THIS AGREEMENT is made this 1st day of April, 1966.

A M O N G:
               CANADA SOUTHERN PETROLEUM LTD.,
               a corporation incorporated under the laws of Canada,
               (hereinafter referred to as "Canada Southern")

                                     - and -

               MAGELLAN PETROLEUM CORPORATION, a Panama corporation,
               (hereinafter referred to as "Magellan")

                                     - and -

               OIL INVESTMENTS, INC., a Panama corporation,
               (hereinafter referred to as "Oil Investments")

               (which said corporations are hereinafter collectively
               referred to as "C-M-O" and individually as a member of the
               C-M-O group)

                                     - and -

               ALMINEX LIMITED, a company incorporated under the
               laws of Canada, (hereinafter referred to as "Alminex")

                                     - and -

               PAN AMERICAN PETROLEUM CORPORATION, a
               company having an office at the City of Calgary, in the
               Province of Alberta,
               (hereinafter referred to as "Pan American")

                                     - and -

               DOME PETROLEUM LIMITED, a company incorporated
               under the laws of Canada,
               (hereinafter referred to as "Dome")

                                     - and -


<PAGE>

               PROVO GAS PRODUCERS LIMITED, a company
               incorporated under the laws of Alberta,
               (hereinafter referred to as "Provo")

               (Alminex, Pan American, Dome and Provo being
               hereinafter collectively referred to as "A-D-P" and
               individually as a member of the A-D-P group)


         WHEREAS  C-M-O and A-D-P are each parties or assignees of parties to an
agreement  in writing  dated May 28, 1959 (herein  called "the Main  Agreement")
among  C-M-O of the one part and Home Oil  Company  Limited,  Kern  County  Land
Company,  Alminex,  United  Oils  Limited  and Signal Oil and Gas  Company  (all
therein   collectively   called   "H-S")  of  the  other  part  (as  amended  by
"Modification of Agreement dated January 3l, 1961, among the parties to the Main
Agreement),  A-D-P  being in the  instance  of  Alminex a party  and the  others
assignee  successors  in  interest  to the said  parties  of the other part with
respect to the said permits and the Main Agreement and the properties  described
in Schedule "A" thereof (hereinafter sometimes referred to as Permits);

         AND WHEREAS C-M-O and A-D-P desire to amend  certain  provisions of the
Main  Agreement  with  effect  from the date hereof as it shall apply to them or
their successors and to make further  provision for the conduct of operations on
the properties;

         AND  WHEREAS  A-D-P  claim to be  assignees  of the rights of H-S;  and
WHEREAS it is not intended by this  Agreement to affect any rights C-M-O now has
or may  hereafter  have for  failures  to comply  with the Main  Agreement;  and
WHEREAS it is not  intended  to affect any rights that any of the parties to the
assignments may have as between each other;

         NOW THEREFORE,  in consideration of the mutual covenants and agreements
hereinafter  contained,  and for other good and  valuable  consideration,  it is
agreed as follows:


<PAGE>

ARTICLE I

Deletion of Clause 3.1 (C) of Main Agreement in respect of A-D-P

1.1 With respect to operations carried on by A-D-P on the said permits after the
date of this Agreement, the Main Agreement shall be read as if Clause 3.1 (C) of
Article  III of the  Main  Agreement  were  deleted  from  the  Main  Agreement.
Correspondingly,  the proviso to Clause M of the Operating Procedure attached as
Schedule "B" to the Main Agreement  shall be deleted from the said Clause M with
effect from the date hereof.

ARTICLE II

Addition of Article VIII to Main Agreement

2.1 Effective  from the date hereof the Main  Agreement  shall be amended by the
addition thereto of a new Article VIII thereof, reading as follows:

         "ARTICLE VIII

         8.1      Notwithstanding anything hereinbefore contained,  with respect
         to  A-D-P  the  interest  of C-M-O in  the  said  permits  and  in  the
         properties described therein shall be and become a fifty percent (50%)
         carried interest (as defined in  Schedule  "D"  hereto),  with C-M-O to
         have the right, however, to convert the same as hereinafter provided.

         8.2      Forthwith  upon the  interest  of  C-M-O  becoming  a  carried
         interest as aforesaid, the provisions of Schedule "D" hereto shall come
         into effect and  shall govern  the relationship  of the  parties hereto
         with respect to the said permits and the properties described therein."

ARTICLE III

Addition of Schedule "D" to the Main Agreement

3.1 Effective from the date hereof the Main Agreement shall be amended by adding
thereto Schedule "D", which shall be in the form attached hereto entitled:


<PAGE>

         "Schedule "D"

attached to and forming  part of an agreement  made as of May 28, 1959,  between
Canada  Southern  Petroleum  Limited,   Magellan  Petroleum   Corporation,   Oil
Investments,  Home Oil  Company  Limited,  Kern  County  Land  Company,  Alminex
Limited, United Oils, Limited and Signal Oil and Gas Company."

ARTICLE IV

Exception for Existing Wells

4.1 Notwithstanding anything contained in this amending agreement or in Schedule
"D" to the Main  Agreement as added by Article III hereof,  the interests of the
parties in the spacing units of the Pan Am Home Signal CSP A-l  Kotaneelee  well
and the Canada  Southern et al North  Beaver River YT 1-27 well and in any lands
which  were not on March 31,  1966,  held for the joint  account  under the said
Operating  Procedure by reason of the  forfeiture  or penalty  provisions of the
said Operating Procedure shall not be affected by this amending agreement;  and,
notwithstanding  any provisions of the Main Agreement or of Schedule "D" thereto
as added by this amending  agreement,  the said spacing units and lands not held
for the  joint  account  shall,  unless  the  beneficial  owners  thereof  agree
otherwise in writing,  be included in leases selected from the said permits when
and if such lease selection is made.

ARTICLE V

Amendment to Article V of the Main Agreement

5.1 Article V of the Main  Agreement is hereby  amended by  inserting  after the
word "Agreement" in the second line of Clause 5.1 thereof the words

         "and except in respect of any lands in which C-M-O's interest
         is held  as a  carried  interest  pursuant  to  Article II of
         Schedule "D" above referred to."


<PAGE>

ARTICLE VI

No Waiver of Rights

6.1 Nothing  herein or in the said Schedule "D" contained  affects or waives any
rights that C-M-O now has or may hereafter  have to enforce the Main  Agreement,
or any agreements  amendatory,  collateral or ancillary thereto,  as against the
original parties in accordance with the tenor thereof.

6.2 Nothing  herein or in the said Schedule "D" contained  affects or waives any
right  that A-D-P now has or may  hereafter  have as  against  their  respective
assignors.

