<PAGE>

                              AMENDED AND RESTATED
                              --------------------
                   EXTENDIBLE REVOLVING TERM CREDIT FACILITY
                   -----------------------------------------

 This Agreement amends and restates in full the Loan Agreement dated March 17,
  1995 and the Amended and Restated Extendible Revolving Term Credit Facility
       Agreement dated June 28, 1996 between the Borrower and the Lender.

                                  May 29, 1997

BORROWER:                  Norcen Energy Resources Limited (Norcen).

FACILITY:                  Extendible Revolving Term Credit Facility.

AMOUNT:                    Cdn. $100,000,000 or the U.S. dollar equivalent.

PURPOSE:                   For general corporate purposes, including commercial
                           paper backstop, capital expenditures, short term 
                           working capital needs, refinancing existing bank
                           indebtedness and for Permitted Acquisitions.

LENDER:                    The Toronto-Dominion Bank

AVAILABILITY PERIOD:       The Facility will revolve and fluctuate for a period
                           of 364 days ("Revolving Period"), subject to renewal
                           as provided below, followed by a 2 year non-revolving
                           term loan ("Term Period") with a bullet payment at 
                           the end of the Term Period.

REPAYMENT:                 Revolving Period

                           The Revolving Period ends May 28, 1998. The Revolving
                           Period may be extended from time to time at the 
                           Lender's sole discretion for up to 364 days, within
                           30 days after the Borrower's request which may not be
                           made more than twice in any 12 month period. The 
                           Borrower's request for extension will include a 
                           restatement of the Representations and Warranties. No
                           response from the Lender within 30 days of the 
                           request shall mean that an extension is not granted.
<PAGE>

                                       2

                           Term Period

                           The Term Period commences on the day after the last
                           day of the Revolving Period and ends two years 
                           thereafter. Any underdrawn portion of the Facility 
                           will be canceled at the end of the Revolving Period.
                           Any prepayment during the Term Period will constitute

                           a permanent reduction of the Facility. For greater
                           certainty, the rollover of a B/A or Libor Loan does
                           not constitute a prepayment during the Term Period.

RANKING:                   All amounts outstanding under the Facility will be 
                           senior unsecured obligations of the Borrower ranking
                           pari passu with all existing and future Senior Debt 
                           of the Borrower, other than indebtedness secured by
                           Permitted Encumbrances which under applicable law 
                           ranks in priority thereto. The Facility will at all
                           times rank senior to any existing or future 
                           Subordinated Indebtedness.

AVAILMENTS:                The Facility will be available by way of the
                           following:

                           o        Canadian dollar prime loans ("Cdn. Prime 
                                    Rate Loans");

                           o        US dollar base rate loans ("USBR
                                    Loans");

                           o        Canadian dollar bankers' acceptances
                                    ("B/A's");

                           o        US dollar London interbank offer rate loans
                                    ("Libor Loans"); and

                           o        US dollar or Canadian dollar letters of
                                    credit or guarantee.

CURRENCY EXCESS:           If at any time the Canadian dollar equivalent of all
                           outstanding advances based on the noon (Toronto time)
                           Bank of Canada exchange rate exceeds the available
                           facility amount (a "Currency Excess"), the Borrower 
                           will repay forthwith Cdn. Prime Rate Loans or USBR 
                           Loans until such time as the Currency Excess is
                           eliminated. If a Currency Excess remains after 
                           repayment of all Cdn. Prime Rate Loans or USBR Loans,
                           then the Borrower will:

                           1)  collateralize dollar for dollar the Currency 
                               Excess with Canadian or US dollar deposits, or

                           2)  repay any Libor Loans, as well as any expenses 
                               associated with breaking a Libor Loan prior to
                               maturity, or
<PAGE>

                                       3

                           3)  any combination of the foregoing.

