Exhibit 10.32

                 INTERNATIONAL DAYWORK DRILLING CONTRACT - LAND
                 ----------------------------------------------


THIS AGREEMENT, dated the 7th day of April, 1998, is made between Challenger Oil
Services, PLC, a company organized under the laws of England, with its principal
office  located  in  London,   England  (hereinafter  called  Contractor),   and
Karakuduk-Munai, Inc., a corporation organized under the laws of the Republic of
Kazakstan,  with and office  located at  Microdistrict,  Region 3,  Building 82,
Aktau, Republic of Kazakstan. (hereinafter called "Operator").

WHEREAS, Operator desires to have onshore wells drilled, produced or worked over
in the  Operating  Area  and to have  performed  or  carried  out all  auxiliary
operations and services as detailed in the Appendices  hereto or as Operator may
require, and

VVHEREAS,  Contractor is willing to furnish the land drilling rig Challenger No.
23,  which is a Cabot  900 rig,  together  with  drilling  and  other  equipment
(hereinafter  called the  "Drilling  Unit"),  insurance  and  personnel,  all as
detailed in the Appendices  hereto for the purpose of drilling or producing said
wells and performing said auxiliary operations and services for Operator.

NOVV THEREFORE THIS AGREEMENT  WITNESSETH that in  consideration of the premises
and the covenants and agreements herein it is agreed as follows:

                           ARTICLE I - INTERPRETATION

101. Definitions

     In this Contract, unless the context otherwise requires:

(a)  "Commencement Date" means the day and time within the nearest hour that the
     Contractor's  drilling  crew  has  arrived  at  Operator's  first  drilling
     location  and is ready to  commence  the rigging up of the  Drilling  Unit.
     Operator  hereby  agrees to give to  Contractor a written  notice two weeks
     before  the  Drilling  Unit is  expected  to arrive  at the first  drilling
     location  in the  Operating  Area to  enable  Contractor  to  mobilize  its
     drilling crew to the first drilling location on a timely basis,

(b)  "Operators  Items" means the  equipment,  material  and  services  owned by
     Operator  or which are listed in  Appendix D that are to be provided at the
     expense of Operator;

<PAGE>


(c)  "Contractors Items" mean the Dulling Unit, equipment, material and services
     owned by  Contractor  or which are listed in Appendices B and D that are to
     be provided at expense of Contractor;

(d)  "Contractor's  Personnel"  means the  personnel  and  subcontractors  to be
     provided by Contractor from time to time to conduct operations hereunder as
     listed in Appendix C;

(e)  "Operator's  Personnel"  means the  personnel and other  contractors  to be
     provided  by  Operator  from  time to time in  connection  with  operations
     hereunder;

(f)  "Operating Area" means the area specified in Appendix A.

(g)  "Operating  Base"  means the  place  onshore  designated  by  Operator  and
     specified in Appendix A;

(h)  "Affiliated  Company" means a company owning fifty percent (50%) or more of
     the stock of  Operator  or  Contractor,  a  company  in which  Operator  or
     Contractor own fifty percent (50%) of more of its stock, or a company fifty
     percent (50%) or more of whose stock is owned by the same company that owns
     fifty percent (50~) or more of the stock of Operator or Contractor.

102. Currency
     --------

     In this Contract, all amounts expressed in dollars are United States dollar
amounts, unless otherwise indicated in Appendix A.

103. Conflicts
     ---------

     Appendices  A, B, C, D and E  attached  hereto are  incorporated  herein by
reference.  If any provision of the Appendices conflicts with a provision in the
body hereof, the latter shall prevail.

104. Headings
     --------

     The paragraph  headings shall not be considered in interpreting the text of
this Contract.


105. Further Assurances
     ------------------

     Each party shall perform the acts and execute and deliver the documents and
give the assurances necessary to give effect to the provisions of this Contract.

<PAGE>


106. Contractor Status
     -----------------

     Contractor in performing its obligations  hereunder shall be an independent
contractor.  Operator may instruct and direct Contractor as to the results to be
obtained from  Contractor's  employees,  however,  Contractor as an  independent
contractor shall have sole and complete control,  supervision and direction over
the Drilling Unit,  its equipment and  personnel,  and over all operations to be
carried out. This is a Contract for drilling services and shall not be construed
as a charter,  lease or demise of  Contractor's  equipment.  None of Contractors
employees are, nor shall be deemed to be,  employees or agents of Operator.  Use
of subcontractors by Contractor shall not relieve  Contractor from any liability
or obligation under this Contract.

107. Governing Law
     -------------

     This  Contract  shall be construed  and the  relations  between the parties
determined in accordance  with the law  designated in Appendix A, not including,
however,  any of its  conflicts  of law rules which would direct or refer to the
laws of another  jurisdiction.  In the event any  provision of this  Contract is
inconsistent  with or contrary to any applicable law, rule or regulations,  said
provision  shall be deemed to be modified to the extent  required to comply with
said  law,  rule or  regulation,  and as so  modified  said  provision  and this
Contract shall continue in full force and effect.

<PAGE>



                                ARTICLE II - TERM

201. Effective Date
     ---------------

     The parties  shall be bound by this Contract when each of them has executed
it (hereinafter referred to as "Effective Date").

202. Duration
     --------

     This Contract  shall,  subject to Paragraphs 203 and 204 below,  be for the
term specified in Appendix A.

203. Termination
     -----------

     This Contract shall terminate:

     (a)  immediately  if the  Drilling  Unit becomes an actual loss on the date
          Contractor's  insurance surveyor determines a constructive or arranged
          total loss to have occurred;

     (b)  on the later of the date specified in Appendix A or, if operations are
          then being  conducted on a well, as soon thereafter as such operations
          are  completed  and the Drilling  Unit has been safely  stacked at the
          demobilization  location  specified  in  Appendix A, unless some other
          location or port is mutually agreed,  and all of Operator's Items have
          been off loaded;

     (c)  in accordance with Paragraph 708;

     (d)  in accordance with Paragraph 802.

<PAGE>


204. Option to Extend
     ----------------

     This Contract may be renewed by Operator for an additional one year term at
the same rates,  terms and  conditions,  provided that  Operator  first gives to
Contractor  a written  notice of renewal at least  ninety (90) days prior to the
expiration of the initial term of this Contract.

