or meeting
                  whose attendees have been invited by any general solicitation
                  or general advertising. No securities of the same class as the
                  CEC Note have been issued and sold by the Corporation within
                  the six (6) month period immediately prior to the date hereof.

         3.28     Registration Requirements. Assuming the accuracy of the
                  Lender's representations and agreements set forth in this
                  Agreement, no registration under the Securities Act of the CEC
                  Note or the Warrants is required for the sale of the CEC Note
                  and the Warrants to the Lender as contemplated by this
                  Agreement.

         3.29     Certificates. Each certificate signed by any officer of the
                  Corporation or any Subsidiary and delivered to any of the
                  Lender or counsel for the Lender will be deemed to be a
                  representation and warranty by the Corporation and the
                  Subsidiaries to the Lender as to the matters covered thereby.

         3.30     Full Disclosure. This Agreement, the Related Agreements and
                  any schedule referenced in or attached to this Agreement or
                  any of the Related Agreements, any document furnished to the
                  Lender under this Agreement and any certification furnished to
                  the Lender under this Agreement or any of the Related
                  Agreements do not contain any untrue statement of a material
                  fact and do not omit to state a material fact necessary to
                  make the statements made, in the circumstances under which
                  they were made, not misleading. All of the representations,
                  warranties and covenants in this Agreement and in the Related
                  Agreements are true and correct as of the date made, will be
                  true and correct as of the Closing and will survive and not be
                  waived, discharged, released, modified, terminated or affected
                  by the Closing or any due diligence by the Lender.



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -12-
<PAGE>   18



         3.31     Acknowledgment. The Corporation acknowledges that the Lender
                  and, for purposes of the opinions to be delivered to the
                  Lender pursuant to this Agreement, counsel to the Corporation
                  and the Subsidiaries and counsel to the Lender will rely upon
                  the accuracy and truth of the foregoing representations and
                  the Corporation hereby consents to such reliance.

4. Lender's Representations and Warranties. The Lender represents and warrants
to the Corporation as follows:

         4.1      Authorization; Power. The Lender has all requisite legal power
                  and authority to execute, deliver and perform this Agreement
                  and the Related Agreements to which it is a party. The Lender
                  has taken all necessary action for the authorization,
                  execution, delivery and performance of this Agreement and the
                  Related Agreements and the consummation of the transactions
                  contemplated thereby. This Agreement and the Related
                  Agreements are legal, valid and binding obligations of the
                  Lender, which are enforceable against the Lender in accordance
                  with their terms.

         4.2      Investment Representations. The Lender understands that the
                  CEC Note, the Warrants and the Warrant Shares are not
                  registered under the Securities Act. The Lender also
                  understands that the CEC Note and Warrants are being offered
                  and sold pursuant to an exemption from registration contained
                  in the Securities Act based in part upon the Lender's
                  representations contained in this Agreement. The Lender hereby
                  represents and warrants as follows:

                  4.2.1    Economic Risk. The Lender has substantial experience
                           in evaluating and investing in private placement
                           transactions of securities in companies similar to
                           the Corporation so the Lender is capable of
                           evaluating the merits and risks of an investment in
                           the Corporation. The Lender understands that: (a) the
                           investment contemplated by this Agreement involves a
                           substantial degree of risk; (b) the Lender must bear
                           the economic risk of this investment indefinitely
                           unless the CEC Note, the Warrants or the Warrant
                           Shares are registered pursuant to the Securities Act,
                           or an exemption from registration is available; and
                           (c) the Corporation has no present intention of
                           registering the CEC Note, the Warrants or the Warrant
                           Shares. The Lender also understands that there is no
                           assurance that any exemption from registration under
                           the Securities Act will be available and that, even
                           if available, such exemption may not allow the Lender
                           to transfer all or any portion of the CEC Note, the
                           Warrants or the Warrant Shares.

                  4.2.2    Acquisition for Own Account. The Lender is acquiring
                           the CEC Note, the Warrants and the Warrant Shares for
                           the Lender's own account for investment purposes
                           only, and does not intend to distribute the CEC Note,
                           the Warrants or the Warrant Shares.



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -13-
<PAGE>   19



                  4.2.3    Protection. The Lender represents that the Lender:
                           (a) is an accredited investor within the meaning of
                           Regulation D promulgated under the Securities Act;
                           (b) has the capacity to protect its own interests in
                           connection with the transactions contemplated in this
                           Agreement and the Related Agreements; and (c) is
                           aware of no publication of any advertisement in
                           connection with the transactions contemplated in this
                           Agreement.

                  4.2.4    Corporation Information. The Lender has: (a) received
                           and read all information that the Lender has
                           requested regarding the Corporation's business,
                           management and financial affairs; (b) had the
                           opportunity to discuss such matters with directors,
                           officers and management of the Corporation; (c) had
                           the opportunity to review the Corporation's
                           operations and facilities; and (40 had the
                           opportunity to ask questions of and receive answers
                           from the Corporation and its management regarding the
                           terms and conditions of this investment.

                  4.2.5    Residence. The office or offices of the Lender in
                           which its investment decision was made is located at
                           the address or addresses of the Lender set forth on
                           the signature page hereto. The Lender represents that
                           no offer to purchase securities of the Corporation
                           was made outside such jurisdiction.

5. Lender's Conditions. The obligation of the Lender to purchase the CEC Note
and the Warrants at the Closing is subject to the fulfillment to the Lender's
satisfaction of each of the following conditions:

         5.1      Representations and Warranties Correct. The representations
                  and warranties made by the Corporation in paragraph 3 of this
                  Agreement will be true and correct when made and will be true
                  and correct in all material respects as of the Closing, with
                  the same force and effect as if made on and as of the date of
                  Closing.

         5.2      Performance. All covenants, agreements and conditions
                  contained in this Agreement and the Related Agreements to be
                  performed by the Corporation or the Subsidiaries at or prior
                  to the Closing will have been performed and each of the
                  Related Agreements will be satisfactory to the Lender and the
                  Lender's counsel in form and content. The foregoing includes
                  the execution and delivery of this Agreement, the CEC Note,
                  the Warrants, the Related Agreements and the documents
                  required thereby and any other instrument, agreement or
                  document reasonably requested by the Lender including, without
                  limitation, security documents in form and substance
                  satisfactory to the Lender and its counsel which may include
                  (a) a requirement that the shares of the Subsidiaries be
                  registered in the name of the Lender or a nominee or agent for
                  the Lender and the trustee for the holders of the Series B
                  Notes and the Series A Notes to be issued in the Rights
                  Offering, and (b) the issuance of other instruments to protect
                  the Lender's interests.



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -14-
<PAGE>   20



         5.3      Compliance Certificate. The Corporation will have delivered to
                  the Lender a certificate of the Corporation, executed by its
                  President dated the date of Closing truthfully certifying to
                  the fulfillment of the conditions specified in this paragraph
                  5, that there has not been a material adverse change in the
                  Corporation, any Subsidiary or the assets and businesses of
                  the foregoing since the date of the Corporation's Annual
                  Report on Form 10-K for the year ended December 31, 2000 such
                  other matters as the Lender may reasonably request.

         5.4      Omnibus Certificate. The Corporation will have delivered to
                  the Lender copies of each of the following in form and
                  substance satisfactory to the Lender and certified by the
                  Secretary of the Corporation to be in full force and effect on
                  the date of the Closing: (a) the certificate of incorporation
                  (or other formation documents as applicable) of the
                  Corporation and each Subsidiary certified by the jurisdiction
                  of formation as of a date not earlier than May 21, 2001; (b)
                  good standing certificates with respect to the Corporation and
                  each Subsidiary certified by the jurisdiction of formation as
                  of a date not more than twenty-one (21) days prior to the
                  Closing; (c) good standing certificates with respect to the
                  Corporation and each Subsidiary certified by the jurisdictions
                  in which the conduct of their businesses require them to be in
                  good standing, in each case as of a date not more than
                  twenty-one (21) days prior to the Closing; (d) the bylaws (or
                  equivalent documents) of the Corporation and each Subsidiary;
                  and (e) resolutions of the Board and each Subsidiary
                  authorizing the (i) the execution, delivery and performance of
                  this Agreement, the CEC Note, the Warrants and the Related
                  Agreements, and (ii) the transactions contemplated thereby
                  including the issuance and sale of the CEC Note, the Warrants
                  and the Warrant Shares to the Lender.

         5.5      Adverse Events. As of the Closing there will not have occurred
                  since the date of the Corporation's Annual Report on Form 10-K
                  for the year ended December 31, 2000: (a) any downgrading,
                  suspension or withdrawal of, nor shall any notice have been
                  given of any potential or intended downgrading, suspension or
                  withdrawal of, or of any review (or of any potential or
                  intended review) for a possible change that does not indicate
                  the direction of the possible change in, any rating of the
                  Corporation or any securities of the Corporation (including,
                  without limitation, the placing of any of the foregoing
                  ratings on credit watch with negative or developing
                  implications or under review with an uncertain direction) by
                  any "nationally recognized statistical rating organization,"
                  as such term is defined for purposes of Rule 436(g)(2) under
                  the Securities Act; or (b) any change, nor shall any notice
                  have been given of any potential or intended change, in the
                  outlook for any rating of the Corporation or any securities of
                  the Corporation by any such rating organization.

         5.6      Legal Opinion. The Corporation will have delivered to the
                  Lender the opinion of McAfee & Taft A Professional
                  Corporation, counsel to the Corporation, and Cayman Islands,
                  Panamanian and Colombian counsel dated the date of Closing,
                  addressed to the Lender covering all of the following matters
                  in form and content reasonably satisfactory to the Lender and
                  its counsel:


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -15-
<PAGE>   21


                  5.6.1    The Corporation is duly formed, validly existing and
                           in good standing under the laws of the Cayman Islands
                           and each of the Subsidiaries is duly formed, validly
                           existing and in good standing under the laws of the
                           jurisdiction of its formation. The Corporation and
                           each of the Subsidiaries have all requisite
                           corporate, partnership or limited liability company
                           power and authority to own or lease and operate their
                           respective properties and to conduct their respective
                           businesses.

                  5.6.2    The Corporation has the authorized capitalization set
                           forth in this Agreement. All of the outstanding
                           shares of capital stock of the Corporation and each
                           of the Subsidiaries have been duly authorized and
                           validly issued, are fully paid and non-assessable and
                           were not issued in violation of or subject to any
                           preemptive rights. To the knowledge of such counsel,
                           there are no: (a) outstanding securities of the
                           Corporation or any of the Subsidiaries convertible
                           into or evidencing the right to purchase or subscribe
                           for any shares of capital stock of the Corporation or
                           any of the Subsidiaries; (b) outstanding or
                           authorized options, warrants, subscriptions, rights,
                           commitments or any other agreements of any character
                           obligating the Corporation to issue any shares of its
                           capital stock or any securities convertible into or
                           evidencing the right to purchase or subscribe for any
                           shares of such stock; or (c) agreements with respect
                           to the voting, sale or transfer of any shares of
                           capital stock of the Corporation to which the
                           Corporation is a party, except as disclosed in this
                           Agreement, the Corporation's Annual Report on Form
                           10-K for the year ended December 31, 2000, or the
                           Corporation's Quarterly Report on Form 10-Q for the
                           quarter ending March 31, 2001.

                  5.6.3    The CEC Note has been duly and validly authorized,
                           and when executed, issued and delivered, will
                           constitute a valid and binding obligation of the
                           Corporation, enforceable against the Corporation in
                           accordance with its terms, except insofar as such
                           enforcement may be subject to (a) applicable
                           bankruptcy, insolvency, fraudulent conveyance,
                           reorganization, moratorium and similar laws now or
                           hereafter in effect relating to creditors' rights and
                           remedies generally and (b) general principles of
                           equity (whether enforcement is sought in a proceeding
                           at law or in equity).

                  5.6.4    This Agreement, the Warrants and the Related
                           Agreements have been duly and validly authorized,
                           executed and delivered by the Corporation and this
                           Agreement has been duly and validly authorized,
                           executed and delivered by the Subsidiaries. This
                           Agreement is a valid and binding agreement of the
                           Corporation and the Subsidiaries enforceable against
                           each of them in accordance with the terms hereof, and
                           each of the Warrants and the Related Agreements is a
                           valid and binding agreement of the Corporation
                           enforceable against the Corporation in accordance
                           with the terms thereof, except insofar as (a) such
                           enforcement may be subject to (i) applicable
                           bankruptcy,



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -16-
<PAGE>   22



                           insolvency, fraudulent conveyance, reorganization,
                           moratorium and similar laws now or hereafter in
                           effect relating to creditors' rights and remedies
                           generally and (ii) general principles of equity
                           (whether enforcement is sought in a proceeding at law
                           or in equity) and (b) rights to indemnification and
                           contribution contained therein may be limited by
                           federal or state securities laws or public policy
                           relating thereto.