BORROWING AND

NOTICE PROVISIONS:         A)  The Borrower may borrow as follows:

                                    o        Cdn. Prime Rate Loans in minimum
                                             amounts of CSI million and
                                             multiples of $100,000 thereafter;

                                    o        USBR Loans in minimum amounts of
                                             US$I million and multiples of
                                             $100,000 thereafter;

                                    o        advances of B/A's will, subject to
                                             availability, be issued for periods
                                             of 30,60, 90, 120 or 180 days, or
                                             such other period as is agreed to
                                             by the Lender, in minimum amounts
                                             of C$1 million and multiples of
                                             C$100,000 thereafter unless other
                                             wise determined by the market for
                                             B/A's; and

                                    o        Libor Loans, with maturities of 1,
                                             2, 3 or 6 months, or such other
                                             period which as is agreed to by the
                                             Lender, in minimum amounts of US
                                             million and multiples thereof

                           B)  The following notice provisions will apply to 
                               drawdowns, repayments, rollovers and conversions:

                               Prime Rate/USBR Loans

                                    o        up to $10,000,000; by 10:00 a m.
                                             (Calgary time), same Business Day
                                             notice is required;

                                    o        between $10,000,000 and
                                             $50,000,000; by 10:00 a.m.(Calgary
                                             time), one Business Day prior
                                             notice is required; and

                                    o        over $50,000,000; by 10:00 a.m.
                                             (Calgary time), 2 Business Days
                                             prior notice is required.
<PAGE>

                                       4

                               B/A's

                               To the extent that the Borrower markets the
                               B/A's, no notice is required. Should the Borrower
                               request the Lender to market the B/A's then the
                               following notice provisions shall apply:


                                    o        same Business Day, 10:00 a.m.
                                             (Calgary time), notice is required.


                               LIBOR Loans

                                    o        3 banking days (in London and
                                             Calgary) prior notice.

                               The Borrower may repay any part of the 
                               outstanding amount without penalty subject to
                               applicable notice periods and provided that B/A's
                               and Libor Loans may be repaid on maturity dates
                               only, unless, in the case of Libor Loans, the
                               Borrower pays the expenses associated with 
                               breaking the Libor Loan prior to maturity.

INTEREST RATES:            During Revolving Period: - Libor + 40 bp
                                                    - B/A Rate + 40 bp
                                                    - USBR
                                                    - Canadian Prime

                           Letters of Credit ("L/C")
                           and Letters of Guarantee

                           ("L/G"):                 - Financial L/C and/or L/G -
                                                      50 bp 
                                                    - Non-Financial or
                                                      Performance L/C and L/G -
                                                      25 bp. 
                                                    - All L/C and L/G's may be 
                                                      renewed annually at the
                                                      discretion of the Lender
                                                      for an additional 1 year
                                                      term.

                           During Term Period:      - All rates increase by 
                                                      12.5 bp

<PAGE>

                                       5

                           Interest based on Cdn. Prime Rate and USBR Loans
                           will be calculated on a 365 or 366 day year, as
                           applicable, and payable monthly in arrears on the
                           last banking day of the month.

                           BA fees are payable at the time of endorsement and
                           are calculated based on a 365-day or 366-day year.

                           Interest on Libor Loans will be based on the
                           Telerate screen #3750 rate two days prior to
                           funding and on a 360-day year. Interest is payable

                           on rollover dates, or if the period of advance
                           exceeds 3 months, interest will accrue and be
                           payable on the day which is 3 months after the
                           first day of such period, and on the last day of
                           the Libor Loan.

                           Any interest rate based on a Period less than a year
                           expressed as an annual rate for purposes of the
                           Interest Act (Canada) is equivalent to such
                           determined rate multiplied by the actual number of
                           days in the calendar year in which same is to be
                           ascertained and divided by the number of days in
                           the period upon which it is based.

                           The Borrower will pay interest on all overdue
                           amounts (including overdue interest) at the
                           Interest Rate specified in this Agreement plus 1%
                           per annum. All overdue interest is calculated on a
                           daily basis and will be payable both before and
                           after default, maturity and judgement.

FEES:                      Standby Fees of 10 bp will be paid quarterly in 
                           arrears on the undrawn portion of the Facility
                           during the Revolving Period. For these purposes,
                           the amount of borrowings outstanding in US Dollars
                           will be notionally converted to Cdn. Dollars at
                           the exchange rate in effect on the Business day
                           prior to the due date for payment of Standby Fees.

EXPENSES:                  The Borrower will pay all reasonable costs and
                           expenses (including legal fees) incurred in
                           connection with the review and preparation of the
                           Facility Documents, the preservation and/or
                           enforcement of any of the rights of the Lender
                           under the Facility, and loss or expenses
                           (including legal fees) incurred by the Lender as a
                           consequence of any failure to pay any stamp,
                           registration or other tax to which the Facility
                           may be subject. 

