AMENDED EMPLOYMENT AGREEMENT

         THIS  AGREEMENT is  effective  as of October 28, 1998 ("the  "Effective
Date")  by  and  between  Pease  Oil  and  Gas  Company,  a  Nevada  corporation
("Corporation") and Willard H. Pease, Jr.
("Employee").

         The  Corporation  and Employee has  employed  Employee  pursuant to the
terms of an Employment  Agreement dated  September 16, 1994. For  consideration,
the receipt and sufficiency of which is acknowledged, the parties have agreed to
modify  the  agreement  to  provide  as set  forth  in this  Amended  Employment
Agreement ("Amended Agreement").

         The Parties hereby enter into this Amended  Agreement (i) setting forth
their mutual promises and  understandings  and (ii) mutually  acknowledging  the
receipt and sufficiency of consideration to enter into this Amended Agreement as
of the Effective Date.

                                    ARTICLE 1

                     EMPLOYMENT DUTIES AND RESPONSIBILITIES

     Section 1.1.  Employment.  The Corporation shall employ the Employee as its
Manager of Operations.  The Employee  accepts such  employment  effective on the
Effective Date and agrees to abide by the Articles of Incorporation,  Bylaws and
decisions of the Board of Directors of the Corporation.

     Section 1.2. Duties and Responsibilities. The Employee is employed pursuant
to the terms of this  Amended  Agreement  and  agrees to  render  exclusive  and
full-time services to the Corporation under this Amended Agreement. The Employee
shall be vested with authority to and shall, to the best of his ability, direct,
supervise and implement certain  day-to-day  operations of the Corporation.  The
Employee  shall perform such duties as (i) are specified by the President of the
Corporation  and (ii) may be determined and assigned to him from time to time by
the Board of Directors of the Corporation. The Employee may not pursue any other
material business  activities on his own behalf unless the Board of Directors in
a formal written statement expressly authorizes the Employee to do so.

     Section 1.3. Working  Facilities.  The Employee shall be based in the Grand
Junction,  Colorado  metropolitan  area  where  the  Corporation  shall  provide
reasonable  office  facilities.  The  Employee  agrees to  travel to the  extent
necessary  to perform  his duties  hereunder.  ^The  Corporation  shall  provide
reasonable transportation to perform these duties.

         Section 1.4.  Vacations.  The  Employee  shall be entitled to vacations
totaling  at least  two  weeks per  year.  Each  vacation  shall be taken by the
Employee  over a period  meeting with the approval of the President or the Board
of  Directors  of the  Corporation  and no one  vacation  shall be so long as to
disturb  the  operations  of  the  Corporation.   Should  the  business  of  the
Corporation preclude the Employee from taking all vacation earned during a year,
then, with the consent of the President or the Board of Directors,  the vacation
shall be accrued and available to be taken by the Employee in subsequent  years.
If the Board of Directors does not consent to such accrual of vacation time, the
Corporation  shall pay the  Employee an airnount  equal to the number of days of
unused vacation times the Employee's equivalent daily compensation.

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         Section 1.5.      Expenses.

                  A.  Employee  Reimbursed  for  Expenses.  During the period of
         employment  pursuant to this Amended  Agreement,  the Employee  will be
         reimbursed  for  reasonable  expenses  incurred  for the benefit of the
         Corporation in accordance with the general policy of the Corporation as
         adopted from time to time by the Corporation's Board of Directors,  and
         specifically  approved  beforehand  by the  Board of  Directors.  While
         employed  under this Amended  Agreement,  Employee shall be entitled to
         use the Corporation  automobile  provided by the corporation for use by
         Employee prior to the Effective Date .

                  B.  Additional  Expenses.  In  addition  to such  reimbursable
         expenses, the Employee may incur in the course of the employment by the
         Corporation  certain other necessary expenses of the business which the
         Employee will be required to pay personally  but which the  Corporation
         shall be under no obligation to reimburse or otherwise  compensate  the
         Employee, including, but not limited to, the cost of maintaining office
         facilities in the  Employee's  home or similar items of reasonable  and
         necessary expense incurred by the Employee in the course of employment.
         However,  nothing in this Section  shall prevent the  Corporation  from
         assuming to pay or reimbursing the Employee for any such expense if the
         Board of Directors so determines.