                  5.6.5    The execution, delivery and performance by the
                           Corporation of this Agreement, the CEC Note, the
                           Warrants and the Related Agreements and the
                           execution, delivery and performance by the
                           Subsidiaries of this Agreement and the consummation
                           of the transactions contemplated hereby and thereby,
                           including the issuance, sale and delivery of the CEC
                           Note and the Warrants will not: (a) to the knowledge
                           of such counsel, conflict with or result in a breach
                           of any of the terms and provisions of, or constitute
                           a default (or an event which with notice or lapse of
                           time, or both, would constitute a default) or require
                           consent under, or result in the creation or
                           imposition of any lien, charge or encumbrance upon
                           any property or assets of the Corporation or any of
                           the Subsidiaries pursuant to the terms of any
                           agreement, instrument, franchise, license or permit
                           to which the Corporation or any of the Subsidiaries
                           is a party or by which any of their respective
                           properties or assets may be bound and that is listed
                           on the Corporation's Annual Report on Form 10-K for
                           the year ended December 31, 2000 (other than those as
                           to which the requisite waivers or consents have been
                           obtained); or (b) violate or conflict with any
                           provision of the certificate of incorporation or
                           other formation documents, as applicable, or the
                           by-laws or equivalent documents or other
                           organizational documents of the Corporation or any of
                           the Subsidiaries or, to the knowledge of such
                           counsel, any judgment, decree, order, statute, rule
                           or regulation of any court or any public,
                           governmental or regulatory agency or body having
                           jurisdiction over the Corporation, any of the
                           Subsidiaries or any of their respective properties or
                           assets. No consent, approval, authorization, order,
                           registration, filing, qualification, license or
                           permit of or with any court or any public,
                           governmental or regulatory agency or body having
                           jurisdiction over the Corporation or any of the
                           Subsidiaries or any of their respective properties or
                           assets is required for the execution, delivery and
                           performance of this Agreement, the CEC Note, the
                           Warrants or the Related Agreements, and the
                           consummation of the transactions contemplated hereby
                           and thereby, except for (i) such consents, approvals,
                           authorizations, orders, registrations, filings,
                           qualifications, licenses and permits as may be
                           required under the state securities or Blue Sky laws
                           in connection with the Rights Offering and the
                           purchase of the CEC Note by the Lender and the
                           performance of the Corporation's obligations under
                           the Registration Agreement and (ii) such other
                           consents, approvals, authorizations, orders,
                           registrations, filings, qualifications, licenses and
                           permits as have been obtained and delivered to the
                           Lender.



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -17-
<PAGE>   23


                  5.6.6    The Corporation is not an "investment company" or a
                           company "controlled" by an "investment company"
                           within the meaning of the Investment Company Act of
                           1940, as amended.

                  5.6.7    Assuming (a) the accuracy of the representations and
                           warranties of the Corporation and the Subsidiaries
                           contained in paragraphs 3.26 and 3.29 and (b) the
                           accuracy of the Lender's representations and
                           warranties contained in paragraph 4, the issuance and
                           sale of the CEC Note and the Warrants to the Lender
                           in the manner contemplated by this Agreement should
                           be held to be exempt from the registration
                           requirements of the Securities Act.

                  5.6.8    The Subsidiaries have full corporate power and
                           authority to execute and deliver this Agreement and
                           the Related Agreements to which any of the
                           Subsidiaries is a party. This Agreement and the
                           Related Agreements to which any of the Subsidiaries
                           is a party have been duly authorized, executed,
                           issued and delivered by the Subsidiaries and
                           constitute valid and legally binding obligations of
                           the Subsidiaries, enforceable against the
                           Subsidiaries in accordance with their respective
                           terms, except insofar as such enforcement may be
                           subject to (a) applicable bankruptcy, insolvency,
                           fraudulent conveyance, reorganization, moratorium and
                           similar laws now or hereafter in effect relating to
                           creditors' rights generally and (b) general
                           principles of equity (whether enforcement is sought
                           in a proceeding at law or in equity).

                  5.6.9    The CEC Note, when issued, will not be of the same
                           class (within the meaning of Rule 144A under the
                           Securities Act) as any other securities of the
                           Corporation that are listed on a national securities
                           exchange registered under Section 6 of the Exchange
                           Act, or quoted in a U.S. automated interdealer
                           quotation system of a registered national securities
                           association.

                  5.6.10   Neither the Corporation nor any of the Subsidiaries
                           is in violation of their respective charter or
                           by-laws.

                  5.6.11   To such counsel's knowledge, except pursuant to the
                           Registration Agreement and in connection with the
                           Rights Offering, there are no contracts, agreements
                           or understandings between the Corporation or any of
                           the Subsidiaries and any person granting such person
                           the right to require the Corporation of any
                           Subsidiary to file a registration statement under the
                           Securities Act with respect to any securities of the
                           Corporation or to require the Corporation or any
                           Subsidiary to include such securities with the
                           Warrant Shares to be registered pursuant to the
                           Registration Agreement.

                  5.6.12   To such counsel's knowledge, neither the Corporation
                           nor any of the Subsidiaries is in default in the
                           performance of any obligation, agreement, covenant or
                           condition contained in any indenture, loan agreement,
                           mortgage, lease or other agreement or instrument that
                           is material to the Corporation or


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -18-
<PAGE>   24



                           the Subsidiaries and which was included or
                           incorporated by reference in the Corporation's Annual
                           Report on Form 10-K for the year ended December 31,
                           2000, taken as a whole, to which the Corporation or
                           any of the Subsidiaries is a party or by which the
                           Corporation or any of the Subsidiaries or their
                           respective property or assets is bound.

                  5.6.13   The Pledge Agreement and the collateral documents
                           executed in connection with the Pledge Agreement
                           create and properly perfect in favor of the Lender
                           for the benefit of the Lender, the trustee under the
                           New Indenture and the holders of the Series A Notes
                           and the Series B Notes a first priority lien and
                           security interest in and to all of the capital stock
                           and equity of each of the Subsidiaries and all
                           dividends, distributions, rights and claims with
                           respect thereto, all accounts receivable, promissory
                           notes and other instruments owing by any Subsidiary
                           to the Corporation or any other Subsidiary and all
                           proceeds and products therefrom and such liens and
                           security interests have been properly and adequately
                           perfected in all jurisdictions where such perfection
                           is reasonably necessary in accordance with the
                           applicable laws of each such jurisdiction. The
                           exercise of remedies under the Pledge Agreement after
                           an event of Default including, without limitation, a
                           change in control of the Subsidiaries, will not cause
                           or create a breach or default under any of the
                           Concession Agreements or give rise to any termination
                           right by Ecopetrol thereunder or the right by
                           Ecopetrol to exercise any other remedies under any of
                           the Concession Agreements.

                  5.6.14   The submission by the Corporation and the
                           Subsidiaries to the jurisdiction of the state and
                           federal courts sitting in the State of Oklahoma and
                           the other provisions of paragraph 13 of this
                           Agreement are valid, binding and enforceable in
                           accordance with the terms thereof.

                  5.6.15   Except as disclosed in the Corporation's Annual
                           Report on Form 10-K for the year ended December 31,
                           2000, such counsel does not know of any legal or
                           governmental proceedings pending or threatened to
                           which the Corporation or any of the Subsidiaries is
                           or could be a party or to which any of their
                           respective property is or could be subject, which
                           might result, singly or in the aggregate, in a
                           Material Adverse Effect.

                  5.6.16   Neither the Corporation nor any of the Subsidiaries
                           has violated any Environmental Law or any provisions
                           of ERISA or the rules and regulations promulgated
                           thereunder or the environmental or employment laws of
                           any foreign jurisdiction, except for such violations
                           which, singly or in the aggregate, would not have a
                           Material Adverse Effect.

                  5.6.17   Each of the Corporation and the Subsidiaries has such
                           permits, licenses, consents, exemptions, franchises,
                           authorizations and other approvals (each an
                           "Authorization") of, and has made all filings with
                           and notices to, all


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -19-
<PAGE>   25



                           governmental or regulatory authorities and
                           self-regulatory organizations and all courts and
                           other tribunals including, without limitation, under
                           any applicable Environmental Laws, as are necessary
                           to own, lease, license and operate their respective
                           properties and to conduct their respective
                           businesses, except where the failure to have any such
                           Authorization or to make any such filing or notice
                           would not, singly or in the aggregate, have a
                           Material Adverse Effect. Each such Authorization is
                           valid and in full force and effect and each of the
                           Corporation and the Subsidiaries is in compliance
                           with all the terms and conditions thereof and with
                           the rules and regulations of the authorities and
                           governing bodies having jurisdiction with respect
                           thereto; and no event has occurred (including the
                           receipt of any notice from any authority or governing
                           body) which allows or, after notice or lapse of time
                           or both, would allow, revocation, suspension or
                           termination of any such Authorization or results or,
                           after notice or lapse of time or both, would result
                           in any other impairment of the rights of the holder
                           of any such Authorization; and such Authorizations
                           contain no restrictions that are burdensome to the
                           Corporation or any of the Subsidiaries.

         5.7      Comfort Letter. The Lender shall have received, at the time
                  this Agreement is executed and at the Closing, letters dated
                  the date hereof and the Closing Date, in form and substance
                  reasonably satisfactory to the Lender from Arthur Andersen
                  LLP, independent public accountants, containing the
                  information and statements of the type ordinarily included in
                  accountants' "comfort letters" to the Lender with respect to
                  the financial statements of the Corporation.

         5.8      Legal Investment. As of the Closing, the purchase of the CEC
                  Note and Warrants by the Lender hereunder will be legally
                  permitted by all laws and regulations to which the Lender and
                  the Corporation are subject.

         5.9      Qualifications. As of the Closing, all authorizations,
                  approval, consents, permits and waivers which are necessary or
                  appropriate for purposes of this Agreement, the CEC Note, the
                  Warrants and the Related Agreements, as determined in the sole
                  discretion of counsel to the Lender, will have been obtained.

         5.10     Due Diligence. The Lender and its advisers, including legal
                  counsel, will have completed a due diligence review of the
                  Corporation, each Subsidiary and their businesses including,
                  without limitation, the Concession Agreements, with results
                  satisfactory to the Lender in the Lender's sole discretion.
                  There will not have occurred a material adverse change in the
                  Corporation, any Subsidiary or in the business, assets or
                  prospects of the foregoing since December 31, 2000.

         5.11     Expenses. At the Closing, the Corporation will have paid or
                  reimbursed the Lender for the Lender's reasonable expenses and
                  out-of-pocket costs incurred in connection with the
                  negotiation of this Agreement and the Related Agreements,
                  documentation of the transactions contemplated hereunder and
                  thereunder and closing costs.


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -20-
<PAGE>   26



         5.12     Purchase of Series B Notes. All of the Series B Notes will
                  have been purchased and paid for in immediately available
                  funds in the principal amount of not less than Twenty-Two
                  Million Five Hundred Thousand Dollars ($22,500,000.00) on
                  terms substantially similar to the terms of the CEC Note.

         5.13     Proceedings and Documents. As of the Closing, all corporate
                  and other proceedings in connection with the transactions
                  contemplated hereby and by the Related Agreements, and all
                  documents and instruments incident to such transactions, will
                  be in form and substance reasonably satisfactory to the
                  Lender.

         5.14     Collateral Perfection and Put Option. The Lender and the
                  Lender's counsel will be satisfied: (a) as to the validity and
                  enforceability of the liens, security interests and other
                  encumbrances covering all of the assets of the Corporation
                  including, without limitation, all of the capital stock of
                  each of the Subsidiaries, all funds to be held in escrow
                  pursuant to the terms of this Agreement, all accounts, general
                  intangibles and other tangible and intangible property and
                  assets of the Corporation; and (b) as to the form, content and
                  enforceability of the Lender's right within fifteen (15) days
                  after the completion of the Rights Offering to put to Robert
                  A. Hefner III ("Hefner") up to an amount of the principal
                  balance of the CEC Note and a pro-rata share of the Warrants
                  sufficient to cause Hefner's aggregate investment in the CEC
                  Notes and the Series A Notes to be at least Ten Million
                  Dollars ($10,000,000.00) in substantially the form at Exhibit
                  "G" attached as a part hereof.

         5.15     Amendments of Articles. The articles of incorporation and
                  other formation and governance documents for each of the
                  Subsidiaries will have been amended in form and substance
                  reasonably satisfactory to the Lender and its counsel.

6. Corporation's Conditions. The Corporation's obligation to issue and sell the
CEC Note and the Warrants is subject to the satisfaction, on or prior to the
Closing, as applicable, of the following conditions:

         6.1      Representations and Warranties True. The representations and
                  warranties made by the Lender in paragraph 4 of this Agreement
                  will be true and correct in all material respects when made
                  and will be true and correct in all material respects as of
                  the Closing, with the same force and effect as if made on and
                  as of said date.