ARTICLE VII

General

7.1 This  Agreement  shall enure to the benefit of, and shall bind,  the parties
hereto and their respective successors and assigns.

7.2 This Agreement shall remain in effect for the term of the Main Agreement.

7.3 This  Agreement  may be  executed in several  counterparts  each of which so
executed  shall be deemed to be an original  and shall be binding upon the party
executing  the same upon its  execution  and delivery  thereof,  as soon as each
party hereto has executed and delivered a counterpart thereof.

         IN WITNESS WHEREOF the parties hereto have executed this Agreement with
effect on April 1, 1966.

                                        CANADA SOUTHERN PETROLEUM LTD.
                                    
                                        ----------------------------------------
                                    
                                        ----------------------------------------
                                    
                                    

<PAGE>

                                        MAGELLAN PETROLEUM CORPORATION
                                    
                                        ----------------------------------------
                                    
                                        ----------------------------------------
                                    
                                    
                                        OIL INVESTMENTS, INC.
                                    
                                        ----------------------------------------
                                    
                                        ----------------------------------------
                                    
                                    
                                        ALMINEX LIMITED
                                    
                                        ----------------------------------------
                                    
                                        ----------------------------------------
                                    
                                    
                                        PAN AMERICAN PETROLEUM CORPORATION
                                    
                                        ----------------------------------------
                                    
                                        ----------------------------------------
                                    
                                    
                                        DOME PETROLEUM LIMITED
                                    
                                        ----------------------------------------
                                    
                                        ----------------------------------------
                                    
                                    
                                        PROVO GAS PRODUCERS LIMITED
                                    
                                        ----------------------------------------
                                    
                                        ----------------------------------------
                                   



<PAGE>




                             AFFIDAVIT OF EXECUTION




    C A N A D A                  )
                                 )
PROVINCE OF ALBERTA              )
                                 )
      TO WIT:                    )


                  I, ANNA THELMA DRAY, of the City of Calgary in the Province of
Alberta, Secretary, MAKE OATH AND SAY:-

1.                That I was  personally  present and did see JOHN C. MEEKER,
Attorney in Fact for Pan American Petroleum  Corporation named in the within
instrument,  who is personally  known to me to be the  Attorney in Fact for Pan
American Petroleum Corporation named therein, duly sign and execute the same for
the purposes named therein.

2.                That the same  was  executed  at the City of  Calgary,  in the
Province of Alberta, and that I am the subscribing witness thereto.

3.                That I know the said JOHN C. MEEKER and  he is in my belief of
the full age of twenty-one years.

SWORN before me at the City of         )
                                       )
Calgary, in the Province of            )
                                       )
Alberta, this 7th day of               )
                                       )
November A.D. 1966                     )    ____________________________________
                                       )
                                       )
---------------------------------------)
A Commissioner for Oaths in and for the
         Province of Alberta


<PAGE>


                                  SCHEDULE "D"

          attached to and forming part of an agreement made as of May 28,
          1959,  between  Canada  Southern  Petroleum  Limited,  Magellan
          Petroleum Corporation,  Oil Investments, Inc., Home Oil Company
          Limited, United Oils, Limited and Signal Oil and Gas Company.

          (as added by amending agreement dated April 1, 1966)



                           CARRIED INTEREST PROVISIONS



ARTICLE I

Definitions

         In this  Schedule "D" the  following  words and phrases  shall have the
following respective meanings, namely:

1.1 "Accounting Procedure" means Schedule "C" to the Main Agreement.

1.2 "Block" means one of the three  areas each  comprising  a number of the said
permits. Block "A" shall comprise Permits 1006, 1007, 1132, 1133 and 1135. Block
"B" shall comprise  Permits 1134,  1136,  1157, 1152, 1153, 1154, 2302, 2713 and
the  North  half of each of  Permits  2301 and 1137.  Block  "C" shall  comprise
Permits 1149, 1150, 1151, 1155, 1156 and Permits 1173 to 1181 inclusive.

1.3 "Carried interest" means the interest described in this Schedule "D".

1.4 "The  carried  interest  lands"  means the lands which are from time to time
subject to the carried interest of C-M-O under this Schedule "D".

1.5 "The  Department"  means the  Department  of Northern  Affairs and  National
Resources of Canada or its successor or successors in authority.


<PAGE>

1.6 "The Main  Agreement"  means the Agreement  dated May 28, 1959 of which this
Schedule "D" forms part,  as amended by agreement  dated April 1, 1966 among the
parties to the Main Agreement and/or their assignee successors in interest.

1.7 "The Operating Procedure" means Schedule "B" to the Main Agreement.

1.8 "The  Permits"  means  the said  Permits  comprised  in Blocks A, B and C as
listed in Clause 1.2 hereof;  and, except where the context otherwise  requires,
includes the lands covered by the said Permits.

1.9 "Petroleum  substances"  means petroleum,  natural gas, sulphur or any other
substances  an interest in which is derived under the Permits or under leases or
other documents of title selected therefrom or otherwise made subject hereto.

ARTICLE II

C-M-O Carried Interest

2.1 When this  Schedule "D" has become  effective  pursuant to Clause 8.2 of the
Main Agreement as amended,  C-M-O's  interest in the Permits shall thereafter be
in the nature of a fifty percent  (50%)  carried  interest and the Permits shall
become  carried  interest  lands.  C-M-O's  said  interest  in  the  Permits  is
hereinafter  referred to as "the C-M-O  carried  interest"  or "C-M-O's  carried
interest".

2.2 The parties  hereto hereby  transfer and set over among them all such right,
title  and  interest  as shall  required  to vest in  C-M-O  the  C-M-O  carried
interest.  No formal transfer need,  however, be made of the registered interest
of the parties in the said Permits for this purpose.


<PAGE>

2.3 C-M-O's  carried  interest  shall be and  constitute  the right of C-M-O (in
addition  to the  further  rights  hereinafter  set forth) to  receive,  and the
obligation  of A-D-P to pay to C-M-O fifty  percent (50%) of the amount by which
the  operational  receipts from each Block on and after April 1, 1966 exceed the
operational  costs from each respective  Block on and after April 1, 1966. A-D-P
covenants  and agrees to pay to C-M-O in cash the  amounts (if any) due to C-M-O
from time to time under this Clause 2.3 with respect to each Block.

