EXHIBIT 10.5

               REGISTRATION RIGHTS AND INDEMNIFICATION AGREEMENT

                 This Registration Rights and Indemnification Agreement, dated
as of November 19, 1996 (this "Agreement"), is entered into by and between
Monterey Resources, Inc., a Delaware corporation (the "Company"), and Santa Fe
Energy Resources, Inc., a Delaware corporation ("Santa Fe").

                              W I T N E S S E T H

                 WHEREAS, the Company is a wholly owned subsidiary of Santa
Fe;

                 WHEREAS, the Company intends to issue shares of its Common
Stock, par value $0.01 per share ("Common Stock"), in a public offering
pursuant to a Registration Statement on Form S-1 (No. 333-12201), as amended
(the "Offering") and Santa Fe intends, after the Offering and subject to
certain conditions, to distribute its remaining interest in the Company to its
stockholders; and

                 WHEREAS, the Company has agreed to grant to Santa Fe certain
registration rights with respect to the Common Stock now owned by or issued to
Santa Fe during the term of this Agreement.

                 NOW, THEREFORE, the parties hereto agree as follows:

                 1.       Certain Definitions.   As used in this Agreement, the
following terms shall have the meanings set forth below:

                 (a)      "Commercially Reasonable Efforts", when used with
         respect to an obligation to be performed or term or provision to be
         observed hereunder, shall mean such efforts as a prudent person
         seeking the benefits of such performance or action would make, use,
         apply or exercise to preserve, protect or advance its rights or
         interests, provided that such efforts do not require such person to
         incur a material financial cost or a substantial risk of material
         liability unless such cost or liability (i) would customarily be
         incurred in the course of performance or observance of the relevant
         obligation, term, or provision, (ii) is caused by or results from the
         wrongful act or negligence of the person whose performance or
         observance is required hereunder or (iii) is not excessive or
         unreasonable in view of the rights or interests to be preserved,
         protected or advanced.  Such efforts may include, without limitation,
         (A) the expenditure of such funds and retention by such person of such
         accountants, attorneys or other experts or advisors as may be
         necessary or 
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         appropriate to effect the relevant action, (B) the undertaking of any
         special audit or internal investigation that may be necessary or
         appropriate to effect the relevant action and (C) the commencement,
         termination or settlement of any action, suit or proceeding involving
         such person to the extent necessary or appropriate to effect the
         relevant action.

                 (b)      "Commission" shall mean the Securities and Exchange
         Commission or any other federal agency at the time administering the
         Securities Act.

                 (c)      "Common Stock" shall have the meaning set forth in the
         recitals of this Agreement.

                 (d)      "Company" shall have the meaning set forth in the
         initial paragraph of this Agreement.

                 (e)      "Exchange Act" shall mean the Securities Exchange Act
         of 1934, as amended, or any similar successor federal statute and the
         rules and regulations thereunder, all as the same shall be in effect
         from time to time.

                 (f)      "Holder" shall mean Santa Fe and any holder of
         Registrable Securities to whom the registration rights conferred by
         this Agreement have been transferred in compliance with Section 9
         hereof.

                 (g)      "Initiating Holders" shall mean any Holder or Holders
         who in the aggregate hold not less than 50% of the outstanding
         Registrable Securities.

                 (h)      "Liabilities" shall mean all debts, liabilities and
         obligations, actual or contingent, liquidated or unliquidated, accrued
         or unaccrued, known or unknown, whenever and however arising,
         including all costs and expenses (including fees and disbursements of
         counsel) relating thereto, and including without limitation debts,
         liabilities and obligations arising in connection with any actual or
         threatened claim, action, suit, arbitration, inquiry, proceeding or
         investigation by or before any court, governmental or other regulatory
         or administrative agency or commission or any arbitration panel.