         6.2      Performance of Obligations. The Lender will have performed and
                  complied with all agreements and conditions herein required to
                  be performed or complied with by the Lender on or before the
                  Closing.

         6.3      Payment. The Lender will have paid the purchase price for the
                  CEC Note and the Warrants and all of the purchasers of the
                  Series B Notes will have paid the full purchase price for the
                  Series B Notes in immediately available funds.



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -21-
<PAGE>   27



         6.4      Consents, Permits and Waivers. The Corporation will have
                  obtained any and all consents, permits and waivers necessary
                  or appropriate for consummation of the transactions
                  contemplated by this Agreement and the Related Agreements.

         6.5      Fairness Opinion. The Corporation will have received an
                  opinion of CIBC World Markets Corp. that the transactions
                  contemplated by this Agreement, the sale of the Series B Notes
                  and the Rights Offering are fair from a financial point of
                  view to the Corporation.

         6.6      Certain Collateral Agreements. The Deed of Mortgage Over
                  Shares (or Charge Over Shares to the extent agreed to by the
                  parties), the Registration Agreement, the Pledge Agreement and
                  the Collateral Sharing Agreement will be in form and content
                  reasonably satisfactory to the Corporation and its counsel.

7. Affirmative Covenants. The Corporation and the Subsidiaries hereby severally
covenant and agree with the Lender to perform or cause to be performed each of
the following obligations set forth in this paragraph 7 during the period (the
"Covenant Period") commencing on the Closing and continuing as long as the CEC
Note is outstanding:

         7.1      Financial Statements and Information. The Corporation will
                  deliver to the Lender the following:

                  7.1.1    SEC Filings. As promptly as practicable after the
                           filing thereof with the SEC, the Corporation will
                           deliver copies of all annual, quarterly and interim
                           reports and all other filings made by the Corporation
                           or any of the Subsidiaries with the SEC together with
                           all exhibits and attachments thereto.

                  7.1.2    Compliance Certificate. Within ten (10) days after
                           the end of each fiscal quarter commencing with the
                           quarter ending September 30, 2001, a certificate
                           executed by the Chief Executive Officer and the Chief
                           Financial Officer of the Corporation stating that:
                           (a) the Corporation and the Subsidiaries are in
                           compliance in all respects with this Agreement, the
                           Related Agreements, the Memorandum of Association or
                           Articles of Association or other formation or
                           governing documents for the Corporation and the
                           Subsidiaries; (b) except as fully disclosed in such
                           certificate, there has not occurred a Default (as
                           hereinafter defined) by the Corporation or any
                           Subsidiary under this Agreement or the Related
                           Agreements; (c) the Corporation and the Subsidiaries
                           are in compliance with all material agreements
                           including, without limitation, the Concession
                           Agreements and any instruments evidencing any
                           indebtedness of the Corporation or any Subsidiary;
                           and (d) there has not occurred a material adverse
                           change in the Corporation, any Subsidiary or their
                           businesses.

                  7.1.3    Budget. Not less than sixty (60) days prior to the
                           commencement of each fiscal year an annual business
                           plan (the "Budget"), updates thereto not less


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -22-
<PAGE>   28



                           frequently than quarterly on the last day of each
                           fiscal quarter and any material revisions thereto
                           within ten (10) days after such revisions become
                           effective. The Budget will include a written
                           narrative together with financial projections,
                           balance sheets, statements of operations and changes
                           in financial position for the Corporation and the
                           Subsidiaries, all prepared on a detailed monthly
                           basis in form reasonably acceptable to Lender.

                  7.1.4    Auditors Reports. Promptly upon receipt thereof,
                           copies of all other reports, if any, submitted to the
                           Corporation by independent public accountants in
                           connection with any annual or interim audit or review
                           of the books of the Corporation and its Subsidiaries
                           including, without implied limitation, any management
                           letters, internal control evaluations and alerts.

                  7.1.5    Third Party Information. Within ten (10) days after
                           issuance, a copy of each financial statement, report,
                           notice or communication (the "TP Information") that
                           the Corporation or any Subsidiary delivers to or
                           receives from: (a) the Board, any committee of the
                           Board, any lender or trustee; (b) any securities
                           exchange, the National Association of Securities
                           Dealers, any credit rating agency or any other
                           industry association; or (c) any governmental
                           official, authority or agency, but only if the TP
                           Information relates to a matter or matters that might
                           reasonably be expected to have a Material Adverse
                           Effect.

                  7.1.6    Litigation. Promptly upon the Corporation's learning
                           thereof, notice of any litigation, suit or
                           administrative proceeding that could reasonably be
                           expected to have a Material Adverse Effect on the
                           Corporation or any Subsidiary or their business,
                           affairs, assets, prospects, operations, employee
                           relations or condition (financial or otherwise)
                           whether or not the claim is covered by insurance.

                  7.1.7    Material Adverse Developments. Promptly upon the
                           occurrence thereof (but in no event later than five
                           (5) days after discovery thereof) notice of: (a) any
                           default or breach of, or default under this
                           Agreement, the Related Agreements or any other
                           material agreement or arrangement to which the
                           Corporation or any of its Subsidiaries is a party or
                           by which any of them is bound including, without
                           limitation, the Concession Agreements, the Indenture
                           covering the Borrower's $110,000,000 12.5% Senior
                           Notes due 2005 (the "Existing Indenture") and the
                           Indenture covering the Series A Notes due 2004 (the
                           "New Indenture"); (b) any event which has or could
                           reasonably be expected to have, a Material Adverse
                           Effect on the business, affairs, assets, prospects,
                           operations, employee relations or condition,
                           (financial or otherwise) of the Corporation or any
                           Subsidiary including, but not limited to, the
                           institution or threat of any material litigation or
                           investigation with respect to the Corporation or any
                           Subsidiary or any material disputes with co-interest
                           owners or customers; (c) any event which has or could
                           reasonably be expected to result in any material
                           adverse change in any law, regulation, rule



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -23-
<PAGE>   29



                           or policy of the Colombian government with respect to
                           oil and/or gas operations in Colombia or the currency
                           or tax regime with respect thereto; and (d) any event
                           which has or could reasonably be expected to create
                           any lien, claim or encumbrance on any of the assets
                           of the Corporation or any of the Subsidiaries or
                           creates any obligation on the part of the Corporation
                           or any of the Subsidiaries to grant any lien or
                           encumbrance or to guarantee any indebtedness other
                           than indebtedness under clause 8.13(e) of this
                           Agreement or liens granted pursuant to this
                           Agreement.

                  7.1.8    Other Information. With reasonable promptness, such
                           other data and information as from time to time may
                           be reasonably requested by the Lender the disclosure
                           of which will not violate any law, rule, regulation
                           or agreement of the Corporation.

         7.2      Accounting. The Corporation will maintain and will cause each
                  Subsidiary to maintain a system of accounting, book records
                  and system of internal control to be established and
                  administered in accordance with GAAP consistently applied. The
                  Corporation and the Subsidiaries will cause complete entries
                  to be made in such books and records and establish appropriate
                  procedures and policies so that the books and records will
                  accurately reflect all transactions entered into by the
                  Corporation and the Subsidiaries, proper reserves and
                  accurately reflect the financial position of the Corporations
                  and the Subsidiaries.

         7.3      Insurance. The Corporation agrees to maintain or cause to be
                  maintained with financially sound and reputable insurers rated
                  A or above by A.M. Best, insurance with respect to its assets
                  and business and the assets and business of its Subsidiaries
                  against loss or damage of the kinds customarily insured
                  against by similarly situated entities of established
                  reputation engaged in the same or similar businesses, in
                  adequate amounts. At the request of the Lender, the
                  Corporation will furnish the Lender with evidence of the same.

         7.4      Payment of Taxes. The Corporation and each of the Subsidiaries
                  agrees to promptly pay or cause to be paid all taxes,
                  assessments and other governmental charges levied or assessed
                  on the Corporation or such Subsidiary, franchises, businesses,
                  income or profits, other than those taxes being contested in
                  good faith, by appropriate actions promptly initiated and
                  diligently conducted if: (a) the appropriate provision is made
                  therefor; and (b) such contest does not and will not have a
                  Material Adverse Effect on the financial condition or
                  operations of the Corporation or any Subsidiary.

         7.5      Compliance With Laws. The Corporation agrees to use reasonable
                  efforts to comply and cause each Subsidiary to comply with all
                  laws, rules, regulations, judgments, orders and decrees of any
                  governmental or regulatory authority applicable to the
                  Corporation, any Subsidiary or their respective assets and
                  businesses, the violation of which could have a Material
                  Adverse Effect.



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -24-
<PAGE>   30



         7.6      Corporate Existence; Property and Operations. The Corporation
                  and each Subsidiary agrees to preserve, protect and maintain:
                  (a) its corporate existence;(b) the Concession Agreements; and
                  (c) all rights, franchises, accreditations, privileges, and
                  properties the failure of which to preserve, protect, and
                  maintain would have a Material Adverse Effect. The Corporation
                  and each Subsidiary will comply with all their respective
                  material agreements, obligations and contracts, including, but
                  not limited to, all leases, any agreements relating to
                  indebtedness, the Existing Indenture, the New Indenture, this
                  Agreement and the Related Agreements.

         7.7      Inspection and Other Rights. Subject to the confidentiality
                  provisions of paragraph 16.11, the Lender will have the right
                  to examine the books, records, other documents and data of the
                  Corporation and the Subsidiaries during normal business hours
                  after reasonable notice. Without limitation of the foregoing,
                  the Lender will have the right to discuss and consult during
                  normal business hours with the officers, directors and
                  accountants of the Corporation and the Subsidiaries regarding
                  the operations and financial affairs of the Corporation and
                  any Subsidiary.

         7.8      Use of Proceeds. The Corporation will use the proceeds from
                  the sale of the CEC Note hereunder and the sale of the Series
                  B Notes for: (a) payment of all fees and expenses incurred by
                  the Lender in connection with the transactions contemplated by
                  this Agreement and the Related Agreements; (b) funding the
                  Corporation's and the Subsidiaries' share of the costs and
                  expenses of building the Guaduas La Dorada pipeline and
                  production facilities (the "Pipeline"); (c) funding the
                  Corporation's and the Subsidiaries' costs and expenses in
                  preparing, drilling, testing and completing well to test the
                  Corporation's sub-thrust prospect under the "Deep Dindal
                  Contract" (the "Sub-Thrust Test Well"); (d) funding the payoff
                  of the Corporation's indebtedness to Stillwater National Bank
                  in the principal amount of up to $10,000,000.00; and (e)
                  working capital and other general corporate purposes. The
                  amounts necessary to fund the Corporation's obligations under
                  subpart (c) hereof, estimated to be Fifteen Million Dollars
                  ($15,000,000.00) will be: (i) funded prior to the other
                  amounts to be funded pursuant to this paragraph; (ii) placed
                  in escrow with an escrow agent reasonably satisfactory to the
                  Lender (the "Escrow Agent") and on terms and conditions
                  satisfactory to the Lender and the Corporation; and (iii)
                  pledged to the Lender to secure the CEC Note, the Series A
                  Notes and the Series B Notes. If the Sub-Thrust Test Well is
                  not spudded prior to February 28, 2002, all funds remaining in
                  escrow will be used to make a prepayment on the CEC Note and
                  the Series A Notes or the Series B Notes on a pro rata basis.
                  Funds remaining in escrow after the drilling and testing of
                  the Sub-Thrust Test Well will be distributed to the
                  Corporation to be used as working capital.

         7.9      Escrow of Interest Payment. So long as the CEC Note is
                  outstanding, the Corporation will, commencing on the Closing
                  Date and continuing on or before the tenth (10th) day of each
                  succeeding month thereafter through July, 2003, escrow with
                  the Escrow Agent an amount equal to one-sixth (1/6th) of the
                  next semi-annual interest payment due on the senior notes
                  issued under the Existing Indenture. The


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                  arrangement with the Escrow Agent will provide for: (a) a
                  pledge of the escrow account to the Lender as collateral agent
                  for itself and the trustee under the New Indenture; (b) notice
                  to the Lender in the event any required deposit is not made
                  when due; and (c) so long as no event of Default has occurred
                  or is continuing, the release escrow funds on each November 15
                  and May 15 to the trustee under the Existing Indenture for
                  payments of interest due thereunder.

         7.10     Charter Amendments. On written request of the Lender, the
                  Corporation and each of the Subsidiaries agree to amend their
                  respective corporate governance documents in such manner as
                  the Lender reasonably determines in order to effectuate the
                  covenants set forth in this Agreement and in the Related
                  Agreements.

         7.11     Exemption Maintenance. The Corporation and each of the
                  Subsidiaries will continuously maintain their respective
                  status as of the Closing Date under the Colombian currency and
                  tax regime applicable to oil and gas companies operating in
                  Colombia.

