WILLARD PEASE OIL AND GAS COMPANY

                             1990 STOCK OPTION PLAN

     1. Purpose of the Plan. The purpose of this 1990 Stock Option Plan ("Plan")
is to secure and retain key employees and directors  responsible for the success
of Willard  Pease Oil and Gas Company  ("Company"),  to motivate such persons to
exert their best efforts on behalf of the Company,  to encourage stock ownership
and to provide such persons with proprietary interests in, and a greater concern
for,  the welfare of, and an incentive to continue  service  with,  the Company.
Options issued  pursuant to this Plan will  constitute  incentive  stock options
within the meaning of ss. 422A of the Internal Revenue Code of 1986 ("Code"), as
amended,  ("Incentive  Stock  Options") or other  options  ("Nonstatutory  Stock
Options").  Incentive Stock Options and  Nonstatutory  Stock Options may both be
granted  hereunder and any option  granted which for any reason does not qualify
as an Incentive Stock Option,  including any option granted to a director of the
Company  who is not also an  employee of the  Company,  shall be a  Nonstatutory
Stock Option.

     2. Stock Subject to the Plan.  The number of shares of the Company's  $0.05
par value common stock ("Common  Stock") which may be optioned under the Plan is
500,000 shares. Such shares may consist, in whole or in part, of unissued shares
or treasury shares.  Nonstatutory  Stock Options to acquire no more than 200,000
of such  shares may be  granted to  directors  of the  Company  who are not also
employees. The maximum number of shares issuable pursuant to the Plan, including
shares  subject  to  outstanding  options,  shall be subject  to  adjustment  as
provided  in Section 6 of the Plan.  No option  shall be granted  under the Plan
after  December 30, 2000.  The aggregate fair market value of the shares subject
to options  granted to any  optionee  which become  exercisable  in a particular
calendar  year shall not exceed  $100,000.  For purposes of this Plan,  the fair
market  value of Common  Stock  subject to an option  shall be equal to the mean
between the bid and asked prices reported in the over-the-counter  market at the
close of business on the date the option is granted.  If no market  exists,  the
Compensation  Committee  described in Section 3 shall  determine the fair market
value for purposes of this Plan.  If any  outstanding  option under the Plan for
any reason expires or is terminated, the shares of Common Stock allocable to the
unexercised  portion of such option may again be optioned under the Plan subject
to the  limitations,  terms and  conditions of the Plan. The Board of Directors,
and the proper officers of the Company shall from time to time take  appropriate
action required for delivery of Common Stock, in accordance with the options and
any exercises thereof.

     3.  Administration.  Administration  of the Plan,  insofar as it relates to
Incentive  Stock  Options and the granting of Incentive  Stock Options under the
Plan  shall  be  administered  by the  Compensation  Committee  of the  Board of
Directors  of the  Company,  hereinafter  referred  to as the  "Committee."  The
Committee  shall  consist of at least three members of the Board of Directors of
the  Company  chosen  by the  Board,  who as of the  date of any  action  of the
Committee,  are not, and have not been during the preceding 12 months, employees
of the Company.  If the Committee thus  established  shall consist of fewer than
three  members at the time of any action by the  Committee,  then the  directors
shall select enough other shareholders to serve on the Committee to have three




                                       2
<PAGE>


members and to meet any  requirements  of ss.  422A of the Code and  regulations
adopted  thereunder and regulations  adopted under Section 16(b) of the Act. The
decision of a majority of those present at any meeting of the Committee  where a
quorum consisting of a majority of the Committee is present shall constitute the
decision  of the  Committee.  The  Committee  is  authorized  and  empowered  to
administer  the Plan  insofar as it  relates to  Incentive  Stock  Options  and,
consistent  with the terms of the Plan,  to (a)  select  the  employees  to whom
Incentive  Stock  Options  are to be granted and to fix the number of shares and
other terms and  conditions  of the Incentive  Stock Options to be granted;  (b)
determine  the date  upon  which  options  shall be  granted  and the  terms and
conditions of the granted options in a manner  consistent  with the Plan,  which
terms need not be identical as between  options or optionees;  (c) interpret the
Plan and the Incentive  Stock Options  granted under the Plan; (d) adopt,  amend
and rescind rules and regulations for the  administration of the Plan insofar as
it relates to  Incentive  Stock  Options;  and (e) direct the Company to execute
Incentive Stock Option agreements  pursuant to the Plan. All such actions of the
Committee shall be binding upon all participants in the Plan.