205. Continuing Obligations
     ----------------------

     The provisions of Article ~X, Article 1304, 1305 and 1309 shall survive the
termination of this Contract and the Parties shall continue to be bound thereby.

206. Return of Operator's Item
     ---------------------------

     Upon termination of operations,  Contractor shall return to Operator at the
last drilling location of the Drilling Unit under this Contract, or at any other
location as directed by Operator  at  Operator's  sole cost,  any of  Operator's
Items which are at the time in Contractor's  possession,  Operator's Items shall
be returned by Contractor  in the same  condition in which they were received by
Contractor, normal wear and tear excepted.

<PAGE>

                      ARTICLE Ill - CONTRACTOR'S PERSONNEL

301. Number. Selection, Hours of Labor and Remuneration
     --------------------------------------------------

     Except where herein otherwise provided, the number, selection, replacement,
hours of labor and remuneration of Contractors  Personnel shall be determined by
the  Contractor.  Such  employees or  subcontractors  shall be the  employees or
subcontractors solely of Contractor.  Notwithstanding the above, minimum manning
shall be as specified in Appendix C.

302. Contractor's Representative
     ---------------------------

     Contractor   shall   nominate   one  of  its   personnel   as   Contractors
Representative who shall be in charge of the remainder of Contractor's Personnel
and who shall have full authority to resolve all day-to-day  matters which arise
between Operator and Contractor.
                                                  
303. Increase in Contractor's Personnel
     ----------------------------------

     Operator may,  subject to mutual  agreement of the parties as to additional
compensation  to  Contractor,  require  Contractor  to  increase  the  number of
Contractor's Personnel.

304. Replacement of Contractor's Personnel
     -------------------------------------

     Contractor will remove and replace at anytime any of Contractors  Personnel
if  Operator  so  requests.  Operator  shall  not  exercise  this  right  in  an
unreasonable  or arbitrary  manner and shall give to Contractor  the reasons for
any such request.

305. Personnel Shortages
     -------------------

     Should  Contractor,  at any time during the term of this Contract,  provide
less  than a full  crew of  personnel  as  established  by the  Appendices,  the
applicable dayrate payable to Contractor hereunder shall be reduced by an amount
calculated by multiplying the applicable dayrate by a fraction, where the number
of crew  members  absent from the Dolling  Unit is the  numerator  and the total
number of required crew members is the denominator.

     If at any time in  Operator's  opinion,  Contractor's  failure to provide a
full crew of personnel as established  in the Appendices is interfering  with or
delaying the conduct of its operations,  and such failure continues for a period
of five (5) days after  written  notice  from  Operator to  Contractor,  then in
addition to (i) a reduction in the  applicable  day rate as provided  herein and
(ii) any other remedies the Operator may have under this Contract,  the Operator
may terminate this Contract.

<PAGE>


306. Safety Measures
     ---------------

     Contractor shall, at its expense, take all measures reasonably necessary or
proper to provide safe  working  conditions,  and shall  comply with  Operator's
safety regulations and with all safety requirements of the country of operation.
Contractor  shall  give  notice to all  persons  at the drill site of all safety
regulations which apply to such personnel. Additionally, Contractor shall ensure
that such persons are fully  informed of and comply with such  regulations.  The
Contractor shall set up and conduct monthly safety drills.


                                                    
                         ARTICLE IV - CONTRACTOR'S ITEMS

401. Obligation to Supply
     --------------------

     Contractor  shall provide  Contractors  Items and Personnel and perform the
services to be performed by it in accordance with Appendices B, C and D.

402. Maintain Stocks
     ---------------

     Contractor  shall be  responsible,  at its cost, for  maintaining  adequate
stock levels of Contractor's Items and replenishing as necessary.

403. Maintain and Repair Equipment
     -----------------------------

     Contractor  shall,  subject  to  Paragraph  901,  be  responsible  for  the
maintenance  and repair of all  Contractor's  Items and shall  provide all spare
parts and  materials  required  therefor.  Contractor  shall,  if  requested  by
Operator,  also maintain or repair any of Operator's Items in the Operating Area
which  Contractor  is qualified to and can maintain or repair with  Contractor's
normal  complement  of  personnel  and  equipment  at the drill site,  provided,
however,  that Operator  shall at its cost provide all spare parts and materials
required to maintain or repair  Operator's  Items, and the basic  responsibility
and ability for furnishing and maintaining such items shall remain in Operator.


                   ARTICLE V - CONTRACTOR'S GENERAL OBLIGATION

501. Contractor's Standard of Performance
     ------------------------------------

     Contractor  shall  carry out all its  operations  under this  Contract on a
daywork  basis For purposes  hereof the term  "daywork  basis" means  Contractor
shall furnish  equipment,  labor and perform services as herein provided,  for a
specified  sum per day under the direction and  supervision  of Operator  (which
term is deemed to include  any  employee,  agent,  consultant  of  subcontractor
engaged by Operator to direct drilling operations).  When operating on a daywork
basis,  Contractor  shall be fully paid at the  applicable  rates of payment and
assumes only the  obligations  and  liabilities  stated herein.  Except for such
obligations and liabilities  specifically assumed by Contractor,  Operator shall
be solely  responsible and assumes  liability for all consequences of operations
by both parties while on a daywork basis,  including results and all other risks
or liabilities  incurred in or incident to such operations,  notwithstanding any
breach of  representation  or warranty,  either expressed or implied,  or latent
defects  (whether or not  preexisting)  and any liability based on any theory of
tort,  breach of  contract  or  strict  liability,  including  defect or ruin or
premises, either latent or patent.

502. Operation of Drilling Unit
     --------------------------

     Subject to Paragraph 606, Contractor shall be responsible for the operation
of the Drilling Unit,  including,  supervising moving operations and positioning
on drilling  locations as required by Operator.  Operations  under this Contract
will be  performed  on a  twenty-four  (24) hour per day,  seven (7) days a week
basis.  Contractor  warrants that the Drilling Unit will operate efficiently and
is physically  capable of drilling  wells to depths  specified in the Appendices
hereto.