         7.12     Pipeline Operation. The Corporation and the Subsidiaries will
                  continuously operate and maintain the Pipeline in good repair
                  and in accordance with all applicable laws, regulations, rules
                  and policies of the Colombian government, the Concession
                  Agreements and any other contracts relating thereto.

         7.13     Dormant Subsidiaries. All of the Subsidiaries except for Seven
                  Seas Petroleum Colombia Inc., Petrolinson SA, GHK Company
                  Colombia and Seven Seas Petroleum USA Inc., will be
                  continuously maintained in an inactive status and the
                  Corporation will not conduct, and will not permit to be
                  conducted, any business or operations in any such
                  Subsidiaries.

         7.14     Production Proceeds. The Corporation and each of the
                  Subsidiaries will cause all amounts due from the sale,
                  production or processing of oil, gas or other petroleum
                  products (including any amounts under the Concession
                  Agreements) to be deposited: (a) directly into one or more
                  deposit accounts of the Corporation that are at all times
                  subject to a first priority perfected lien under the Pledge
                  Agreement or similar arrangement, all in form and substance
                  satisfactory to the Lender; or (b) to the extent that such
                  amounts are required to remain in the Subsidiaries to fund
                  reasonably anticipated working capital needs of the
                  Subsidiaries or remain under Columbia's jurisdiction, directly
                  into a deposit account that permits withdrawals by the
                  Subsidiaries prior to a Default but prohibits withdrawals post
                  Default without the prior written consent of the Lender (all
                  in form and substance satisfactory to the Lender). It is
                  anticipated that the amounts deposited under the foregoing
                  clause (a) will be accounted for by the Corporation as
                  dividends from the Subsidiaries to the Corporation and will
                  include all proceeds in United States Dollars from the sale,
                  production or processing of oil, gas or other petroleum
                  products. In any event the failure of the Corporation or
                  Subsidiaries to make such deposits of all amounts



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                  attributable to the sale, production or processing of oil, gas
                  or other petroleum products as provided in this paragraph for
                  any reason will constitute a Default.

8. Corporation's Negative Covenants. The Corporation and each of the
Subsidiaries hereby severally covenants and agrees with the Lender that during
the Covenant Period, unless the Lender otherwise consents in writing, neither
the Corporation nor any Subsidiary will directly or indirectly:

         8.1      Dividends. Declare or pay, or permit any Subsidiary which is
                  not a wholly owned Subsidiary to declare or pay to anyone
                  other than the Corporation or a wholly owned Subsidiary of the
                  Corporation, any dividends or distributions on any of the
                  equity securities of the Corporation or any Subsidiary.

         8.2      Redemptions. Redeem, purchase or otherwise acquire, or permit
                  any Subsidiary to directly or indirectly redeem, purchase or
                  otherwise acquire, any of the Corporation's or any
                  Subsidiary's equity securities except as contemplated by this
                  Agreement, the Related Agreements and the Rights Offering.

         8.3      Mergers. Merge or consolidate with any person or permit any
                  Subsidiary to merge or consolidate with any person (other
                  than, in the case of a wholly-owned Subsidiary, with or into
                  the Corporation or any other wholly-owned Subsidiary) or
                  undertake any share exchange of any of the capital stock of
                  the Corporation or any Subsidiary.

         8.4      Sale of Assets. Except for the sale of oil, gas or other
                  hydrocarbons in the ordinary course of business and the sale
                  of obsolete equipment, sell, lease or otherwise dispose of, or
                  permit any Subsidiary to sell, lease or otherwise dispose of,
                  any assets in one or a series of related transactions that
                  represent five percent (5%) or more of the greater of the
                  Corporation's consolidated assets or income. In addition,
                  neither the Corporation or any Subsidiary will sell, grant or
                  enter into any production payment or similar arrangement
                  whether volumetric or dollar denominated.

         8.5      Liquidations. Liquidate, dissolve or effect a recapitalization
                  or reorganization in any form of transaction, except by merger
                  or consolidation not prohibited under paragraph 8.3 of this
                  Agreement.

         8.6      Charter Amendments. Except as provided in paragraph 7.10, make
                  any amendment to the Corporation's or any Subsidiary's
                  corporate governance documents including, but not limited to,
                  an amendment increasing or decreasing the number of directors
                  constituting the Board or changing its corporate domicile.

         8.7      Affiliate Transactions. Directly or indirectly enter into or
                  permit any Subsidiary to enter into or permit to exist any
                  transaction or series of related transactions (including the
                  purchase, sale, lease, exchange, transfer or disposition of
                  property or assets, the rendering of any service, or any
                  contract, agreement, understanding, loan, advance or
                  guarantee) with, or for the benefit of, any Affiliate of the
                  Corporation or any Subsidiary, except: (a) normal employment
                  arrangements and benefit programs on


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                                      -27-
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                  reasonable terms; (b) affiliate transactions entered into in
                  accordance with Section 4.16 of the Existing Indenture; or (c)
                  as otherwise permitted by this Agreement and the Related
                  Agreements.

         8.8      Investments. Make or permit to exist, or permit any Subsidiary
                  to make or permit to exist, any Investment other than
                  Investments permitted under subparts (ii), (viii), (ix) and
                  (xi) of the definition of Permitted Investments in the
                  Existing Indenture and Investments in the oil and gas business
                  in the Magdelana Valley area of Colombia.

         8.9      Capital Expenditures. Make, or permit any Subsidiary to make,
                  any capital expenditures exceeding, in the aggregate, on a
                  consolidated basis, the amounts set forth in the Budget as
                  revised from time to time and approved by the Board.

         8.10     Loans. Make, or permit any Subsidiary to make, any loans or
                  advances to, or guarantees for the benefit of, any person or
                  entity, other than travel advances and similar loans to
                  employees not to exceed $500,000.00 at any one time in the
                  aggregate and except for loans and advances between and among
                  the Corporation and the Subsidiaries evidenced by promissory
                  notes pledged to the Lender pursuant to the Pledge Agreement.

         8.11     Other Business. Enter into (directly or indirectly through a
                  new subsidiary), or permit any Subsidiary to enter into, the
                  ownership, management or operation of any business other than
                  the businesses conducted by the Corporation and the
                  Subsidiaries as of the date of Closing or contemplated by the
                  written business plan provided to the Lender prior to Closing.

         8.12     Subsidiaries. Establish or acquire any new subsidiaries
                  including, without limitation, any interest in any
                  corporation, limited liability company, partnership, trust,
                  association or other entity. The Subsidiaries will not issue
                  any capital stock, equity interests or any instrument
                  convertible, exercisable or exchangeable into the foregoing
                  except as shown on Schedule "3.7" of this Agreement.

         8.13     Indebtedness. Create, incur, assume or suffer to exist, or
                  permit the Corporation and its Subsidiaries, taken as a whole,
                  to create, incur, assume or suffer to exist, indebtedness in
                  an aggregate amount exceeding One Million Dollars
                  ($1,000,000.00) at any time outstanding, other than: (a)
                  indebtedness to the holders of the Corporation's 121/2% Senior
                  Notes due 2005; (b) the CEC Note; (c) the Series A Notes; (d)
                  the Series B Notes; and (e) unsecured trade debt in the
                  ordinary course of business not more than sixty (60) days past
                  due or indebtedness in respect of taxes, assessments, levies
                  or other governmental charges which are not past due.

         8.14     Related Agreements. Amend, modify or waive any provision of
                  any of the Related Agreements or fail to perform the
                  provisions of any of the Related Agreements in any material
                  respect.


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                                      -28-
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         8.15     Restrictive Agreements. Enter into, become a party to or
                  become subject to, or permit any of its Subsidiaries to enter
                  into, become a party to or become subject to, any agreement or
                  instrument, which by its terms would (under any circumstance):
                  (a) restrict the Corporation's or any Subsidiary's right to
                  perform any of its obligations pursuant to the terms of this
                  Agreement, the Related Agreements, the Existing Indenture or
                  the New Indenture; (b) grant, provide or issue registration
                  rights for any security which are equal to or more favorable
                  than those granted under the Registration Agreement (except
                  any such rights granted in connection with the Rights
                  Offering); or (c) give rise to any default, termination right
                  or the loss of any benefit upon the exercise of any remedy by
                  the Lender (except for the Existing Indenture and the New
                  Indenture).

         8.16     Liens. Grant, create, assume or permit to continue in
                  existence, or permit any Subsidiary to grant, create, assume
                  or permit to continue in existence, any lien, security
                  interest or encumbrance on any asset of the Corporation or any
                  Subsidiary other than liens for taxes not yet due and payable,
                  involuntary liens for obligations not yet due or contested in
                  good faith and similar encumbrances.

         8.17     Transactions. Enter into, assume or perform, or permit any
                  Subsidiary to enter into, assume or perform, any material
                  agreement, lease, sale, exchange, contract or transaction
                  which: (a) violates this Agreement, the Related Agreements,
                  the Existing Indenture or the New Indenture; or (b) is not in
                  the Corporation's ordinary course of business based on
                  historical practices.

         8.18     Participating Preferred Stock. Neither the Corporation nor any
                  of the Subsidiaries will issue any capital stock (other than
                  Common Stock of the Corporation) or shares of any class
                  preferred as to dividends or as to the distribution of assets
                  on voluntary or involuntary liquidation, dissolution or
                  winding up.

         8.19     Debt Prepayment. Neither the Corporation nor any of the
                  Subsidiaries will prepay, redeem, defease, exchange or
                  purchase or materially alter the payment terms of any of: (a)
                  the securities issued under the Existing Indenture; (b) the
                  Series A Notes; or (c) the Series B Notes (except pursuant to
                  the Rights Offering).

         8.20     No Excess Working Capital to Subsidiaries. The Corporation
                  will not fund or provide its Subsidiaries with funds in excess
                  of their reasonably anticipated working capital needs.

9. Related Agreements. The Corporation hereby grants to the Lender all of the
rights, benefits and privileges set forth in each of the Related Agreements.

10. Payment or Exchange of Series B Notes. The Corporation and the Lender
acknowledge and agree that to the extent the Series A Notes and RO Warrants are
purchased under the Rights Offering the proceeds raised by the Corporation
therefrom will be used to pay the Series B Notes on a pro rata basis unless
another allocation of such proceeds among the holders of the Series B Notes is


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                                      -29-
<PAGE>   35



otherwise agreed to in writing by the all of the holders of the Series B Notes.
After consummation of the issuance of the Series A Notes and RO Warrants under
the Rights Offering, any remaining unissued Series A Notes and RO Warrants will
be issued by the Corporation to the Series B Notes purchasers in exchange for
the Series B Notes plus an amount equal to accrued unpaid interest on the Series
A Notes to be exchanged. Such exchange will take place within twenty (20) days
after closing of the Rights Offering.

11. Default. The Corporation will be in default under this Agreement if any of
the following events occur (a "Default"):

         11.1     Nonpayment of CEC Note. A default in payment when due of any
                  interest on or principal of the CEC Note or a default in
                  payment when due of any other amount payable to the Lender
                  under the terms of this Agreement or the Related Agreements;
                  or

         11.2     Breach of Agreement. Default in the performance or observance
                  of any covenant contained in this Agreement, the CEC Note, the
                  Related Agreements or any other agreement between the
                  Corporation and the Lender entered into in connection with
                  this Agreement, the CEC Note or the Related Agreements
                  including, without implied limitation, the failure of the
                  Corporation to pay or satisfy any redemption, payment,
                  purchase or other obligation with respect to the CEC Note, the
                  Warrants or the Warrant Shares even if such failure results
                  from any restriction or prohibition on the ability of the
                  Corporation to satisfy such obligations; or

         11.3     Representations and Warranties. Any representation, statement,
                  certificate, schedule or report made or furnished to the
                  Lender by or on behalf of the Corporation or any Subsidiary
                  proves to be false or erroneous in any material respect or any
                  warranty ceases to be complied with in any material respect;
                  or

         11.4     Material Agreements. The Corporation or any Subsidiary
                  defaults under or fails to duly observe, perform or comply
                  with any term or condition of the Existing Indenture, the New
                  Indenture, the Concession Agreements or any other contract,
                  instrument or agreement with any person if such contract,
                  instrument or agreement is material to the Corporation or any
                  Subsidiary or such default or failure can reasonably be
                  expected to materially and adversely effect the Corporation,
                  any Subsidiary or their respective businesses or assets; or

         11.5     Indebtedness. The default by the Corporation or any Subsidiary
                  in the payment of any interest, principal or other amount on
                  any indebtedness for borrowed money owing to any person which
                  is not cured in the time permitted by the documents governing
                  such indebtedness or the maturity or acceleration of any such
                  indebtedness; or