<PAGE>

                                       6

CONDITIONS
PRECEDENT:                 A)  Conditions precedent to the acceptance and
                               implementation of this Agreement are the
                               following:

                               1) officer's certificate stating that the
                                  Representations and Warranties are true and
                                  accurate in all material respects;

                               2) internal legal opinion stating that this

                                  Agreement is valid, binding and legally
                                  enforceable against the Borrower.

                           B)  Conditions precedent to subsequent
                               drawdowns, rollovers and conversions
                               will be as follows:

                               1) receipt of applicable notice; and

                               2) no Event of Default or Potential Event
                                  of Default has occurred or would occur
                                  as a result of such drawdown, rollover
                                  or conversion.

REPRESENTATIONS
AND WARRANTIES:            Representations and Warranties are the following:

                           1)  corporate existence of the Borrower;

                           2)  corporate power and legal capacity of
                               the Borrower to carry on business and
                               own assets;

                           3)  corporate power and authorization of the
                               Borrower to execute and deliver the
                               Facility Documents and to perform
                               covenants under the Facility Documents;

                           4)  Facility Documents have been duly
                               executed and delivered by the Borrower;

                           5)  Facility Documents create legal, valid,
                               binding and enforceable obligations of
                               the Borrower;

                           6)  the most recent audited consolidated
                               financial statements of the Borrower
                               (initially December 31, 1996), fairly
                               present the consolidated financial
                               condition of the Borrower, as at such
                               date and the results of operations for
                               the year ended, in accordance with GAAP
                               consistently applied, and since the most
                               recent audited financial statements of
                               the Borrower, there has been no material
                               adverse change in the 

<PAGE>

                                       7

                               consolidated financial position or business
                               operations of the Borrower;


                           7)  the Borrower has in full force and
                               effect such insurance policies in
                               amounts covering the properties and
                               operations of the Borrower as are
                               customarily held by similar corporations
                               engaged in the same or similar
                               businesses in the localities where the
                               Borrower's properties and operations are
                               located;

                           8)  no pending or threatened action, suit,
                               litigation, judgement or proceeding that has a
                               reasonable likelihood of materially adversely
                               affecting the Borrower's ability to repay or
                               perform its obligations under the Facility
                               Documents other than as disclosed in writing by
                               the Borrower on or prior to the execution of the
                               Facility Documents;

                           9)  no known material environmental liability,
                               actual or contingent which has not been provided
                               for in the financial statements of Borrower in
                               accordance with GAAP; compliance with
                               environmental laws in all material respects; all
                               necessary material permits, licenses and other
                               consents required under environmental laws have
                               been received and are in good standing, and
                               properties are not the subject of any outstanding
                               or threatened order or judgement alleging
                               violation of Environmental Laws which if enforced
                               against the Borrower would have a material 
                               adverse effect on the financial condition, 
                               operations or business of the Borrower;

                           10) unencumbered ownership and clear title to
                               assets except for Permitted Encumbrances;

                           11) all amounts outstanding under the Facility
                               rank at least pari passu in right of payment with
                               the Borrower's other most senior unsecured
                               Indebtedness, other than Indebtedness which is a
                               preferred claim arising by operation of law or a
                               Permitted Encumbrance; and

                           12) no Event of Default or Potential Event of
                               Default has occurred and is continuing.

GENERAL COVENANTS:         The Borrower will:

                           1)  pay all amounts owing under the Facility when
                               due;
<PAGE>                                 8

                           2)  perform its obligations under the Facility

                               Documents;

                           3)  maintain its corporate existence;

                           4)  supply to the Lender on a regular basis:

                               a) annual audited consolidated financial
                                  statements of the Borrower prepared in
                                  accordance with GAAP, as soon as
                                  available but in any event within 120
                                  days of the end of each fiscal year;

                               b) quarterly unaudited consolidated
                                  financial statements of the Borrower
                                  prepared in accordance with GAAP, as
                                  soon as available but in any event
                                  within 90 days of the end of the first
                                  3-fiscal quarters of each fiscal year,
                                  in all cases stating comparative figures
                                  for the corresponding date and period in
                                  the previous fiscal year;

                               c) a compliance certificate as per Exhibit
                                  A within 120 days of the fiscal year end
                                  and within 90 days of the end of the
                                  first 3 quarters of each fiscal year
                                  showing the calculation of all Financial
                                  Ratios and including an officer's
                                  certificate stating that no Event of
                                  Default or Potential Event of Default
                                  has occurred;