2.4 Subject to the provisions of the Operating  Procedure  relating to a party's
right to decline  to  participate  in an  operation  and the right to  surrender
pursuant to the Operating Procedure, A-D-P shall from April 1, 1966 maintain the
Permits and the leases or other  documents  of title  derived  therefrom in good
standing,  shall pay all lease rentals, make all required deposits or guarantees
with the Department,  perform all exploratory  work and development  work on the
Permits,  and pay any costs or  expenses  whatever  with  respect to the further
holding,  managing,  exploration and development of the Permits (whether held in
permit  or  lease  stage or  howsoever).  This  Clause  shall  not  apply to any
expenditure  by  C-M-O  with  respect  to  any  operation  instituted  by  it as
hereinafter  provided,  nor shall it prevent a full settlement of accounts among
the parties hereto as at March 31, 1966, with respect to matters  accruing up to
and including March 31, 1966.


<PAGE>

2.5 The  "operational  receipts"  from a Block for the  purposes  of Clause  2.3
hereof and wherever used herein shall mean the cumulative  total of all receipts
(other than refunds of deposits with the Department) by A-D-P on and after April
1, 1966 from the Block,  including the proceeds of sale of petroleum  substances
from the Block and any refund of or cash  contribution  toward  any  operational
costs  charged to that Block and any proceeds  realized upon the disposal of any
machinery  or equipment  charged to the  operational  costs for that Block,  and
including,  without limiting the generality of the foregoing, any receipts which
the  Operator  would be  required  to  credit  to the  joint  account  under the
Accounting Procedure.

2.6 The  "operational  costs" with  respect to a Block for the purpose of Clause
2.3 hereof and  wherever  used  herein  shall mean the  cumulative  total of all
expenditures made by A-D-P on and after April 1, 1966 on or with respect to that
Block, including,  without limiting the generality of the foregoing,  all permit
renewal fees, lease rentals,  exploratory costs,  development costs,  production
costs and marketing costs with respect to that Block, and including all lessor's
royalties  and the  overriding  royalties to which the permits in that Block are
subject as  described in Schedule "A" to the Main  Agreement;  provided  that no
cost  shall be charged as an  operational  cost  unless it can be charged to the
joint account under the Accounting Procedure (or, with respect to the cost of an
independent  operation,  could be so charged if the operation were for the joint
account).

2.7 When the operational receipts with respect to a Block exceed the operational
costs with respect to that Block,  C-M-O shall  become  entitled to its share of
such excess,  notwithstanding that with respect to the other Block or Blocks the
operational costs may still exceed the operational receipts.


<PAGE>

2.8 If any  operational  costs are  incurred  which cover more than one Block in
such a manner that a division  of such costs on an acreage  basis would not be a
fair division  thereof or if it is difficult or impossible to determine to which
Block the  operational  costs should be  attributed,  A-D-P shall  allocate such
costs  according to its best bona fide estimate of the value or  relationship to
each Block of the costs thus incurred.

ARTICLE III

Accounting for the C-M-O Carried Interest

3.1 On and from April 1, 1966,  C-M-O's rights to receive statements and to make
audits with respect to the C-M-O  carried  interest  shall be the same as though
C-M-O were a joint operator (non-operator) under the Accounting Procedure.

3.2 A-D-P agrees to maintain  accounts and render  statements  for each Block so
that the  operational  receipts  and the  operational  costs  may be  separately
determined for each Block and so reported to C-M-O.  Paragraph 2 of Schedule "C"
shall be followed in rendering statements.

3.3 Where a statement of the C-M-O carried  interest account for any month shows
an amount due C-M-O,  payment of the amount due C-M-O shall be forwarded  either
with such statement or not more than 15 days thereafter.

3.4 C-M-O shall not be obligated to repay to A-D-P any moneys paid on account of
the C-M-O carried interest with respect to a Block if the operational  costs for
that Block again exceed the operational receipts for a Block after a period when
the reverse was the case.


<PAGE>

ARTICLE IV

Right to Access and Information, Etc.

4.1  Except  as  may  be  expressly  hereinafter  provided,  C-M-O's  rights  to
information  and data with respect to all  operations on the Permits  (including
that  received  in trade which is related to the  Permits)  shall be the same as
though such  operations were being carried on for the joint account of C-M-O and
A-D-P under the Operating Procedure; and, with the said exception, C-M-O's right
of access to the Permits while  operations are being conducted  thereon shall be
the same as if C-M-O were participating therein as operations for the said joint
account.

4.2 With the  consent of all parties  hereto,  A-D-P or any member or members of
the A-D-P group shall have the right to trade seismic data obtained from or with
respect to the Permits.  Such data shall  otherwise be kept  confidential by the
parties.

4.3 Canada Southern alone or its assigns shall represent C-M-O in exercising the
rights of C-M-O under Clause 4.1 hereof while the C-M-O  carried  interest is in
effect.

ARTICLE V

Independent Operations While Carried Interest in Effect

5.1 For the  purposes  of the  C-M-O  carried  interest  it shall be  immaterial
whether  operational costs and operational  receipts are incurred or received by
one or more members of the A-D-P group, should independent operations be carried
out by less than all the members of the A-D-P group  pursuant to Clause N of the
Operating Procedure (or howsoever).


<PAGE>

5.2 C-M-O shall have the right to propose the drilling,  deepening or re-working
of a well  (hereinafter  called "the  operation"),  on any lands  subject to the
C-M-O carried interest which have been selected under lease from the Permits, in
the same manner and under the same  conditions  as provided in Clause N.2 of the
Operating  Procedure;  provided  that the  approval of a drilling  or  deepening
operation in a budget of the A-D-P group shall not prevent C-M-O from  proposing
an operation under the said Clause N.2 unless A-D-P undertakes to C-M-O to carry
out the  operation  approved in the said budget within the time proposed in such
budget (or, if earlier, within six months). No such operation may be proposed by
C-M-O  unless  upon the basis that  either all  members of the C-M-O  group will
participate  therein or that the participating  members of the C-M-O group shall
bear at least fifty  percent (50%) of the cost of the  operation.  While C-M-O's
interest in a Block is a carried interest and the operation proposed by C-M-O is
with  respect to that Block,  A-D-P  agrees that A-D-P shall act as one party in
electing  whether to participate in the operation so proposed by C-M-O. If A-D-P
does elect so to  participate,  the operation shall be carried out for the joint
account of A-D-P and C-M-O, and C-M-O shall pay in cash its share of the cost of
the operation in the same manner as a Joint Operator.  The share of the costs of
the operation paid by C-M-O shall not be operational costs. Otherwise,  however,
the well and the lands upon which the  operation  is  carried  out shall  remain
subject to the C-M-O carried interest.