         11.6     Insolvency. The Corporation or any Subsidiary admits the
                  inability to pay its debts as such debts mature; or


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                                      -30-
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         11.7     Bankruptcy. The institution of bankruptcy, reorganization,
                  readjustment of any debt, liquidation or receivership
                  proceedings by or against the Corporation or any Subsidiary
                  under the Bankruptcy Code, as amended, any part thereof, or
                  under any other laws, whether state, federal or foreign, for
                  the relief of debtors, now or hereafter existing (which in the
                  case of an involuntary filing, is not removed or dismissed in
                  sixty [60] days); or

         11.8     Receivership. The appointment of a receiver or trustee for the
                  Corporation, any Subsidiary or any substantial part of their
                  assets or businesses or the discontinuance of business by the
                  Corporation or any Subsidiary; or

         11.9     Judgment. Entry by any court of a final judgment against the
                  Corporation or any Subsidiary in an amount greater than Two
                  Hundred Fifty Thousand Dollars ($250,000.00) or an attachment
                  of any of the assets of the Corporation or any Subsidiary by
                  any means, including, without limitation, levy, distraint,
                  replevin, or self-help, which is not discharged or stayed
                  within thirty (30) days thereof; or

         11.10    Concession Contracts. The expiration, termination or material
                  breach of any of the Concession Agreements of the Corporation
                  or the Subsidiaries which would have a Material Adverse Effect
                  or the seizure, nationalization or forfeiture of any assets of
                  the Corporation or the Subsidiaries; or

         11.11    Indentures. The occurrence of an event of default under the
                  Existing Indenture or the New Indenture which is not cured or
                  waived in strict compliance with the terms thereof; or

         11.12    Change of Control. The occurrence of any of the following
                  events: (a) any person other than the Corporation or one of
                  the Subsidiaries acquires or holds any legal or beneficial
                  ownership of any Subsidiary whether now or hereafter existing;
                  (b) any Person or two or more Persons acting as a group
                  acquires beneficial ownership (within the meaning of Rule
                  13d-3 of the SEC under the Securities Exchange Act of 1934, as
                  amended, without consideration of the sixty (60) day period,
                  and including holding proxies to vote for the election of
                  directors other than proxies held by the Corporation's
                  management or their designees to be voted in favor of persons
                  nominated by the Corporation's Board) of fifty percent (50%)
                  or more of the outstanding voting securities of the
                  Corporation, measured by voting power (including both common
                  stock and any preferred stock or other equity securities
                  entitling the holders thereof to vote with the holders of
                  common stock in elections for directors of the Corporation);
                  (c) one-third or more of the directors of the Corporation
                  consists of persons not nominated by the Corporation's Board
                  (not including as Board nominees any directors which the Board
                  is obligated to nominate pursuant to shareholders agreements,
                  voting trust arrangements or similar arrangements); or (d) the
                  merger or consolidation of the Corporation with or into
                  another person or entity or the merger or consolidation of
                  another person or entity into the Corporation, or the sale of
                  all or substantially all of the assets of the



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                                      -31-
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                  Corporation or any Subsidiary to another person or entity
                  (other than a person or entity that is wholly controlled by
                  the Corporation or one or more of the Subsidiaries), and, in
                  the case of any such merger or consolidation, the securities
                  of the Corporation that are outstanding immediately prior to
                  such transaction and which represent one hundred percent
                  (100%) of the aggregate voting power of the voting stock of
                  the Corporation are changed into or exchanged for cash,
                  securities or property, unless pursuant to such transaction
                  such securities are changed into or exchanged for, in addition
                  to any other consideration, securities of the surviving
                  corporation that represent immediately after such transaction,
                  at least a majority of the aggregate voting power of the
                  voting securities of the surviving corporation.

         11.13    Opportunity to Cure. In the event the Corporation cures or
                  causes to be cured such Default within twenty (20) days after
                  receipt of written notice thereof, the parties will be
                  restored to their respective rights and obligations under this
                  Agreement as if no Default had occurred, except that no right
                  to cure or notice of Default will be given as to events of
                  Default in paragraphs 11.1, 11.5, 11.6, 11.7, 11.8, 11.9,
                  11.10, 11.11 or 11.12. The Borrower's opportunity to cure will
                  be applicable as herein set forth notwithstanding any contrary
                  provisions contained in any of the Related Agreements.

12. Remedies. On the occurrence of a Default the Lender may elect to do any of
the following:

         12.1     Exercise Remedy. The Lender may exercise any remedy at law or
                  in equity or any remedy provided by this Agreement or the
                  Related Agreements.

         12.2     Selective Enforcement. In the event the Lender elects to
                  selectively and successively enforce the Lender's rights under
                  any one or more of this Agreement or the Related Agreements,
                  such action will not be deemed a waiver or discharge of any
                  other right or remedy until such time as all of the
                  Corporation's obligations thereunder have been satisfied.

         12.3     Waiver of Default. By an instrument or instruments in writing,
                  signed by the Lender, waive any Default which occurs and any
                  of the consequences of such Default, and, in such event, the
                  Lender, the Corporation and the Subsidiaries will be restored
                  to their respective former positions, rights and obligations
                  hereunder. Any default so waived will, for all purposes of
                  this Agreement, be deemed to have been cured and not to be
                  continuing, but no such waiver will extend to any subsequent
                  or other Default or impair any consequence of such subsequent
                  or other Default.

13. Agent Appointment; Jurisdiction. The Corporation and each of the
Subsidiaries hereby appoints CT Corporation, located in Oklahoma City, Oklahoma,
or such other person as may be designated by the Corporation and approved by the
Lender, in writing, as the Corporation's and the Subsidiaries' agent (the
"Agent") for the purpose of accepting notices and service of process until the
payment in full of the CEC Note and so long as the Lender owns any of the
Warrants or the Warrant Shares. Neither the Corporation nor any of the
Subsidiaries will remove or terminate the Agent unless prior thereto: (a) the
Lender has consented to such removal or termination in writing; and (b)


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                                      -32-
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a substitute Agent acceptable to the Lender has been appointed by the
Corporation and each of the Subsidiaries. Any notice or service of process
delivered to the Agent will be deemed to be served on the Corporation and the
Subsidiaries for purposes of this Agreement and the Related Agreements. EACH OF
THE CORPORATION AND THE SUBSIDIARIES HEREBY IRREVOCABLY SUBMITS ITSELF TO THE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF OKLAHOMA
AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON THE CORPORATION
AND THE SUBSIDIARIES BY SERVICE ON THE AGENT IN ANY LEGAL PROCEEDING RELATING TO
THIS AGREEMENT OR THE RELATED AGREEMENTS BY ANY MEANS ALLOWED UNDER OKLAHOMA OR
FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR ANY OF THE RELATED AGREEMENTS WILL BE BROUGHT AND LITIGATED
EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
OKLAHOMA, TO THE EXTENT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE IN THE
OKLAHOMA DISTRICT COURT SITTING IN OKLAHOMA COUNTY, OKLAHOMA. THE PARTIES HERETO
HEREBY WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT
THE VENUE THEREOF IS IMPROPER, AND FURTHER AGREE TO A TRANSFER OF ANY SUCH
PROCEEDING TO A FEDERAL COURT SITTING IN THE OKLAHOMA CITY, OKLAHOMA TO THE
EXTENT THAT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT
IN OKLAHOMA COUNTY, OKLAHOMA. IN FURTHERANCE THEREOF, THE CORPORATION, THE
SUBSIDIARIES AND THE LENDER EACH HEREBY ACKNOWLEDGE AND AGREE THAT IT WAS NOT
INCONVENIENT FOR THEM TO NEGOTIATE AND RECEIVE FUNDING OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IN SUCH COUNTY AND THAT IT WILL BE NEITHER
INCONVENIENT NOR UNFAIR TO LITIGATE OR OTHERWISE RESOLVE ANY DISPUTES OR CLAIMS
IN A COURT SITTING IN SUCH COUNTY.

14. Indemnification. The Corporation agrees to indemnify, pay and hold the
Lender and its Affiliates and any subsequent holder of the CEC Note, and each
such person's officers, directors, employees and agents and each person, if any,
who controls the Lender within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively called the "Indemnified
Parties"), harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever including, but not limited
to, the fees and disbursements of counsel for such Indemnified Parties, in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnified Parties will be designated a party thereto,
which may be imposed on, incurred by, or asserted against such Indemnified
Party, in any manner relating to or arising out of the transactions contemplated
by this Agreement, the Related Agreements or the ownership of any of the CEC
Note, Warrants or Warrant Shares or caused by any untrue statement or alleged
untrue statement of a material fact contained in the Rights Offering (or any
amendment or supplement thereto), any preliminary offering memorandum or any
Rule 144A Information provided by the Corporation or any Subsidiary to any
holder or prospective purchaser of the Series A Notes or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (a "Claim"),
except that the Corporation will have no obligation hereunder to an Indemnified
Party with respect to any such liabilities arising directly out of the gross
negligence or willful misconduct of such Indemnified Party or with respect to
any Claim caused by any untrue statement or omission or alleged untrue statement
or omission



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                                      -33-
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based upon information relating to such Indemnified Party furnished in writing
to the Corporation by such Indemnified Party as determined by a final,
non-appealable judgment of a court of competent jurisdiction. If any indemnity
provided for in the preceding sentence is not available solely because it is
found to be contrary to public policy or otherwise unlawful, then the
Corporation and the Indemnified Parties will contribute to the amount payable in
such proportion as is appropriate to reflect the relative faults and benefits
and any other relevant equitable considerations provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

         14.1     Procedure. If any Claim or alleged Claim is brought against
                  any Indemnified Party in respect of which such Indemnified
                  Party may be indemnified under this paragraph 14.1 by the
                  Corporation, such Indemnified Party will promptly notify the
                  Corporation in writing. The Corporation at its option may
                  assume the defense of any action in respect of which it has
                  acknowledged its obligation to indemnify such Indemnified
                  Party under this paragraph 14.1. If the Corporation assumes
                  the defense of any action, the Indemnified Party will not be
                  liable for any settlement thereof without its consent (but
                  such consent will not be unreasonably withheld). If the
                  Corporation assumes the defense of any such action, such
                  Indemnified Party will have the right to employ separate
                  counsel in such action and to participate in the defense
                  thereof, but the fees and expenses of such counsel will be
                  paid by such Indemnified Party unless in the reasonable
                  opinion of such Indemnified Party there may be a conflict
                  between the positions of the Corporation and of such
                  Indemnified Party in conducting the defense of such action or
                  that there may be legal defenses available to such Indemnified
                  Party different from or in addition to those which counsel to
                  the Corporation would be able to raise, in which event the
                  fees and expenses of such counsel will be paid by the
                  Corporation.

         14.2     Environmental and Governmental. Without limiting the
                  generality of the indemnity set out in this paragraph 14, the
                  Corporation will defend, protect, indemnify and hold harmless
                  the Lender and all other Indemnified Parties from and against
                  any and all actions, causes of action, suits, losses,
                  liabilities, damages, injuries, penalties, fees, costs,
                  expenses and claims of any and every kind whatsoever paid,
                  incurred or suffered by, or asserted against, the Lender or
                  any other Indemnified Parties pursuant to environmental laws
                  with respect to the past, present or future operations or
                  facilities of the Corporation, any Subsidiary or any
                  predecessors, successors, or Affiliates thereof. The
                  Corporation also agrees to pay all governmental assessments,
                  charges or taxes (except income taxes), including any interest
                  or penalties thereon, at any time payable or ruled to be
                  payable in respect of the existence, execution, delivery or
                  performance of this Agreement and the Related Agreements or
                  the issuance or existence of the CEC Note, the Warrants or the
                  Warrant Shares, by reason of an existing or hereafter enacted
                  federal, state or local statute, and to indemnify and hold the
                  Lender, and each and every holder of the CEC Note, the
                  Warrants or the Warrant Shares, harmless against liability in
                  connection with any such assessments, charges or taxes.


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT



                                      -34-
<PAGE>   40



         14.3     Other Remedies. The remedies provided for in this paragraph 14
                  are not exclusive and will not limit any rights or remedies
                  which may otherwise be available to any Indemnified Party at
                  law or in equity.

15. Effectiveness of Agreement and Termination. This Agreement shall become
effective upon the execution and delivery of this Agreement by the parties
hereto. This Agreement may be terminated at any time on or prior to the Closing
Date by the Lender by written notice to the Corporation if any of the following
has occurred: (a) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change which in the Lender's judgment, is
material and adverse and, in the Lender's judgment, makes it impracticable to
market the Series A Notes on the terms and in the manner contemplated in the
Rights Offering, (b) the suspension or material limitation of trading in
securities or other instruments on the New York Stock Exchange, the American
Stock Exchange, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade or the Nasdaq Market or limitation on
prices for securities or other instruments on any such exchange or the Nasdaq
National Market unless such suspension or limitation is removed prior to the
Closing Date, (c) the suspension of trading of any securities of the Corporation
on any exchange or in the over-the-counter market unless such suspension is
removed prior to the Closing Date, (d) the enactment, publication, decree or
other promulgation of any foreign, federal or state statute, regulation, rule or
order of any court or other governmental authority which in the Lender's
reasonable opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of the Corporation and its Subsidiaries, taken as a whole, or (e) the
declaration of a banking moratorium by foreign, federal or state authorities.