                  C. Employee  Shall Account for Expenses to  Corporation.  With
         respect to any expenses which are reimbursed by the  Corporation to the
         Employee,  the Employee  agrees to make an itemized  accounting  to the
         Corporation  (i) for proper  accounting by the  Corporation and (ii) in
         detail sufficient to entitle the Corporation to an income tax deduction
         for paid items if deductible.

         Section 1.6.      Review of Work. The Employee's performance shall a
all times be subject to review by the Board of Directors, in its sole discretion

                                    ARTICLE 2

                                  COMPENSATION

         Section 2.1.  Salary.  Commencing  effective  the Effective  Date,  the
Corporation  shall pay a salary to the Employee  during the term of this Amended
Agreement  at an annual  rate of  $80,000,  bi-weekly,  or such other  amount as
determined from time to time by the Board of Directors.

         Section 2.2.  Death During  Employment.  In the event of the Employee's
death during the term of this Amended Agreement the Corporation shall pay to the
Employee's estate,  bi-weekly, the compensation which otherwise would be payable
to the  Employee  for 60 days  following  the  Employee's  death  at the rate of
compensation described in Section 2.1


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         Section  2.3.  Benefits.  In  addition to all other  compensation,  the
Employee shall be entitled to  participate in any pension plans,  profit sharing
plans, medical or dental reimbursement plans, group term or other life insurance
plans,  medical or hospitalization  insurance plans and any other group employee
benefit plan which may be established  by the  Corporation.  Such  participation
shall be in accordance with the terms of any such plan as adopted and maintained
by the Corporation.

         Section 2.4. Life and Disability Insurance.  The Corporation may obtain
for its own benefit such  amounts of key  executive  term life  insurance on the
life of the Employee as it may deem necessary or advisable. The proceeds of this
may be used to pay  Corporation  obligations  under Sections 2.2 and 3.6 of this
contract; but the Corporation's obligations thereunder shall be absolute.

                                    ARTICLE 3

                       TERM OF EMPLOYMENT AND TERMINATION

         Section 3.1. Term. Employment under this Amended Agreement shall be "at
will"  with  no  specific  term  and  shall  be in  effect  for a  period  until
termination in accordance with this Article 3 (the "Term").

         Section 3.2. Termination by the Corporation Without Cause. The Board of
Directors,  without cause, may terminate this Amended Agreement at any time upon
30 days written notice to the Employee, unless Section 3.7 applies in which case
this  Section  3.2  shall be  inapplicable.  In such  event,  the  Employee,  if
requested  by the Board of  Directors,  shall  continue  to render the  services
required under this Amended  Agreement for 30 days. Upon termination  under this
Section 3.2, the Employee shall be paid $150,000 in a lump sum within 30 days of
termination.  All  outstanding  stock  options  will be extended to the original
expiration date established at the date of grant.

         Section 3.3.  Termination by the Employee  Without Cause. The Employee,
without cause, may terminate this Amended  Agreement upon 90 days written notice
to the  Corporation.  In such event,  the  Employee  shall,  if requested by the
Corporation,  continue  to render  the  services  required  under  this  Amended
Agreement to the date identified in the Employee's  written notice. The Employee
shall continue to be paid  compensation  at the rate set forth in Section 2.1 of
this Amended  Agreement for at least 30 days and thereafter  through the earlier
of (i) the date  identified in the  Employee's  written  notice or (ii) the date
through which the Employee furnishes services at the request of the Corporation,
and no further payments shall be made by the Corporation unless agreed to by the
Board of Directors.