<PAGE>

5.3 If A-D-P elects not to participate  in an operation  proposed by C-M-O under
Clause 5.2  hereof,  and if C-M-O  carries out the  operation,  C-M-O shall upon
completion  of the  operation be entitled to the same penalty  under Clause N of
the  Operating  Procedure  as if C-M-O had  proposed  the  operation  as a Joint
Operator. Any cash paid by A-D-P to participate in the operation with respect to
a development well under Subclause N.2(c) (ii) of the Operating  Procedure shall
not be  operational  costs  except to the extent of the amount which A-D-P would
have borne had A-D-P  initially  participated  with C-M-O in the  operation.  If
A-D-P or one or more  members of the A-D-P group elects by payment of cash under
Subclause N.2(c) (ii) of the Operating Procedure to participate in the operation
with respect to a  development  well after the operation has been carried out by
C-M-O,  the spacing  unit of that well  (subject to Clause N.3 of the  Operating
Procedure)  shall cease to be subject to the C-M-O carried interest and shall be
held by the parties  participating  therein as joint lands for their own account
pursuant to the Operating Procedure.

5.4 Any  acreage  which is  forfeited  to C-M-O by reason of the  provisions  of
Clause N of the  Operating  Procedure,  where A-D-P does not  participate  in an
operation  proposed by C-M-O,  shall cease to be subject to this Schedule "D" or
to the Main  Agreement  (except  as to  lease  selection  under  Clause O of the
Operating Procedure).

5.5 Except as provided in Clauses 5.3 and 5.4 hereof,  all lands in a Block upon
which  C-M-O has  conducted  the  operation,  whether or not A-D-P  participated
therein, shall continue to be subject to the C-M-O carried interest.


<PAGE>

5.6 If at the time C-M-O gives  notice of election to convert the C-M-O  carried
interest to a working  interest as  hereinafter  provided any  operations are in
progress  pursuant to Clause E of Schedule  "B" on the  Permits,  C-M-O shall be
deemed to have elected to participate in those operations.  If, however,  notice
of a  proposed  operation  has been  given  under  Clause  N.2 of the  Operating
Procedure and the period for replying to such notice has not expired,  the party
proposing  the  operation  shall give C-M-O a new notice  thereof under the said
Clause N.2 when notice of C-M-O's  conversion of the C-M-O carried interest to a
working  interest  has been  received;  provided  that the  proposing  party may
proceed with the operation,  if it so wishes,  without awaiting C-M-O's election
with respect to participation  in the operation,  in which event the election of
C-M-O shall be treated as retroactive  for determining  costs and  participating
interests.

ARTICLE VI

Work Credits

6.1 For the purposes of the C-M-O carried  interest the operational  costs shall
be  calculated  as if no  grouping  of  permits  or leases  (for the  purpose of
permitting  the allocation of work credits as provided by statute or regulation)
had occurred, whether work credits earned elsewhere are applied to lands subject
to the C-M-O carried interest or whether work credits earned on lands subject to
the C-M-O carried interest are applied to other lands.


<PAGE>

6.2 While the C-M-O  carried  interest is in effect with  respect to one or more
Blocks,  A-D-P  shall by April 30 of each year  after  1966  submit to C-M-O its
proposed allocation of work credits among the Blocks.  Unless C-M-O gives notice
to A-D-P  within  30 days that it is  dissatisfied  with  such  allocation,  the
allocation  shall be deemed  acceptable.  If C-M-O gives such notice the parties
will attempt to arrive at a  mutually-agreeable  allocation.  If either party is
dissatisfied  with the progress of the negotiations in this respect it may elect
to have the  available  work  credits  allocated  among the Blocks on an acreage
basis.  Allocations  of work credits  under this  Article  shall be binding upon
C-M-O if and when it elects to convert the C-M-O  carried  interest to a working
interest.

6.3 Work credits  earned by  operations  by C-M-O under  Article V hereof shall,
except to the extent  that they may be applied to reduce  costs with  respect to
lands forfeited to C-M-O under Article V hereof or lands held jointly as working
interests  by C-M-O  and A-D-P  under the said  Article  V, be  treated  as work
credits earned by A-D-P and shall be allocated under Clause 6.2 hereof.

6.4 Upon the  surrender of any lands out of a Block to another  party or parties
to this Agreement the then existing unused work credits applicable to that Block
shall be deemed to have been allocated equally among each acre in that Block.

ARTICLE VII

Conversion of Permits to lease

7.1 A-D-P  shall  maintain  all the said  Permits in permit  form until at least
their respective anniversary dates in 1967.


<PAGE>

7.2 A-D-P shall  maintain in permit form until the earliest  permit  anniversary
date  falling  in the year  1969 all the  Permits  except  the  total of

         (a)      the Permits or parts thereof which may  meanwhile  be required
                  to be converted to lease by the Department; and

         (b)      the  Permits  or  parts  thereof  which  A-D-P  may  meanwhile
                  surrender to C-M-O;

         and

         (c)      Permit areas totaling not more than 400,000 acres in area.

7.3 A-D-P  shall  maintain  in permit  form until at least the  earliest  permit
anniversary  date  falling in the year 1970 all the Permits  except the total of

         (a)      the Permits or parts thereof which may meanwhile be required
         to be converted to lease by the Department; and

         (b)      the  Permits  or  parts  thereof  which  A-D-P  may  meanwhile
         surrender to C-M-O;

         and

         (c)      Permit areas  totaling not  more than  550,000 acres  in area,
         inclusive of 7.2 (c) areas above.

7.4 A-D-P  shall  maintain  in permit  form until at least the  earliest  permit
anniversary  date  falling in 1971 all the  Permits  except the total of

         (a)      the Permits or parts thereof which may  meanwhile  be required
         to be converted to lease by the Department; and

         (b)      the  Permits  or  parts  thereof  which  A-D-P  may  meanwhile
         surrender to C-M-O;

         and

         (c)      Permit  areas  totaling  not more than  650,000 acres in area,
         inclusive of 7.2 (c) and 7.3 (c) areas above.


<PAGE>

7.5 Subject to the foregoing  Clauses of this Article VII, A-D-P may convert the
remaining  Permits  to lease as A-D-P  sees  fit and  C-M-O  shall  Join in such
conversion and shall accept the selection of leases proposed by A-D-P;  provided
that if C-M-O has prior to the time of any such lease  selection  converted  the
C-M-O  carried  interest  to a  working  interest,  Clause  O of  the  Operating
Procedure shall apply to the lease selection.