16. Miscellaneous. The parties further agree as follows:

         16.1     Fees and Expenses. The Corporation agrees to pay on demand the
                  following amounts: (a) all of the Corporation's costs and
                  expenses of compliance with all agreements and conditions
                  contained in this Agreement and in the Related Agreements; (b)
                  attorney fees, expenses and disbursements of counsel to the
                  Lender in connection with the preparation, negotiation and
                  execution of this Agreement and the Related Agreements; (c)
                  all other out-of-pocket expenses incurred by the Lender in
                  connection with their due diligence investigation of the
                  Corporation and the performance of this Agreement and the
                  Related Agreements by the Lender; and (d) all costs and
                  expenses (including attorney's fees and costs) incurred by the
                  Lender or any holders of the CEC Note, the Warrants or the
                  Warrant Shares arising out of or in connection with the
                  administration, enforcement or preservation of any rights
                  under this Agreement or the Related Agreements including,
                  without limitation, the collection or enforcement of this
                  Agreement, the CEC Note, and the Related Agreements by
                  judicial proceedings, proceedings under Chapter 7 or 11 of the
                  Bankruptcy Code or any successor statute thereto, or
                  otherwise.

         16.2     Consent to Amendments; Waivers. The provisions of this
                  Agreement may be amended or waived at any time only by the
                  written agreement of the Corporation, the Subsidiaries and the
                  Lender. Any waiver, permit, consent or approval of any kind


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -35-
<PAGE>   41



                  or character on the part of the Lender of any provisions or
                  conditions of this Agreement must be made in writing and will
                  be effective only to the extent specifically set forth in such
                  writing. No course of dealing between the Corporation and the
                  Lender and no delay in exercising any right, remedy, or power
                  conferred hereby, by the Related Agreements, or now or
                  hereafter existing at law or under equity, by statute or
                  otherwise, will operate as a waiver of or otherwise prejudice
                  any such right, power or remedy.

         16.3     Representations and Warranties. All representations,
                  warranties and covenants contained herein or made in writing
                  by any party in connection herewith will survive the execution
                  and delivery of this Agreement and any investigation made at
                  any time, or knowledge obtained or capable of being obtained
                  at any time, by or on behalf of the Lender or any other holder
                  of the CEC Note.

         16.4     Successors and Assigns. Except as otherwise expressly provided
                  herein, all covenants and agreements contained in this
                  Agreement by or on behalf of any of the parties hereto will
                  bind and inure to the benefit of the respective successors and
                  assigns of the parties hereto, whether so expressed or not. In
                  addition, and whether or not any express assignment has been
                  made, the provisions of this Agreement which are for the
                  benefit of the Lender are also for the benefit of, and
                  enforceable by, any subsequent holder of the CEC Note.

         16.5     Severability. Whenever possible, each provision of this
                  Agreement will be interpreted in such manner as to be
                  effective and valid under applicable law, but if any provision
                  of this Agreement is held to be prohibited by or invalid under
                  applicable law, such provision will be ineffective only to the
                  extent of such prohibition or invalidity, without invalidating
                  the remainder of this Agreement.

         16.6     Construction; Currency. The descriptive headings of this
                  Agreement are inserted for convenience of reference only and
                  do not constitute a part of and will not be utilized in
                  interpreting this Agreement. Except as expressly provided
                  herein, all currency amounts are in United States Dollars and
                  any and all payments are to be made in United States Dollars.

         16.7     Notices. Any notice, demand or communication required or
                  permitted to be given by any provision of this Agreement will
                  be in writing and will be deemed to have been given and
                  received when delivered personally or by telefacsimile to the
                  party designated to receive such notice, or on the date
                  following the day sent by overnight courier, or on the third
                  (3rd) business day after the same is sent by certified mail,
                  postage and charges prepaid, directed to the addresses of the
                  parties set forth on the signature pages hereto or to such
                  other or additional addresses as any party might designate by
                  written notice to the other parties.

         16.8     Governing Law. All questions concerning the construction,
                  validity and interpretation of this Agreement, and the
                  performance of the obligations imposed by


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -36-
<PAGE>   42



                  this Agreement, will be governed by the laws of the State of
                  Oklahoma applicable to contracts made and wholly to be
                  performed in that state.

         16.9     Exhibits and Schedules. All exhibits and schedules hereto are
                  an integral part of this Agreement.

         16.10    Exchange of Certificates. Upon surrender by any holder to the
                  Corporation of any Warrants or certificates evidencing any
                  Warrant Shares, the Corporation, at its expense, will issue in
                  exchange therefor, and deliver to such holder, a new
                  certificate or certificates representing such shares of stock
                  of the Corporation, in such denomination or denominations as
                  may be requested by such holder. Upon receipt of evidence
                  satisfactory to the Corporation of the loss, theft,
                  destruction or mutilation of any certificate representing any
                  Warrants or Warrant Shares, and in case of any such
                  mutilation, upon surrender and cancellation of such
                  certificate, the Corporation at its expense will issue and
                  deliver to any such holder a new certificate evidencing such
                  warrants or shares of stock of the Corporation of like tenor,
                  in lieu of such lost, stolen, destroyed or mutilated
                  certificate.

         16.11    Confidentiality. The Lender recognizes that the Corporation
                  may provide the Lender access to information which is of a
                  confidential and proprietary nature. Except as may be required
                  in the opinion of counsel to the Lender in connection with any
                  litigation discovery, the SEC or any other governmental agency
                  or under other applicable law, the Lender agrees not to
                  disclose to any person, other than the Lender's officers,
                  employees, financial institutions or consultants or legal
                  counsel who are subject to a general obligation of
                  confidentiality, nor use for any purpose, other than in
                  connection with this Agreement and the Related Agreements, any
                  information, data or material (regardless of form) which is
                  clearly marked confidential and delivered to the Lender by the
                  Corporation pursuant to the provisions of this Agreement (the
                  "Confidential Information"). The term "Confidential
                  Information" will not include any information which: (a) at
                  the time of disclosure to the Lender is already in the
                  Lender's possession on a non-confidential basis or thereafter
                  is generally available to the public; (b) was available to the
                  Lender on a non-confidential basis from a source other than
                  the Corporation; or (c) has been independently acquired or
                  developed by the Lender without violating the Lender's
                  obligations under this paragraph 16.11.

         16.12    Public Announcements. Prior to Closing and at all times during
                  the term of this Agreement, the Corporation and the
                  Subsidiaries will consult with the Lender before issuing any
                  press release or otherwise making any public statements with
                  respect to the transactions contemplated by this Agreement and
                  will not issue any press release or make any such public
                  statement relating to this Agreement prior to obtaining the
                  written approval of the Lender; provided, however, that such
                  approval will not be required where such release or
                  announcement is required by applicable law rule or regulation;
                  and provided further, that the Corporation may respond to
                  inquiries by the


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -37-
<PAGE>   43



                  press or others regarding the transactions contemplated by
                  this Agreement, so long as such responses are consistent with
                  previously issued press releases.

         16.13    Final Agreement. This Agreement, together with the Related
                  Agreements constitutes the complete and final agreement of the
                  parties concerning the matters referred to herein, and
                  supersedes all prior agreements and understandings.

         16.14    Execution in Counterparts. This Agreement may be executed in
                  any number of counterparts, each of which when so executed and
                  delivered will be deemed an original, and such counterparts
                  together will constitute one instrument. The parties hereto
                  have executed this Agreement on the date first set forth
                  above.

         16.15    ACKNOWLEDGMENTS AND ADMISSIONS. EACH OF THE CORPORATION AND
                  THE SUBSIDIARIES HEREBY REPRESENTS, WARRANTS, ACKNOWLEDGES AND
                  ADMITS THAT (A) EACH OF THE CORPORATION AND THE SUBSIDIARIES
                  HAS MADE AN INDEPENDENT DECISION TO ENTER INTO THIS AGREEMENT,
                  WITHOUT RELIANCE ON ANY REPRESENTATION, WARRANTY, COVENANT OR
                  UNDERTAKING BY THE LENDER, WHETHER WRITTEN, ORAL OR IMPLICIT,
                  OTHER THAN AS EXPRESSLY SET OUT IN THIS AGREEMENT OR IN
                  ANOTHER DOCUMENT EXECUTED BY THE LENDER AND DELIVERED AFTER
                  THE DATE HEREOF, (B) THERE ARE NO REPRESENTATIONS, WARRANTIES,
                  COVENANTS, UNDERTAKINGS OR AGREEMENTS BY THE LENDER AS TO THE
                  PURCHASE OF THE CEC NOTE EXCEPT AS EXPRESSLY SET OUT IN THIS
                  AGREEMENT, (C) THE LENDER HAS NO FIDUCIARY OBLIGATION TOWARD
                  THE CORPORATION OR THE SUBSIDIARIES WITH RESPECT TO THIS
                  AGREEMENT, THE RELATED AGREEMENTS OR THE TRANSACTIONS
                  CONTEMPLATED HEREBY OR THEREBY, AND (D) THE LENDER HAS RELIED
                  UPON THE TRUTHFULNESS OF THE ACKNOWLEDGMENTS IN THIS PARAGRAPH
                  16.14 IN DECIDING TO EXECUTE AND DELIVER THIS AGREEMENT AND TO
                  BECOME OBLIGATED HEREUNDER.

         16.16    JOINT ACKNOWLEDGMENT. THIS WRITTEN AGREEMENT REPRESENTS 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.

         16.17    WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF THE
                  LENDER, THE CORPORATION AND THE SUBSIDIARIES HEREBY KNOWINGLY,
                  VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY (A) WAIVES, TO THE
                  MAXIMUM EXTENT NOT PROHIBITED BY LAW,


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -38-
<PAGE>   44



                  ANY RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY
                  LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME
                  ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
                  ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH,
                  (B) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
                  RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION
                  ANY "SPECIAL DAMAGES," AS DEFINED BELOW, (C) CERTIFIES THAT NO
                  PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY
                  HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED
                  THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
                  ENFORCE THE FOREGOING WAIVERS, AND (D) ACKNOWLEDGES THAT IT
                  HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
                  TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE
                  MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS PARAGRAPH.
                  AS USED IN THIS PARAGRAPH, "SPECIAL DAMAGES" INCLUDES ALL
                  SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES
                  (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS
                  OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY
                  OR DELIVER TO ANY OTHER PARTY HERETO.


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -39-
<PAGE>   45



                  IN WITNESS WHEREOF, the Corporation, the Subsidiaries and the
Lender have executed this Agreement as of 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 "Corporation")


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


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


                              SEVEN SEAS PETROLEUM TURKEY INC., a
                              British Columbia corporation


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


                              SEVEN SEAS RESOURCES AUSTRALIA  INC., a
                              British Columbia corporation


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


                              SEVEN SEAS PETROLEUM USA INC., a Delaware
                              corporation


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



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT



                                      -40-
<PAGE>   46



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


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


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


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


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


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


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


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


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


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


SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT



                                      -41-
<PAGE>   47




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


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

                              PETROLINSON S.A.., a Panamanian corporation


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

                              GHK COMPANY COLOMBIA, an Oklahoma corporation


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

                              GUADUAS PIPELINE COMPANY, a Cayman
                              Islands exempted company limited by shares


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

                              (the "Subsidiaries")

                              Notice Addresses:

                              Seven Seas Petroleum, Inc.
                              Attention: Larry A. Ray, President
                              5555 San Felipe, Suite 1700
                              Houston, Texas 77056
                              Telefacsimile: (713) 621-9770

                              and

                              McAfee & Taft
                              Attention: Gary Fuller
                              211 North Robinson
                              10th Floor
                              Oklahoma City, Oklahoma 73102
                              Telefacsimile: (405) 235-4439



SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -42-
<PAGE>   48



                              CHESAPEAKE ENERGY CORPORATION,
                              an Oklahoma corporation


                              By /s/ AUBREY K. MCCLENDON
                                ------------------------------------------------
                                Aubrey K. McClendon, Chief Executive Officer

                              (the "Lender")

                              Notice Addresses:

                              Chesapeake Energy Corporation
                              Attention: Marcus C. Rowland
                              6100 North Western
                              Oklahoma City, Oklahoma  73118
                              Telefacsimile: (405) 879-9580

                              and

                              Commercial Law Group, P.C.
                              Attention: Ray Lees
                              2725 Oklahoma Tower
                              210 Park Avenue
                              Oklahoma City, Oklahoma  73102
                              Telefacsimile:  (405) 232-5553




SEVEN SEAS PETROLEUM, INC.
NOTE PURCHASE AND LOAN AGREEMENT
                                      -43-
<PAGE>   49





                                   EXHIBIT "A"


                                   (CEC Note)


                   TO BE PREPARED AND APPROVED BY THE PARTIES
                             SUBSEQUENT TO EXECUTION




<PAGE>   50
                            Exhibit B - Warrant No. 1




     Deliberately omitted; incorporated by reference to Exhibit 4(B) hereof.