<PAGE>



503. Compliance with Operator's Instructions
     ---------------------------------------

     Contractor shall comply with all  instructions of Operator  consistent with
the provisions of this Contract,  including, without limitation,  drilling, well
control and safety  instructions.  Such  instructions  shall,  if  Contractor so
requires  and  time  permits,   be  confirmed  in  writing  by  the   authorized
representative of Operator.  However,  Operator shall not issue any instructions
which would be  inconsistent  with  Contractors  rules,  policies or  procedures
pertaining to the safety of its  personnel,  equipment or the Drilling  Unit, or
require Contractor to exceed the capacity of the Drilling Unit.

504. Adverse Weather
     ---------------

     Contractor,  in consultation with Operator,  shall decide when, in the face
of impending adverse weather conditions,  to institute precautionary measures in
order to safeguard the well, the well equipment, the Drilling Unit and personnel
to the fullest possible  extent.  Contractor and Operator shall each ensure that
each respective senior  representative will not act unreasonably in the exercise
of their discretion under this Paragraph.

505. Drilling Fluids and Casing Program
     ----------------------------------

     Contractor shall follow any of Operator's  instructions with respect to the
Drilling  Fluid and Casing  Program as may be specified  by  Operator.  Operator
shall provide  Contractor  with any such  programs  reasonably in advance of the
spud date of each well to be drilled hereunder.

506. Cutting/Coring Program
     ----------------------

     Contractor  shall  save  and  identify  cuttings  and  cores  according  to
Operator's instructions and place them in containers furnished by Operator.

507. Records to be Kept by Contractor
     -------------------------------

     Contractor  shall keep and furnish to  Operator  an accurate  record of the
work performed and formations drilled on the IADC-API Daily Drilling Report Form
or other form  acceptable  to  Operator.  A legible  copy of said form signed by
Contractor's Representative shall be furnished by Contractor to Operator.

508. Difficulties During Drilling
     ----------------------------

     In the event of any  difficulty  arising which  precludes  either  drilling
ahead  under  reasonably  normal  procedures  or the  performance  of any  other
operations  planned for a well,  Contractor may suspend the work in progress and
shall immediately notify the  representative of Operator of the difficulty,  and
in the meantime exert its best efforts to overcome the difficulty.

509. Well Control Equipment
     ----------------------

     Subject to Article IX, Contractor shall maintain its well control equipment
listed in  Appendices  B and D in good  condition at all times and shall use all
reasonable  means to prevent and control  fires and  blowouts and to protect the
hole.

510. Inspection of Materials Furnished by Operator
     ---------------------------------------------

     Contractor  agrees to visually inspect all materials  furnished by Operator
before  using  same and to notify  Operator  of any  apparent  defects  therein.
Contractor  shall not be liable for any loss or damage resulting from the use of
materials furnished by Operator.

<PAGE>


                 ARTICLE Vl - OPERATOR'S RIGHTS AND OBLIGATIONS

501. Equipment and Personnel
     -----------------------

     Operator  shall  at  its  cost  provide  Operator's  Items  and  Operator's
Personnel  and perform the  services to be provided or performed by it according
to Appendix D. ln addition to providing the initial supply of Operator's  Items,
Operator  shall be  responsible,  at its cost,  for  maintaining  adequate stock
levels and  replenishing  as necessary.  When,  at  Operator's  request and with
Contractor's  agreement,  the Contractor  furnishes or subcontracts  for certain
items  which  Operator  is  required  herein to  provide,  for  purposes of this
Contract  said  items or  services  shall be  deemed  to be  Operators  items or
Contractors,  and Operator  shall not be relieved of any of its  liabilities  in
connection  therewith.  For furnishing  said items and services,  Operator shall
reimburse  Contractor  its entire cost plus a handling  charge as  specified  in
Appendix A.

602. Maintenance and Repair
     ----------------------

     Operator shall be responsible,  at its cost, for the maintenance and repair
of all Operator's  Items on the Drilling Unit which  Contractor is not qualified
to or cannot maintain or repair with Contractors  normal complement of personnel
and the equipment at the drill site.

603. Operator's Employees
     --------------------

     Operator  shall  designate a senior  representative  to resolve  day-to-day
matters  requiring  decision by Operator  who will be present at the drill site.
Contractor may treat Operator's senior  representative for the time being at the
drill site as being in charge of all Operator Personnel.

604. Replacement of Operator's Personnel
     -----------------------------------

     Contractor  shall have the right to request in writing  Operator  to remove
and replace any Operator  Personnel at the drill site if the Contractor can show
reasonable grounds for such request;  however the final decision with respect to
such removal shall rest with Operator.

605. Drilling Site and Access
     ------------------------

     Operator  shall  be  responsible  for  providing  access  to  the  drilling
location,  as well as  selecting,  surveying,  marking and clearing the drilling
locations as may be  reasonably  required by Contractor  for location  approval.
Operator shall obtain and provide all required  certificates,  drilling  permits
and licenses  required for the drilling  operations and Dolling Unit  hereunder.
Operator shall notify  Contractor of any impediments or hazards to operations at
each  drilling  location or at any access  routes to the  drilling  locations of
which it has knowledge.  Notwithstanding  any other  provision of this Contract,
should there be  obstructions  at or within the area of the drill site and these
obstructions   result  in  damage  to  the  Drilling  Unit,  Operator  shall  be
responsible  for and hold  harmless and indemnify  Contractor  for all resulting
damage,  including the payment of the Standby Rate during repairs,  but Operator
shall receive  credit for any physical  damage  insurance  proceeds  received by
Contractor as a result of such damage.

606. Custom or Excise Duties, Taxes and Fees
     ---------------------------------------

     Contractor  shall transport the Drilling Unit and its equipment to the port
of Houston and provide  Operator with information and  documentation  concerning
the Drilling Unit and  equipment  which  Operator may need to arrange  shipment.
Operator  shall  arrange for and pay all expenses of shipping the Drilling  Unit
and equipment from the Port of Houston to the Operator's first drilling location
in the  Operating  Area,  including  the  costs of trip  insurance  to cover the
Drilling Unit during the transportation.  After the first well has been spudded,
Contractor  shall pay all costs of shipping and  transportation  of spare parts,
materials  and supplies to the drill site.  Operator  shall be  responsible  for
obtaining  permits  and  licenses  and  clearing  customs  for the  initial  and
subsequent items in the country in which the Operating Area is located,  as well
as all related charges such as customs duties, excise duties, sales taxes, value
added taxes,  clearing  agent's fees, port clearances,  pilotage,  other similar
fees, handling charges and port dues.