7.6 If, while the C-M-O carried interest is in effect, A-D-P does not propose to
take  leases of the  maximum  area which may by law be leased  from any  permit,
A-D-P shall so advise C-M-O not less than 30 days before the lease  selection is
to be  forwarded  to the  Department.  C-M-O shall then have the right to select
further  leases for C-M-O's  account  from that  permit up to the  maximum  area
permitted by law,  provided that any such selection by C-M-O shall not cause any
change in the  lease  selection  already  made by A-D-P.  C-M-O  shall  promptly
furnish to A-D-P the funds required to take such C-M-O leases.

         For the  purpose of this Clause 7.6 A-D-P shall be deemed to have taken
the "maximum  area" if it selects  leases with the intention of  converting  the
entire permit to lease,  notwithstanding  that its manner of lease selection may
not result in the maximum  acreage which it might be possible to select from the
permit if the selection were made in some other manner.

7.7 If any  selection of leases must be made in the names of all parties  hereto
or if such  leases  must be  issued  in the  names of all  parties  hereto or to
parties  not  owning  the  beneficial  interest  therein  in the same  manner as
provided  herein  or in the Main  Agreement,  the  parties  shall  execute  such
assignments  and  documents  as may be necessary to transfer the leases to their
beneficial owners.


<PAGE>

7.8 All such  leases  selected  by A-D-P from the  permits  (except  for C-M-O's
account  under  Clause 7.6  hereof)  shall  continue  to be subject to the C-M-O
carried  interest  with respect to the Block in which the  respective  permit is
contained,  unless C-M-O has converted  the C-M-O carried  interest to a working
interest in that Block prior to the said lease selection.

7.9 All acreage of the permits  which is not  selected  under lease by A-D-P for
A-D-P's account under the foregoing provisions of this Article shall cease to be
subject  hereto or to the Main  Agreement,  except as provided  in Article  VIII
hereof.

7.10 In selected  leases from  Permits  1137 and 2301,  it is  recognized  that,
unless  otherwise  agreed  with the  owners of the south half of each of Permits
1137 and 2301,  the said owners  shall be entitled to select  one-half the total
acreage  which  may be  acquired  under  lease  out of  Permits  1137  and  2301
respectively,  such  selection to be made from acreage in the south half of each
of the said two permits.  By mutual agreement with such owners,  lease selection
may be made across the  boundaries of the north and south half of each or either
of the said two permits, in which case the portion of such leases falling within
each respective half-permit shall be assigned to the owners of that half-permit.

7.11 A-D-P is hereby given the right to arrange with the Department for a common
renewal  date for all or some of the  Permits,  as a matter  of  convenience  of
administration  and  programming of work  requirements.  With respect to each of
those Permits for which such common renewal date is approved by the  Department,
the  "anniversary  date" shall thereafter for all purposes hereof be such common
renewal date.


<PAGE>

7.12 To the extent  that A-D-P is  required  under this  Article VII to keep the
said Permits in permit form and therefore to make  deposits with the  Department
as a guarantee for the  performance  of exploratory  work,  A-D-P agrees that it
will in fact expend on exploratory  work on the Permits an amount  sufficient to
cause to be refunded all such  deposits made and to be made in the calendar year
1966.  A-D-P  agrees to commence on or before  February 1, 1967 the  exploratory
work  necessary to ensure refund of the said deposits made and to be made in the
calendar year 1966.

ARTICLE VIII

After-Acquired Lands

8.1 If any  Permit is  surrendered  to the  Department  by both  C-M-O and A-D-P
(other than for the mere purpose of selecting oil and gas leases therefrom), the
area of the surrendered Permit shall cease to be subject in any way hereto.

8.2 If any lease selected from a Permit is surrendered to the Department by both
C-M-O and A-D-P (except for  replacement  or  amendment)  the area of that lease
shall cease to be subject in any way hereto.

8.3 If any lease is  acquired by A-D-P or C-M-O in such  circumstances  that the
acquiror is expressly  required  hereunder  to offer an interest  therein to the
other party and such other party  declines such offer,  the lease shall cease to
be in any way subject hereto.


<PAGE>

8.4 If, prior to March 31, 1973,  any lands  (hereinafter  called "the  acquired
lands") all or not less than twenty-five  (25%) percent of which fall within the
original  area of a Permit or Permits  and any part of which lie within one mile
of the lands then subject to the C-M-O carried  interest  (excluding lands which
become  subject to the C-M-O  carried  interest  by reason of this  Clause  8.4)
should be for sale,  and provided  the  acquired  lands are not lands which have
ceased to be subject  hereto by reason of Clauses  8.1,  8.2 or 8.3 hereof,  the
parties shall take the following action:

         (a) If no well is then being  drilled by A-D-P on lands  subject to the
         C-M-O  carried  interest,  and if A-D-P  acquires  any of the  acquired
         lands,  A-D-P shall advise  C-M-O what  parcels of the  acquired  lands
         A-D-P has acquired. C-M-O shall then have the right for a period of ten
         (10)  days  after  receipt  of such  advice  to  elect  to have all the
         acquired  lands which have been acquired by A-D-P included in the lands
         subject to the C-M-O carried interest.

         (b) If A-D-P is then  drilling  a well on lands  subject  to the  C-M-O
         carried interest,  and if A-D-P  advises  that the well is being  timed
         for a Crown sale (and such is the case)  A-D-P  shall have the right to
         withhold from C-M-O all information  and derrick floor  privileges with
         respect to the well until after the Crown sale,  and the offer to C-M-O
         to have any  acquisition  by  A-D-P at  the Crown sale  included in the
         lands subject to the C-M-O carried  interest shall be made to C-M-O not
         later than ten (10) days  after the Crown sale,  accompanied by all the
         information which A-D-P had  with respect to the  said well at the time
         it submitted its  bid for  the posted  lands.  Subclause (a) shall then
         apply to such offer. If, however,  A-D-P does not propose to bid at the
         Crown sale where a well is timed for the sale as aforesaid, A-D-P shall


<PAGE>

         so advise C-M-O not later than forty-eight  (48) hours before the Crown
         sale and  give C-M-O  all  the  information  (including  derrick  floor
         privileges)  available  to  A-D-P from the said  well at that time.  If
         C-M-O then  bids at the  Crown sale  and  acquires  any  of  the posted
         lands, such acquisition  shall cease to be subject in any way hereto.

         (c) C-M-O agrees  that,  except as provided  in  Subclause  (b),  C-M-O
         will not bid  independently on  any posted lands  in which  it  must be
         offered a carried interest under Subclause (b) of this Clause 8.4.