     The  administration of the Plan insofar as it relates to Nonstatutory Stock
Options and the granting of  Nonstatutory  Stock Options under the Plan shall be
administered  by the Board of  Directors.  The  decision  of a majority of those
present at any meeting of the Board of Directors where a quorum  consisting of a
majority of the Board is present shall constitute the decision of the Board. The
Board is authorized  and empowered to administer  the Plan insofar as it relates
to Nonstatutory Stock Options and, consistent with the terms of the Plan, to (a)
select  any  directors  who  are  not  also  employees  of the  Company  to whom
Nonstatutory Stock Options are to be granted and to fix the number of shares and
other terms and conditions of the options to be granted;  (b) determine the date
upon  which  Nonstatutory  Stock  Options  shall be  granted  and the  terms and
conditions of the granted options in a manner  consistent  with the Plan,  which
terms need not be identical as between  options or optionees;  (c) interpret the
Plan and the Nonstatutory Stock Options granted under the Plan; (d) adopt, amend
and rescind rules and regulations for the  administration of the Plan insofar as
it relates to Nonstatutory Stock Options;  and (e) direct the Company to execute
Nonstatutory  Stock Option agreements  pursuant to the Plan. All such actions of
the Board shall be binding upon all participants in the Plan.

     4.  Eligibility  The  employees  of the  Company  who shall be  eligible to
receive  grants of  Incentive  Stock  Options  under the Plan shall be those key
employees,  including  officers  or  directors  of  the  Company  who  are  also
employees,  who are from time to time responsible for the management,  growth or
success of the  business of the Company and who shall have been  selected by the
Committee.  Officers of the Company who are also directors  shall be eligible to
participate  in the Plan if they are also  employees.  The  persons  to  receive
Incentive  Stock  Options  under the Plan shall be selected from time to time by
the Committee, in its sole discretion, and the Committee shall determine, in its
sole  discretion,  the  number of shares to be covered  by the  Incentive  Stock
Option or Options granted to each person selected. Subject to the exception


                                      -2-


<PAGE>


under Section  5(b), no person may be granted an Incentive  Stock Option if such
person,  at the  time the  option  is  granted,  owns  shares  of  Common  Stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the Company.  For purposes of  calculating  such stock  ownership,  the
attribution  rules of stock ownership set forth in Section 425(d) of the Code as
amended  shall apply.  Accordingly,  an optionee,  with respect to whom such 10%
limitation is being determined, shall be considered as owning Common Stock owned
directly or indirectly by or for the optionee's brothers and sisters (whether by
the whole or  half-blood),  spouse,  ancestors and lineal  descendants;  and any
Common Stock owned directly or indirectly by or for a corporation,  partnership,
estate or trust,  shall be considered as being owned  proportionately  by or for
its shareholders, partners or beneficiaries.

     5. Terms and Conditions.  Nonstatutory Stock Options granted under the Plan
shall be subject to the  restrictions of Sections 5(a),  5(d), 5(e), 5(f), 5(g),
5(i), 56) and 5(o) and all Incentive Stock Options granted under this Plan shall
be  subject  to the terms and  conditions  of this  Plan,  including  all of the
following:

          (a) Option  Price.  Subject to the  provisions  of Section  5(b),  the
     option price per share shall be  determined  by the Committee but shall not
     be less than 100% of the fair  market  value of such shares at the time the
     option is granted.

          (b) More than 10%  Shareholder.  If an employee  owns more than 10% of
     the fair market value of Common Stock as determined under Section 4, at the
     time an Incentive Stock Option is granted under the Plan, the Committee may
     issue an  Incentive  Stock Option to such person at 110% of the fair market
     value of Common  Stock  determined  by using the mean  between  the bid and
     asked prices in the  over-the-counter  market at the close of the market on
     the date such option was granted or if there is no public  trading  market,
     110% of the fair  market  value of the common  stock as  determined  by the
     Committee. Any Incentive Stock Option granted to any employee who owns more
     than 10% of Common stock shall not be  exercisable  after the expiration of
     five years from the date such option is granted.

