EXHIBIT 10.13

                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is entered into effective as
of November 13, 1996 by and between Monterey Resources, Inc., a Delaware
corporation ("Company"), and R. Graham Whaling ("Employee").

         WHEREAS, the Company employs Employee and desires to continue such
employment relationship and Employee desires to continue such employment;

         NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

         1.      Employment.  The Company hereby employs Employee, and Employee
hereby accepts employment by the Company, on the terms and conditions set forth
in this Agreement.

         2.      Term of Employment.  Subject to the provisions for earlier
termination provided in the Agreement, the term of this Agreement (the "Term")
shall commence on the effective date of this Agreement as stated above and
shall terminate on December 31, 1999; provided, however, commencing on January
1, 1998 and on each January 1 thereafter, the term of this Agreement shall
automatically be extended one additional year unless, not later than September
30 of the preceding year, the Board of Directors of the Company (the "Board")
shall give written notice to Employee that the Term of the Agreement shall
cease to be so extended; provided, further, that if a Change in Control, as
defined in Section 6, shall have occurred during the original or extended Term
of this Agreement, the Term shall continue in effect for a period of not less
than 36 months beyond the date of such Change in Control.  In no event,
however, shall the Term of this Agreement extend beyond the end of the calendar
month in which Employee's 65th birthday occurs.  Notwithstanding any provision
of this Agreement to the contrary, termination of this Agreement shall not
alter or impair any rights of Employee (or Employee's estate or beneficiaries)
that have arisen under this Agreement prior to such termination.

         3.      Employee's Duties.  During the Term of this Agreement,
Employee shall serve as the Chief Executive Officer of the Company, with such
customary duties and responsibilities as may from time to time be assigned to
him by the Board, provided that such duties are at all times consistent with
the duties of such position.

         Employee agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the extent
necessary to discharge the duties and responsibilities assigned to Employee
hereunder, to use reasonable best efforts to perform faithfully and efficiently
such duties and responsibilities.
<PAGE>   
         4.      Base Compensation.  For services rendered by Employee under
this Agreement, the Company shall pay to Employee a base salary ("Base
Compensation") of $325,000 per annum payable in accordance with the
Company's customary payroll practice for its executive officers.  The amount of
Base Compensation shall be reviewed periodically and may be increased to
reflect inflation or such other adjustments as the Board may deem appropriate
but Base Compensation, as increased, may not be decreased thereafter.

         5.      Additional Benefits.  In addition to the Base Compensation
provided for in Section 4 herein, Employee shall be entitled to receive all
fringe benefits and perquisites offered by the Company to its executive
officers, including, without limitation, participation in the Company's Annual
Incentive Compensation Plan and other incentive plans offered generally to key
employees, the various employee benefit plans or programs provided to the
employees of the Company in general, subject to the regular eligibility
requirements with respect to each of such benefit plans or programs, and such
other benefits or prerequisites as may be approved by the Board during the Term
of this Agreement.  Nothing in this paragraph shall be deemed to prohibit the
Company from making any changes in any of the plans, programs or benefits
described in this Section 5, provided the change similarly affects all
executives of the Company similarly situated.

         6.      Change of Control.

         For purposes of this Agreement, a "Change in Control" shall mean the
occurrence of one of the following events:

                 (i)      any "person" (as such term is used in Section 13(d)
         and 14(d) of the Securities Exchange Act of 1934, as amended (the
         "Exchange Act")), other than a trustee or other fiduciary holding
         securities under an employee benefit plan of Santa Fe Energy
         Resources, Inc.  ("SFER") or any affiliate, or any corporation owned,
         directly or indirectly, by the stockholders of SFER in substantially
         the same proportions as their ownership of stock of SFER, is or
         becomes the "beneficial owner" (as defined in Rule 13d-3 under the
         Exchange Act), directly or indirectly of securities of SFER
         representing 25% or more of the combined voting power of SFER's then
         outstanding securities;

                 (ii)     during any period of two consecutive years (not
         including any period prior to the execution of this Agreement),
         individuals who at the beginning of such period constitute the Board
         of Directors of SFER, and any new director (other than a director
         designated by a person who has entered into an agreement with SFER to
         effect a transaction described in clause (i), (iii) or (iv) of this
         Section) whose election by the Board of Directors of SFER or
         nomination for election by SFER's stockholders was approved by a vote
         of at least two-thirds of the directors then still in office who
         either were directors at the beginning of the period or whose election
         or nomination for election was previously so approved (hereinafter
         referred to as "Continuing Directors"), cease for any reason to
         constitute at least a majority thereof;

