<PAGE>
                              AMENDED AND RESTATED
                              --------------------
                   EXTENDIBLE REVOLVING TERM CREDIT FACILITY
                   -----------------------------------------

         This Agreement amends and restates in full the Extendible Revolving
Term Credit Facility dated September 15, 1995 and the Amended and Restated
Extendible Revolving Term Credit Facility Agreement dated July 4, 1996 between
the Borrower and the Lender.

                                  May 29, 1997

BORROWER:             Norcen Energy Resources Limited (Norcen).
--------

FACILITY:             Extendible Revolving Term Credit Facility (the 
--------              "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:               Royal Bank of Canada
------

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 written 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
                      undrawn 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.

REPAYMENT:            The Borrower will repay all borrowings and other amounts
---------             outstanding hereunder in full on the last day of the Term
                      Period, and the commitment shall reduce to zero on such
                      date. The Borrower will ensure that Libor Loans and B/A's
                      mature, and L/C's and L/G's expire, on or before such
                      date.

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.
                      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 ("L/C's)
                         or guarantee ("L/G's).

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

<PAGE>
                                       3

                      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
                         Canadian or US dollar deposits;

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

                      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 C$1
                            million and multiples of $100,000 thereafter;

                         o  USBR Loans in minimum amounts of US$1 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 otherwise 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 as is agreed to by the Lender,
                            in minimum amounts of US$1 million and multiples
                            thereof.

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

                         Prime Rate/USBR Loans

                         o  up to $20,000,000: same Business Day 9:00 a.m.
                            notice is required; and

                         o  over $20,000,000: 9:00 a.m. one Business Day prior
                            notice is required.

<PAGE>
                                       4

                      B/A's

                      To the extent that the Borrower markets the B/A's,
                      customary 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 9:00 notice is required.

                      o  one Business Day 9:00 a.m. notice is required for the
                         rollover of B/A's, regardless of size.

                      B/A's will be issued and dealt with in accordance with the
                      Lender's usual practices, and must be repaid, rolled over,
                      or converted to another borrowing on their maturity dates.

                      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.

ACCOUNTS:             The Lender's records will constitute prima facie evidence
--------              of amounts outstanding hereunder.

INTEREST RATES:       The Borrower shall pay interest or fees on all borrowings
---------------       hereunder at the following rates:

                      During Revolving Period:  - Libor + 40 bp
                                                - BA Rate + 40 bp
                                                - USBR
                                                - Canadian Prime

<PAGE>
                                       5

                      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
                                                  prorated on commencement of
                                                  the Term Period.

                      Interest on Cdn. Prime Rate and USBR Loans is payable
                      monthly in arrears on the last Business Day of each month,
                      on the basis of a year of 365 days. Interest on Libor
                      Loans is payable in arrears on the last day of the

                      interest period thereof, or every 3 months if such
                      interest period exceeds 3 months, on the basis of a year
                      of 360 days. Stamping fees on B/A's are payable in advance
                      on the acceptance thereof, calculated on the face amount
                      of each B/A on the basis of the number of days in its term
                      in a year of 365 days. Fees in respect of L/C's and L/G's
                      are payable in advance on issuance thereof, calculated on
                      the maximum amount available to be drawn thereunder on the
                      basis of the number of days in its term in a year of 365
                      days.

                      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 Cdn. Prime (for Canadian
                      Dollars) and USBR (for U.S. Dollars), plus 1% per annum.
                      All overdue interest is calculated on a daily basis and
                      will be payable both before and after default, maturity
                      and judgment.

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

<PAGE>
                                       6

                      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.

EVIDENCE OF INDEBTEDNESS:
------------------------

                      The Bank shall open and maintain at the Branch of Account
                      accounts and records evidencing the principal amount of
                      each Borrowing, the payment of principal and interest and
                      all other amounts owing to the Bank under this Agreement.
                      The Bank's accounts and records constitute, in the absence
                      of manifest error, conclusive evidence of the indebtedness
                      of the Borrower to the Bank.