<PAGE>   51




                                   EXHIBIT "C"



                         (Pledge and Security Agreement
                          Deed of Mortgage Over Shares
                              Collateral Agreement)



                   TO BE PREPARED AND APPROVED BY THE PARTIES
                            SUBSEQUENT TO EXECUTION.





<PAGE>   52



                   Exhibit D - Shareholder's Rights Agreement




     Deliberately omitted; incorporated by reference to Exhibit 4(C) hereof.

<PAGE>   53





                                   EXHIBIT "E"



                         (Registration Rights Agreement)



                   TO BE PREPARED AND APPROVED BY THE PARTIES
                            SUBSEQUENT TO EXECUTION.






<PAGE>   54






                                   EXHIBIT "F"



                         (Collateral Sharing Agreement)



                   TO BE PREPARED AND APPROVED BY THE PARTIES
                            SUBSEQUENT TO EXECUTION.







<PAGE>   55









                                   EXHIBIT "G"



                                 (Put Agreement)



                   TO BE PREPARED AND APPROVED BY THE PARTIES
                            SUBSEQUENT TO EXECUTION.







<PAGE>   56



                                  SCHEDULE 3.1

     List of jurisdictions in which the Corporation is duly qualified to do
                                    business.


                            Seven Seas Petroleum Inc.

                 Registered: Cayman Islands as of March 1, 2001




<PAGE>   57

                                  SCHEDULE 3.2

       List of subsidiaries that the Corporation directly owns 100% of the
          legal and beneficial capital equity and the jurisdictions in
            which the subsidiaries are organized and qualified to do
                                    business



<Table>
<Caption>
                                                                                                     OTHER JURISDICTIONS
                                                                                                          IN WHICH
                                                                         JURISDICTION OF               QUALIFIED TO DO
  NO.                         SUBSIDIARY                                  INCORPORATION                   BUSINESS
-------- ----------------------------------------------------- ------------------------------------- ----------------------
<S>     <C>                                                    <C>                                   <C>
   1     Seven Seas Petroleum Holdings Inc.                    Cayman Islands (Dormant)
   2     Seven Seas Petroleum Turkey Inc.                      British Colombia (Dormant)
   3     Seven Seas Resources Australia Inc.                   British Colombia (Dormant)
   4     Seven Seas Petroleum USA Inc.                         Delaware                              Texas
   5     Seven Seas Petroleum Australia Inc.                   Cayman Islands (Dormant)
   6     Seven Seas Petroleum PNG Inc.                         Cayman Island (Dormant)
   7     Seven Seas Petroleum Argentina Inc.                   Cayman Islands (Dormant)
   8     Seven Seas Petroleum Mediterranean Inc.               Cayman Islands (Dormant)
   9     Seven Seas Petroleum Turkey Inc.                      Cayman Islands (Dormant)
  10     Seven Seas Petroleum Colombia Inc.                    Cayman Island                         Colombia
  11     Petrolinson SA                                        Panama                                Colombia
  12     GHK Company Colombia                                  Oklahoma                              Colombia
  13     Guaduas Pipeline Company                              Cayman Islands (Dormant)
</Table>
<PAGE>   58



                                  SCHEDULE 3.6




              Options Issued Under Corporation's Stock Option Plan
                               As of July 6, 2001




<Table>
<Caption>
                                    GRANTED
            EXERCISE PRICE                          OUTSTANDING OPTIONS
                RANGE                                (NUMBER OF SHARES)
---------------------------------------        -----------------------------
<S>                                            <C>
             $1.06 - 1.94                                            317,134
             2.00 - 2.94                                             760,912
             3.00 - 3.94                                             727,105
             4.22 - 4.81                                             375,000
             6.16 - 7.13                                              10,000
             8.06 - 8.63                                             175,000
                 9.00                                              1,008,500
            10.70 - 10.90                                            629,000
                14.09                                                 18,000
            18.55 - 18.75                                            530,000
            Undetermined(1)                                          136,283
                                               -----------------------------
            TOTAL GRANTED                                          4,686,934
                                               =============================
         AVAILABLE FOR GRANT                                         669,954
                                               -----------------------------
            TOTAL OPTIONS                                          5,356,888
                                               =============================
</Table>


(1) Certain options were granted to the Corporation's directors and officers
that vest periodically during the course of the year. The exercise price of the
option is the average between the high and low trading prices of the
Corporation's stock on the day of vesting.
<PAGE>   59



                                  SCHEDULE 3.7

                List of each subsidiary's authorized, issued and
                    outstanding capital stock or other equity
                   interests along with the ownership of such
                         issued and outstanding shares.



<Table>
<Caption>
                                                                                              CAPITAL STOCK
                                                                             -----------------------------------------------
            SUBSIDIARY                                OWNER (100%)            AUTHORIZED       ISSUED       OUTSTANDING
-------------------------------------------- -------------------------       --------------- ----------- -------------------
<S>                                          <C>                             <C>             <C>         <C>
Seven Seas Petroleum Holdings Inc. (Cayman)  Seven Seas Petroleum Inc.               50,000           1                   1
Seven Seas Petroleum Turkey Inc. (B.C.)      Seven Seas Petroleum Inc.               10,000           1                   1
Seven Seas Resources Australia Inc. (B.C)    Seven Seas Petroleum Inc.               10,000           1                   1
Seven Seas Petroleum USA Inc.                Seven Seas Petroleum Inc.                1,000         100                 100
Seven Seas Petroleum Australia Inc.          Seven Seas Petroleum Inc.               50,000           1                   1
(Cayman)
Seven Seas Petroleum PNG Inc.                Seven Seas Petroleum Inc.               50,000           1                   1
(Cayman)
Seven Seas Petroleum Argentina Inc.          Seven Seas Petroleum Inc.               50,000           1                   1
(Cayman)
Seven Seas Petroleum Mediterranean Inc.      Seven Seas Petroleum Inc.               50,000           1                   1
(Cayman)
Seven Seas Petroleum Turkey, Inc. (Cayman)   Seven Seas Petroleum Inc.               50,000           1                   1
Seven Seas Petroleum Colombia Inc. (Cayman)  Seven Seas Petroleum Inc.               50,000           1                   1
Petrolinson S.A.                             Seven Seas Petroleum Inc.                5,000       5,000               5,000
(Panama)
GHK Company Colombia                         Seven Seas Petroleum Inc.              100,000       1,000               1,000
(Oklahoma)
Guaduas Pipeline Company                     Seven Seas Petroleum Inc.               50,000           1                   1
(Cayman)
</Table>

<PAGE>   60




                                  SCHEDULE 3.10




          LIST OF SEC DOCUMENTS THAT DO NOT COMPLY WITH THE SECURITIES
               EXCHANGE ACT OF 1933, AS AMENDED, AND THE EXCHANGE
                             ACT OF 1934, AS AMENDED


                                      NONE
<PAGE>   61



                                  SCHEDULE 3.12



  List of Debts, Liabilities or Obligations by the Company or its Subsidiaries




         1)       Accounts Payable - General expenditures - Estimate of $263,000
                  as of 7/3/01

         2)       Accounts Payable related to Dindal and Rio Seco contract areas
                  (includes El Segundo 5-S well) - Estimate of $1,810,610 as of
                  7/3/01

         3)       Accounts Payable related to Guaduas--La Dorada Pipeline -
                  Estimate of $816,000 as of 7/3/01

         4)       Association contract obligations - Dindal, Rio Seco,
                  Rosablanca, Deep Dindal, and Cristales

         5)       Any obligation of the Company or its subsidiaries under the
                  contracts listed as exhibits to the Company's Form 10-K for
                  the year ended December 31, 2001.


<PAGE>   62



                                  SCHEDULE 3.13



       List of a Sale, Transfer, or Lease of any of Company's Assets since
                                December 31, 2000




1)       Termination of Seven Seas interest in Tapir Association Contract

2)       Reorganization of the Company's subsidiaries, converting all second and
         third tier subsidiaries to first tier subsidiaries.









<PAGE>   63



                                  SCHEDULE 3.14



      List of Contracts, Leases, Agreements, Plans, Licenses, Arrangements,
                           Obligations or Commitments



1)       Dindal Association Contract, effective March 1993 as amended per the
         agreement attached hereto

2)       Rio Seco Association Contract, effective August 1995

3)       Rosablanca Association Contract, effective February 1998

4)       Deep Dindal Association Contract, effective April 2001

5)       Cristales Association Contract, effective April 2001

6)       Joint Operating Agreements related to the Dindal and Rio Seco
         association contracts, signed March 1996 with January 2001 amendments

7)       Lease for Corporate Headquarters office space in the Marathon Oil Tower
         in Houston, signed in April 1998 and amended in April 2001

8)       Lease agreements for Colombian operations office in the Teleport office
         tower in Bogota, Colombia. Currently eight agreements are in place,
         each with a year-long duration and a six-month advance notice of
         termination clause.

9)       Trust Indenture governing $110 million of senior subordinated notes,
         dated May 1998

10)      Exploration Agreement with Guaduas Oil Field partners, signed January
         2001

11)      Agreement with CIBC World Markets Corp. for service as the Company's
         financial advisor, dated March 2001

12)      Any contract, lease, agreement, obligation or commitment of the Company
         or its subsidiaries listed as an exhibit to the Company's Form 10-K as
         of 12/31/01

13)      Any and all contracts contemplated by this Agreement or in that certain
         term sheet dated April 20, 2001, specifically:

         a)       Pledge and Security Agreement
         b)       Deed of Charge over Shares Agreement (Colombian shares)



<PAGE>   64



c)       Collateral Agreement (Panamanian shares)
d)       Collateral Sharing Agreement
e)       Shareholders Rights Agreement
f)       Registration Rights Agreement
g)       Escrow Agreement - Subthrust Dindal Well Funds
h)       Escrow Agreement - Senior Subordinated Notes Interest Payments
i)       Series B Note Purchase Agreement
j)       Trust Indenture for Series A and B Notes
k)       Parent Guaranty Agreement
l)       Master Warrant Agreement
m)       Subscription Agreement
<PAGE>   65



                                  SCHEDULE 3.15

               List of Employee Benefit Plans or Related Policies


1)       Employment contract with Larry A. Ray, effective June 1997

2)       Employment contract with Todd Habliston, effective date December 1998
         (attached)

3)       Employment contract with Jeff McCloskey, effective date October 1998
         (attached)

4)       Employment contract with Claudia M. Vaca, effective November 1999
         through November 2000 (contract will continue month to month until
         either party terminates contract)

5)       Change of Control contracts with certain Seven Seas employees,
         including R. Lefaive (June 2001), R. Cunningham (February 2001), R.
         Parsons (February 2001), B. Sanchez (February 2001) (standard form
         attached)

6)       Self funded Dental reimbursement policy for Company employees and their
         eligible dependents - The Company has an unwritten policy of
         reimbursing Houston-based and expatriate employees for all dental
         expenses, excluding strictly cosmetic procedures.

7)       Health insurance policies for Company employees - Insurer: The
         Principal Financial Group

                               Summary of Benefits

         HEALTH INSURANCE - Seven Seas Petroleum Inc. participates in a
         Preferred Provider Organization (PPO) network established and
         administered by Principal Financial Group. All members and their
         dependents are eligible for coverage in the PPO plan. Member means any
         person who is an eligible employee of the policyholder. If any member
         or dependent is sick or injured, they are eligible for comprehensive
         medical and prescription drugs under the terms of the PPO network. This
         policy also covers vision expenses.

8)       Life insurance policies for Company employees - Insurer: The Principal
         Financial Group

                               Summary of Benefits

         MEMBER LIFE INSURANCE - To be eligible for insurance one must be a
         Member. A member is any person who is employed by the Policyholder on
         other than a temporary or part-time basis, and regularly scheduled to
         work for the Policyholder for at least 30 hours a week. The schedule of
         benefits for Member Life Insurance is equal to two (2) times the
         covered person's annual compensation. If the covered person shall die
         while insured for Member Life Insurance, the company will pay the
         covered person's beneficiary the Scheduled Benefit in force on the date
         of the covered person's death. If the beneficiary does not survive the
         covered person, the company will pay the estate, spouse, children,
         parents or other persons as provided in the group policy. The maximum
         schedule of benefit amount will not exceed



<PAGE>   66



         $600,000 or be less than $10,000. If the covered person is age 70 but
         less than 75, the Company will pay 65% of the scheduled benefit. If the
         covered person is age 75 and over, the Company will pay 45% of the
         scheduled benefits.