                                      -2-
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                 (iii)    the stockholders of SFER approve a merger or
         consolidation of SFER with any other corporation, other than (a) a
         merger or consolidation which would result in the voting securities of
         SFER outstanding immediately prior thereto continuing to represent
         (either by remaining outstanding or by being converted into voting
         securities of the surviving entity) more than 65% of the combined
         voting power of the voting securities of SFER (or such surviving
         entity) outstanding immediately after such merger or consolidation or
         (b) a merger or consolidation effected to implement a recapitalization
         of SFER (or similar transaction) in which no "person" (as hereinabove
         defined) acquires more than 25% of the combined voting power of SFER's
         then outstanding securities; or

                 (iv)     the stockholders of SFER approve a plan of complete
         liquidation of SFER or an agreement for the sale or disposition by
         SFER of all or substantially all of SFER's assets.  For purposes of
         this clause (iv), the term "the sale or disposition by SFER of all or
         substantially all of SFER's assets" shall mean a sale or other
         disposition transaction or series of related transactions involving
         assets of SFER or of any direct or indirect subsidiary of SFER
         (including the stock of any direct or indirect subsidiary of SFER) in
         which the value of the assets or stock being sold or otherwise
         disposed of (as measured by the purchase price being paid therefor or
         by such other method as the Board of Directors of SFER determines is
         appropriate in a case where there is no readily ascertainable purchase
         price) constitutes more than two-thirds of the "fair market value of
         SFER" (as hereinafter defined).  For purposes of the preceding
         sentence, the "fair market value of SFER" shall be the aggregate
         market value of SFER's outstanding common stock (on a fully diluted
         basis) plus the aggregate market value of SFER's other outstanding
         equity securities.  The aggregate market value of SFER's common stock
         shall be determined by multiplying the number of shares of SFER's
         common stock (on a fully diluted basis) outstanding on the date of the
         execution and delivery of a definitive agreement with respect to the
         transaction or series of related transactions (the "Transaction Date")
         by the average closing price for SFER's common stock for the ten
         trading days immediately preceding the Transaction Date.  The
         aggregate market value of any other equity securities of SFER shall be
         determined in a manner similar to that prescribed in the immediately
         preceding sentence for determining the aggregate market value of
         SFER's common stock or by such other method as the Board of Directors
         of SFER shall determine is appropriate.

                 (v)      If SFER ceases to own 80% of the combined voting
         power of the then outstanding voting securities of the Company, the
         term "Company" shall be substituted for SFER as used in this
         definition of "Change in Control;" provided, however, as long as SFER
         owns 35% or more of the combined voting power of the voting securities
         of the Company, the above "Change in Control" definition shall be
         applied separately with respect to SFER and with respect to the
         Company as substituted for SFER in the definition, and a Change in
         Control with respect to either SFER or the Company in such situation
         shall be a Change in Control for purposes of this Plan.
         Notwithstanding anything herein to the contrary, a distribution by
         SFER to its stockholders of its interest in such voting securities of
         the Company shall not constitute a Change in Control.

                                      -3-
<PAGE>   
         7.      Termination.  This Agreement may be terminated prior to the
end of its Term as set forth below.

                 (a)      Resignation.  Employee may resign, including by
         reason of retirement, his position at any time.  In the event of such
         resignation, except in the case of resignation for Good Reason (as
         defined below) on or following a Change in Control, Employee shall not
         be entitled to further compensation pursuant to this Agreement.

                 (b)      Death.  If Employee's employment is terminated due to
         his death, this Agreement shall terminate and the Company shall have
         no obligations to Employee or his legal representatives with respect
         to this Agreement other than the payment of any Base Compensation and
         vacation pay which had accrued hereunder at the date of Employee's
         death.

                 (c)      Discharge.