                               d) Annual information forms or notices of
                                  material change which are required to be
                                  filed by the Borrower with any
                                  regulatory authority or securities
                                  exchange;

                           5)  maintain the Interest Coverage Ratio and the
                               Senior Debt to Capital Ratio (the "Financial 
                               Ratios") as follows:

                               a) Interest Coverage Ratio on a rolling 4
                                  quarter basis to be greater than 2.50
                                  times;

                               b)  Senior Debt to Total Capital Ratio to be
                                   maintained below.60:1,

                               all Financial Ratios to be calculated quarterly  
                               on a consolidated basis, in accordance with GAAP;
<PAGE>

                                       9


                           6)  carry on and conduct its business in a
                               proper and efficient manner and in
                               compliance with applicable laws in all
                               material respects;

                           7)  maintain insurance policies covering
                               its material properties and operations as is
                               customarily maintained by similar corporations
                               engaged in the same or similar business;

                           8)  not liquidate, dissolve or wind-up or take any
                               steps or proceedings in connection therewith;

                           9)  not permit a merger with or into, or a
                               consolidation or amalgamation with, or transfer
                               all or substantially all its assets to, another
                               entity, other than a merger or amalgamation 
                               between the Borrower and a Wholly-Owned
                               Subsidiary, or between Wholly-Owned Subsidiaries:

                               a) if an Event of Default or Potential
                                  Event of Default exists or would occur
                                  and be continuing immediately before and
                                  after giving effect to the transaction;
                                  and 
                               b) unless the successor corporation:

                                  i)    agrees to be bound by the Facility
                                        Documents;

                                  ii)   acknowledges the continuing validity and
                                        enforceability of the Facility
                                        Documents;

                                  iii)  represents and warrants that the
                                        transaction wi11 not adversely affect
                                        the rights and benefits afforded the 
                                        Lender under the Facility Documents;

                                  iv)   represents that the creditworthiness of
                                        the resulting, surviving or transferee
                                        entity is not materially weaker than the
                                        Borrower prior to such action; and

                                  v)    provides legal opinions confirming the
                                        matters set forth in paragraphs i), ii),
                                        and iii) above. 
<PAGE>

                                       10

                           10) not permit any lien, mortgage, charge, hypothec,
                               pledge or any other security interest or

                               encumbrance on its property or assets, except for
                               Permitted Encumbrances, unless at the same time 
                               or prior to securing any other Indebtedness, the
                               Borrower grants security for this Facility which
                               ranks equally and rateably with the other
                               Indebtedness.

EVENTS OF DEFAULT:         Events of Default are as follows:

                           1)  nonpayment of principal when due;

                           2)  nonpayment of interest or stamping fees due to
                               the Lender for 5 days after the due date, and 
                               non-payment of standby fees, letter of credit 
                               fees or other fees due to the Lender in either 
                               case for 5 days after notice of nonpayment.

                           3)  nonpayment of other amounts under the Facility
                               within 30 days after notice from the Lender;

                           4)  breach of covenant under the Facility which
                               remains unremedied for 30 days after notice;

                           5)  materially incorrect or misleading
                               representation or warranty under the Facility
                               when given;

                           6)  cross default to any defaulted Indebtedness of
                               the Borrower in excess of C$25 million and any
                               applicable period of grace has expired;

                           7)  bankruptcy, insolvency, cessation of business
                               or other dissolution proceedings of the Borrower
                               (30 day cure period if involuntary bankruptcy
                               applies);

                           8)  final judgement or order in excess of C$25
                               million is rendered against the Borrower which is
                               not, within 60 days after entry thereof, bonded,
                               discharged or stayed pending appeal, or is not
                               discharged within 60 days after the expiration of
                               such stay; or

                           9)  a lien or security interest in excess of $25
                               million is enforced against the property of the
                               Borrower or a Wholly-Owned Subsidiary.
<PAGE>

                                       11

                           Upon the occurrence and continuance of an Event of
                           Default: the Lender may declare all Indebtedness
                           under the Facility to be due and payable, and the
                           Leader will have no obligation to make further

                           advances, rollovers or conversions; the Lender
                           will have right of set off upon the occurrence and
                           continuance of an Event of Default; all Libor
                           Loans and USBR Loans may, at the Lender's sole
                           discretion, be converted to Cdn Prime Rate Loans
                           at any time and B/A's and letters of credit must
                           be collateralized by the Borrower in an escrow
                           account; interest will be calculated at the
                           default rate of 1% per annum above the Applicable
                           Credit Spread; and, upon the occurrence and
                           continuance of an Event of Default the Lender may
                           arrange for an environmental audit at the expense
                           of the Borrower.