<PAGE>


607. Taxes
     -----

     Contractor  shall pay any and all  liabilities or claims for Profit Tax and
Net  Income Tax or other  taxes  assessed  or levied on account of  Contractor's
earnings under this Contract which any Kazakstan taxing authority (including any
political  subdivision  thereof  claiming  jurisdiction  over Contractor and its
performance  of this  Contract may assess or levy against  Contractor  up to the
aggregate sum of $850 U.S_ Dollars per day. Operator shall assume responsibility
for and pay on behalf of  Contractor  or reimburse to  Contractor  any Kazakstan
taxes  which  exceed $850 U.S.  Dollars  per day on a grossed up basis,  so that
Contractor's maximum obligation for such Kazakstan taxes shall never exceed $850
U.S. Dollars per day.

     Contractor shall indemnify and hold harmless  Operator from and against any
personnel  income  taxes which may be assessed  against  Contractor's  personnel
based on tax rates,  laws and  regulations  as they exist as of the date of this
Contract.  If, after the  execution of this  Contract,  such tax rates,  laws or
regulations  pertaining to personnel income taxes increase,  then Operator shall
indemnify and hold harmless Contractor from and against any such increase.

     Operator shall pay or reimburse Contractor for all other taxes of any kind,
including but not limited to, VAT,  Drilling Unit registration  costs,  Property
taxes, Road taxes and other taxes.

608. Take Over of Work
     -----------------

     ln the event any well drilled  under this contract  should blow out,  catch
fire or in any  manner  get out of  control,  Operator  may take  over  complete
control  and  supervision  of the work of  bringing  the well  under  control or
putting  out the  fire.  If at any time in  Operator's  opinion,  contractor  is
failing to conduct its operations in a diligent, skillful and workmanlike manner
and in all respects in strict  accordance with accepted good oil field practices
pursuant to the terms of this contract,  and such failure continues for a period
of ten (10) days (or in the event such failure  results in a significant  safety
hazard,  if such failure  continues  for 96 hours) after notice from Operator to
contractor,  Operator  may  take  over  and  continue  the  work on the  well to
completion or abandonment. In the event Operator takes over the work pursuant to
this Article 608, Operator shall have full use of Contractor's Drilling Unit and
other  equipment,  facilities,  material,  supplies  and  personnel  at the well
location,  which  Contractor  shall  continue to insure in accordance  with this
Contract,  and  Contractor  shall  continue to be paid the  applicable day rates
provided for in this Contract.  During any such take over period the indemnities
given by  Contractor  to Operator  under this  Contract  shall be suspended  and
Contractor shall have no responsibility to Operator under such indemnities. when
such take over period has ended, Operator shall return the Drilling Unit and all
of  Contractor's  items to Contractor in as good condition as when the take over
began, normal wear and tear excepted.

609. Operator's Well Program
     -----------------------

     Operator  shall from time to time provide  Contractor  with a well drilling
program or  programs,  which  shall  include,  but not be limited to hole sizes,
casing program,  mud control program and Operator's  deviation policy.  Operator
may modify these programs while drilling is in progress.

<PAGE>


                         ARTICLE VII - RATES OF PAYMENT

701. Payment
     -------

     Operator  shall pay to  Contractor  during  the term of this  Contract  the
amounts from time to time due  calculated  to the nearest hour  according to the
rates of payment herein set forth,  notwithstanding any breach of representation
or warranty,  either  expressed or implied,  or latent  defects or any liability
based upon any theory of tort,  breach of contract or strict  liability,  either
latent or patent.

702. Mobilization Fee
     ----------------

     There shall be no  Mobilization  Fee due and payable by Operator under this
Contract, except for Operator's obligations under Article 606 and 703 hereof.

703. (This article intentionally deleted and left blank)

704. Demobilization Fee
     ------------------

     Operator shall pay Contractor a Demobilization Fee as specified in Appendix
A  to  cover   Contractor's   costs  of  demobilizing   the  Dulling  Unit.  The
Demobilization  Fee shall be earned and  payable on the date of  termination  of
this  Contract.  Except as is  provided  below,  Operator  shall have no further
demobilization  obligations  other than the payment of the  Demobilization  Fee.
Operator,   however,  shall  provide  to  Contractor  all  export  documentation
necessary to enable to freely export the Drilling Unit upon the  termination  of
this  Contract.  lf  Contractor  is  unable  to export  the  Drilling  Unit from
Kazakstan  for any cause other than the fault of  Contractor  within thirty (30)
days after  termination of this  Contract,  then Operator shall begin paying the
Standby  Rate  Vathout  Crews  beginning  on the  thirty-first  (31st)  day  and
continuing until the Drilling Unit is safely exported from Kazakstan.

705. Operating Rate
     --------------

     The Operating  Rate  specified in Appendix A will first become payable from
the moment  when the  Drilling  Unit has been rigged up and is ready to spud the
first well under this Contract.  The Operating Rate shall continue to be payable
throughout  the  duration  of the  Contract,  except when some other rate herein
provided applies.

706. Standby Rate
     ------------

     The Standby Rate specified in Appendix A will be payable as follows:

     (a)  during  any  period of delay  when  Contractor  is  unable to  proceed
          because of adverse weather conditions or as a direct result of an act,
          instruction or omission of Operator including, without limitation, the
          failure of any of  Operator's  Items,  or the  failure of  Operator to
          issue instructions, provide Operator Items or furnish services;

     (b)  from the  Commencement  Date until the moment when the Operating  Rate
          first becomes payable;

     (c)  during any period after  Commencement  Date that the Drilling  Unit is
          undergoing  periodic  inspections  required  for  maintenance  of  any
          Certification or Classification Certificates;

<PAGE>


     (d)  during any period when operations are suspended to repair the Drilling
          Unit or  other  Contractor  Items  due to  blowout,  fire,  cratering,
          shifting  or  punch  through  at a  drilling  location,  obstacles  or
          obstructions or the consequences thereof;

     (e)  during any period when operations are being  conducted  hereinunder to
          redrill or repair any well drilled  hereunder which is lost or damaged
          as a result of Contractors sole negligence;

     (f)  during any period when operations are suspended or are being conducted
          due to  difficulties  encountered  while  drilling as provided  for in
          Article 508 hereof.