         Section 3.4. Termination by the Corporation With Cause. The Corporation
may terminate the Employee's employment for cause, which shall be limited to the
following:  (a) the Employee's knowing and willful or reckless  commission of an
act of gross misconduct which the Employee knows or reasonably should have known
at the time would be injurious to the Corporation; or (b) the Employee's refusal
to devote  substantially  all his time and  efforts  to his  duties  under  this
Amended  Agreement  after the Board of  Directors  has  notified the Employee in
writing of his noncompliance;  or (c) the Employee's  continued  refusal,  after
written  notice from the Board of Directors to follow the specific  instructions
of the Board of Directors.  Termination pursuant to this subsection shall result
in

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no further  compensation being due or payable to the Employee hereunder from and
as of the date of such termination.

     Section 3.5. Termination Upon Death of Employee.  Subject to Section 2.3 of
this Amended Agreement,  this Amended Agreement shall be terminated in the event
of the Employee's death.

         Section 3.6.  Termination Upon Disability of Employee.  The Corporation
may  terminate  the  Employee's  employment  if,  during the Term,  the Employee
becomes physically or mentally disabled,  whether totally or partially,  so that
the Employee is unable  substantially to perform his services under this Amended
Agreement (i) for a period of two consecutive months or (ii) for shorter periods
aggregating four months during any twelve month period, by written notice to the
Employee. Notwithstanding any such disability, the Corporation shall continue to
pay  the  Employee  his  full  salary  up to and  including  the  date  of  such
termination  and for 12 months  thereafter in addition to any amounts payable to
Employee under any disability or similar insurance.

         Section  3.7.  Termination  Upon Change of Control.  If the Employee is
terminated  as a direct or indirect  result of either (i)  actions  taken by the
Board of Directors  following the  replacement of at least 40% of the members of
the  Board  of  Directors  with  persons  who  are  not  also  employees  of the
Corporation  in any 15 month  period  which were  opposed  by a majority  of the
directors before the replacement, (ii) a shareholder or group of shareholders or
a person acting on behalf of  shareholders  increasing  his, hers,  their or its
ownership  of the  Corporation's  outstanding  stock by more than 10%  within 24
months of the Employee's termination,  or (iii) upon a merger,  consolidation or
other business  combination  where the Corporation is not the surviving  entity,
then the  Employee  shall be paid in a lump  surn an  amount  equal to  $150,000
within 30 days of termination. Further, all amounts then owed by Employee to the
Corporation shall be deemed to be paid in full and all outstanding stock options
shall become immediately  exercisable.  The Corporation shall within 10 business
days pay in full all amounts then owed to the Employee or any  affiliates of the
Employee,  including  members  of the  family  of  Willard  Pease,  Jr.,  family
businesses or family  partnerships.  If the Corporation  does not pay the amount
specified by this Section 3.7 on a timely  basis,  the unpaid  amount shall bear
interest at ten percent per annum until paid and the  Corporation  shall pay all
costs and  expenses,  including  attorney's  fees,  incurred by the  Employee in
collecting all amounts owed under this Section 3.7.

         Section 3.8. Resignation as Director. Upon any termination described in
Sections 3.2 through 3.7,  Employee shall  promptly  resign as a Director of the
Corporation.  Employee's right to compensation upon termination, as set forth in
sections 3.2 and 3.7 shall be subject to such resignation.

                                    ARTICLE 4

                            DISCLOSURE OF INFORMATION

         Section 4.1.      Definitions.

                  4.1.1.  As used  herein,  the term  "proprietary  information"
         shall  mean   technical   information   and  know-how   concerning  the
         Corporation's oil and gas exploration, development,

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<PAGE>



         production  and servicing  business and its related  equipment,  books,
         maps and records  developed by or otherwise  owned or controlled by the
         Corporation.

                  4.1.2. As used herein, the term "trade secrets" shall mean any
         proprietary  information and any other  non-public  information used by
         the  Corporation,  including  such matters as geologic  records,  maps,
         surveys,  documents evidencing interests in real property,  patented or
         unpatented   technology,   supplier  information,   books,   processes,
         concepts,  methods, formulae or technique know-how,  customer or vendor
         lists  or  information  or  development  plans  or  strategy,  owned or
         controlled by the Corporation or otherwise  subject to an obligation or
         intent of the Corporation to maintain the confidentiality thereof which
         is of a proprietary  or secret nature and which is or may be applicable
         to, or related  to the  business,  equipment  or  services,  present or
         future,  of  the  Corporation  or  the  oil  and  gas  exploration  and
         development   business   of  the   Corporation,   or  the   contractual
         relationships of the Corporation with customers or clients.