          (c) Limitations on Grant of Option . Subject to the limitations  under
     Section 5(b) of this Plan, no Incentive Stock Option shall be granted which
     may be exercised more than ten years after the date it was granted.

          (d)  Limitations  on Exercise  of Option- No optionee  granted a stock
     option under the Plan may exercise such option for six months following the
     date of grant of the  option  and  unless at all times  during  the  period
     beginning  on the date of the  granting of the option and ending on the day
     three months before the date of such exercise such optionee was employed by
     the Company or a corporation or subsidiary  thereof issuing or assuming the
     option in a  transaction  set forth under  Section 6 of this Plan (as to an
     Incentive  Stock  Option)  or  within  three  months  of the date  when the
     optionee ceased to serve as a director of the Company (as to a Nonstatutory
     Stock Option).

                                      -3-

<PAGE>


          (e) Payment for Shares.  Payment in full,  in cash,  shall be made for
     all  shares  pursuant  to the  exercise  of an  option,  provided  that the
     Committee may permit payment to be made with shares of the Company's Common
     Stock owned by  optionee to be valued at the fair market  value at the date
     of exercise.  All options shall be exercised for 100 shares,  or a multiple
     thereof,  or for the full  number  of shares  for which the  option is then
     exercisable.  No optionee shall have the right to dividends or other rights
     of a  stockholder  with  respect to shares  subject to an option  until the
     optionee has given written notice of exercise of the optionee's  option and
     paid in full for such shares.

          (f) Manner of Exercise.  Any option granted  pursuant to this Plan may
     be  exercised  at such  time or times as set  forth in the  option,  by the
     delivery of written  notice to any officer of the  Company,  other than the
     optionee,  together with payment in full, in cash, for the number of shares
     to be purchased pursuant to such exercise.  Such notice (i) shall state the
     election to exercise  the option,  (ii) shall state the number of shares in
     respect  of which the  option is being  exercised,  (iii)  shall  state the
     optionee's address, (iv) shall state the optionee's social security number,
     (v) shall contain such representations and agreements concerning optionee's
     investment  intent with  respect to such shares of Common Stock as shall be
     satisfactory  to  the  Company's   counsel,   (vi)  shall  state  that  the
     certificate  evidencing the shares may be stamped with a restrictive legend
     and the shares evidenced by such  certificate  will constitute  "restricted
     securities" as defined in Rule 144 promulgated  under the Securities Act of
     1933 and (vii) shall be signed by optionee.

          (g)  Limitation  on  Transfer  of Shares.  All shares of Common  Stock
     acquired by an optionee upon  exercise of a stock option  granted under the
     Plan shall be deemed to be  "restricted  securities" as defined in Rule 144
     promulgated  under the  Securities  Act of 1933, as amended (the 'Act") and
     the certificate evidencing such shares shall contain a legend as follows:

          "The securities represented by this certificate may not be offered for
          sale,  sold or otherwise  transferred  except pursuant to an effective
          registration statement under the Securities Act of 1933 (the 'Act') or
          pursuant  to  an  exemption  from  registration  under  the  Act,  the
          availability of which is to be established to the  satisfaction of the
          Company."

          (h) Other  Representations  or  Warranties.  Asa further  condition to
     exercise of any Incentive  Stock Option granted under the Plan, the Company
     may require each  optionee to make any  representation  and warranty to the
     Company as may be required by any applicable law or regulation.

          (i) Holding Period of Shares.  No shares of Common Stock acquired upon
     exercise  of a stock  option  granted  under  this  Plan  shall  be sold or
     otherwise disposed of, within the meaning of Section 425(c) of the Code, at


                                      -4-


<PAGE>


     any time  before  the  sooner of two years from the date of the grant of an
     option  under  this  Plan or one year  after  the date of  exercise  of the
     option.  However,  an optionee who has acquired shares of Common Stock upon
     exercise of a stock option  granted  under this Plan,  who  transfers  such
     shares to a trustee, receiver, or other similar fiduciary in any proceeding
     under Title 11 of the United  States  Bankruptcy  Law or any other  similar
     insolvency  proceeding at a time when such optionee is insolvent  shall not
     have been deemed to have made a transfer  or  disposition  for  purposes of
     this  subsection,  nor shall one who  acquires  the shares from the Company
     with another  person in joint  tenancy be deemed to have made a transfer or
     disposition.