INCREASED COSTS
AND CHANGE OF LAW:         Increased costs to the Lender in providing and
                           maintaining the Facility including those costs
                           arising from capital adequacy requirements and
                           change of law to be for the account of the
                           Borrower. The Lender will not be obliged to
                           provide advances if rendered illegal.

ASSIGNMENT:                The Lender reserves the right to sell, assign,
                           transfer or grant participation in the Facility,
                           in whole or in part, with the consent of the
                           Borrower (such consent not to be unreasonably
                           withheld) provided that consent of the Borrower
                           will not be required after an Event of Default or
                           Potential Event of Default. Assignments will be
                           permitted in minimum amounts equal to the lesser
                           of (i) C$10,000,000; and (ii) the remaining
                           commitment of the Lender. 

                           The Borrower agrees to execute such further
                           documentation as the Lender may request for the
                           purpose of any assignment, sale or transfer of the
                           Facility.

CANCELLATION:              The undrawn portion of the Credit Facility may be
                           cancelled without penalty upon 3 Business Days
                           notice.

GOVERNING LAW:             Governing law will be the laws of the Province of
                           Alberta and Canada applicable therein.
<PAGE>

                                       12

In witness whereof the parties hereto, by executing this document, are agreeable
to the terms and conditions as presented herein; Dated on, the 29 day of May,
1997.

THE TORONTO-DOMINION BANK


Per: /s/ Dean Ariss
     --------------
     Dean Ariss

Per: /s/
     --------------


NORCEN ENERGY RESOURCES LIMITED

Per: /s/ Robert J. Waters
     --------------------
     Robert J. Waters, Treasurer

Per:  /s/
     --------------------

<PAGE>

                                       13

                                  DEFINITIONS

"Applicable Credit Spread" means: 
     - with respect to Canadian Prime Rate Loans...... nil
     - with respect to USBR Loans..................... nil 
     - with respect to Libor Loans.................... 40 bp 
     - with respect to B/A's.......................... 40 bp (stamping fee)

"B/A Rate" means the discount rate at which the Lender's B/A's are purchased by
the Lender or sold into the market by the Borrower.

"Business Day" is a day, other than a Saturday or Sunday, on which the Lender is
open for business in Calgary, Alberta, Toronto, Ontario and New York, New York,
and with respect to Libor Loans, in London England.

"Cashflow" means, in respect of the Borrower, the aggregate of Consolidated Net
Earnings, Consolidated Interest Expense, Taxes and Non-Cash Items, all without
duplication and determined in accordance with GAAP.

"Cdn. Prime" means the rate of interest per annum, based on a 365 day year,
established and reported by the Lender to the Bank of Canada from time to time
as its reference rate of interest for determination of interest rates which the
Lender charges to customers of varying degrees of creditworthiness in Canada for
Canadian dollar loans made by it in Canada. For purposes of this Facility, the
Cdn. Prime will be the higher of the stated rate by the Lender or CDOR plus the
Applicable Credit Spread.

"CDOR" means the average yield to maturity for bankers' acceptances which is
quoted on Reuters Canadian Discount Offer Rate screen at 10:00 a.m. Toronto
time on the applicable date of advance for B/A's having a term to maturity of 1
month.

"Consolidated Interest Expense" means consolidated interest, whether expensed or

capitalized, in respect of Indebtedness determined in accordance with GAAP.

"Consolidated Net Earnings" means consolidated net income or loss as reported on
the Borrower's consolidated statement of earnings excluding income from
discontinued operations determined in accordance with GAAP.

"Consolidated Tangible Net Worth" means, on a consolidated basis determined in 
accordance with GAAP, at any time, the sum of:

          a) the Borrower's total shareholder equity; and 
          b) Subordinated Indebtedness; 
          less: 
          c) any amounts of goodwill attributable to the Borrower.