                          (i)     The Company may terminate this Agreement and
                 Employee's employment for any reason deemed sufficient by the
                 Company upon notice as provided in Section 10.  However, in
                 the event that Employee's employment is terminated during the
                 Term by the Company on or following a Change in Control and
                 for any reason other than his Misconduct (as defined in
                 Section 7(c)(ii) below) or Disability (as defined in Section
                 7(d)(i) below), then, subject to Sections 7(h) and (i): (A)
                 the Company shall pay in a lump sum in cash to Employee,
                 within 15 days of the Date of Termination, an amount equal to
                 the sum of (1) three times Employee's Base Compensation, and
                 (2) the maximum incentive award payable to Employee under the
                 Company's Annual Incentive Compensation Plan for such year in
                 lieu of any payment thereunder, assuming for purposes hereof
                 that all performance objectives for such year had been met at
                 the maximum level and that Employee is entitled to a full
                 award thereunder; (B) for the 36-month period after such Date
                 of Termination, the Company shall provide or arrange to
                 provide Employee (and Employee's dependents) with life,
                 disability, accident and group health insurance benefits
                 substantially similar to those which Employee (and Employee's
                 dependents) were receiving immediately prior to the Notice of
                 Termination, with the Employee charged a monthly premium(s)
                 for such coverage(s) that does not exceed the premium(s)
                 charged to an active employee for comparable coverage(s);
                 benefits otherwise receivable by Employee pursuant to this
                 clause (B) shall be reduced to the extent comparable benefits
                 are actually received by Employee (and Employee's dependents)
                 during the 36-month period following Employee's termination,
                 and any such benefits actually received by Employee shall be
                 reported to the Company (To the extent coverage and/or
                 benefits received under a self-insured health plan of the
                 Company are taxable to Employee, the Company shall make
                 Employee "whole" on a net after tax basis); (C) within 15 days
                 of the Date of Termination or, if later, the first date on
                 which such payment would not subject Employee to suit under

                                      -4-
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                 Section 16(b) of the Securities Exchange Act of 1934, if
                 applicable, the Company shall pay to Employee in cancellation
                 of all outstanding stock-based awards that were granted to
                 Employee after the Change in Control and which are not vested
                 on the Date of Termination (collectively, "Awards"), a lump
                 sum amount in cash equal to the sum of the value (with respect
                 to an option or stock appreciation right, the "spread"; and
                 with respect to restricted stock or phantom stock, the value
                 of an unrestricted share) of all such nonvested Awards,
                 calculated, where applicable, as if all corporate performance
                 goals had been achieved (thus warranting full value of the
                 Award); and (D) the Company shall provide to Employee
                 outplacement services by a nationally recognized firm.

                          (ii)    Notwithstanding the foregoing provisions of
                 this Section 7, in the event Employee is terminated because of
                 Misconduct, the Company shall have no compensation obligations
                 pursuant to this Agreement after the Date of Termination.  As
                 used herein, "Misconduct" means (a) the willful and continued
                 failure by Employee to substantially perform his duties with
                 the Company (other than any such failure resulting from
                 Employee's incapacity due to physical or mental illness or any
                 such actual or anticipated failure after the issuance of a
                 Notice of Termination by Employee for Good Reason), after a
                 written demand for substantial performance is delivered to
                 Employee by the Board, which demand specifically identifies
                 the manner in which the Board believes that Employee has not
                 substantially performed his duties, or (b) the willful
                 engaging by Employee in conduct which is demonstrably and
                 materially injurious to the Company, monetarily or otherwise.
                 For purposes hereof, no act, or failure to act, on Employee's
                 part shall be deemed "willful" unless done, or omitted to be
                 done, by Employee not in good faith and without reasonable
                 belief that Employee's action or omission was in the best
                 interest of the Company.  Notwithstanding the foregoing,
                 Employee shall not be deemed to have been terminated for
                 Misconduct unless and until there shall have been delivered to
                 Employee a copy of a resolution duly adopted by the
                 affirmative vote of not less than three-quarters of the entire
                 membership of the Board at a meeting of the Board called and
                 held for such purpose (after reasonable notice to Employee and
                 an opportunity for Employee, together with Employee's counsel,
                 to be heard before the Board), finding that in the good faith
                 opinion of the Board Employee was guilty of conduct set forth
                 above and specifying the particulars thereof in detail.

         (d)     Disability.

                          (i)     If Employee shall have been absent from the
                 full-time performance of Employee's duties with the Company
                 for six consecutive months as a result of Employee's
                 incapacity due to physical or mental illness, as determined by
                 Employee's physician, and within 30 days after written Notice
                 of Termination is given by the Company Employee shall not have
                 returned to the full-time performance of Employee's duties,
                 Employee's employment may be terminated by the Company

                                      -5-
<PAGE>   
                 for "Disability" and Employee shall not be entitled to further
                 compensation pursuant to this Agreement.

                          (ii)    If Employee fails during any period during
                 the Term to perform Employee's full-time duties with the
                 Company as a result of incapacity due to physical or mental
                 illness, as determined by Employee's physician, Employee shall
                 continue to receive his Base Compensation, together with all
                 compensation payable to Employee under the Company's Long Term
                 Disability Plan or other similar plan during such period until
                 this Agreement is terminated.