          (j) Death of  Optionee.  If an optionee  dies,  any option  previously
     granted to the optionee shall be exercisable by the personal representative
     or  administrator  of the deceased  optionee's  estate,  or by any trustee,
     heir,  legatee or beneficiary  who shall have acquired the option  directly
     from the optionee by will or by the laws of descent and distribution at any
     time  within one year after his  death,  but not more than ten years  [five
     years if Section  5(b) is  applicable]  after the date of  granting  of the
     option, provided the deceased optionee was entitled to exercise such option
     at the time of his death.

          (k)  Retirement.   If  an  optionee's   employment  with  the  Company
     terminates by reason of retirement,  any option  previously  granted to him
     shall be exercisable as determined in the sole  discretion of the Committee
     only within three months after the date of such  termination,  but not more
     than ten years [five years if Section 5(b) is applicable] after the date of
     granting  of the  option,  and  then  only to the  extent  to  which it was
     exercisable  at the  time  of such  termination  by  retirement;  provided,
     however, that if the optionee dies within three months after termination by
     retirement,  any  unexercised  option,  to  the  extent  to  which  it  was
     exercisable at the time of his death,  shall  thereafter be exercisable for
     one year after the date of his death, but not more than ten years after the
     date of granting of the option.

          (l) Disability If an optionee  becomes  disabled within the meaning of
     Section  105(d)(4)  of the  Code,  and at the time of such  disability  the
     optionee is entitled to exercise such option,  the optionee  shall have the
     right to  exercise  such  option  within  one year  after  such  disability
     provided  that the  optionee  exercises  within ten years after the date of
     grant thereof [or five years if Section 5(b) is applicable],  and then only
     to the extent to which it was exercisable at the time of such disability.

          (m) Optionee's Termination. If an optionee's employment by the Company
     is terminated  for any reason other than death,  retirement or  disability,
     any Incentive  Stock Option  previously  granted to the optionee  which was
     exercisable at the time of termination  shall  terminate three months after
     the date  upon  which the  optionee's's  employment  terminates  or at such
     earlier time as provided in the terms of the optionee's option.

                                      -5-

<PAGE>


          (n) Leave of  Absence.  For the  purposes  of this Plan (i) a leave of
     absence,  duly authorized in writing by the Company for military service or
     sickness,  or for any other purpose approved by the Company,  if the period
     of such leave does not exceed 90 days and (ii) a leave of absence in excess
     of 90  days,  duly  authorized  in  writing  by the  Company  provided  the
     optionee's  right to  re-employment  is guaranteed  either by statute or by
     contract, shall not be deemed a termination of employment.

          (o)  Nontransferability  of Option . No option granted under this Plan
     will be  transferable  by the  optionee  other  than by will or the laws of
     descent and distribution.  During the lifetime of the optionee,  the option
     will be exercisable only by optionee.

     6.  Recapitalization  or Merger. If the outstanding  shares of Common Stock
which are eligible for the granting of options hereunder,  or subject to options
theretofore granted, shall at any time be changed or exchanged by declaration of
a  stock   dividend,   split-up,   subdivision   or   combination   of   shares,
recapitalization,  merger,  consolidation or other corporate  reorganization  in
which the Company is the  surviving  corporation,  the number and kind of shares
subject to this Plan or  subject  to any  options  previously  granted,  and the
option prices, shall be appropriately and equitably adjusted,  so as to maintain
the proportionate  number of shares without changing the aggregate option price.
In the  event of a  dissolution  or  liquidation  of the  Company,  or a merger,
consolidation,  sale  of  all or  substantially  all of  its  assets,  or  other
corporate  reorganization in which the Company is not the surviving  corporation
and the holder of Common Stock receives securities of another  corporation,  any
outstanding  options  hereunder shall terminate as of the effective date of such
event;  provided that  immediately  prior to such event each optionee shall have
the right to  exercise  any  unexpired  option in whole or in part.  The Company
shall  afford each  person who holds an option  under this Plan with at least 30
days advance written notice of such event. However, no option shall be exercised
more  than ten  years  [five  years if  Section  5(b) is  applicable]  after the
granting thereof. The existence of this Plan, or of any options hereunder, shall
not in any way prevent any  transaction  described  in this  section,  nor shall
anything  contained in this Plan prevent the  substitution  of a new option by a
surviving corporation.