<PAGE>

                                       14

"Facility Documents" means:

          a) this letter agreement between the Borrower and the Lender; and

          b) such other documents and certificates which in the opinion
             of the Lender, acting reasonably, are required to fully
             document or satisfy the terms and conditions herein contained.

"Fed Funds Rate" means the rate set forth in the Federal Reserve Bank of New
York weekly statistical release designated at H.15(519), opposite the caption
"Federal Funds (Effective)".

"Funded Debt" means all Indebtedness payable more than one year from the date of
creation thereof including current maturities of such Indebtedness and
Indebtedness which by its terms is renewable to a due date beyond one year;
excluding Subordinated Indebtedness.

"GAAP" means generally accepted accounting principles which are in effect from
time to time in Canada.

"Guarantees" means an undertaking to become liable for indebtedness for borrowed
money as presented on consolidated financial statements of Borrower.

"Hostile Acquisition" means an offer to acquire shares of a corporation, which
is required to be reported to an applicable securities regulatory authority,
where the board of directors of the target corporation has not approved such
offer nor recommended to the shareholders of the corporation that they sell
their shares pursuant to the proposed offer,

"Indebtedness" means all items in the consolidated financial statements of the
Borrower classified as liabilities for money borrowed in accordance with GAAP
(and will include capitalized leases, and Guarantees or endorsements (other than
of notes, bills and checks presented to banks for collection or deposit in the
ordinary course of business) of indebtedness of others by the Borrower or a
Wholly-Owned Subsidiary, to the extend required by GAAP).


"Interest Coverage Ratio" means Cashflow divided by Consolidated Interest
Expense.

"Libor" means the rate of interest per annum based on a 360 day year at which
the Lender makes available United States dollars which are obtained by the
Lender in the Interbank Euro Currency Market, London, England at approximately
10:00 a.m. (New York time) on the second Business Day before the first day of,
and in an amount similar to, and for the period similar to the interest period
of such advance.

"Non-Cash Items" means depreciation, depletion, amortization, foreign exchange
translation gains or losses and other non-cash items included in the calculation
of Consolidated Net Earnings as reported on the Borrower's consolidated
statement of earnings as determined in accordance with GAAP.

<PAGE>

                                       15

"Permitted Acquisition" means a direct or indirect acquisition by the
Borrower which is not a Hostile Acquisition.

"Permitted Encumbrances" means:

          a) any security interest, except on fixed assets or on shares
             of any Subsidiary or affiliate, given in the ordinary course
             of business to any bank or other financial institution, to
             secure indebtedness payable on demand or maturing within 12
             months of the date that such indebtedness is originally
             incurred provided that the total indebtedness so secured
             does not exceed $25 million;

          b) any Purchase Money Mortgage;

          c) Risk Management Liens where the aggregate value of all cash
             and securities will not at any time exceed $25 million;

          d) any security interest on any petroleum and natural gas
             right, tangible assets associated therewith or the products
             derived therefrom or the proceeds of sale of such products,
             to secure production payments, royalties, carried interests
             and similar obligations or to secure obligations in
             connection with or necessarily incidental to commitments or
             purchase and sale of, or the transportation or distribution
             of, products derived from the petroleum and natural gas
             right, including without limitation forward sales;

          e) any security interest on any resource property of the
             Borrower that has not been in commercial production during
             the 12-month period ending on the date hereof, or has not
             been in commercial production during the 12-month period
             ending at the time of the imposition of such security to
             secure any indebtedness incurred for the development or
             improvement thereof or the development or improvement of any

             other resource property of the Borrower that has not been
             in commercial production during the 12-month period ending
             on the date hereof or has not been in commercial production
             during the 12-month period ending at the time of the
             imposition of such security;

          f) any security interest in favor of the government of any
             country in which the Borrower owns assets or carries on
             business or the government of any province, state,
             municipality or other political subdivision in any such
             country, or any department or agency of any such government,
             given pursuant to a contract, concession, lease, license,
             franchise, grant, permit or other instrument pertaining to
             such assets or business or required by applicable laws; 
<PAGE>