707. Rate During Repair
     ------------------

     The Repair Rate  specified  in Appendix A will be payable  during the first
twenty-four (24) hours per month during which operations are suspended to permit
necessary replacement,  inspection,  repair or maintenance of Contractors Items,
except as  provided  in  Paragraphs  608 and 708.  Routine  maintenance  such as
lubrication,  packing of swivels,  changing of pump parts, slipping lines, drill
string and certification inspections, shall not be considered as maintenance for
purposes of this Paragraph.

708. Force Majeure Rate
     ------------------

     The Force Majeure Rate  specified in Appendix A will be payable  during any
period in which  operations are not being carried on because of Force Maleure as
defined in Paragraph 1303, including periods required to repair damage caused by
a Force Majeure  event.  However,  should an event of Force Majeure  continue in
existence for a period of Ninety (90) days, then no dayrate shall be payable for
the period after such 90 days and either  Contractor or Operator  shall have the
right to terminate this Contractor at anytime.

709. Moving Rate
     -----------

     Operator  shall  pay to  Contractor  a lump sum  payment  of ten  ($10,000)
thousand for each move of the  Drilling  Unit from well site to well site in the
Kara~uduk Field.

710. Standby Rate without Crews
     --------------------------

     The Standby Rate without Crews shall be the rate so stated in Appendix A

711. Additional Payments
     -------------------

     Operator shall, in addition, pay to Contractor:

     (a)  the cost of any overtime paid by Contractor to  Contractors  Personnel
          in  respect  of the  maintenance  or  repair  at  the  drill  site  of
          Operator's Items, if requested by Operator, or other overtime required
          by the Operator;

     (b)  Contractors  costs  associated  with  waiting  on  Operator  furnished
          transportation or as the result of an act,  instruction or omission of
          Operator;

     (c)  Contractors  costs associated with evacuations and  accommodations  of
          personnel caused by hazardous conditions or circumstances at the drill
          site; and

     (d)  Contractor's  costs  associated  with  moving  Contractor's  items and
          Personnel,  and their personal  effects,  if Contractor is required to
          change  its  operating  base to a new  Operating  Area or  within  the
          Operating Area.

<PAGE>


712. Variation of Rates
     ------------------

     The rates and  Payment  herein  set forth  shall be  revised  by the actual
amount of the change in Contractor's  cost if an event as described below occurs
or if the cost of any of the items  hereinafter  listed  shall  increase by more
than the amount  indicated below from  Contractor's  cost thereof on the date of
execution of this Contract:

     (a)  labor  costs,  including  all  payroll  burden  and  benefits  paid by
          Contractor for its employees;
     (b)  if Operator requires Contractor to increase the number of Contractor's
          Personnel;
     (c)  if it becomes  necessary for Contractor to change the work schedule of
          its  personnel  or  change  the  location  of its  Operating  Base  or
          Operating Area;
     (d)  in the event described in Paragraph 1102;
     (e)  if the cost of  insurance  premiums  increases by five percent (5%) or
          more;
     (f)  if there is any change in laws,  rules,  regulations,  or legislation,
          including the enforcement or  interpretation  thereof,  that increases
          Contractor's financial burden;


                      ARTICLE Vlll - INVOICES AND PAYMENTS

801. Monthly Invoices
     ----------------

     Contractor  shall bill Operator at the end of each month,  or at the end of
each well, if sooner, for all daily charges earned by Contractor.  Other charges
shall be billed as earned.  Billings for daily  charges will reflect  details of
the time spent  (calculated  to the nearest  hour) and the rate charged for that
time.  Billings  for other  charges  will be  accompanied  by invoices and other
documentation  supporting costs incurred for Operator or other substantiation as
reasonably required by Operator.

802. Payment
     -------

     Operator  shall pay all  invoices  within  thirty  days  after the  receipt
thereof except that if Operator disputes an item invoiced, Operator shall within
twenty  days  after  receipt  of the  invoice  notify  Contractor  of the amount
disputed, specifying the reason therefor, and payment of the disputed amount may
be withheld  until  settlement of the dispute,  but payment shall be made of any
undisputed  portion.  Contractor shall have the right,  upon ten (10) days prior
written  notice,  to  terminate  this  Contract if Operator  fails or refuses to
timely pay Contractor undisputed amounts due and owning to Contractor.

803. Manner of Payment
     -----------------

     All payments due by Operator to Contractor  hereunder shall be made by wire
transfer or as otherwise agreed to Contractor's  bank account which is specified
in Appendix A.

804. Local Currency Expenditures
     ---------------------------

     Contractor  shall  have the  right  to  specify  that  Operator  shal[  pay
Contractor  in the currency of the country  where the Drilling Unit is operating
in amounts equal to Contractor's  local currency  expenditures  (including those
expenditures  incurred locally by Contractor for the account of Operator) and as
needed by Contractor.  All amounts of local currency so paid  Contractor  during
the month shall be credited against Contractor's U.S. Dollar monthly invoice for
that month at the rate of  exchange of U.S.  Dollars  for the local  currency in
effect on the date Contractor  makes the local currency  payment as published by
the Central Bank of Kazakstan.