                  4.1.3.  As used  herein,  the term  "document"  shall mean any
         data, notes, drafts,  manuals,  blueprints,  maps, notebooks,  reports,
         photographs,  drawings, sketches or other records, in any tangible form
         whatsoever,  whether  originals,  copies,  reproductions,  or excerpts,
         produced or obtained from the  Corporation by the Employee or any other
         representative of the Corporation which relates to trade secrets of the
         Corporation.

                  4.1.4. As used herein, the term "Corporation  invention" shall
         mean any invention,  discovery,  improvement,  or trade secret, whether
         patentable or not and whether or not reduced to practice,  conceived or
         learned by the Employee  either  alone or jointly  with  others,  while
         employed  by the  Corporation,  which  relates to or  results  from the
         actual  or  anticipated  investigation,   research,   development,   or
         production of the Corporation,  or which results to any extent from use
         of the Corporation's facilities.

                  4.1.5. As used herein, the term  "Corporation"  shall mean not
         only the Corporation as first defined above, but also the Corporation's
         subsidiaries and all affiliates of the Corporation.

         Section 4.2.  Employee  Shall Not Disclose  Proprietary  Information or
Trade  Secrets.   The  Employee   recognizes  that  the  trade  secrets  of  the
Corporation,  as they may exist from time to time,  are a valuable,  special and
unique asset of the  Corporation.  The Employee will not, during or for a period
of 24 months after termination of the Employee's  employment  relationship under
this Amended Agreement,  disclose or confirm the Corporation's  trade secrets or
any part thereof to any person, firm,  corporation,  association or other entity
for any reason or purpose whatsoever, without the prior written authorization to
do so from the Corporation.

         Further,  all documents  shall be property of the  Corporation  and the
Employee shall not remove these  documents upon  termination of employment  with
the Corporation except pursuant to a specific  authorization in writing from the
Board of Directors  of the  Corporation.  The Employee  agrees that any document
produced or obtained by the Employee while employed by the Corporation  shall be
the sole and  exclusive  property of the  Corporation.  The  Employee  agrees to
return any such document to the

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Corporation Immediately upon termination of employment with the Corporation,  or
upon request of the Corporation.

         In no event  shall the  Employee  copy or remove any  documents  of any
person,  Corporation or association with whom the Employee did not directly work
while an Employee of the Corporation.

         The Employee  recognizes and acknowledges  that much of the information
and knowledge  which he has received or will receive by virtue of his employment
with the  Corporation  is or will be proprietary  information  and trade secrets
which  have  unique,   special  value  to  the   successful   operation  of  the
Corporation's  business.  The Employee  agrees not to disclose  any  proprietary
information  or trade  secrets to any other person for any purpose,  for his own
direct or  indirect  benefit or the benefit of any other  employer or  affiliate
during  the  term  of  this  Amended  Agreement  or for a  period  of 24  months
thereafter without the prior written consent of the Corporation.

         The aforesaid noncompetition covenant shall remain in any effect at all
times while the Employee is in the employ of the Corporation and for a period of
24 months after termination of the Employee's  relationship with the Corporation
in  any  capacity  whatsoever,  regardless  of the  reason  for  termination  or
cessation of the Employee's relationship.  The aforesaid covenant is intended to
be a  reasonable  restriction  on the  Employee.  If all,  or any portion of the
covenant is held unreasonable or unenforceable by a court or agency having valid
jurisdiction,  the Employee  expressly agrees to be bound by any lesser covenant
subsumed  within  the terms of such  covenant  that  imposes  the  maximum  duty
permitted by law, as if the  resulting  covenant were  separately  stated in and
made apart of this Article 4.