8.5 If prior to March 31, 1973,  and while it holds the C-M-O  carried  interest
position in a Block,  C-M-O  should  acquire  from other than A-D-P any lands in
that Block (or which lie at least  twenty-five  (25%) percent in that Block) and
provided  such lands have not then ceased to be subject  hereto by reason of the
provisions  of Clauses 8.1 to and  including  8.4 hereof,  C-M-O shall  promptly
offer such lands to A-D-P at C-M-O's cost  thereof;  and if A-D-P  promptly pays
for such  lands,  they  shall  become  subject  to the  C-M-O  carried  interest
hereunder in that Block.  Such offer shall be accompanied by all the information
which C-M-O has with respect to the acquisition and shall be open for acceptance
by payment for ten (10) days (only) after the receipt thereof.

         This Clause 8.5 shall  not apply to  leases  selected for  C-M-O's  own
account from the Permits under Clause 7.6 hereof.


<PAGE>

         If C-M-O  elects to have any  acquired  lands made subject to the C-M-O
carried  interest  pursuant to Clause 8.4 hereof,  or should any  acquisition of
lands  be  taken  over by A-D-P  from  C-M-O  pursuant  to this  Clause  8.5 the
acquisition  thus made subject to the C-M-O carried  interest  shall be added to
the  Block in which are  situated  or partly  situated  the lands  which are the
subject  of such  acquisition.  Should  such  acquisition  include  lands in two
Blocks, both of which are subject to the C-M-O carried interest, the acquisition
(and the cost thereof) shall be divided  between the respective  Blocks in which
they lie. If such division causes a parcel to be divided between two Blocks, the
acquisition cost of that parcel shall be divided on an acreage basis.

         Any such  acquisition  thus  added to a Block  shall  thereupon  become
subject  to all the  provisions  hereof  (including  the  right  of  conversion)
relating to the C-M-O carried interest lands in that Block.

         The  operational  costs for the Block to which is added any acquisition
made subject to the C-M-O carried  interest  under Clause 8.4 or this Clause 8.5
hereof shall be increased by the bonus consideration and other costs to A-D-P of
the acquisition thereof, and in the case of a bonus consideration there shall be
added to the  operational  costs for the Block six (6%) percent per annum of the
said bonus consideration until such time as either (i) the operational  receipts
for that  Block  have  exceeded  the  operational  costs  (including  such bonus
consideration and interest) for that Block or (ii) the operational receipts from
the acquired  parcel have  exceeded the said bonus  consideration  plus interest
with respect to that parcel, whichever time is earlier.

8.6 No party hereto shall, by use of a parent company, subsidiary,  affiliate or
associate  company or any company nominee or person employed by or controlled by
such party, evade any of its obligations under this Article VIII.


<PAGE>

8.7 Should C-M-O convert the C-M-O carried interest to a working  interest,  the
provisions  of this Clause 8.7 shall apply  thereafter  in lieu of the foregoing
provisions of this Article VIII, (except Clauses 8.1, 8.2 and 8.3 hereof,  which
shall remain in full force and effect):

         (a) If prior to March 31, 1973, any lands,  all or not less than 25% of
         which lie within an area bounded by lines drawn (1) outside of a Permit
         area (2) parallel to the respective  boundaries of that Permit area and
         (3) one mile from the respective  boundaries of that Permit,  should be
         posted for Crown sale (as to the  petroleum  and/or  natural gas rights
         thereunder),  the parties  hereto  shall meet to attempt to arrive at a
         joint bid for such posted lands or for one or more parcels thereof.  If
         the parties do not agree upon a joint bid,  each of the  parties  shall
         disclose to the other parties the bid it proposes to make at such Crown
         sale for the  respective  parcels  upon which it  intends to bid.  If a
         joint bid is agreed upon, it shall be submitted by the Manager-Operator
         for the  account  of the  parties,  each of whom shall be  required  to
         provide its pro rata share of the moneys  required to be tendered  with
         such bid. If a joint bid is not agreed upon and any party is successful
         in  acquiring  at such Crown sale a parcel or parcels at a price  which
         varies  more  than 5% from the  amount  the  acquiror  revealed  as its
         proposed bid for such parcel or parcels, the acquirer shall be required
         to  offer a pro  rata  share of the  acquisition  at cost to the  other
         parties  hereto.  The said offer shall  remain open for a period of ten
         days only (or for 48 hours only if a well is then being drilled  within
         one mile of the parcel or parcels subject to the offer).


<PAGE>

         (b) If any party hereto should  acquire any interest  in lands to which
         Subclause (a)  of this  Clause 8.7 would  apply if such  lands were the
         subject of a Crown sale,  but such acquisition  is made by way of other
         than Crown sale, the acquiror shall offer participation at cost in such
         acquisition  to the other parties hereto.  Subclause (a) shall apply as
         to acceptance of such offer.

         (c) For the purposes of this Clause 8.7,  references  to parties hereto
         shall refer to the individual parties to this agreement rather  than to
         the A-D-P  group and the C-M-O group as such;  and  a  "pro rata share"
         shall mean pro rata to the following percentages:

               Canada Southern     -  45.00%

               Magellan            -   4.00%

               Oil Investments     -   1.00%

               Alminex             -   2.50%

               Pan American        -  25.00%

               Dome                -  15.00%

               Provo               -   7.50%

         (d) Any party hereto who  (in default of its obligation so to do)  does
         not comply  with the foregoing provisions  of this Clause as to bidding
         at the Crown sale shall in any event be  obliged  to offer to the other
         parties hereto an interest  in every acquisition  at such Crown sale in
         the same manner and extent as above  provided for a party hereto who is
         required to offer an interest in its  acquisition  to the other parties
         hereto.

8.8      The provisions of this Article shall  not apply to any lands within the
south half of Permit 1137 and the south half of Permit 2301.


<PAGE>

ARTICLE IX

Gas Plants and Gathering Systems

9.1 If A-D-P during the period in which C-M-O holds the C-M-O  carried  interest
in the Blocks or any of them as  aforesaid,  proposes to construct gas gathering
systems and a gas processing  plant for the purpose of putting  natural gas from
that Block or those Blocks in a marketable  state or otherwise to process it for
the  removal  of  liquids  and/or  sulphur,  A-D-P  shall  advise  C-M-O of such
proposal,  giving C-M-O the cost estimates and proposed  specifications  of such
gathering systems and plant.  C-M-O shall have ninety (90) days after receipt of
such information to advise A-D-P whether C-M-O elects to participate in the said
gathering  systems and plant as a fifty (50%) percent working interest owner. If
C-M-O elects so to  participate it shall be required to bear and pay in cash its
fifty (50%)  percent  share of the cost of  construction  of the said  gathering
systems and plant.