                 (e)      Resignation for Good Reason.  In the event of a
         Change in Control, Employee shall be entitled to terminate his
         employment for Good Reason as defined herein.  If Employee terminates
         his employment for Good Reason, Employee shall be entitled to the
         compensation and benefits provided in Paragraph 7(c)(i) hereof.  "Good
         Reason" shall mean (1) the material breach of any of the Company's
         obligations under this Agreement without Employee's express written
         consent or (2) the occurrence of any of the following circumstances
         without Employee's express written consent unless such breach or
         circumstances are fully corrected prior to the Date of Termination
         specified in the Notice of Termination pursuant to Subsections 7(e)
         and 7(f), respectively, given in respect thereof:

                          (i)     the assignment to Employee of any duties
                 inconsistent with the position in the Company that Employee
                 held immediately prior to the Change in Control, or a
                 significant adverse alteration in the nature or status of
                 Employee's office, title, responsibilities, including
                 reporting responsibilities, or the conditions of Employee's
                 employment from those in effect immediately prior to such
                 Change in Control or a failure to reelect Employee as Chairman
                 of the Board;

                          (ii)    a reduction in Employee's Base Compensation;

                          (iii)   the failure by the Company to pay to Employee
                 any portion of Employee's current compensation or to pay to
                 Employee any portion of an installment of deferred
                 compensation under any deferred compensation program of the
                 Company within seven days of the date such compensation is
                 due;

                          (iv)    the failure by the Company to continue in
                 effect any compensation plan in which Employee participates
                 immediately prior to a Change in Control that is material to
                 Employee's total compensation unless an equitable arrangement
                 (embodied in an ongoing substitute or alternative plan) has
                 been made with respect to such plan, or the failure by the
                 Company to continue Employee's participation therein (or in
                 such substitute or alternative plan) on a basis not materially
                 less favorable, both in terms of the amount of benefits
                 provided and the level of Employee's participation relative to
                 other participants, as existed at the time of the Change in
                 Control;

                                      -6-
<PAGE>  
                          (v)     the failure by the Company to continue to
                 provide Employee with benefits substantially similar to those
                 enjoyed by Employee under any of the Company's life insurance,
                 medical, health and accident, or disability plans in which
                 Employee was participating at the time of the Change in
                 Control; the taking of any action by the Company which would
                 directly or indirectly materially reduce any of such benefits
                 or deprive Employee of any material fringe benefit enjoyed by
                 Employee at the time of the Change in Control, or the failure
                 by the Company to provide Employee with the number of paid
                 vacation days to which Employee is entitled on the basis of
                 years of service with the Company (and its predecessors) in
                 accordance with the Company's normal vacation policy in effect
                 at the time of the Change in Control;

                          (vi)    the failure of the Company to obtain a
                 satisfactory agreement from any successor to assume and agree
                 to perform this Agreement, as contemplated in Section 12
                 hereof;

                          (vii)   the relocation of the Company's principal
                 executive offices to a location outside the greater
                 Bakersfield, California area, or the Company's requiring
                 Employee to relocate anywhere other than the location of the
                 Company's principal executive offices, except for required
                 travel on the Company's business to an extent substantially
                 consistent with Employee's business travel obligations
                 immediately prior to the change in control of the Company;

                          (viii)  the amendment, modification or repeal of any
                 provision of the Certificate of Incorporation, or the Bylaws
                 of the Company which was in effect immediately prior to such
                 Change in Control, if such amendment, modification or repeal
                 would materially adversely effect Employee's right to
                 indemnification by the Company; or

                          (ix)    any purported termination of Employee's
                 employment that is not effected pursuant to a Notice of
                 Termination satisfying the requirements of Subsection (f)
                 hereof, which purported termination shall not be effective for
                 purposes of this Agreement.

                 Notwithstanding anything in this Agreement to the contrary, if
         Employee's employment with the Company terminates prior to, but within
         six months of, the date on which a Change in Control occurs and it is
         reasonably demonstrated by Employee that such termination of
         employment was (i) by the Company in connection with or anticipation
         of the Change in Control or (ii) by Employee under circumstances which
         would have constituted Good Reason if the circumstances arose on or
         after the Change in Control, then, for purposes of this Agreement,
         Employee shall be deemed to have continued employment with the Company
         until the date of the Change in Control and then terminated his
         employment on such date for Good Reason.

                                      -7-
<PAGE>   
                 Employee's right to terminate his employment pursuant to this
         subsection shall not be affected by his incapacity due to physical or
         mental illness.  Employee's continued employment shall not constitute
         consent to, or a waiver of rights with respect to, any circumstance
         constituting Good Reason hereunder.