         Section  4.3.  Duty of Loyalty,  Conflicts  of  Interest.  The Employee
agrees that he will not, while employed by the  Corporation  and for a period of
24 months  thereafter,  be an employee or  consultant,  or assist in any way, or
work directly or indirectly on behalf of, any person, corporation, firm or other
entity  engaged in, or proposing to engage in, any line of business  which would
directly compete or conflict with the Corporation's business,  without the prior
express  written  consent of the  Corporation.  Notwithstanding  the  foregoing,
however,  the Corporation and the Employee acknowledge that at the present time,
the  Employee  individually  owns  various  interests  in  certain  oil  and gas
properties  in which  the  Corporation  also  owns  interests  and/or  which are
operated by the Corporation;  and the parties agree that in such  circumstances,
where  the Board of  Directors  is fully  informed  about  and  approves  of the
Employee's individual interest in a business opportunity of the Corporation,  it
shall not be  considered a violation  of this  Section 4.3. The Employee  agrees
that  he will  not use any  assets  of the  Corporation  for his own  individual
projects  and  that  he  will  not  use  any  proprietary   information  to  the
disadvantage of the Corporation.  The Employee agrees that he will not interfere
with the right of the  Corporation to do business with any person,  corporation,
firm or other entity.

         Section 4.4.  Enforcement.  The  Employee  acknowledges  that  monetary
damages would not adequately or fairly  compensate the Corporation for breach of
any of the obligations of the Employee under Article 4 of this Amended Agreement
and agrees that in the event of any breach or threatened  breach the Corporation
shall  be  entitled  to seek  appropriate  injunctive  relief  from a  court  of
competent jurisdiction,  in addition to any other relief or damages which may be
available.

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                                    ARTICLE 5

                                  MISCELLANEOUS

         Section 5.1.  Colorado Law. It is the  intention of the parties  hereto
that this  Amended  Agreement  and its  performance  hereunder  be  construed in
accordance  with and pursuant to the laws of the state of Colorado and that,  in
any action, special proceedings, or other proceeding that may be brought arising
out of, in connection with, or by reason of this Amended  Agreement,  the law of
the state of Colorado  shall be applicable  and shall govern to the exclusion of
any forum,  without  regard to the  jurisdiction  in which any action or special
proceeding may be instituted.

     Section  5.2. No Waiver.  No provision  of this  Amended  Agreement  may be
waived except by an agreement in writing  signed by the waiving  party. A waiver
of any term or provision shall not be construed as a waiver of any other term or
provision.

         Section 5.3. Amendment.  This Amended Agreement may be amended, altered
or  revoked  at any  time,  in whole or in part,  by filing  with  this  Amended
Agreement a written instrument setting forth such changes,  signed by all of the
parties.

         Section 5.4. Effect of Agreement.  The terms of this Amended  Agreement
shall  be  binding  upon  and  inure  to the  benefit  of the  Employee  and the
Corporation and their heirs,  personal representa tives,  successors and assigns
to the extent that any such benefits  survive or may be assigned under the terms
of this Amended Agreement.

     Section 5.5.  Construction.  Throughout this Amended Agreement the singular
shall  include the  plural,  the plural  shall  include  the  singular,  and the
masculine  and neuter  shall  include  the  feminine,  wherever  the  context so
requires.

     Section  5.6.  Text to Control.  The  headings of articles and sections are
included  solely for  convenience  or reference.  If any  conflicts  between any
headings and the text of this Amended Agreement exists, the text shall control.

         Section 5.7.  Severability.  If any provision of this Amended Agreement
is declared by any court of competent jurisdiction to be invalid for any reason,
such invalidity shall not affect the remaining provisions. On the contrary, such
remaining provisions shall be fully severable,  and this Amended Agreement shall
be construed and enforced as if such invalid  provisions never had been inserted
in the Amended Agreement.