<PAGE>

                             ARTICLE IX - LIABILITY

901. Equipment or Property
     ---------------------

     Except as specifically  provided herein to the contrary,  each party hereto
shall at all times be responsible  for and hold harmless and indemnity the other
party  from  and  against  damage  to or loss of its own and its  subcontractors
equipment or property,  except to the extent that the proceeds from Contractor's
insurance as made available to Contractor do not compensate Contractor therefor:
Operator  shall  be  responsible  for and  shall  hold  harmless  and  indemnify
Cuntractor for loss or destmcUon of or damage to Contractors  drill pipe,  drill
collars,  subs,  reamers,  bumper subs,  stabilizers and other in-hole equipment
when such  equipment  is being used In the hole below the rotary  table,  normal
wear  excepted.  Abnormal  wear  and/or  damage  for  svhich  Operator  shall be
responsible  hereunder shall include,  but not be limited to, wear andlor damage
resulting  from the  presence  of H2S or other  corrosive  elements  In the hole
including thosa  introduced  into the drilling  fluid,  excessive wear caused by
sandcutting,  damage resulting from excessive or uncontrolled  pressures such as
those  encountered  durtng  testing,  blowout,  or in a  well  out  of  control,
excessive  deviation  of  the  hole  from  vemcal,  dog-leg  Severity,  fishing,
cementing  or  testing  operations,  Hnd from  any  unusual  drilling  practices
employed at Operatofs request.  Operators  responsibility for such abnormal wear
andlor damage as referred to herein shall include abnormal wear and/ar damage to
Gontractofs  choke hoses and  manifolds.  BOP and other  appurtenant  equipment,
Operator shall pay the cost of repairing damaged equipment if repairable_ In the
case of equipment  lost.  destroyed or damaged  beyond  repair,  Operator  shall
reimburse  Contractor  an amouot equal to the then current  replacement  cost of
such equipment delivered to the Drilling Unlit.

902. The Hole
     --------

     In the  event  the  hole  should  be lost or  damagad,  operator  shall  be
responsible  for and hold harmless and indemnify  Contractor from such damage to
or loss Qf the hole, including all down hole property therein,

903. Contractor's Personnel
     ----------------------

     Contractor  shall  be  responsible  for and  hold  harmless  and  indemnify
Operator from and against all claims, demands and causes of action of every kind
and character arising in connection herewith in favor of Contractor's employees,
or Contractor's  subcontractors or their employees, or Contractor's invitees, on
account of bodily injury, death or damage to property.

904. Operator's Personnel
     --------------------

     Operator  shall  be  responsible   for  and  hold  harmless  and  indemnify
Contractor from and against all claims,  demands,  and causes of action of every
kind and  character  arising  in  connection  herewith  in  favor of  Operator's
employees,  or Operator's other contractors  (excluding Contractor hereunder) or
their employees,  or Operator's invitees,  on account of bodily injury, death or
damage to property.

905. Pollution and Contamination
     ---------------------------

     Notwithstanding   anything   to  the   contrary   contained   herein,   the
responsibility for pollution or contamination shall be as follows:

     (a)  Contractor  shall be  responsible  for and hold harmless and indemnify
          Operator for control and removal of pollution or  contamination  which
          originates  above the  surface  of the  ground  from  spills of fuels,
          lubricants, motor oils, normal water base drilling fluid and attendant
          cuttings, pipe dope, paints,  solvents,  ballast, bilge and garbage in
          Contractor's possession and control.

     (b)  Operator  shall be  responsible  for and hold  harmless and  indemnify
          Contractor against all claims,  demands, and causes of action of every
          kind and  character  (including  control and removal of the  pollutant
          involved)  arising  directly  or  indirectly  from  all  pollution  or
          contamination,  other than that  described in Paragraph  905(a) above,
          which may occur as a result of operations  hereunder,  including,  bit
          not limited to, that which may result from fire,  blowout,  cratering,
          seepage or any other  uncontrolled  flow of oil,  gas,  water or other
          substance,  as well as the use or disposition of lost  circulation and
          fish  recovery  materials  and  fluids,  oil  emulsion,  oil  base  or
          chemically  treated  drilling  fluids.  and drilling fluids other than
          "normal water base drilling 9uid" defined in Paragraph 805(a) above.

<PAGE>


     (c)  ln the event a third party commits an act or omission which results in
          pollution or contamination for which either the Contractor or Operator
          for whom such party is performing  work is held to be legally  liable.
          the  responsibility  therefor  shall be  considered,  as  between  the
          Contractor  and Operator,  to be the same as if the party for whom the
          work was performed  had performed the same and all af the  obligations
          and limitations set forth in Paragraphs 205(a) and (b) above, shall be
          specifically applied.

906. Debris Removal and Cost of Control
     ----------------------------------

     Operator  shall  be  responsible   for  and  hold  harmless  and  indemnify
contractor  for the cost of  removal  of debris  including  the  Drilling  Unit.
Operator  shall  also  be  responsible  for  and  hold  harmless  and  indemnify
Contractor for the cost of regaining control of any wild well.

907. Underground Damage
     ------------------

     Operator  shall  be  responsible   for  and  hold  harmless  and  indemnify
Contractor for and and all claims resulting from operations under this Agreement
on account of injury to, destruction, of, or Ioss or impairment of production or
any proper right in or to oil, gas or other  mineral  substance or water,  if at
the time of the act or omission  causing  such  injury,  destruction,  loss,  or
impairment, said substance had not been reduced to physical possession above the
earth surface, and for any loss or damage to any formation, strata, or reservoir
beneath the earth surface.

506. Consequential Damages
     ---------------------

     Neither  party shall be liable to the other for,  and each party shall hold
harmless and indemnify the other  against,  special,  indirect of  consequential
damages  resulting  from or arising  out of this  Contract,  including,  without
limitation, loss of profits, loss of use or business interruptions, however same
may be caused.

910. Indemnity Obligation
     --------------------

     (a)  The parties intend and agree that the phrase "be  responsible  for and
          hold harmless and  indemnify"  in  Paragraphs  505 and 901 through 908
          hereof mean that the indemnifying party shall indemnify, hold harmless
          and defend (including payment of reasonable  attorney's fees and costs
          of  litigation)  the  indemnified  party from and  against any and all
          claims, demands,  causes of action, damages,  judgements and awards of
          any kind or character,  without limit and without  regard to the cause
          or causes thereof,  including  pre-existing  conditions,  whether such
          conditions  be  patent  or  latent,  breach of  warranty  (express  or
          implied),  strict  liability,  or  the  negligence  of any  person  or
          persons,  including  that  of  the  indemnified  party,  whether  such
          negligence be sole, joint or concurrent,  active,  passive or gross or
          due to the willful misconduct of any party.

     (b)  An indemnifying party's obligations  contained in this Agreement shall
          also extend to the indemnified party and its Affiliated  Companies and
          the officers,  directors,  employees, agents, owners, shareholders and
          insurers of each and to actions in rem or in personam.

     (c)  The terms and  provisions of Paragraphs  605 and 901 through 909 shall
          have no  application  to claims or causes of action  asserted  against
          Operator or Contractor by reason of any agreement of indemnity  with a
          person or entity not a party hereto.