                 (f)      Notice of Termination.  On and after a Change in
         Control, any purported termination of Employee's employment by the
         Company or by Employee shall be communicated by written Notice of
         Termination to the other party hereto in accordance with Section 10
         hereof.  For purposes of this Agreement, a "Notice of Termination"
         shall mean a notice which shall set forth in reasonable detail the
         reason for termination of Employee's employment, or in the case of
         resignation for Good Reason, said notice must specify in reasonable
         detail the basis for such resignation.  No purported termination which
         is not effected pursuant to this Section 7(f) shall be effective.

                 (g)      Date of Termination, Etc.  "Date of Termination"
         shall mean the date specified in the Notice of Termination.  Either
         party may, within 15 days after any Notice of Termination is given,
         provide notice to the other party pursuant to Section 10 hereof that a
         dispute exists concerning the termination.  Notwithstanding the
         pendency of any such dispute, the Company will continue to pay
         Employee his full compensation in effect when the notice giving rise
         to the dispute was given (including, but not limited to, Base
         Compensation) and continue Employee as a participant in all
         compensation, benefit and insurance plans in which Employee was
         participating when the notice giving rise to the dispute was given,
         until the dispute is finally resolved in accordance with Section 16
         hereof, but in no event past the expiration date of this Agreement.

                 (h)      Mitigation.  Employee shall not be required to
         mitigate the amount of any payment provided for in this Section 7 by
         seeking other employment or otherwise, nor shall the amount of any
         payment or benefit provided for in this Agreement be reduced by any
         compensation earned by Employee as a result of employment by another
         employer, self-employment earnings, by retirement benefits, by offset
         against any amount claimed to be owing by Employee to the Company, or
         otherwise, except that any severance amounts otherwise payable to
         Employee pursuant to a Company severance plan or policy for employees
         in general shall reduce the amount otherwise payable pursuant to
         Section 7(c)(i).

                 (i)      Gross-Up of Parachute Payments.

                          (1)     To provide Employee with adequate protection
                 in connection with his ongoing employment with the Company,
                 this Agreement provides Employee with various benefits in the
                 event of termination of Employee's employment with the
                 Company.  If Employee's employment is terminated following a
                 "change in control" of the Company, within the meaning of
                 Section 280G of the Internal Revenue Code of 1986, as amended
                 (the "Code"), a portion of those benefits could be
                 characterized as "excess parachute payments" within the
                 meaning of Section 280G of the Code.

                                      -8-
<PAGE>  
                 The parties hereto acknowledge that the protections set forth
                 herein are important, and it is agreed that Employee should
                 not have to bear the burden of any excise tax that might be
                 levied under Section 4999 of the Code, in the event that a
                 portion of the benefits payable to Employee pursuant to this
                 Agreement are treated as an excess parachute payment.  The
                 parties, therefore, have agreed as set forth herein.

                          (2)     Anything in this Agreement to the contrary
                 notwithstanding, if it shall be determined that any payment or
                 distribution by the Company or any other person to or for the
                 benefit of Employee (whether paid or payable or distributed or
                 distributable pursuant to the terms of this Agreement or
                 otherwise, but determined without regard to any additional
                 payments required hereunder (a "Payment") would be subject to
                 the excise tax imposed by Section 4999 of the Code or any
                 interest or penalties are incurred by Employee with respect to
                 such excise tax (such excise tax, together with any such
                 interest and penalties, are hereinafter collectively referred
                 to as the "Excise Tax"), then the Company shall pay an
                 additional payment (a "Gross-Up Payment") in an amount such
                 that after payment by Employee of all taxes (including any
                 interest or penalties imposed with respect to such taxes),
                 including, without limitation, any income taxes (and any
                 interest and penalties imposed with respect thereto) and
                 Excise Tax imposed upon the Gross-Up Payment, Employee retains
                 an amount of the Gross-Up Payment equal to the Excise Tax
                 imposed upon the Payments.

