<PAGE>
 
                                                                  EXHIBIT 10.116
 

Bank of America




                                                     Special Assets Group
                                                     United States Division 4346


                             FORBEARANCE AGREEMENT


                                 July 23, 1996



LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
4200 East Skelly Drive
Suite 1000
Tulsa, OK  74135

Attention:  President

     Re:  Amended and Restated Credit Agreement dated as of October 20, 1995, as
          amended by Amendment No. 1 to Amended and Restated Credit Agreement
          dated as of December 29, 1995 (such agreement, as the same has been
          from time to time amended, the "Credit Agreement") , by and among
                                          ----------------  
          LaTex Petroleum Corporation, LaTex/GOC Acquisition, Inc. and Germany
          Oil Company (collectively, "Borrowers") and Bank of America National
                                      ---------
          Trust and Savings Association ("Lender")
                                          ------
Gentlemen:

     Reference is made to the Credit Agreement.  Capitalized terms used, and not
otherwise defined herein, shall have the meanings set forth in the Credit
Agreement.  LaTex Resources, Inc. ("LRI") and Enpro,  Inc.  ("Enpro";  together
                                    ---                       -----
with LRI,  "Guarantors")  are guarantors of the Obligations.  After each of us
            ----------
has signed this letter, this letter agreement (the "Agreement") shall constitute
                                                    ---------
a binding agreement between Borrowers, the Guarantors and the Lender.

     1. Each of the Borrowers and Guarantors acknowledges that each of the
Borrowers is in default in performance of certain of its undertakings under the
Credit Agreement, and that no waiver, consent or forbearance of any kind is now
in effect with respect to any such Events of Default. Specifically, Borrowers
and Guarantors acknowledge the defaults  set  forth in those  certain  letter



Bank of America National Trust and Savings Association 
333 S Beaudry Avenue Los Angeles, CA 90017
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 2


agreements dated as of May 10,  1996,  among the Lender and Borrowers.

     2.  Except as specifically set forth in paragraph 4 hereof, (a) neither the
                                             -----------
execution of this Agreement nor any negotiations or other actions undertaken
hereunder or pursuant  hereto shall constitute a waiver or forbearance of the
rights of the Lender under the Credit Agreement or any other Loan Document, and
(b) the Lender shall retain all rights and remedies whatsoever to which it may
be entitled under the Credit Agreement or any other Loan Document.

     3.  Borrowers have advised the Lender that Events of Default occurred as a
result of the breach of the following covenants:

     a.  Non-Payment of Obligations under Section 9.1.1. of the Credit
         ------------------------------------------------------------- 
         Agreement. Borrowers failed to pay the Annual Engineering Fee due on
         ---------
         March 31, 1996 under Section 3.3.3. of the Credit Agreement (such
                              --------------
         amounts having been paid subsequently on May 24, 1996);

     b.   Non-Performance of Certain Covenants and Obligations under Section
          ------------------------------------------------------------------
          9.1.3. of the Credit Agreement:
          ------------------------------

          (1)  Borrowers have violated the Current Ratio (Section 8.2.4. (c) of
                                                          ------------------
               the Credit Agreement) and the working Capital (Section 8.2.4. (d)
                                                              ------------------
               of the Credit Agreement) negative covenants by permitting their
               Current Ratio to be less than 1.0:1.0 and their Working Capital
               to be less than $500,000; and

          (2)  Borrowers have violated the permitted Investments negative
               covenant (Section 8.2.5. of the Credit Agreement);
                         --------------

     c.   Non-Performance of Other Covenants and Obligations under Section 9.1.4
          ----------------------------------------------------------------------
          of the Credit Agreement.  Borrowers have used the proceeds of the Loan
          ----------------------- 
          in violation of Section 2.7 of the Credit Agreement;
                          -----------

     d.   Default on Other Indebtedness under Section 9.1.5. of the Credit
          ----------------------------------------------------------------
          Agreement. Borrowers have defaulted in the payment of other
          ---------
          Indebtedness in excess of $50,000;
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 3


     e.   Judgments Default under Section 9.1.6. of the Credit Agreement.   A
          --------------------------------------------------------------
          judgment in excess of $50,000 has been entered against one or all of
          Borrowers constituting a default under Section 9.1.6. of the Credit
          Agreement;                             --------------

     f.   Failure to Maintain Minimum Tangible Net Worth. LRI Resources, Inc.
          ----------------------------------------------
          ("LRI") has failed to maintain the minimum Tangible Net Worth required
            ---
          pursuant to the Undertaking and Indemnity; and

     g.   Failure to Maintain Current Ratio. LRI has failed to maintain the
          ---------------------------------
          Consolidated Current Ratio required pursuant to the Undertaking and
          Indemnity.