<PAGE>


                              ARTICLE X - INSURANCE

1001. Contractor's Insurance
      ----------------------

     Contractor shall carry and maintain  insurance  coverage of the type and in
the  amounts  set  forth in  Appendix  E, All  references  in this  Contract  to
"insurance" of Contractor shall mean such insurance as set forth in Appendix E.

1002. Certificates
      ------------

     Contractor will furnish Operator, on request, with certificates  indicating
that the required  insurance is in full force and effect and that the same shall
not be  canceled  or  materially  and  adversely  changed  without ten (10) days
written notice to Operator.

1003. Subcontracts
      ------------

     For  liabilities  assumed  hereunder by Contractor,  its insurance shall be
endorsed to provide  that the  underwriters  waive  their  right of  subrogation
against Operator,  its Affiliated  Companies and co-venturers,  and employees of
each.  Operator will, as well,  cause its insurer to waive  subrogation  against
Contractor  and  Contractor's  Affiliated  Companies  and  employees of each for
liabilities it assumes.

1004. Additional Insured
      ------------------

     Contractor  shall name Operator as  additional  insured,  where  permitted,
under its policies of insurance, but only with respect to liabilities assumed by
Contractor  under this Contract.  Operator  shall name  Contractor as additional
insured, where permitted, under its policies of insurance, but only with respect
to liabilities assumed by Operator under this Contract.


                     ARTICLE Xl - SUBLETTING AND ASSIGNMENT

1101. Subcontracts
      ------------

     Operator may employ other  contractors  to perform any of the operations or
services  to be  provided  or  performed  by it.  Contractor  may  employ  other
contractors  to perform  any of the  operations  or  services  to be provided or
performed by it with the prior consent of Operator.

1102. Assianment
      ----------

     Neither  party may assign this  Contract to anyone other than an Affiliated
company  without the prior when consent of the other,  and prompt  notice of any
such intent to assign  shall be given of the other  party.  In the event of such
assignment,  the  assigning  party shall  remain  liable to the other party as a
guarantor of the  performance by the assignee of the terms of this Contract.  If
any assignment by Operator is made that increases Contractors' financial burden,
except for any  assignment  by  Contractor,  Contractors  compensation  shall be
adjusted  to give  effect to any  increase in  Contractor's  operating  costs or
taxes.

                              ARTICLE IX - NOTICES


1201. Notices
      -------

     Notices,  reports and other  communications  required or  permitted by this
Contract  to be given or sent by one party to the other  shall be  delivered  by
hand, mailed,  telexed, or telecopied to the address as specified in Appendix A.
Either party may by notice to the other party change its address.  Notices shall
be effective upon receipt.

<PAGE>

                             ARTICLE Xlll - GENERAL

1301. Confidential Information
      ------------------------

     Upon written  request of  Operator,  all  information  relating to the well
obtained by  Contractor  in the conduct of  operations  hereunder  shall be held
confidential  by  contractor  who will use the  same  degree  of care it uses in
safeguarding its own confidential information.

1302. Attorney's Fees
      ---------------

     If this  Contract is placed in the hands of an attorney for  collection  of
any sums due  hereunder,  or suit is brought on same,  or sums due hereunder are
collected  through  bankruptcy or arbitration  proceedings,  then the prevailing
party shall be entitled to recover reasonable attorney's fees and costs.

1303. Force Majeure
      -------------

     Except as otherwise  provided in this  Paragraph  1303,  each party to this
Contract shall be excused from complying with the terms of this Contract, except
for the payment of monies when due and the honoring of  indemnities,  if and for
so long as such  compliance  is hindered or  prevented by riots,  strikes,  wars
(declared  or  undeclared),  insurrection,  rebellions,  terrorist  acts,  civil
disturbances,  dispositions  or order of  governmental  authority,  whether such
authority  be actual or  assumed , acts of God or  adverse  weather  conditions,
inability to obtain  equipment,  supplies or fuel, or by any act or cause (other
than financial  distress or inability to pay debts when due) which is reasonably
beyond the  control of such  party,  such cause being  herein  sometimes  called
"Force  Majeure."  In the event that either  party  hereto is  rendered  unable,
wholly or in part,  by any of these  causes to carry out  obligation  under this
Contract,  such party shall give notice and details of Force  Majeure in writing
to the other party as promptly as possible after its occurrence.  In such cases,
the  obligations  of the party giving the notice  shall be suspended  during the
continuance  of any inability so caused except that Operator shall be obliged to
pay to Contractor the Force Majeure Rate provided for in Paragraph 708.

1304. Right to Audit
      --------------

     For a period of three years from  termination  of the Contract,  Contractor
shall keep proper books,  records and accounts of operation  hereunder and shall
permit Operator at all reasonable  times to inspect the portions thereof related
to any variation of the rates hereunder or charges for reimbursable items.

1305. Compliance with Laws
      --------------------

     Each  party  hereto  agrees  that all laws,  rules and  regulations  of any
federal,  state  or  local  government  authority  which  are now or may  become
applicable  to  that  party's  operations  covered  by or  arising  out  of  the
performance  of this  Contract  will apply.  In the event any  provision of this
Contract is inconsistent  with or contrary to any applicable  federal,  state or
local law, rule or regulation,  said provision shall be deemed to be modified to
the extent  required  to comply  with said law,  rule or  regulation,  and as so
modified  said  provision  and this  Contract  shall  continue is full force and
effect. If any act or omission by Contractor in response to Operator's  explicit
instruction  violates such law,  Operator  shall  indemnify  Contractor  for any
consequences  thereof.  In no event  however,  will  Contractor  be requested or
required  to  violate  any law,  rule or  regulations  of the  United  States of
America.

1305. Waivers
      -------

     lt is fully  understood  and agreed that none of the  requirements  of this
Contract  shall be  considered as waived by either party unless the same is done
in writing, and then only by the persons executing this Contract,  or other duly
authorized agent or representative of the party.

<PAGE>


1307. Entire Agreement
      ----------------

     This Contract  supersedes  and replaces any oral or written  communications
heretofore made between the parties relating to the subject matter hereof.