                          (3)     Subject to the provisions of subparagraph (4)
                 below, all determinations required to be made hereunder,
                 including whether and when a Gross-Up Payment is required and
                 the amount of such Gross-Up Payment and the assumptions to be
                 utilized in arriving at such determination, shall be made by
                 an independent public accounting firm with a national
                 reputation that is selected by Employee (the "Accounting
                 Firm") which shall provide detailed supporting calculations
                 both to the Company and to Employee within 15 business days
                 after the receipt of notice from Employee that there has been
                 a Payment, or such earlier time as is requested by the
                 Company.  In the event that the Accounting Firm is serving as
                 accountant or auditor for the individual, entity or group
                 effecting the change in control of the Company, Employee shall
                 appoint another nationally recognized accounting firm to make
                 the determinations required hereunder (which accounting firm
                 shall then be referred to as the Accounting Firm hereunder).
                 All fees and expenses of the Accounting Firm shall be borne
                 solely by the Company.  (The Company shall indemnify and hold
                 harmless Employee, on an after-tax basis, for any Excise Tax
                 or income tax (including interest and penalties with respect
                 thereto) imposed on Employee as a result of such payment of
                 fees and expenses.)  Any Gross-Up Payment, as determined
                 pursuant hereto, shall be paid by the Company to Employee
                 within five days of the receipt of the Accounting Firm's
                 determination.  If the Accounting Firm determines that no
                 Excise Tax is payable by Employee, it shall furnish Employee
                 and the Company with a written opinion that failure to report

                                      -9-
<PAGE>   
                 the Excise Tax on Employee's applicable federal income tax
                 return would not result in the imposition of a negligence or
                 similar penalty.  Any determination by the Accounting Firm
                 shall be binding upon the Company and Employee.  As a result
                 of uncertainty in the application of Section 4999 of the Code
                 at the time of the initial determination by the Accounting
                 Firm hereunder, it is possible that Gross-Up Payments may not
                 have been made by the Company which should have been made
                 ("Underpayment"), consistent with the calculations required to
                 be made hereunder.  If the Company exhausts its remedies
                 pursuant to subparagraph (4) below and Employee thereafter is
                 required to make a payment of any Excise Tax, the Accounting
                 Firm shall determine the amount of the Underpayment that has
                 occurred and any such Underpayment shall be promptly paid by
                 the Company to or for the benefit of Employee.

                          (4)     Employee shall notify the Company in writing
                 of any claim (including any threatened tax lien related to or
                 based upon any such claim) by the Internal Revenue Service
                 that, if successful, would require the payment by the Company
                 of the Gross-Up Payment.  Such notification shall be given as
                 soon as practicable but no later than 10 business days after
                 Employee is informed in writing of such claim (or threatened
                 lien) and shall apprise the Company of the nature of such
                 claim and the date on which such claim is requested to be
                 paid.  Employee shall not pay such claim prior to the
                 expiration of the 30-day period following the date on which
                 Employee gives such notice to the Company (or such shorter
                 period ending on the date that any payment of taxes with
                 respect to such claim is due or such tax lien would be
                 imposed).  If the Company notifies Employee in writing prior
                 to the expiration of such period that it desires to contest
                 such claim (or threatened lien), Employee shall:

                                  (a)      give the Company any information
                          reasonably requested by the Company relating to such
                          claim (or threatened lien);

                                  (b)      take such action in connection with
                          contesting such claim (or threatened lien) as the
                          Company shall reasonably request in writing from time
                          to time, including, without limitation, accepting
                          legal representation with respect to such claim by an
                          attorney reasonably selected by the Company;

                                  (c)      cooperate with the Company in good
                          faith in order effectively to contest such claim (or
                          threatened lien); and

                                  (d)      permit the Company to participate in
                          any proceedings relating to such claim (or threatened
                          lien);

                 provided, however, that the Company shall bear and pay
                 directly all costs and expenses (including additional interest
                 and penalties) incurred in connection with

                                      -10-
<PAGE>   
                 such contest and shall indemnify and hold Employee harmless,
                 on an after-tax basis, for any Excise Tax or income tax
                 (including interest and penalties with respect thereto)
                 imposed as a result of such representation and payment of
                 costs and expenses.  Without limitation on the foregoing
                 provisions of this subparagraph (4), the Company shall control
                 all proceedings taken in connection with such contest and, at
                 its sole option, may pursue or forgo any and all
                 administrative appeals, proceedings, hearings and conferences
                 with the taxing authority in respect of such claim and may, at
                 its sole option, either direct Employee to pay the tax claimed
                 and sue for a refund or contest the claim in any permissible
                 manner, and Employee agrees to prosecute such contest to a
                 determination before any administrative tribunal, in a court
                 of initial jurisdiction and in one or more appellate courts,
                 as Employee shall determine (but in no event shall the Company
                 permit or direct Employee to allow a tax lien to be imposed on
                 Employee's property); provided, further, that if the Company
                 directs Employee to pay such claim and sue for a refund, the
                 Company shall advance the amount of such payment to Employee,
                 on an interest-free basis, and shall indemnify and hold
                 Employee harmless on an after-tax basis, from any Excise Tax
                 or income tax (including interest or penalties with respect
                 thereto) imposed with respect to such advance or with respect
                 to any imputed income with respect to such advance; and
                 further, provided that any extension of the statute of
                 limitations relating to payment of taxes for the taxable year
                 of Employee with respect to which such contested amount is
                 claimed to be due is limited solely to such contested amount.
                 In addition, the Company's control of the contest shall be
                 limited to issues with respect to which a Gross-Up Payment
                 would be payable hereunder and Employee shall be entitled to
                 settle or contest, as the case may be, any other issue raised
                 by the Internal Revenue Service or any other taxing authority.