         Section 5.8. Complete  Agreement.  This Amended Agreement  contains the
complete agreement concerning the employment arrangement between the Parties and
shall, as of the Effective Date hereto,  supersede all other agreements  between
the parties,  whether oral or written.  The parties  acknowledge that neither of
them has made any  representations  with  respect to the subject  matter of this
Amended  Agreement,  including the execution  and delivery  hereof,  except such
representations as are

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specifically set forth herein, and each of the parties hereto  acknowledges that
he or it has relied on his or its own  judgment  in entering  into this  Amended
Agreement.  The  parties  hereto  further  acknowledge  that  any  statement  or
representation that may have heretofore been made by either of them to the other
are of no effect and that neither of them has relied thereon in connection  with
his or its  dealings  with the other.  Employee  hereby  waives and releases any
obligation by the Corporation  under the original  Employment  Agreement and any
other claims which Employee might  otherwise  assert against the  Corporation or
its officers or directors through the Effective Date except as set forth in this
Agreement.


         Section 5.9.  Binding  Arbitration.  Any controversy  arising out of or
relating to this  Amended  Agreement  or any  modification  or extension of this
Amended Agreement,  including any claim for damages and/or rescission,  shall be
settled by binding  arbitration in Grand  Junction,  Colorado in accordance with
the Commercial Arbitration rules of the American Arbitration  Association before
a panel of one arbitrator.  The arbitrator sitting in any such controversy shall
have no power to alter or modify any express provisions of the Amended Agreement
or to  render  any award  which by its terms  effects  any such  alteration,  or
modification.  This  section  shall  survive  the  termination  of  the  Amended
Agreement.




         Wherefore,  the Parties have signed this Amended Agreement effective as
of the date first above written.

                           PEASE OIL AND GAS COMPANY,
                              a Nevada corporation



                                By _______________________________________
                                    President

                           EMPLOYEE



                                     ------------------------------------------
                                     Willard H. Pease, Jr.






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         Section 5.10.  General  Release.  Employee,  on his own behalf,  and on
behalf of his heirs  and  assigns,  hereby  fully  and  forever  unconditionally
releases and discharges  the  Corporation,  all of its past and present  parent,
subsidiary, affiliated and related corporations, their predecessors,  successors
and assigns,  together  with their  divisions and  departments,  and all past or
present  officers,  directors,  employees,  insurers  and agents of any of them,
(hereinafter  referred  to  collectively  as  "Releasees"),  of  and  from,  and
covenants not to sue or assert against Releasees,  for any purpose,  all claims,
administrative complaints,  demands, actions and causes of action, of every kind
and nature whatsoever,  whether at law or in equity,  arising from or in any way
related to my employment by the Corporation  including the termination  thereof,
based in whole or in part upon any act or omission  concerning  on or before the
date of this general release,  whether negligent or intentional,  without regard
to Employee's  present actual  knowledge of the act or omission,  which Employee
may now have, or which  Employee,  or any person acting on his behalf may at any
future  time have or claim to have,  including  specifically,  but not by way of
limitation,  unpaid wages,  unpaid  benefits,  matters which may arise at common
law,  such as breach of  contract,  express  or  implied,  promissory  estoppel,
wrongful discharge, tortious interference with contractual rights, infliction of
emotional distress,  defamation,  or under federal, state or local laws, such as
the Fair Labor Standards Act, the Employee  Retirement  Income Security Act, the
National Labor Relations Act, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the  Rehabilitation Act of 1973, the Americans
with  Disabilities  Act,  the  Family  and  Medical  Leave  Act,  the  Pregnancy
Disability Act, the Equal Pay Act, and the Colorado Civil Rights Act,  excepting
only  retirement   benefits   described  herein,   COBRA  rights,   unemployment
compensation  and  worker's  compensation.  Employee  warrants  that  he has not
assigned or transferred  any right or claim  described in this general  release.
Employee  expressly  assumes  all risk that the facts  and law  concerning  this
general  release  may  be  other  than  as  presently  known  to  Employee,  and
acknowledges  that, in signing this general release,  Employee is not relying on
any information  provided by Releasees or upon Releasees to provide  information
not known to Employee. Employee acknowledges that he has been advised to consult
an  attorney  regarding  this  release.  This  release  shall be governed by and
construed in accordance  with the laws of Colorado.  In the event of any dispute
under this release,  the prevailing party shall be entitled to recover all costs
and reasonable attorneys' fees incurred in connection therewith.




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