     Inurement
     ---------

     This  Contract  shall  inure  to the  benefit  of and be  binding  upon the
successors and assigns of the parties.

1309. Resolution of Disputes
      ----------------------

     Any dispute,  controversy  or claim  arising out of or in relation to or in
connection with this Agreement,  including without  limitation any dispute as to
the  construction,  validity,  Interpretation,  enforceability or breach of this
Agreement,  shall be exclusively  and finally  settled by  arbitration,  and any
Party may submit such a dispute, controversy or claim to arbitration.

     A single arbitrator shall be appointed by unanimous consent of the Parties.
If the Parties,  however,  cannot reach agreement on an arbitrator within thirty
(30) days of the submission of a Notice of Arbitration, the appointing authority
shall be the American Arbitration Assoctiation, which can appoint an independent
arbitrator which does have any financial interest in the dispute, controversy or
claim.  Unless  otherwise  expressly  agreed in  Writing  by the  Parties to the
arbitration proceedings:

     (a)  The arbitration proceedin9s:~hgll be hold in the Borough Of Manhatten,
          City of New York;
     (b)  The arbitrator shall be and remain at all times wholly independent and
          impartial;
     (c)  The arbitratlon  pracE8dings shall be conducted in accordance with the
          Commercial  Arbitration Rules of the American  Arbitration  hssociaton
          then in effort;
     (d)  Any  Procedural  issues  not  determined  under  the  arbitrate  rules
          selected pursuant to this Agreement shall  be-determined by the low of
          the plea of  erhtrefion  other than those laws which  would  refer the
          matter to another jurisdiction:
     (e)  Each Party shall be responsible  for its own costs of the  arbitration
          proceedings (including attorney's fees and costs); and
     (f)  Judgement  upon the award rendered by the arbitrator may be entered in
          any court" having jurisdiction thereof.

     lN WITNESS  THEREOF THE PARTIES HAVE  EXECUTED THIS CONTRACT ON THE DAY AND
YEAR FIRST ABOVE WRlTTEN.

                                      OPERATOR: Karakuduk-Munai, Inc.

WITNESS:
/s/ Nicoli Klinhev                    BY: /s/ J. Mcgee
--------------------------                --------------------------------------
General Director                      TITLE: General Director

                                      CONTRACTOR: Challenger Oil Services. PC

WITNESS:
/s/                                   BY: /s/ Y.S. Tatanaki
--------------------------                --------------------------------------
                                      TITLE:  General Manager

<PAGE>

                                   APPENDIX A



     Attached  to and  incorporated  as a part of that  certain  Contract  dated
______________________.

Para Nos.:

101 (f)           Operating Area:              Karakuduk Field, Kazakstan

101 (g)           Operating Base:              Karakuduk Field, Kazakstan

102 Currency:                                  United States Dollars

107 Governing Law:                             The Laws of the State of New York

202 Duration:                                  One (1) year from Spud in date of
                                               the first well drilled under this
                                               Contract.

203 (b) Termination:                           One (1) year from Spud in date of
                                               the first well drilled under this
                                              Contract or after well in progress
                                              on that date.

203 (b) Demobilization Location: Operator's last well location in the Operating
Area.
&705 (c)

204      Option Term:                       One year

         Option Notice:                     Ninety (90) days before Termination
                                            of original term
         Deadline for Mutual
         Agreement:                         Ninety (90) days before termination
                                            of original term

503      Maximum Well Depth:              11,500 feet with 41/2 inch drill pipe.

601      Handling Charge:                 Ten (10%) Percent

702      Mobilization Fee:                At Operators cost

704      Demobilization Fee:              $250,000

705      Operating Rate:                  $15,056 (includes pol. risk ins.)

706      Standby Rate without Crews:      $14,706         "

707      Repair Rate:                     $14,706         "
<PAGE>

         Repair Time                      At Repair Rate for first twenty-four
                                        (24) hours per month, then at zero rate.

708      Force Majeure Rate:            $14,706

709      Moving Rate                    $10,000 lump sum for each move of the
                                        Drilling Unit from well site to well
                                        site within the Karakuduk Field.

710      Standby Rate without Crews:    $8,500

         Interest Rate on Late

         Payments:                      One month LIBOR plus 2% per annum

803      Address for Payment            (BANK)

                                        Acct, No.

201 Address for Notices:

Operator:

Telex:
Telecopier:
Attention:

Contractor:

Telex:
Telecopier:
Attention:

1305 Country of Legal
Jurisdiction: Courts of the State of New York

1310 Value of Contractor's Unit and equipment: U.S.S $5,500,000.
<PAGE>






                                   APPENDIX B


            DRILLING UNIT AND EQUIPMENT TO BE PROVIDED BY CONTRACTOR

<PAGE>

                                  APPENDIX E

                             CONTRACTOR'S INSURANCE

Workers' Compensation and Employers' Liability Insurance
--------------------------------------------------------

Workers'  compensation and labor liability  insurance  covering all Contractor's
employees. in accordance with the statutory requirements of the state of hire or
country in which the work is to be performed. The Employer's liability insurance
shell have a limit of one million  United States Dollars (U.S.  $1,000,000)  per
occurrence.

ll. Comprehensive General Liability
    -------------------------------

     Comprehensive  general  liability  insurance  with  contractual  liability,
     products and completed operations,  and broad form property damage coverage
     included,  providing  for a combined  Single  limit of one  million  United
     States Dollars (U.S.  S1,000.000)  (or personal  injury.  death or property
     damage  resulting  from each  occurrence  and covering all of  Contractor's
     operator's under Contract.  The aloresaid insurance shall cover, but not be
     limiteded to, loss of or damage to Operator's and to Contractor's Equipment
     and Personnel

III. Umbrella Liability Insurance
     ----------------------------

     Umbrella liability insurance coverage excess of !he primary coverage with a
     limit of no less than five million United States Rollers (U.S.  $5,000,0GG)
     per occurrence  including all areas  involved in operations  covered by the
     Contract.

IV. Automobile Liability
    --------------------
     Automobile  liability  insurance covering owned,  non-owned and hired motor
     vehicles, with combined single limits of al least one million United Slates
     Dollars (U.S  S1,000,000)  for personal  injury,  death or property  damage
     (resulting from each occurrence.

                   (Subject to Confirmation With Underwriters)