                 (i)     The terms "register," "registered" and "registration"
         shall refer to a registration effected by preparing and filing a
         registration statement in compliance with the Securities Act and
         applicable rules and regulations thereunder, and the declaration or
         ordering of the effectiveness of such registration statement.

                 (j)     "Registrable Securities" shall mean (i) the shares of
         Common Stock issued to Santa Fe, and (ii) any Common Stock issued as a
         dividend or other distribution with respect to or in exchange for or
         in replacement of such shares, provided, however, that Registrable
         Securities shall not include any shares of Common Stock which have
         previously been registered under the Securities Act, which have been
         sold or otherwise transferred under Rule 144 or which may be sold
         without restriction pursuant to Rule 144(k).

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<PAGE>   
                 (k)     "Registration Expenses" shall mean all expenses
         incurred in effecting any registration pursuant to this Agreement,
         including, without limitation, all registration, qualification, and
         filing fees, printing expenses, escrow fees, fees and disbursements of
         counsel for the Company, blue sky fees and expenses, and expenses of
         any regular or special audits incident to or required by any such
         registration, but shall not include Selling Expenses (and shall not
         include the compensation of regular employees of the Company, which
         shall be paid in any event by the Company).

                 (l)     "Rule 144" shall mean Rule 144 as promulgated by the
         Commission under the Securities Act, as such Rule may be amended from
         time to time, or any similar successor rule that may be promulgated by
         the Commission.

                 (m)     "Rule 145" shall mean Rule 145 as promulgated by the
         Commission under the Securities Act, as such Rule may be amended from
         time to time, or any similar successor rule that may be promulgated by
         the Commission.

                 (n)     "Securities Act" shall mean the Securities Act of 1933,
         as amended, or any similar successor federal statute and the rules and
         regulations thereunder, all as the same shall be in effect from time
         to time.

                 (o)     "Selling Expenses" shall mean all underwriting
         discounts and selling commissions applicable to the sale of
         Registrable Securities and all fees and disbursements of counsel for
         any Holder.

                 (p)     "Taxes" shall mean any and all taxes (including
         interest, penalties and additions to tax), fees and charges (including
         sales, use, excise, value added, personal property and other taxes)
         imposed by any federal, state or local or government tax authority in
         the United States of America or by any foreign government or taxing
         authority.

                 2.       Demand Registration.

                 2.1      REQUEST FOR REGISTRATION.  (a) If the Company shall
receive from Initiating Holders, at any time or times not earlier than 180 days
after the date of this Agreement, a written request that the Company effect any
registration with respect to all or a part of the Registrable Securities,
representing the lesser of (i) 10% of the Company's then-outstanding shares of
Common Stock and (ii) the number of Registrable Securities held by such
Initiating Holders at the time of such request, but in no event fewer than 
100,000 shares (subject to appropriate adjustment for any stock dividend, stock 
split, combination, recapitalization, merger, consolidation, reorganization or 
other occurrence affect the number of Registrable Securities then outstanding) 
the Company will:

                 (i)      promptly give written notice of the proposed
         registration to all other  Holders; and

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                 (ii)     as soon as practicable, use Commercially Reasonable
         Efforts to effect such registration (including, without limitation,
         filing a registration statement and any appropriate pre-effective or
         post-effective amendments, appropriate qualifications under applicable
         blue sky or other state securities laws, and appropriate compliance
         with the Securities Act) so as to permit or facilitate the sale and
         distribution of all or such portion of the Registrable Securities as
         are specified in such request, together with all or such portion of the
         Registrable Securities of any Holder or Holders joining in such request
         as are specified in a written request received by the Company within 20
         days after such written notice from the Company is effective.

         Each request for registration under this Section 2 shall specify the
amount of Registrable Securities proposed to be registered.