(such Events of Defaults herein collectively called the "Acknowledged
                                                         ------------ 
Defaults"). Borrowers and Guarantors have requested that the Lender forbear from
--------
the exercise of its rights and remedies under the Credit Agreement and the other
Loan Documents, which rights and remedies would otherwise be available to the
Lender in respect of the Acknowledged Defaults.

     4.  Upon timely satisfaction of the conditions precedent listed below, the
Lender hereby agrees during the Forbearance Period (as defined below) to delay
enforcement of the rights granted to Lender under the Credit Agreement and the
other Loan Documents and applicable law arising as a result of the Acknowledged
Defaults. For purposes hereof, the enforcement delay granted by the Lender
hereby is referred to as the "Forbearance" and the "Forbearance Period" shall
                              -----------           ------------------
mean the period beginning with the effectiveness hereof and ending on the
earliest of:

     a.  October 15, 1996,

     b.   the occurrence of a default by any of the Borrowers or the Guarantors
          in respect of any of its covenants or agreements, or the breach of any
          of its representations and warranties, contained in this Agreement,

     c.   the occurrence of any Default or Event of Default under the Credit
          Agreement or any other Loan Document (other than the Acknowledged
          Defaults) with respect to any of the Borrowers or the Guarantors, and
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 4


     d.   the date on which each of the Acknowledged Defaults is cured to the
          satisfaction of the Lender.

     5.   The Forbearance and the Forbearance Period shall become effective upon
the satisfaction of each of the following conditions precedent on or before
August 16, 1996, in each case to the satisfaction of the Lender:

     a.   Inter-Affiliate Transactions. Borrowers, LRI, and the applicable
          ----------------------------
          subsidiaries and affiliates of LRI shall have taken the following
          actions and delivered appropriate evidence thereof to the Lender:

               (1) The existing inter-company indebtedness of Wexford
               Technology, Incorporated ("Wexford") to LRI shall be documented
               in the form of promissory notes payable by Wexford to the order
               of LRI (such promissory notes to be in a form acceptable to the
               Lender); 

               (2) The existing inter-company indebtedness of Imperial Petroleum
               Inc. ("Imperial") to LRI shall be documented in the form of
                      --------
               promissory notes payable by Imperial to the order of LRI (such
               promissory notes to be in a form acceptable to the Lender) and
               Imperial shall have granted, subject only to any perfected liens
               on the assets of Imperial existing as of July 9, 1996, to LRI
               first priority, perfected liens and security interests in all
               of its assets to secure all outstanding loans or intercompany
               advances (regardless of how such transactions were documented or
               evidenced) previously made by LRI to Imperial;

               (3) LaTex Resources International shall have delivered to
               Borrowers a note payable by LaTex Resources International to
               Borrowers evidencing the amounts shown as "A/P-Interco-Geodyne
               Tunisia" on the unconsolidated balance sheets of LaTex Petroleum
               Corporation and Germany Oil Company as of February 29, 1996;

               (4) Each of the Borrowers shall have, with respect to all amounts
               due and owing to LaSalle Street
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 5


               Natural Resources Corporation ("LSNRC") as of the date hereof,
               relating to overriding royalties interests or other interests
               burdening the Oil and Gas Properties of such Borrower (the
               "Override"): (i) provided a written acknowledgment of all
               amounts due and owing and (ii) agreed to pay such amounts plus
               interest at the rate at the Prime Rate plus 2.00%, in three (3)
               equal monthly installments beginning on August 1, 1996; and

               (5) With respect to all future Override amounts due and payable
               to LSNRC, each of the Borrowers agrees that: (i) the failure to
               pay such amounts will be an Event of Default under the Credit
               Agreement, and (ii) Borrowers will execute letters-in-lieu of
               transfer orders for any and all of the Mortgaged Properties to be
               used as determined by the Lender in its sole discretion.

      b.  Additional Security.
          -------------------

               (1) Enpro shall have executed and delivered to the Lender
               security agreements, financing statements and other Loan
               Documents, in form and substance satisfactory to the Lender,
               granting to the Lender as security for the obligations of Enpro
               pursuant to its Guaranty, a first priority, perfected lien and
               security interest in and to all of its existing and hereafter
               acquired personal property assets, including without limitation,
               all its right, title and interest in and to the Crude Oil
               Purchase Agreement dated as of January 2, 1994, between LaTex 
               Petroleum Corporation and Enpro. The security agreement to be
               executed by Enpro shall be in a form acceptable to the Lender.