                                       16

          g) liens for taxes, assessments or other governmental charges
             not yet due or, if due, the validity of which is being
             contested in good faith, and liens for the excess of the
             amount of any past due taxes for which a final assessment
             has not been received over the amount of such taxes as
             estimated and paid by the Borrower;

          h) unless it constitutes an Event of Default, the lien of any
             judgement rendered or claim filed against the Borrower,
             which is being contested in good faith by the Borrower;

          i) undetermined or inchoate liens and charges (including
             builders', mechanics', warehousemen's carriers' and other
             similar liens) incidental to construction or current
             operations which relate to obligations not due or delinquent
             or which are being contested in good faith by the Borrower;

          j) liens incurred or created in the ordinary course of business
             on any particular petroleum and natural gas right and or on
             any tangible assets associated therewith as security, in
             favour of any other person who is conducting the
             exploration, exploitation, development or operation of the
             property or asset to which such petroleum and natural gas
             right relates, to secure payment by the Borrower of its
             proportion of the costs and expenses of such exploration,
             exploitation, development or operation incurred by such
             other person;

          k) any security interest given by the Borrower to a public utility or
             municipality or governmental or other public authority when
             required by such utility or municipality or other authority in
             connection with utility or municipal services required for the
             operations of the Borrower in the ordinary course of its business;

          1) any security interest on a lease or other instrument permitting the
             extraction of substances other than crude oil, natural gas, natural

             gas liquids and related products by the Borrower, provided that any
             such lease does not interfere with the enjoyment by the Borrower of
             any petroleum and natural gas right;

          m) any renewal, refunding or extension of any security interest or
             encumbrance referred to in the foregoing clauses a) or 1) or of any
             security interest or encumbrance on any property in existence at
             the time of acquisition thereof, in which the indebtedness thereby
             secured after such renewal, refunding or extension is not increased
             and the security interest or encumbrance is limited in its recourse
             to the property originally subject thereto and any improvements
             thereon; and

          n) any security interest or encumbrance, other than those referred to
             in the foregoing clauses a) to m), created by the Borrower if,
             after giving effect to the creation of such security interest or
             encumbrance, the aggregate principal amount of the indebtedness
             secured thereby would not be greater than C$25,000,000.
<PAGE>
                                       17

"Potential Event of Default" means an event that would constitute an Event of
Default with the giving of notice, lapse or time or both.

"Purchase Money Mortgage" means any mortgage, charge, hypothec, pledge or other
security or encumbrance created upon any real or personal property acquired by
the Borrower after the date hereof (or previously acquired and substantially
unimproved) to secure or securing the whole or any part of the purchase price of
such property (or, in the case of previously acquired and substantially
unimproved property, the cost of the improvement thereof) or the repayment of
money borrowed to pay the whole or any part of such purchase price or cost, or
any vendor's privilege or lien on such property securing all or any part of such
purchase price or cost, including title retention agreements and leases in the
nature of title retention agreements.

"Risk Management Liens" means liens on cash or marketable securities of the
Borrower granted in connection with any interest rate, foreign exchange or
commodity risk management
arrangements provided:

          a) the Borrower reasonably expects to produce sufficient
             commodities of the type in question in the ordinary course of
             business to fulfill such contracts; and

          b) the obligations secured by such Hens are not due and delinquent.

"Senior Debt" means all Funded Debt that ranks senior to Subordinated
Indebtedness.

"Senior Debt to Total Capital Ratio" means, Senior Debt divided by Total
Capital.

"Subordinated Indebtedness" means Indebtedness that is subordinate in all
circumstances including bankruptcy, in right of payment to Indebtedness under

this Facility and Senior Debt.

"Subsidiary" means any corporation a majority of the shares carrying voting
rights of which are at the time owned or controlled directly or indirectly by
the Borrower.

"Taxes" means income taxes on the Borrower's consolidated statement of earnings
determined in accordance with GAAP.

"Total Capital" means Senior Debt plus Consolidated Tangible Net Worth.

"USBR" or "US Base Rate" means the rate of interest per annum, based on a 365
day year, established by the Lender from time to time as a reference rate for
the determination of interest rates that the Lender charges to customers of
varying degrees of creditworthiness for US dollar loans made by it in Canada.
For purposes of this Facility, the US Base Rate will be the higher of the stated
rate by the Lender or the Fed Funds Rate plus 1%.

<PAGE>

                                       18

"Wholly-Owned Subsidiary" means any Subsidiary in which all of the issued and
outstanding voting shares of each class of its capital are owned directly or
indirectly by the Borrower except that director's qualifying shares need not be
so owned.

* * * *