9.2 If C-M-O does not elect so to  participate,  A-D-P may proceed to  construct
the gathering  systems and the plant for A-D-P's  account and risk.  Whether the
said  plant and gas  gathering  systems  are  constructed  by C-M-O and A-D-P or
solely by A-D-P,  the cost of construction,  operation and maintenance  thereof,
and the receipts and revenues  therefrom,  shall not be added to the operational
costs or the  operational  receipts  respectively  for the purposes of the C-M-O
carried  interest,  but the  following  provisions  of this Article  shall apply
thereto:

         (a) The said gathering systems and plant shall be owned and operated by
         the parties hereto who bear the cost thereof as provided in this Clause
         9.2  and as a  project  separate  and  apart  from  the  ownership  and
         operation  of the  lands  subject  hereto.


<PAGE>

         (b) The owners of the  said gathering systems  and plant shall have and
         are hereby exclusively  granted the right to gather and process the gas
         produced from the lands subject hereto and to the Main  Agreement which
         are (or are to be) served by the said gathering  systems and plant, and
         to charge for such gathering and  processing a fee or charge which will
         limit  cumulative  net revenue to the said owners of the said gathering
         systems and plant  in accordance with  the principles  expounded in the
         Alberta  Public  Utilities  Board's  Shell-Jumping  Pound  decision  of
         December, 1961, assuming the following in applying such principles:

                  (a)      a rate of return of 8 1/2% on rate base;
                  (b)      a 50/50 debt - equity ratio;
                  (c)      a 6% interest rate on debt;
                  (d)      a 11% return on equity capital;
                  (e)      an income tax  allowance to be computed as 50% of the
                           taxable  income  consisting of the allowed  return on
                           equity and debt  capital  plus income tax  allowance,
                           less interest on debt capital;
                  (f)      depreciation on a unit of throughput  basis (that is,
                           the  factor to be used in  determining  the amount of
                           depreciation  to be allowed in any year is arrived at
                           by dividing the  throughput of the gathering  systems
                           and plant by the remaining  recoverable  gas reserves
                           at the beginning of the period under review);
                  (g)      and provisions  for  working  capital equal to 25% of
                           annual operating costs.

         (c) The  operational  costs for a Block shall include the fee or charge
         which is made under  Subclause  (b) for gathering  and  processing  gas
         produced from that Block while C-M-O holds the C-M-O interest  therein.


<PAGE>

         (d) If any plant to which this  Clause 9.2  applies is also used in any
         calendar  year to process gas from sources other than the lands subject
         hereto  (and the right to process  such other gas is  expressly  hereby
         given) then all costs (including depreciation) of processing gas at the
         plant in that  year,  and the rate  base for that  year,  shall for the
         purposes of  determining  the charge or fee to be made under  Subclause
         (c) of this Clause 9.2 be divided among such other gas and gas from the
         lands subject  hereto in proportion  to the  respective  volumes of gas
         processed from such other lands and from the lands subject hereto.

         (e) If the said  gathering  systems  or  any  part  thereof are used to
         transport such other gas,  an allocation of  the costs of the gathering
         systems or  parts thereof  so used  shall  be  made in  the same manner
         mutatis  mutandis  in  proportion  to  the  respective  volumes  of gas
         transported in the calendar year.

ARTICLE X

Proposed Surrender of Carried Interest Lands

10.1 If A-D-P  proposes  to  surrender  to the  Department  any lands  which are
subject  to  the  C-M-O  carried  interest,  and  if the  lands  proposed  to be
surrendered  are then held in  permit  form,  A-D-P  shall  give  notice of such
proposed  surrender  not less than 90 days before the next  ensuing  anniversary
date of the  permit  (or  respective  permits,  if more  than  one)  which it is
proposed to surrender.  Unless within 60 days after receipt of such notice C-M-O
requests in writing an assignment to C-M-O of the lands which A-D-P has proposed
to  surrender,  C-M-O shall be deemed to have elected to join in such  surrender
and shall in fact join therein.


<PAGE>

         If C-M-O  requests  such  assignment,  A-D-P shall  assign to C-M-O the
interest which A-D-P had proposed to surrender, and such interest shall cease to
be subject hereto or to the Main Agreement.

10.2 If A-D-P  proposes  to  surrender  to the  Department  any lands  which are
subject to the C-M-O carried interest but which are not then in permit form, the
provisions of Clause P of the Operating Procedure shall apply to such surrender,
for which purpose  A-D-P and C-M-O shall each act as one party.  If the interest
proposed to be  surrendered  is assigned to C-M-O pursuant to the said Clause P,
that interest shall cease to be subject in any way hereto.

ARTICLE XI

Operations Generally

11.1 With respect to lands subject to the C-M-O carried interest C-M-O shall not
be  "Joint  Operators"  under  the  Operating  Procedure,  except  as  otherwise
expressly  provided herein.  C-M-O shall be entitled to vote,  however,  for the
appointment of a Manager Operator under the Operating  Procedure as if the C-M-O
carried  interest were a working  interest;  provided that the Manager  Operator
while the C-M-O  carried  interest  is in effect  shall be a member of the A-D-P
group unless A-D-P otherwise unanimously agrees or unless no member of the A-D-P
group  fills the  position  of  Manager  Operator  for a period  of thirty  (30)
consecutive days.

11.2 If C-M-O fails to exercise its vote to join in the appointment of a Manager
Operator as aforesaid,  the Manager  Operator  shall be appointed by A-D-P,  and
each member of the A-D-P group shall have a percentage vote for this purpose pro
rata to its  working  interest as if the  working  interests  of the A-D-P group
totaled 100%.


<PAGE>

ARTICLE XII

Conversion of C-M-O Carried Interest

12.1 With  respect to each Block,  C-M-O shall have the right at any time during
the term hereof to convert the C-M-O  carried  interest in that Block to a fifty
(50%) percent  undivided working interest therein by paying to A-D-P one-half of
the amount by which the operational  costs for that Block exceed the operational
receipts  for  that  Block;  provided  that  if at the  effective  date  of such
conversion the operational receipts exceed the operational costs with respect to
that Block, such conversion may be made without any payment to A-D-P.

12.2 Upon converting the C-M-O carried interest in a Block to a working interest
as provided in Clause 12.1 and making the payment, if any, due thereunder, C-M-O
shall,  without  further  formality  or  assignment,  have and hold an undivided
one-half  working  interest  in all  wells,  batteries,  dehydrators,  treaters,
compressors,  tanks, flow lines, and equipment and material of all kinds in that
Block, the cost of which had been paid as operational costs or incurred prior to
the date hereof  (subject to Article IV of the said amending  agreement of April
1, 1966).