EXPENSES:             The Borrower will pay all reasonable costs and expenses
--------              (including legal fees) incurred in connection with the
                      review of the Facility Documents, the preservation and/or
                      enforcement of any of the rights of the Lender under the
                      Facility Documents, 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.

CONDITIONS
PRECEDENT:            A) Conditions precedent to implementation of the terms and
----------               conditions herein contained 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 Facility
                            Agreement is valid, binding and legally enforceable.

                      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.

<PAGE>
                                       7

REPRESENTATIONS
AND WARRANTIES:       The borrower represents and warrants as follows:
---------------
                      1) it is duly incorporated, validly existing, and duly
                         registered where required;

                      2) it has all corporate power and legal capacity to carry
                         on business and own assets;

                      3) it has all corporate power and authorization to execute
                         and deliver the Facility Documents and to perform its
                         covenants under the Facility Documents;

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

                      5) the 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
                         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) there is no pending or threatened action, suit,
                         litigation, judgment 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;

<PAGE>
                                       8

                      9) there is no known material environmental liability,
                         actual or contingent which has not been provided for
                         in the financial statements of Borrower in accordance
                         with GAAP; it is in 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 its properties are not the subject of any
                         outstanding or threatened order or judgment 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) it has unencumbered ownership and clear title to
                         its 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;

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

                     13) neither the execution and delivery of the Facility
                         Documents nor compliance with the terms and provisions
                         thereof will conflict with, result in a breach of, or
                         constitute a default under any law or regulation, any
                         court order, judgment or decree, or any agreement or
                         instrument binding upon the Borrower.

GENERAL COVENANTS:   The Borrower will:

-----------------
                     1)  pay all amounts owing under the Facility Documents when
                         due;

                     2)  perform its obligations under the Facility Documents;

                     3)  maintain its current corporate existence as a Canadian
                         corporation;

                     4)  supply to the Lender on a regular basis:

<PAGE>
                                        9

                         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;

                     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;

<PAGE>
                                       10

                     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
                                 will not adversely affect the rights and
                                 benefits afforded the Lender under the Facility
                                 Documents;

                            iv)  represents and warrants 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;

                     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; and


                     11) promptly advise the Lender in writing of any Event of
                         Default or any Potential Event of Default.

ENVIRONMENTAL
INDEMNITY         The Borrower will indemnify the Lender for losses or damages  
-------------     incurred as a result of environmental matters that are        
                  attached to the Lender as a result hereof.                    

<PAGE>
                                       11

EVENTS OF DEFAULT:      Events of Default are as follows:
-----------------
                        1) nonpayment of principal when due;

                        2) nonpayment of interest, stamping fees, L/C fees,
                           or L/G fees due to the Lender for 5 days after the
                           due date. Nonpayment of standby 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
                           Documents within 30 days after notice from the
                           Lender;

                        4) breach of covenant or other written agreement
                           (e.g. L/C, L/G, and B/A's) under the Facility
                           Documents which remains unremedied for 30 days after
                           notice;

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

                        6) if the Borrower defaults under any obligations to
                           pay any Indebtedness (excluding under this Agreement)
                           in an amount in aggregate in excess of $25,000,000 or
                           its equivalent in any other currency or causes or
                           permits to exist any default or event of default
                           under any agreement evidencing Indebtedness
                           (excluding this Agreement) if the effect of such
                           default or event of default is to accelerate, or
                           permit the acceleration of, the maturity of any such
                           obligations which are of an aggregate amount in
                           excess of $25,000,000, provided that an occurrence
                           under this clause will not be an Event of Default, if
                           within such period that is available under such
                           agreement for remedying such default or event of
                           default, such default or event of default is remedied
                           by the Borrower or duly waived by the relevant lender
                           in respect of such Indebtedness;

                        7) if the Borrower becomes insolvent, or institutes
                           proceedings for its winding-up or dissolution, or to
                           be adjudicated a voluntary bankrupt, or files an