                          (5)     If, after the receipt by Employee of an
                 amount advanced by the Company pursuant to subparagraph (4),
                 Employee becomes entitled to receive any refund with respect
                 to such claim, Employee shall (subject to the Company's
                 complying with the requirements of subparagraph (4) above)
                 promptly pay to the Company the amount of such refund
                 (together with any interest paid or credited thereon after
                 taxes applicable thereto).  If after the receipt by Employee
                 of an amount advanced by the Company pursuant to subparagraph
                 (4) above, a determination is made that Employee shall not be
                 entitled to any refund with respect to such claim and the
                 Company does not notify Employee in writing of its intent to
                 contest such denial of refund prior to the expiration of 30
                 days after such determination, then such advance shall be
                 forgiven and shall not be required to be repaid and the amount
                 of such advance shall offset, to the extent thereof, the
                 amount of Gross-Up Payment required to be paid.

                          (6)     The Company hereby acknowledges that, as a
                 consequence of this full parachute tax gross-up to Employee
                 under this Agreement, any provision in a Company plan or
                 program that provides for a parachute payment, "cut-back" to
                 2.99,

                                      -11-
<PAGE>   
                 if such "cut-back" would result in the employee being in a
                 better net after-tax position, shall be inapplicable to
                 Employee.

         8.      Non-exclusivity of Rights.  Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
affiliated companies and for which Employee may qualify, nor shall anything
herein limit or otherwise adversely affect such rights as Employee may have
under any stock option or other agreements with the Company or any of its
affiliated companies.

         9.      Assignability.  The obligations of Employee hereunder are
personal and may not be assigned or delegated by him or transferred in any
manner whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer.  The Company shall have the right to assign this
Agreement and to delegate all rights, duties and obligations hereunder, either
in whole or in part, to any parent, affiliate, successor or subsidiary
organization or company of the Company, so long as the obligations of the
Company under this Agreement remain the obligations of the Company.

         10.     Notice.  For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the Company at its principal office address, directed to the attention of the
Board with a copy to the Secretary of the Company, and to Employee at
Employee's residence address on the records of the Company or to such other
address as either party may have furnished to the other in writing in
accordance herewith except that notice of change of address shall be effective
only upon receipt.

         11.     Validity.  The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

         12.     Successors; Binding Agreement.

         (a)     The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.  Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Employee to compensation from the Company in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.  As used herein, the term "Company" shall
include any successor to its business and/or assets as aforesaid

                                      -12-
<PAGE>   
which executes and delivers the Agreement provided for in this Section 12 or
which otherwise becomes bound by all terms and provisions of this Agreement by
operation of law.

         (b)     This Agreement and all rights of Employee hereunder shall
inure to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If Employee should die while any amounts would be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Employee's devisee, legatee, or other designee or, if there be no
such designee, to Employee's estate.

         13.     Indemnification.  In consideration of the premises and of the
mutual agreements set forth in this Agreement, the parties hereto further agree
as follows:

                 1.       The Company shall pay on behalf of Employee and
         Employee's executors, administrators or assigns, any amount which
         Employee is or becomes legally obligated to pay as a result of any
         claim or claims made against Employee by reason of the fact that
         Employee served as an employee, director and/or officer of the Company
         or because of any actual or alleged breach of duty, neglect, error,
         misstatement, misleading statement, omission or other act done, or
         suffered or wrongfully attempted by Employee in Employee's capacity as
         an employee, Director and/or Officer of the Company.  The payments
         that the Company will be obligated to make hereunder shall include
         (without limitation) damages, judgments, settlements, costs and
         expenses of investigation, costs and expenses of defense of legal
         actions, claims and proceedings and appeals therefrom, and costs of
         attachments and similar bonds; provided, however, that the Company
         shall not be obligated to pay fines or other obligations or fees
         imposed by law or otherwise that it is prohibited by applicable law
         from paying as indemnity or for any other reason.

