EXHIBIT 10.4

               LETTER AGREEMENT AMONG DOLPHIN ENERGY CORPORATION,
                 HARBOR PETROLEUM, LLC AND FLORIDA ENERGY, INC.
                              DATED MARCH 6, 2003




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                           DOLPHIN ENERGY CORPORATION
                             1155 BRICKELL BAY DRIVE
                                   SUITE 1708
                              MIAMI, FLORIDA 33131



                                               March 6, 2003




Harbor Petroleum, LLC                          Florida Energy, Inc.
602 South Harbor Court                         602 South Harbor Court
Granbury, TX  76048                            Granbury, Texas 76048

Attention:  Cecil D. Gritz, Manager            Attention: Stephen E. Bruner,
                                               President

Dear Sirs:

This letter will confirm and reduce to writing our common understanding with
respect to amounts advanced by and on behalf of Dolphin Energy Corporation, a
Nevada corporation ("Dolphin") to Harbor Petroleum, LLC, a Texas limited
liability company ("Harbor") and/or Florida Energy, Inc., a Florida corporation
("Florida") and will constitute an ongoing agreement (the "Agreement") by,
between and among the parties hereto.

In this connection, Dolphin, Harbor and Florida, in consideration of the mutual
covenants and premises set forth below, agree and each agrees:

     1.  ADVANCES.  From May 31, 2002 through November 30, 2002, Harbor has
         received advances in accordance with Exhibit "A" hereto on behalf of
         Dolphin for the purpose of acquiring oil, gas and mineral leases in
         Rusk and Nacogdoches Counties in the State of Texas. Through the date
         hereof, Harbor has continued to take leases as above and continues to
         receive advances from Dolphin. The advances are intended to cover all
         of the acquisition costs of the oil, gas and/or mineral interests
         acquired, including Harbor's out-of-pocket expenses and including any
         costs related to title searches, recordation, additional land work,
         geology and engineering. Further, Florida has taken certain leases in
         Nacogdoches County on behalf of Dolphin.

     2.  LEASES. Although all of the oil, gas and mineral leases acquired in
         Rusk and Nacogdoches Counties through the date hereof by Harbor and
         Florida are held in the name of Harbor or Florida, such leases are held
         as such on behalf of Dolphin, and it is understood that neither Harbor
         nor Florida has any equitable interests in


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         such leases. Further, within fifteen (15) days of any request from
         Dolphin, Harbor and/or Florida will cause any and/or all such leases to
         be assigned directly to Dolphin or its nominee.

     3.  TERM. Except as otherwise herein provided, this Agreement shall be
         deemed to be effective with respect to acquisitions of leases as of May
         31, 2002 and shall continue in full force and effect for a term of one
         (1) year from the date hereof, provided that by common consent the
         parties may extend the term of this Agreement from year to year
         thereafter and provided that either party may terminate this Agreement
         at any time by providing prior written notice to the other of no fewer
         than thirty (30) days

     4   SCOPE OF TERMINATION. For a period of five (5) years after this
         Agreement terminates, all of the provisions of this Agreement shall
         continue in effect and remain applicable to those leases and mineral
         interests acquired by the parties during the term of this Agreement.

     5.  PARTICIPATION; BENEFICIAL INTEREST. Except as otherwise herein
         provided, the parties shall participate in the ownership of all
         geological and geophysical information acquired as a result of
         operations conducted hereunder, and Dolphin shall have ownership of all
         working interests acquired under any lease or other mineral interest
         hereunder, provided that there shall be a two percent (2%) overriding
         royalty interest ("ORRI") reserved under any such lease or mineral
         interest, with one half (1/2) of such ORRI being reserved in the name
         of Harbor and the other one half (1/2) being reserved in the name of
         Florida. In addition, within fifteen days (15) of the date hereof,
         Florida shall designate 400 contiguous acres (the "Designated Acreage")
         of the leased acreage in the prospect area of Nacogdoches County known
         as "Cushing," and Florida shall be entitled to a one thirty-second ORRI
         on the Designated Acreage which amount shall be reserved in the name of
         Florida rather than the one percent (1%) ORRI which shall be applicable
         to the other leased acreage hereunder.

     6.  BONUS TO FLORIDA.  In recognition of the fact that Florida first
         identified the lease play in Rusk and Nacogdoches Counties and in
         further consideration hereof, Dolphin agrees to pay Florida a bonus of
         $50,000.00 which shall be satisfied by Dolphin's giving Florida a
         promissory note in the principal amount of $50,000.00 payable in full
         one year and one day from the date of Florida's acceptance hereof and
         bearing interest at an annual rate of seven and one-half percent (7
         1/2%).

     7.  INITIAL OPERATOR. Harbor shall be operator for and shall have full
         control of all operations conducted under the provisions of this
         Agreement; provided, however, that, if and when the leases hereunder
         are assigned to Dolphin or its nominee, Dolphin or such nominee will
         have the right to be named operator. Operator shall conduct all such
         operations in a good and workmanlike manner, but it shall have no
         liability as operator to the nonoperator for losses sustained or
         liabilities incurred, except as may result from its gross negligence or
         willful misconduct.