                 (b)      The Company shall not be obligated to effect, or to
take any action to effect, any such registration pursuant to this  Section 2:


                 (i)      in any particular jurisdiction in which the Company
         would be required to execute a general consent to service of process
         in effecting such registration, qualification, or compliance, unless
         the Company is already subject to service in such jurisdiction and
         except as may be required by the Securities Act;

                 (ii)     within 180 days after the consummation of the
         Offering;

                 (iii)    (A) prior to the expiration of a period of six months
         after the Company has initiated any registration pursuant to this
         Section 2.1, provided that a registration initiated pursuant to this
         Section 2.1 and subsequently withdrawn by the Holders registering
         shares therein shall not be counted as a requested registration
         pursuant to this clause (ii) if (X) such withdrawal is based upon
         material adverse information relating to the Company that is not known
         by or available (upon request from the Company or otherwise) to the
         Initiating Holders at the time of their request for registration
         pursuant to this Section 2.1 or (Y) the Holders bear the Registration
         Expenses for such registration;

                 (iv)     during the period starting with the date 60 days
         prior to the Company's good faith estimate of the date of filing of,
         and ending on a date 180 days after the effective date of, a
         Company-initiated registration, provided that the Company is in good
         faith continuing to use all Commercially Reasonable Efforts to cause
         such registration statement to become effective;

                 (v)      if the Initiating Holders do not request that such
         offering be firmly underwritten by underwriters selected by a majority
         in interest of the Initiating Holders (subject to the consent of the
         Company, which consent will not be unreasonably withheld);

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<PAGE>   
                 (vi)     if the Company and the Initiating Holders are unable
         to obtain the commitment of the underwriters described in clause (iv)
         above to firmly underwrite the offer;

                 (vii)    if, within 14 days after its receipt of a written
         request to effect such registration, the Company causes to be delivered
         to the Initiating Holders an opinion of Andrews & Kurth L.L.P. or other
         counsel reasonably acceptable to the Initiating Holders to the effect
         that the proposed disposition of Registrable Securities by the
         Initiating Holders will not require registration or qualification under
         the Securities Act, it being specifically understood and agreed that
         the Initiating Holders will promptly furnish to the Company and such
         counsel all information such counsel may reasonably request in order to
         enable such counsel to determine whether it would be able to render
         such opinion; or

                 (viii)   if the Company has effected three such registrations
         pursuant to subparagraph 2.1(a) and such registrations have been
         declared or ordered effective.

                 2.2     RIGHT TO DEFER REGISTRATION.  Subject to the
provisions of Section 2.1(b), the Company shall use its Commercially Reasonable
Efforts to file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable after receipt of the request
or requests of the Initiating Holders; provided, however, that if (i) in the
good faith judgment of the Board of Directors of the Company, such registration
would be detrimental to the Company and the Board of Directors of the Company
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
detrimental to the Company for such registration statement to be filed in the
near future and that it is, therefore, essential to defer the filing of such
registration statement, then the Company shall have the right to defer such
filing for the period during which such filing would be detrimental,
provided that (except as provided in Section 2.1(b)(iii) above) the Company may
not defer the filing for a period of more than 180 days after receipt of the
request of the Initiating Holders, and, provided further, that the Company
shall not defer its obligation in this manner more than once in any
twelve-month period.

                 2.3      UNDERWRITING.  (a) The right of any Holder to
registration pursuant to Section 2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.  All
Holders proposing to distribute their securities through such underwriting
(together with the Company and other holders of securities of the Company
exercising registration rights with respect to such registration) shall enter
into an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by a majority in interest of the
Initiating Holders, subject to the consent of the Company, which consent shall
not be unreasonably withheld.

                 (b)      Notwithstanding any other provision of this
Section 2, if the representative of the underwriters advises the Initiating
Holders in writing that marketing factors require a limitation on the number of
shares to be underwritten, the number of shares to be included in the

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<PAGE>   
underwriting or registration shall be allocated as set forth in Section 10
hereof. If a person who has requested inclusion in such registration as provided
above does not agree to the terms of any such underwriting, such person shall be
excluded therefrom by written notice from the Company, the underwriter or the
Initiating Holders. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall also be withdrawn from such registration.
If shares are so withdrawn from the registration and if the number of shares to
be included in such registration was previously reduced as a result of marketing
factors pursuant to this Section 2.3, then the Company shall offer to all
Holders who have retained rights to include securities in the registration the
right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be
allocated among such Holders requesting additional inclusion in accordance with
Section 10 hereof.