     7. Use of Proceed .  Proceeds  from the sale of stock  pursuant  to options
granted under this Plan shall constitute general funds of the Company.

     8. Reservation of Issuance of Shares. The Company shall at all times during
the  duration of this Plan reserve and keep  available  such number of shares of
Common Stock as will be  sufficient to satisfy the  requirements  of all options
granted  pursuant to this Plan,  and shall pay all  original  issue and transfer
taxes with  respect to the  issuance of shares  pursuant to the exercise of such
options,  and shall pay all of the fees and  expenses  necessarily  incurred  in
connection with the exercise of such options and the issuance of such shares.

                                      -6-

<PAGE>


     9. Amendments. The Board of Directors may amend, alter, or discontinue this
Plan, but no amendment,  alteration or discontinuation shall be made which would
impair the rights of any optionee under any options previously granted,  without
the  optionee's  consent,  or which,  without the approval of the  stockholders,
would:

          (i) except as is  provided  in Section 6 of this  Plan,  increase  the
     total number of shares reserved for the purposes of the Plan;

          (ii)  decrease  the option  price to less than 100% of the fair market
     value [or 110% if Section 5(b) is  applicable]  on the date of the granting
     of the option;

          (iii)  change the persons  (or class of  persons)  eligible to receive
     options under the Plan;

          (iv)   increase   the  number  of  shares  which  may  be  subject  to
     Nonstatutory  Stock  Options  granted to directors who are not employees of
     the Company under this Plan; or

          (v) increase the  aggregate  fair market value of options which may be
     granted under this Plan to any person and which become  exercisable  in any
     year to an amount in excess of $100,000.

     10.  Indemnification.-  In addition to such other rights of indemnification
as they may have as  directors,  the members of the  Committee  and the Board of
Directors  shall be  indemnified  by the Company  against  reasonable  expenses,
including  attorneys' fees actually  incurred in connection with the defenses of
any action, suit or proceeding,  or in connection with any appeal therefrom,  to
which  they or any of them  may be a party  by  reason  of any  action  taken or
failure  to act  under or in  connection  with the  Plan or any  option  granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such  settlement  is  approved  by  independent  legal  counsel  selected by the
Company) or paid by them in  satisfaction  of  judgment  in any action,  suit or
proceeding,  except in  relation  to matters as to which it shall be adjudged in
such action,  suit or proceeding,  that such member of the Board of Directors is
liable for gross negligence,  fraud or willful  misconduct in the performance of
the director's  duties so long as within 60 days after  institution of ally such
action, suit or proceeding,  the director shall in writing offer the Company the
opportunity,  at its own  expense,  to handle and defend  such  action,  suit or
proceeding.

     11. Approval of  Shareholders.  The Plan shall take effect upon approval by
the holders of a majority of the shares of the Company's Common Stock present at
a meeting attended by a quorum of shareholders, which approval must occur within
12 months after the date the Plan is adopted by the Board of Directors.

     12.  Miscellaneous.  Unless the context requires otherwise,  words denoting
the as denoting the singular, and words of one gender may be construed as


                                      -7-


<PAGE>


denoting such other gender as is appropriate.  Paragraph  headings are not to be
considered part of this Plan and are included solely for convenience and are not
intended to be full or accurate descriptions of the contents thereof.

Adopted December 31, 1990.

                                        WILLARD PEASE OIL AND GAS COMPANY,
                                        a Colorado corporation

ATTEST                                  By /s/ Willard Pease, Jr.
                                           -----------------------------------
                                           Willard Pease, Jr., President

/s/ Lily Roeland
---------------------------------
Lily Roeland, Secretary

S E A L













                                      -8-