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     8.  ACQUISITIONS. Should Harbor identify an oil, gas or mineral lease or
         any mineral interest covering all or any portion of lands located in
         Rusk or Nacogdoches Counties, Harbor shall notify Dolphin of such
         potential acquisition, specifying the price to be paid therefor and the
         other conditions of such acquisition. Dolphin shall have the right and
         option to acquire all of the working interest in such acquisition by
         notifying Harbor within thirty (30) days from the date of receipt of
         said notice, of its election to participate in the acquisition. If
         Dolphin elects to participate in an acquisition, Dolphin shall pay
         Harbor the acquisition costs as set forth above and shall take the
         acquisition, without warranty of title and free of additional burdens
         imposed thereon by the original acquiring party, other than those set
         forth in paragraph 5 above..

     9.  ACQUISITION AND OPERATING COSTS.  Except as otherwise specifically
         provided in this Agreement, all costs of any acquisition hereunder and
         all costs, charges and expenses of operations conducted hereunder shall
         be charged to and borne by Dolphin.

     10. ACCOUNTING INFORMATION AND REPORTS.  If possible prior to and, in any
         event, as soon as practicable after Harbor incurs any acquisition or
         other chargeable costs, Harbor shall provide Dolphin with an accounting
         of such expenditures, including the amount and purpose thereof. In
         addition, Harbor shall promptly furnish to Dolphin all data and
         information acquired in operations hereunder, and Harbor shall consult
         freely with Dolphin and keep it informed of all important matters.
         Harbor shall make all reports to governmental agencies required in
         connection with the conduct of operations hereunder.

     11. MAINTENANCE OF LEASES.  Harbor shall make a good faith effort to pay
         all rentals due or payable under the terms of leases acquired by it
         pursuant to this Agreement, but the burden of all such payments shall
         be borne by Dolphin. If possible, Harbor shall notify Dolphin of the
         dates upon which rentals are due under leases acquired hereunder by the
         parties at least seventy-five (75) days prior to such due dates.

     12. CONFIDENTIALITY.  Unless otherwise specifically provided for herein,
         all maps, reports, interpretations, records, data and information
         pertaining to the leases acquired hereunder and obtained or shared by
         the parties pursuant to the provisions hereof, shall be and remain held
         strictly confidential by the parties hereto, their successors, assigns,
         agents, employees and contractors engaged in the performance of any
         work hereunder, during the entire term of this Agreement, and shall not
         be disclosed to any other person or entity, unless such disclosure is
         required by applicable law.

     13. RELATIONSHIP OF  PARTIES.  Harbor and Florida have acquired, and Harbor
         is acquiring the leases hereunder for and on behalf of Dolphin.
         However, the duties,


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         obligations and liabilities of the parties hereto are intended to be
         several and not joint or collective. This Agreement is not intended to
         create, and shall not be construed to create, any association or trust,
         or to impose a partnership duty, obligation, or liability with regard
         to any one or more of the parties hereto. Each party hereto shall be
         individually responsible for its own obligations as herein provided.
         This Agreement is not intended to provide, and shall not be construed
         to provide, directly on indirectly, for any joint refining or marketing
         of oil, gas or other minerals.

     14. NOTICES.  Each party's proper address for notices shall be the
         addresses given above until such party specifies another address by
         written notice to the other party.

     15. SUCCESSORS AND ASSIGNS.  This Agreement shall extend to, be binding
         upon, and inure to the benefit of the parties hereto and their
         respective successors and assigns, and shall constitute a covenant
         running with the lands, leases and interest covered hereby.

     16. COUNTERPARTS; FACSIMILES.  This Agreement may be executed by signing
         the original or a counterpart thereof. If this Agreement is executed in
         counterparts, all counterparts taken together shall have the same
         effect as if all parties had signed the same instrument. This agreement
         may also be executed by signing and returning by facsimile a copy
         hereof, and such facsimile copy shall have the same force as signed
         original counterpart.

     17. FURTHER COOPERATION ON SUBSEQUENT DOCUMENTS.  Dolphin and Harbor agree
         to cooperate at all times from and after the date hereof with respect
         to the supplying of any information requested by the other regarding
         any of the matters described herein and each agrees to execute such
         further bills of sale, assignments, releases or other documents as may
         be reasonably requested for the purpose of giving effect to, evidencing
         or giving notice of the transactions described herein. Specifically, it
         is anticipated that there will be assignments of the oil, gas and
         mineral leases or other mineral interests from Harbor and Florida
         Energy, Inc. into Dolphin and that Dolphin and Harbor may enter into a
         joint operating agreement or agreements.

     18. MODIFICATION AND WAIVER.  No supplement, modification, waiver or
         termination of this Agreement or any provisions hereof shall be binding
         unless executed in writing by the parties to be bound thereby. No
         waiver of any of the provisions of this Agreement shall constitute a
         waiver of any other provision (whether or not similar), nor shall such
         waiver constitute a continuing waiver unless otherwise expressly
         provided.


     19. GOVERNING LAW.  This Agreement shall be construed and enforced in
         accordance with the laws of the State of Texas.


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If the foregoing correctly states your understanding of our Agreement, please
sign and return one copy hereof to the undersigned.

                                        Very truly yours,

                                        Dolphin Energy Corporation


                                        By   /s/ MARC E. BRUNER
                                           ----------------------------------
                                           Marc E. Bruner
                                        Title: President



AGREED AND ACCEPTED                     AGREED AND ACCEPTED

Harbor Petroleum, LLC                   Florida Energy, Inc.

By   /s/ CECIL D. GRITZ                 By   /s/ STEPHEN E. BRUNER
   --------------------------              ----------------------------------
   Cecil D. Gritz                          Stephen E. Bruner
Title:  Manager                         Title:  President
Date:  3/6/03                           Date:   3/7/03
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