                           application seeking reorganization, arrangement,
                           composition or any other similar relief under any
                           bankruptcy, arrangement or other similar law, or
                           files a proposal (or notice of intent to file a
                           proposal) under any bankruptcy law, or makes an
                           assignment for the benefit of creditors, or applies
                           for the appointment of a receiver or receiver-manager
                           over any of its property, or admits in writing its
                           inability to pay its debts

<PAGE>
                                       12
  
                           generally as they become due, or suspends transaction
                           of its usual business, or consents to any proceeding
                           in 8) below;

                        8) any application is filed or proceeding instituted
                           against the Borrower to have it adjudged a bankrupt
                           or insolvent or seeking reorganization, arrangement,
                           composition or other similar relief under any
                           bankruptcy, arrangement or any other similar law in
                           respect of the Borrower, or seeking the appointment
                           of a receiver, receiver-manager, administrator,
                           liquidator, trustee or assignee in bankruptcy or
                           insolvency of the Borrower or its property, or for
                           the winding-up or dissolution of its affairs, and
                           such application or proceeding remains in force
                           undischarged or unstayed for a period of 30 days or
                           more;

                        9) final judgment 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

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

                       Upon the occurrence and continuance of an Event of
                       Default: the Lender may declare all Indebtedness under
                       the Facility to be due and payable, whereupon the same
                       shall be due and payable, and the Lender will have no
                       obligation to make further advances, rollovers or
                       conversions; the Lender will have a 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, L/C's and L/G's must be collateralized by
                       the Borrower in an escrow account; interest on overdue
                       amounts shall be payable as provided in "Interest Rates"
                       above; 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 and compensation for reduced return      
-----------------      to the Lender in providing and maintaining the           
                       Facility including those costs arising from capital      
                       adequacy requirements and change of law shall be for     
                       the account of the Borrower. The Lender will not         

<PAGE>
                                       13

                       be obliged to provide advances if rendered illegal or if
                       market conditions make advances unavailable or
                       impracticable.

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 three Business Days
                       notice.                                                
                       
GOVERNING LAW:         Governing law will be the laws of the Province of Alberta
-------------          and Canada applicable therein. Parties submit to Alberta 
                       courts.                                                  
                                                                                
JUDGMENT
CURRENCIES:            In order to obtain judgments, the Lender can convert
----------             currencies to Canadian dollars on a customary basis.

In witness whereof the parties hereto, by executing this document, have agreed
to the terms and conditions as presented herein, with the intention that this
document will form a binding contract between them. Dated on 30 day of May,
1997.

ROYAL BANK OF CANADA

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

Per: /s/

     --------------------------    

NORCEN ENERGY RESOURCES LIMITED
                                   
Per:  /s/ Robert J. Waters
     --------------------------
          Robert J. Waters
             Treasurer

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

<PAGE>
                                       14

                                  DEFINITIONS
                                  -----------

"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 1%.

"CDOR" means the average yield to maturity for bankers' acceptances which is
quoted on Reuter's 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.

"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.

<PAGE>
                                       15

"Fed Funds Rate" means, for any day, the rate set forth in the Federal Reserve
Bank of New York's weekly statistical release designated at H.15(519), opposite
the caption "Federal Funds (Effective)" for that day, or (if that day is not a
Business Day) for the next preceding Business Day.

"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 cheques presented to banks for collection or deposit in the
ordinary course of business) of indebtedness of others by the Borrower or
Subsidiaries, to the extent 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, as
determined by the Lender (rounded upwards, if necessary to the nearest whole
multiple of 1/16th of 1%) at which the Lender, in accordance with its normal
practice, would be prepared to offer U.S. dollar deposits to leading banks 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, in an amount
similar to, and for the period similar to the interest period of, a requested
Libor Loan.


"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.

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

"Permitted Encumbrances" means: 

<PAGE>
                                       16

     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 favour 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;

     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 judgment
        rendered or claim filed against the Borrower, which is being contested
        in good faith by the Borrower;

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                                       17

     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;

     l) any security 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 l) 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.

"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

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                                       18

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 liens 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%.

"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.