SEVERANCE AGREEMENT

This Severance  Agreement is entered into as of the 12th day of February,  1997,
by and among Chaparral Resources,  Inc.  ("Chaparral"),  a Colorado corporation,
and Matthew R.  Hoovler  ("Hoovler").  Chaparral  and  Hoovler  are  hereinafter
jointly referred to as the Parties.

For good and valuable  consideration,  including the promises and mutual general
releases contained herein, the Parties hereby agree as follows:

1. Approval and Effective Date This Agreement  shall be effective as of February
12,  1997  ("Effective  Date") and will become  binding on the Parties  upon its
ratification and approval by the Chaparral Board of Directors.

2. Salary and Benefits  Hoovler will receive his salary and unpaid  vacation pay
accrued through the Effective Date.  Hoovler may request that Chaparral transfer
to him, in accordance with the plan's terms, the vested portion of his 401K plan
account .

3.  Warrants  On  August 19, 1996,  the  Chaparral  Board of  Directors  awarded
Hoovler a cash bonus of $70,000 as recognition  of past and present  services to
the company; said bonus to be used solely and exclusively by Hoovler to exercise
certain  Warrants,  granted  to Hoovler  pursuant  to the  company's  1989 Stock
Warrant Plan (the "Plan"),  to purchase 250,000 shares of Chaparral common stock
at an  exercise  price of $0.28 per share.  This  bonus will not become  payable
until  receipt of notice from  Hoovler,  which notice may not be given and shall
not be  effective  until the  earlier of a)  completion  of a sale or farmout by
Chaparral  of all or a  portion  of its  interest  in the  Karakuduk  Oil  Field
Development  Project  (the  "Project"),  or b) the date when  Chaparral  makes a
public  disclosure  of a sale or farmout of the Project.  At its sole option and
discretion,  Chaparral  may, in lieu of making payment of such bonus to Hoovler,
use all or a portion of such bonus as a direct offset to Hoovler's obligation to
make any  payment  due to  Chaparral  upon  exercise  of the  Warrant.  Anything
contained  in the  foregoing  provisions  of  this  paragraph  to  the  contrary
notwithstanding,  in the event  Hoovler has  exercised  and paid for the Warrant
prior to the date the bonus  becomes  payable,  Chaparral  shall pay such  bonus
directly to Hoovler,  but only upon  completion of a sale or farmout of all or a
portion of its interest in the Project,

Chaparral shall use its reasonable best efforts, consistent with its past policy
and practice, to continue to maintain the registration statement registering the
shares  underlying  the  Warrant  until  the date  that the  Warrant  is  either
exercised or expires,  whichever  shall first  occur;  provided,  however,  that
Chaparral  shall not be  required to take any action or make any filing with the
Securities and Exchange  Commission that, in the sole discretion of the Board of
Directors of Chaparral, is not in the best interest of the company.



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Chaparral  shall  request  the  Board of  Directors  to amend the Plan to permit
Hoovler to transfer the Warrant to a member of his family or to a trust  created
by Hoovler. For purposes of this Agreement, the term family shall mean a parent,
child, grandchild or spouse.

4. Office Equipment  Hoovler  understands that Chaparral intends to sell certain
office furniture, equipment and supplies, and that if Hoovler so desire, Hoovler
may bid for these items.  The furniture  presently  located in Hoovler's  office
will be given to Hoovler by  Chaparral  as well as any of the  computers  in his
office that Chaparral does not want.

5. Resignation  Hoovler will resign, as of the Effective Date, as an officer and
director of Chaparral and its subsidiaries  and affiliates.  A copy of Hoovler's
resignation is attached hereto.

6. General Release by Hoovler  Hoovler,  his successors,  heirs and assigns (the
"Releasors") fully and forever release and discharge Chaparral, its subsidiaries
and related  companies,  their  officers,  directors,  employees,  shareholders,
agents, representatives,  attorneys, accountants,  predecessors,  successors and
assigns (the  "Releasees")  from any and all actions,  causes of action,  suits,
debts,  claims,  promises and demands,  other than those specifically  stated in
this Severance  Agreement,  or any claim by Hoovler for indemnification  against
claims of others for  actions or matters  which  occurred  while  Hoovler was an
officer,  director  or employee  of  Chaparral  and for which he would have been
entitled to  indemnification  by  Chaparral  under  Chaparral's  Certificate  of
Incorporation, By-laws or policies as in effect on February 12, 1997, whether in
law or equity which the Releasors  ever had now have or hereafter  can, shall or
may have  against  Releasees,  which  are based  upon or arise out of  Hoovler's
employment with Chaparral, including without limitation, his service as a member
of the Board of Directors of Chaparral,  as a shareholder  of Chaparral,  or his
execution  of  this  Severance  Agreement,  other  than  any  action,  claim  or
proceeding to enforce his rights under this Severance Agreement.

7.  General  Release  by  Chaparral  Chaparral,  its  subsidiaries  and  related
companies,  their  officers,   directors,   employees,   shareholders,   agents,
representatives,  attorneys, accountants,  predecessors,  successors and assigns
(the  "Releasors")  fully  and  forever  release  and  discharge  Hoovler,   his
successors,  heirs or assigns (the "Releasees") from any and all actions, causes
of  action,  suits,  debts,  claims,  promises  and  demands,  other  than those
specifically stated in this Severance Agreement,  whether in law or equity which
the  Releasors  ever had now have or  hereafter  can,  shall or may have against
Releasees,  which  are  based  upon or arise out of  Hoovler's  employment  with
Chaparral, including without limitation, his service as a member of the Board of
Directors of Chaparral or as a shareholder of Chaparral.

8. Covenant Not to Sue The Parties agree not to commence, directly or indirectly
cause the  commencement  of,  or cause or  attempt  to cause any third  party to
commence,  any suit,  arbitration  or  proceeding  to enforce any claim or other
matter released under this Severance Agreement.


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9 Severability If any provision of this Agreement or the application  thereof to
any  Party  or  circumstance  shall be  determined  by any  court  of  competent
jurisdiction  to be invalid and  unenforceable  to any extent,  the remainder of
this  Agreement  or  the   application  of  such  provision  to  such  Party  or
circumstance, other than those as to which it was so determined to be invalid or
unenforceable,  shall not be affected thereby,  and each provision thereof shall
be valid and shall be enforced to the fullest extent permitted by law.

10.  Applicable Law This Agreement shall be construed and enforced in accordance
with the laws of the State of Colorado,  without giving effect to the provisions
or principals thereof relating to choice or conflict of laws.

11. Section  Headings  Section titles and headings are for descriptive  purposes
only and shall not control or alter the meaning of this  Agreement  as set forth
in the text.  Reference to the  singular  includes a reference to the plural and
vice versa. Reference to any gender includes a reference to all other genders.

12. Counterparts This Agreement may be executed in several counterparts,  all of
which  together  shall  constitute  one agreement  binding on all parties hereto
notwithstanding that all the parties have not signed the same counterpart.

IN WITNESS WHEREOF, the Parties have executed this Severance Agreement as of the
date first written above.


CHAPARRAL RESOURCES, INC.                            MATTHEW R. HOOVLER

By:/s/Arlo G. Sorensen                               /s/Matthew R. Hoovler
   -----------------------------------               --------------------------
Arlo G. Sorensen, Chairman
Board of Directors Severance Committee


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