               (2) LRI shall have executed and delivered to the Lender security
               agreements, financing statements and other Loan Documents, in
               form and substance satisfactory to the Lender, granting to the
               Lender as security for the obligations of LRI pursuant to its
               Guaranty, a first priority, perfected lien and security interest
               in and to all of its existing and hereafter acquired personal
               property assets,
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 6


               including without limitation, all its right, title and interest
               in and to (i) the unsecured promissory notes from Wexford
               described in Section 5.a.(1) above, (ii) the secured promissory
                            ---------------
               notes from Imperial and related security described in Section
                                                                     -------
               5.a.(2)  above and (iii) all of the capital stock of Wexford and
               -------
               Imperial now held by LRI. The security agreements to be executed
               by LRI shall be in a form acceptable to the Lender.

               (3) Borrowers shall have executed and delivered to the Lender
               security agreements, financing statements and other Loan
               Documents, in form and substance satisfactory to the Lender,
               granting to the Lender as security for the Obligations, a first
               priority, perfected lien and security interest in and to all of
               its and their existing and hereafter acquired personal property
               assets, including without limitation, all accounts receivable and
               general intangibles. The security agreements to be executed by
               Borrowers shall be in a form acceptable to the Lender.

     C.   Certain Financial Information.
          ------------------------------

               (1)  Borrowers shall have delivered to the Lender monthly
               financial statement projections (including balance sheets, income
               statements and statements of cash flow) for each of the Borrowers
               (individually) and for all Borrowers (on a combined basis) for
               the period beginning June 1, 1996 through January 31, 1997. Such
               financial projections shall assume that the intercompany
               transactions describe in Section 5.a. above have occurred.
                                        -----------

               (2)  Borrowers shall have caused Wexford to deliver to the Lender
               copies of Wexford's most recent internal financial statements
               (including balance sheet, income statement and statement of
               changes in cash flow).

     d.   Payment of Transaction Costs. Borrowers shall have reimbursed the
          ----------------------------
          Lender for its out-of-pocket expenses (including but not limited to
          the costs and expenses of
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 7


          in-house and outside legal counsel, costs associated with the granting
          and perfection of security interests and travel costs) incurred by
          the Lender in connection with the negotiation, documentation and
          implementation of this Agreement.

     e.   General Releases. Borrowers, LRI and Enpro shall each have executed
          ----------------
          and delivered to the Lender a General Release, such releases to be in
          a form acceptable to the Lender.

     f.   Internal Authorizations, etc. Borrowers, LRI and Enpro shall each have
          -----------------------------
          received all required management, board of directors or shareholder
          approvals to the effectiveness of the terms and conditions of this 
          Agreement, and the Lender shall have received satisfactory
          certificates and opinions as to such matters.

     6.  The Forbearance shall be limited precisely as written herein and
relates solely to the Acknowledged Defaults. The Forbearance shall not be deemed
to (a) constitute a waiver of compliance by Borrowers or Guarantors or a
forbearance of the rights of the Lender with respect to any other term,
provision or condition of the Credit Agreement or any other instrument or
agreement referred to therein, or (b) except to the extent of the Forbearance,
prejudice or impair in any manner the exercise of any right or remedy that the
Lender may now have or may in the future under applicable law or under in
connection with the Credit Agreement or any other instrument or agreement
referred to therein. Subject only to the Forbearance, the Lender expressly
reserves the right to exercise any right or remedy which the Lender may have
under applicable law, the Credit Agreement or the other Loan Documents.