                 2.       Costs and expenses (including, without limitation,
         attorneys' fees) incurred by Employee in defending or investigating
         any action, suit, proceeding or claim shall be paid by the Company in
         advance of the final disposition of such matter upon receipt of a
         written undertaking by or on behalf of Employee to repay any such
         amounts if it is ultimately determined that Employee is not entitled
         to indemnification under the terms of this Agreement.

                 3.       If a claim under this Agreement is not paid by or on
         behalf of the Company within ninety days after a written claim has
         been received by the Company, Employee may at any time thereafter
         bring suit against the Company to recover the unpaid amount of the
         claim and, if successful in whole or in part, Employee shall also be
         entitled to be paid the expense of prosecuting such claim.

                 4.       In the event of payment under this Agreement, the
         Company shall be subrogated to the extent of such payment to all of
         the rights of recovery of Employee, who shall execute all papers
         required and shall do everything that may be necessary to secure such

                                      -13-
<PAGE>   
         rights, including the execution of such documents necessary to
         enable the Company effectively to bring suit to enforce such rights.

                 5.       The Company shall not be liable under this Agreement
         to make any payment in connection with any claim made against
         Employee:

                          (a)     for which payment is actually made to
                 Employee under an insurance policy maintained by the Company,
                 except in respect of any excess beyond the amount of payment
                 under such insurance;

                          (b)     for which Employee is indemnified by the
                 Company otherwise than pursuant to this Agreement;

                          (c)     based upon or attributable to Employee
                 gaining in fact any personal profit or advantage to which
                 Employee was not legally entitled;

                          (d)     for an accounting of profits made from the
                 purchase or sale by Employee of securities of the Company
                 within the meaning of Section 16(b) of the Securities Exchange
                 Act of 1934 and amendments thereto; or

                          (e)     brought about or contributed to by the
                 dishonesty of Employee; provided, however, that
                 notwithstanding the foregoing, Employee shall be protected
                 under this Agreement as to any claims upon which suit may be
                 brought alleging dishonesty on the part of Employee, unless a
                 judgment or other final adjudication thereof adverse to
                 Employee shall establish that Employee committed acts of
                 active and deliberate dishonesty with actual dishonest purpose
                 and intent, which acts were material to the cause of action so
                 adjudicated.

                 6.       Employee, as a condition precedent to his right to be
         indemnified under this Agreement, shall give to the Company notice in
         writing as soon as practicable of any claim made against him for which
         indemnity will or could be sought under this Agreement.  Notice to the
         Company shall be directed to the Company, 5201 Truxtun, Suite 100,
         Bakersfield, California 93309, Attention: Secretary (or such other
         address as the Company shall designate in writing to Employee).
         Notice shall be deemed received if sent by prepaid mail properly
         addressed, the date of such notice being the date postmarked.  In
         addition, Employee shall give the Company such information and
         cooperation as it may reasonably require and as shall be within
         Employee's power.

                 7.       Nothing herein shall be deemed to diminish or
         otherwise restrict Employee's right to indemnification under any
         provision of the Certificate of Incorporation or Bylaws of the Company
         or under Delaware law.

                                      -14-
<PAGE>   
         14.     Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Employee and such officer as may be
specifically authorized by the Board.  No waiver by either party hereto at any
time of any breach by the other party hereto of, or in compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.  This Agreement is an integration
of the parties agreement; no agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.  The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware.

         15.     Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         16.     Arbitration.  Employee shall be permitted (but not required)
to elect that any dispute or controversy arising under or in connection with
this Agreement be settled by arbitration in Los Angeles, California, in
accordance with the rules of the American Arbitration Association then in
effect.  Judgment may be entered on the arbitrator's award in any court having
jurisdiction.  All legal fees and costs incurred by Employee in connection with
the resolution of any dispute or controversy under or in connection with this
Agreement shall be paid by the Company as bills for such services are presented
by Employee to the Company.

         17.     Prior Agreements.  This Agreement shall replace in full any
prior agreement (written or oral) between SFER and Employee concerning
employment and benefits on or following a Change in Control and any such prior
agreement(s) are hereby terminated as of the effective date of this Agreement.

                                      -15-
<PAGE>   
         IN WITNESS WHEREOF, the parties have executed this Agreement on
___________, 1996, effective for all purposes as provided above.

                                        MONTEREY RESOURCES, INC.

                                        By: /s/ D. B. KILPATRICK
                                        Name:   D. B. Kilpatrick
                                        Title:  President

                                        EMPLOYEE
                                            /s/  R. GRAHAM WHALING
                                                 R. Graham Whaling

                                      -16-