12.3 Upon  converting  the C-M-O  carried  interest  to a working  interest in a
Block,  C-M-O shall then become and be subject to all the rights and liabilities
of a Joint Operator under the Operating Procedure with respect to that Block.

12.4 C-M-O shall give A-D-P written notice of its intention to convert the C-M-O
carried  interest  to a  working  interest  in any  Block  or  Blocks,  and such
conversion  shall become  effective on the first day of the calendar month which
falls next after the  notice,  provided  the  payment,  if any,  due A-D-P under
Clause 12.1 hereof is made.  Such payment  will be adjusted as of the  effective
date as soon as a statement to that date is prepared  and  submitted to C-M-O by
A-D-P.


<PAGE>

12.5 Where any lands  cease to be subject to the C-M-O  carried  interest,  that
fact  shall not  affect  the  operational  receipts  and the  operational  costs
theretofore credited or charged to the account of the C-M-O carried interest.

ARTICLE XIII

Conversion By Less Than All C-M-O

13.1 Each member of the C-M-O group shall have the right  separately  to convert
that  member's  share of the C-M-O carried  interest to a working  interest in a
Block or Blocks.  The working  interest  obtained  upon such  conversion by such
member  (hereinafter  called "a converting member") shall be that shown opposite
the converting member's name below, namely:

         Canada Southern                    -      45.00%

         Magellan                           -       4.00%

         Oil Investments                    -       1.00%

13.2     In making such separate conversion the converting member

         (1) Shall for the  purposes  of Clause 12.1 hereof pay A-D-P a fraction
         of  one-half  the  amount by which the  operational  costs  exceed  the
         operational receipts, which fraction shall be

                  (i)      in the case of Canada Southern     -   45/50ths

                  (ii)     in the case of Magellan            -    4/50ths

                  (iii)    in the case of Oil Investments     -     1/50th

         (2)  Shall for the  purposes  of Clause  12.2  hereof  obtain a working
         interest in wells and other items listed in Clause 12.2 hereof equal to
         the same fraction as in Subclause 13.2(1) hereof of one-half the entire
         working interest therein.


<PAGE>

13.3 After any such conversion is made by less than all the members of the C-M-O
group, the percentage carried interest held by each non-converting member of the
C-M-O group shall be that shown  opposite  its name where first listed in Clause
13.1 hereof. A converting  member shall bear no share of the burden of the C-M-O
carried interest held by the non-converting members of the C-M-O group.

13.4 The payment (if any) made under Clause 12.1 hereof by a  converting  member
of the C-M-O group shall not be considered as  operational  receipts,  nor shall
any  receipts  accruing  to or  expenditures  made  by a  converting  member  be
considered as operational receipts or operational costs for the purposes of this
agreement.

13.5 Unless and until such time as Canada  Southern is a converting  member with
respect to a Block, a converting member who proposes an operation under Clause N
of the Operating  Procedure  shall not be entitled to proceed with the operation
unless all members of the C-M-O group participate  therein. If less than all the
members of the A-D-P  group  participate  in any such  proposed  operation,  the
participating  members of the A-D-P  group shall bear pro rata the same share of
the cost of the  operation  as if all  members of the A-D-P group had elected to
participate  in the  operation  and  shall be  entitled  to the  entire  penalty
accruing  from the  non-participating  member or  members  of the  A-D-P  group,
subject to the C-M-O carried interest still held by the  non-converting  members
of the C-M-O group.

13.6 A converting member of the C-M-O group shall not thereby become a member of
the A-D-P group.


<PAGE>

13.7 For the  purposes of Article  VIII hereof  with  respect to  after-acquired
lands, a converting member of the C-M-O group (provided all members of the C-M-O
group  are not  then  converting  members)  shall,  as  between  A-D-P  and such
converting  member,  be  considered  a member of the C-M-O group except that any
interest  acquired by A-D-P which is to be offered to C-M-O shall,  with respect
to the converting  member only, be offered at cost as a working  interest rather
than as a carried interest.

13.8 For the purposes of Clause 8.5 hereof,  if a converting member acquires any
lands which if  acquired  by C-M-O would be offered to A-D-P under that  clause,
the converting member shall offer A-D-P such acquisition except for a percentage
thereof equal to the  converting  member's  percentage  working  interest in the
Permits. If A-D-P accepts the offer, A-D-P shall then, as provided in Clause 8.4
hereof,  offer to include the  acquisition  by A-D-P in the lands subject to the
C-M-O carried interest.

ARTICLE XIV

C-M-O Rights Re Sale of Production

14.1 Subject to Article IX of this Schedule "D", while C-M-O holds the C-M-O net
carried  interest in a Block C-M-O shall have the right to dispose of 50% of the
petroleum  substances  produced  and saved from that Block  (except  the portion
thereof  required  for use in  operations  on  that  Block),  and to  make  such
contracts for the sale of the said 50% of such petroleum substances as C-M-O may
wish,  provided  such  contracts  shall be at arm's  length (or on terms no less
favourable to C-M-O than if made at arm's  length) and provided  such  contracts
are not at terms less  favourable than those which A-D-P offers C-M-O in writing
before  such  contracts  are made for the same.  The rights of C-M-O  under this
clause may be exercised separately with respect to oil and natural gas.


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l4.2 The  rights  of C-M-O  under  Clause  14.1 may be  exercised  only upon the
condition  that the  proceeds  of all such sales  shall be assigned to A-D-P and
made payable  directly to A-D-P to be applied towards the  operational  receipts
for the  respective  Block  from  which the  petroleum  substances  so sold were
produced,  unless and until A-D-P  agrees in writing to the  contrary  after the
operational receipts exceed the operational costs for that Block.

ARTICLE XV

Notice

15.1 For the purposes of Clause X of the Operating  Procedure (which shall apply
hereto) and for the  purposes of this  Schedule D, the  addresses of the parties
hereto shall be as follows:

         (a)      C-M-O and Alminex      -  as  provided  in  Clause  X  of  the
                                            Operating Procedure

         (b)      Pan American           -  444 Seventh  Avenue S. W.,  Calgary,
                                            Alberta

         (c)      Dome and Provo         -  706 Seventh  Avenue S. W.,  Calgary,
                                            Alberta


Provided that with respect to the C-M-O carried interest,  C-M-O agrees that all
notices and  communications  to be given to or by the members of the C-M-O group
may be given to or by Canada Southern on behalf of the C-M-O group.