     7.  The Lender acknowledges and agrees that the Default Rate shall not
accrue during the Forbearance Period, but shall accrue at the Default Rate upon
the termination of the Forbearance Period unless all Acknowledged Defaults have
been cured to the satisfaction of the Lender and there shall not have occurred
any other Default or Event of Default under the Credit Agreement or the Loan
Documents or any breach or default under this Agreement.
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 8


     8.  In addition to the covenants and agreements set forth in the Credit
Agreement and the other Loan Documents, Borrowers and Guarantors agree that:

     a.   Additional Reporting.  Borrowers shall deliver to the Lender not later
          --------------------
          than the 25th day of each calendar month, internally-prepared monthly
          consolidated financial statements of LRI and internally-prepared
          monthly individual and combined financial statements of each of the
          Borrowers for the preceding calendar month.

     b.   Sale,   Merger   or   Refinancing;   Repayment  of  All 
          -------------------------------------------------------
          Obligations.     LRI shall use its best efforts to expeditiously
          -----------
          negotiate the sale or merger of LRI, or the refinancing with another
          lender of the Obligations, which transaction would result in the
          payment and performance in full of the Obligations by not later than
          October 15, 1996. LRI and Borrower shall deliver to the Lender copies
          of all correspondence, drafts, projections and other information
          generated by or at the request of LRI or any Borrower, or any such
          material received by LRI or any Borrower in respect of any such
          transaction.

     c.   Compliance with Projections. Borrowers shall take the necessary
          ---------------------------
          actions to comply with and achieve the business and financial
          projections set forth in the projections delivered to the Lender
          pursuant to Section 5.c. (1) above.
                      ----------------

     d.   Limitations  on  Certain  Investments.       During  the
          -------------------------------------
          Forbearance Period:

               (1)  each of LRI, Enpro and the Borrowers shall not make any
               Investment, distribution or inter-company loan to LaTex Resources
               International, Phoenix Metals, Inc., Imperial or Wexford; and

               (2)  Capital Expenditures by the Borrowers shall not exceed, in
               the aggregate, $120,000.

     e.   Imperial Payment Proceeds. In the event that Imperial receives the
          -------------------------
          amounts previously described by LRI to the Lender and further
          described in letters from you dated June 17, 1996 and July 19, 1996,
          and a letter from Lorsan
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company   
July 23, 1996
Page 9


          Investments Ltd. USA, dated June 18, 1996, relating to certain gold
          reserves owned by Imperial or its affiliates (the "Imperial Settlement
                                                             -------------------
          Proceeds"), then, within three (3) days after Imperial's receipt of
          --------
          the Imperial Settlement Proceeds:

               (1) LRI shall (i) repay to Borrowers all outstanding loans or
               intercompany advances (regardless of how such transactions were
               documented or evidenced) previously made by each Borrower to LRI,
               (ii) make additional Investments in Borrowers or any of them
               and/or (iii) make additional loans (subordinated to the
               Obligations on terms and conditions satisfactory to the Lender)
               to Borrowers or any of them, such that the total of such payments
               under this subsection 8.e. (1) equals at least $3.5 million;
                          -------------------

               (2) Borrowers shall repay to the Lender, in partial repayment of
               the Loans, an amount not less than $1 million, in addition to
               scheduled repayments required pursuant to the Credit Agreement
               (such prepayment to be applied to the Tranche A Loans in the
               inverse order of maturity and shall result in a permanent
               reduction of the Tranche A Commitment Amount);

               (3) Wexford and Imperial shall repay to LRI all outstanding loans
               or intercompany advances (regardless of how such transactions
               were documented or evidenced) previously made by LRI to Wexford
               or Imperial; and

               (4) Each of the Borrowers shall, with respect to all amounts
               relating to the Override due and owing to LSNRC as of the date
               hereof, repay any amounts of the Override then outstanding.

          Upon payment of the amounts described in this Section 8.e. and if no
                                                        ------------
          Default or Event of Default has then occurred, the Lender shall
          release, at the sole cost and expense of the Borrowers, its Liens
          against the promissory notes given by Wexford and Imperial pursuant to
          Section 5.b. hereof, the collateral given by Imperial
          ------------
<PAGE>
 
 LaTex Petroleum Corporation
 LaTex/GOC Acquisition, Inc.
 Germany Oil Company
 July 23, 1996
 Page 10


            to LRI as security for such notes and the capital stock of Wexford
            and Imperial then held by LRI; provided, that if, in connection with
                                           --------
            such transactions, LRI determines to sell to Imperial, Wexford or
            any other Affiliate of LRI the capital stock of Imperial and/or
            Wexford, then the Board of Directors of LRI shall have determined
            that such sale transaction is fair to LRI.

        9.  Except as expressly set forth herein, the terms and provisions of
  the Credit Agreement and the other Loan Documents shall remain in full force
  and effect and in all other respects are hereby ratified and confirmed.