         In the case of Accidental Death and Dismemberment Insurance, the
         Company will pay a percentage of the injured person's Scheduled
         Benefit. Payment for loss of life will be to the injured person's
         beneficiary. Payment for any other loss will be to the injured person.


9)       Long Term Disability Insurance - Insurer: Fortis Benefits Insurance
         Company

                               Summary of Benefits

         GROUP LONG TERM DISABILITY INSURANCE - The policy pays a monthly
         benefit designed to partly replace income lost during periods of
         disability that result from injury, sickness, or pregnancy.

         A covered person who remains disabled during the qualifying period may
         become eligible to receive a monthly benefit based on monthly pay.
         These benefits are payable while the disability continues, or until the
         Maximum Benefit Period ends.

         If a disabled person receives benefits from other sources, we may
         reduce the benefits payable under the policy. There are also certain
         disabilities for which benefits are not paid or are limited.

         The policy includes a conversion privilege. If a covered person's Long
         Term Disability Insurance ends, it may be possible to convert to a
         conversion policy with no health exam.


10)      Any stock option plans listed as an exhibit to the Company's Form 10-K
         for the year ended December 31, 2000

11)      Contribution to Texas Workers' Compensation Fund and any other employee
         benefit plan as defined in the Agreement that is a state, federal, or
         other governmental jurisdiction requirement

12)      Retirement Plan: On January 1, 1996, the Company adopted a 401(k) plan
         to provide employees with an opportunity to increase their retirement
         savings by making tax-deductible contributions from their salaries into
         the plan. The Company does not make any contribution to the retirement
         plan.

13)      Personnel Policy: Seven Seas has not adopted a formal personnel policy
         to date. Except as specified in individual employment contracts, the
         Company does not have a formal vacation policy.
<PAGE>   67


                                  SCHEDULE 3.16



                    List of Arrangements with Related Parties




1)       Seven Seas loan to Larry A. Ray, President and Chief Operating Officer
         of Seven Seas. This principal amount of this loan is $200,000, bears a
         6.06% interest rate and is due November 1, 2002.

2)       Administrative Services Agreement with The GHK Corporation, a private
         company owned by Robert A. Hefner III, Chairman and Chief Executive
         Officer of Seven Seas. Seven Seas recognized expenses related to this
         agreement of $21,000, $21,000 and $28,000 in 2000, 1999 and 1998,
         respectively. Seven Seas also pays certain miscellaneous costs incurred
         by The GHK Corporation on behalf of Seven Seas. The Company reimbursed
         GHK $23,000, $31,000 and $0.1 million in 2000, 1999, and 1998,
         respectively, for such costs.

3)       Executive Aircraft Agreement with The GHK Corporation. Seven Seas has
         entered into an agreement with The GHK Corporation for the use of The
         GHK Corporation's executive aircraft to transport Seven Seas executives
         and employees on certain business travel. Under this agreement, Seven
         Seas pays The GHK Corporation the lesser of the cost of a first class
         airline ticket or the total actual expenses for each specific flight.
         The Company had $24,000, $57,000 and $31,000 in such expenses during
         2000, 1999 and 1998, respectively.

4)       Stillwater Loan Agreement - Robert A. Hefner guaranteed this loan and
         received $62,500 in remuneration for the guarantee.

5)       McAfee & Taft, A Professional Corporation, serves as Seven Seas'
         corporate counsel. Gary F. Fuller is a shareholder of McAfee & Taft and
         has been a member of Seven Seas' board of directors since 1997. The
         Company incurred expenses from McAfee & Taft in the amounts of
         $499,340, $267,368 and $45,955 in 2000, 1999 and 1998, respectively.


<PAGE>   68



                                  SCHEDULE 3.18

                  LIST OF INSURANCE POLICIES AND PENDING CLAIMS




<Table>
<Caption>
                              TYPE OF INSURANCE                             POLICY NUMBER
--------------------------------------------------------------------     --------------------
<S>                                                                      <C>
Foreign Workers' Compensation                                            CXC037912
Foreign General Liability/Hired / Non-owned Automobile                   CXC037912
Texas Workers' Compensation                                              TSF-001071312
Commercial General Liability/ Hired /Non-owned Automobile/ Property      35392096PHA
Director & Officers Liability                                            DO978A1A00
Special Contingency Risk                                                 OE49375
Energy Package                                                           WCE8121
Group Long Term Disability Insurance                                     G 3500348
Principal Financial Group Medical Insurance                              BC98472 A-1
</Table>



                                 PENDING CLAIMS

Seven Seas and one of its officers and directors, Robert A. Hefner III, has been
sued by four former Seven Seas officers and directors in DeCort, et al. v. Seven
Seas Petroleum Inc., et al., Cause No. 2000-50498, District Court of Harris
County, Texas, 133rd Judicial District. Plaintiffs recently dismissed from the
case Larry A. Ray, a current officer and director, and Breene M. Kerr, a former
director. Plaintiffs allege that Seven Seas failed to obtain extensions of time
in which plaintiffs could exercise certain stock options granted to them, and
that the defendants induced them to enter into separation agreements with Seven
Seas that they would not have entered into but for Seven Seas' agreement to
obtain an extension of the time for plaintiffs to exercise their stock options.
The plaintiffs filed the case October 2, 2000, seeking damages in excess of $13
million. The Company has responded, and the case is in the process of discovery.
The Company has filed a counterclaim against two plaintiffs for breaching their
fiduciary duties in connection with certain employment agreements that they
caused the Company to enter into. A trial is scheduled for late August 2001.
Seven Seas intends to vigorously defend the case. There is a claim filed against
the Directors and Officers Liability insurance policy in excess of $100,000.
<PAGE>   69



                                  SCHEDULE 3.19

        LIST OF ACTIONS, SUITS, PROCEEDINGS OR INVESTIGATIONS PENDING OR
         THREATENED AGAINST OR AFFECTING THE COMPANY OR ANY SUBSIDIARIES
                            DURING THE LAST TWO YEARS


HEIRS OF NICOLAS BELTRAN FRANCO

Two of our subsidiaries, Petrolinson, S.A. and GHK Colombia, along with the
former owner of Petrolinson, S.A., Norman Rowlinson and the heirs of Howard
Thomas Corrigan, are defendants in a lawsuit that was filed in Santa Fe de
Bogota, Colombia in 1998. The plaintiffs are the heirs of Nicolas Beltran
Franco. The plaintiffs have two claims. First, they claim that a de facto
company existed between Nicolas Beltran Franco and the defendants concerning the
Dindal and Rio Seco association contract areas. Second, they claim that before
the Dindal and Rio Seco association contracts were executed, the de facto
company conducted exploration works in the Dindal and Rio Seco association
contract areas. The plaintiffs claim they have the right to participate in
income earned from the Dindal and Rio Seco association contract areas. None of
the plaintiffs are party to the association contracts. However, they are seeking
50% of the income generated by the de facto company they claim existed. It is
not clear what percentage of the Dindal and Rio Seco association contract areas
are covered by the plaintiffs' claims. Our Colombian counsel, Raisbeck, Lara,
Rodriguez and Rueda, members of the law firm of Baker and McKenzie, believe that
if this claim is litigated the chances of the plaintiffs succeeding are remote.

SURFACE LOCATION

A lawsuit was filed by the landowner of the El Segundo 1 surface location to
cancel the Company's surface lease. The Company responded to this claim on
November 4, 1999, and has vigorously defended this claim. Examinations regarding
the claim were held in September 2000, and the probatory stage of the matter was
closed on March 21, 2001. Final allegations were presented on April 16, 2001.
The Company's Colombian legal counsel, Gamba, Barrera, Arriaga y Asociados, has
advised the Company that, on the basis of the claims asserted, it is unlikely
that it will lose the lawsuit.


NOTEHOLDER CLAIM

A claim has been brought against Seven Seas by one of the noteholders in
connection with the Special Notes issued on August 7, 1997. The claim, which is
against Seven Seas and Yorkton Securities Inc., alleges that the noteholder was
not initially advised of the right of Seven Seas to convert the debentures into
units of common shares and warrants. The claim also alleges that there were
errors in the methodology of effecting conversion pursuant to the indenture
between Seven Seas and Montreal Trust Company of Canada dated August 7, 1997
such that the conversion was not effective. The plaintiff in the claim is
seeking damages against Seven Seas in the amount of $340,000 for negligent
misrepresentation and breach of contract or alternatively, for an order
directing Seven Seas to exchange the units currently held by the plaintiff into
a note in the amount of $340,000 payable on July 24, 2002 with interest payable
thereon at a rate of 6% per annum or directing Seven Seas to reimburse the
plaintiff in the amount of $340,000 for the purchase price of the Special Notes.
Seven Seas believes it has meritorious defenses and intends to take appropriate
steps to defend the action vigorously.

FORMER MANAGEMENT

Seven Seas and one of its officers and directors, Robert A. Hefner III, has been
sued by four former Seven Seas officers and directors in DeCort, et al. v. Seven
Seas Petroleum Inc., et al., Cause No. 2000-50498, District Court of Harris
County, Texas, 133rd Judicial District. Plaintiffs recently dismissed from the
case Larry A. Ray, a current officer and director, and Breene M. Kerr, a former
director. Plaintiffs allege that Seven Seas failed to obtain extensions of time
in which plaintiffs could exercise certain stock options granted to them, and
that the defendants induced them to enter into separation agreements with Seven
Seas that they would not have entered into but for Seven Seas' agreement to
obtain an extension of the time for plaintiffs to exercise their stock options.
The plaintiffs filed the case October 2, 2000, seeking damages in excess of $13
million. The Company has responded, and the case is in the process of discovery.
The Company has filed a counterclaim against two plaintiffs for breaching their
fiduciary duties in connection with certain employment agreements that they
caused the Company to enter into. A trial is scheduled for late August, 2001.
Seven Seas intends to vigorously defend the case.



<PAGE>   70



                                                      SCHEDULE 3.19 CONTINUED...


FORMER EMPLOYEE

A lawsuit has been filed against GHK Company Colombia in the Bogota labor court
by a former employee who claims that he incurred $1.6 million in expenses in
connection with a criminal action filed against him in Guaduas. Our Colombian
legal counsel has advised us that it is unlikely that we will lose the lawsuit
due to the fact that, upon his departure from service, the plaintiff
acknowledged that GHK had paid in full all monies owed.

WAYNE LEWIS

Wayne Lewis filed a labor suit against GHK on September 15, 2000, attempting to
prove the existence of a fixed term employment contract for the period between
September 8, 1998 and September 8, 2001. Consequently his pretensions are the
payment of severance, severance interests, vacations, service premium,
indemnification for unilateral termination of the employment contract and a
penalty for the unearned salaries since the unilateral termination of the
contract. GHK answered the claim opposing the pretensions made, based on the
settlement signed in the USA. The proceeding was closed by the Court during the
first hearing, since the lawyer acting as informal agent for the plaintiff was
not timely ratified. The recommendation is to have a settlement between Lewis
and GHK in front of a Colombian Labor Court, in order to prevent future
litigation.

ENVIRONMENTAL PENALTY

On June 8, 1998, the Ministry of Environment required our subsidiary, GHK
Company Colombia, to perform some remedial work on the El Segundo 6-E location
and access road. GHK Company Colombia performed the work, and thereafter
reported to the Ministry of Environment that all the work had been completed. In
various site visits, ministry officials have confirmed that the alleged
violations have been properly remedied. On July 8, 1999, GHK Company Colombia
filed all the documentation, which confirmed total compliance to the
requirements.

In March 2000, we paid a fine of approximately $223,000 to the Ministry of
Environment in connection with a resolution issued against GHK Colombia by the
Ministry of Environment in which it declared GHK Company Colombia to be in
violation of a 1997 decree in connection with the construction of the El Segundo
7-E well location. We have filed an appeal for a reversal of the resolution. We
believe that we have corrected the environmental violations claimed by the
Ministry of Environment; however, the appeal process can take up to two years.
The El Segundo 7-E location has been restored and we currently have no drilling
activities planned at this location.

<PAGE>   71




                                  SCHEDULE 3.23


      LIST OF FACTS OR CIRCUMSTANCES RESULTING IN A MATERIAL ADVERSE CHANGE
                     IN DECEMBER 31, 2001 RESERVE ESTIMATES


                                      NONE
<PAGE>   72
                                 SCHEDULE 3.25

     LIST OF FACTS OR CIRCUMSTANCES RESULTING IN A MATERIAL ADVERSE CHANGE
                     IN DECEMBER 31, 2001 RESERVE ESTIMATES


                                      NONE