       10.  In order to induce the Lender to enter into this Agreement and to
  grant the Forbearance, each of the Borrowers hereby represents and warrants
  that (i) no Default or Event of Default exists under the Credit Agreement
  other than as described in paragraph 3 above, (ii) all representations and
                             -----------
  warranties contained in the Credit Agreement are true, correct and complete in
  all material respects on and as of the date hereof except to the extent such
  representations and warranties specifically relate to an earlier date, in
  which case they were true, correct and complete on and as of such earlier
  date, and (iii) except as described in clause (i), each of the Borrowers has
                                         ----------
  performed all agreements and covenants to be performed on its part as set
  forth herein or in the Credit Agreement.

       11.  In order to induce the Lender to enter into this Agreement and to
  grant the Forbearance, each of the Guarantors hereby joins in this Agreement
  for the purposes of consenting and agreeing to the terms and conditions of
  this Agreement and hereby represents and warrants that (i) no Default or Event
  of Default exists under the Credit Agreement other than as described in
  paragraph 3 above, (ii) all representations and warranties contained in the
  -----------
  Credit Agreement are true, correct and complete in all material respects on
  and as of the date hereof except to the extent such representations and
  warranties specifically relate to an earlier date, in which case they were
  true, correct and complete on and as of such earlier date, and (iii) except
  as described in clause (i), each of the Borrowers has performed all
                  ----------
  agreements and covenants to be performed on its part as set forth herein or in
  the Credit Agreement.
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 11


     12.  This Agreement constitutes the only agreement among Borrowers,
Guarantors and the Lender concerning the subject matter hereof and supersedes
any prior or contemporaneous representations or agreements not contained herein
concerning the subject matter of this Agreement. This Agreement shall be binding
upon the parties hereto, their respective successors and assigns.

     13.  The validity of this Agreement and the construction interpretation and
enforcement hereof and the rights of the parties hereunder shall be determined
under, governed by and construed in accordance with the laws of the State of
Illinois. The parties agree that all actions or proceedings arising under or in
connection with this Agreement shall be tried and litigated in the state and
federal courts located in the County of Cook, State of Illinois. THE BORROWERS,
GUARANTORS AND THE LENDER WAIVE ANY RIGHT TO A TRIAL BY JURY AND ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
                                ----- --- ----------   
THE EXTENT ANY PROCEEDING IS BROUGHT IN CONNECTION WITH THIS AGREEMENT.

     14.  Each of the parties further agrees with and acknowledges to the other
that it (i) has read and understands the provisions of this Agreement; (ii) has
consulted with legal counsel who has read and reviewed this Agreement; (iii)
understands the rights and remedies that each party is receiving, waiving and/or
forbearing from hereto; and (iv) has made the agreement set forth herein
knowingly, voluntarily and intentionally.

     15.  Unless each of Borrowers and Guarantors executes and returns to Lender
a counterpart of this letter on or before July 25, 1996 1/2 the offer of
forbearance contained in this letter shall lapse and become void.
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 12


     If the foregoing summarizes the terms of our binding agreement, please sign
this letter in the space provided below and return one copy to the undersigned
at your earliest convenience.

                                    Very truly yours,

                                    BANK OF AMERICA NATIONAL TRUST 
                                    AND SAVINGS ASSOCIATION


                                    By  /s/ SIGNATURE APPEARS HERE
                                       ----------------------------
                                    Its Vice President



CONSENTED AND AGREED TO 
on July 25, 1996

BORROWERS:

LATEX PETROLEUM CORPORATION, 
an Oklahoma corporation 


By  Jeffrey T. Wilson
  --------------------------
Its
  --------------------------

LATEX/GOC ACQUISITION, INC., 
a Delaware corporation,   


By  Jeffrey T. Wilson
  --------------------------
Its
   -------------------------


GERMANY OIL COMPANY, 
a Delaware corporation
(f/k/a LRI Acquisition, Inc.)


By  Jeffrey T. Wilson
  -------------------------- 
Its
   -------------------------
<PAGE>
 
LaTex Petroleum Corporation
LaTex/GOC Acquisition, Inc.
Germany Oil Company
July 23, 1996
Page 13


GUARANTORS:

LATEX RESOURCES, INC.,
a Delaware corporation


By  Jeffrey T. Wilson
  --------------------------
Its  
  --------------------------

ENPRO , INC.,
a Texas corporation


By  Jeffrey T. Wilson
  --------------------------
Its
   -------------------------