                 3.       Piggyback Registration.

                 3.1      NOTICE OF REGISTRATION.  If the Company shall
determine to register any of its securities either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights (other than pursuant to Section 2 hereof), other than a
registration relating solely to employee benefit plans, a registration relating
solely to a Rule 145 transaction, a registration relating to a business
combination or a registration on any registration form that does not permit
secondary sales, the Company will:

                 (a)      promptly give to each Holder written notice thereof;
         and

                 (b)      use Commercially Reasonable Efforts to include in
         such registration (and any related qualification under blue sky laws
         or other compliance), except as set forth in Section 3.2 below, and in
         any underwriting involved therein, all the Registrable Securities
         specified in a written request or requests, made by any Holder within
         20 days after the written notice from the Company described in clause
         (i) above is given.  Such written request may specify all or a part of
         a Holder's Registrable Securities.


                 3.2      RIGHT TO TERMINATE REGISTRATION.  The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 3 prior to the effectiveness of such registration whether or not
any Holder has elected to include Registrable Securities in such registration.

                 3.3      UNDERWRITING.  (a) If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 3.1 above.  In such event, the right of any
Holder to registration pursuant to this Section 3 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein.  All Holders proposing to distribute their securities through such
underwriting (together with the Company and such other holders of securities of
the Company exercising registration rights with respect to such registration)
shall enter into an 

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<PAGE>   
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company or the security holders
initiating such registration, as the case may be.

                 (b)      Notwithstanding any other provision of this Section 3,
if the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting. The
Company shall so advise all holders of securities requesting registration, and
the amount of securities that are entitled to be included in the registration
and underwriting shall be allocated first to the Company for securities being
sold for its own account and thereafter as set forth in Section 10 hereof. If
any person does not agree to the terms of any such underwriting, such person
shall be excluded therefrom by written notice from the Company or the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.

                 4.       Expenses of Registration.  All Registration Expenses
in any registration, qualification or compliance pursuant to Section 2 and
Section 3 shall be borne by the Company.  All Selling Expenses relating to
securities so registered shall be borne by the holders of such securities pro
rata on the basis of the number of shares of securities so registered on their
behalf.

                 5.       Registration Procedures.  In the case of each
registration effected by the Company pursuant to this Agreement, the Company
will keep each Holder advised in writing as to the initiation of each
registration and as to the completion thereof.  At its expense (except, as
otherwise provided herein), the Company will use Commercially Reasonable
Efforts to:

                 (a)      keep such registration effective for a period of 120
         days or until the Holder or Holders have completed the distribution
         described in the registration statement relating thereto, whichever
         first occurs; provided, however, that such 120-day period shall be
         extended for a period of time equal to the period after the
         effectiveness of such registration that the Holder refrains from
         selling any securities included in such registration at the request of
         an underwriter of Common Stock (or other securities) of the Company;

                 (b)      prepare and file with the Commission such amendments
         and supplements to such registration statement and the prospectus used
         in connection with such registration statement as may be necessary to
         comply with the provisions of the Securities Act with respect to the
         disposition of all securities covered by such registration statement;

                 (c)      furnish such number of prospectuses and other
         documents incident thereto, including any amendment of or supplement
         to the prospectus, as a Holder from time to time may reasonably
         request;

                 (d)      notify each seller of Registrable Securities covered
         by such registration statement at any time when a prospectus relating
         thereto is required to be delivered under the 

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<PAGE>   
         Securities Act of the happening of any event as a result of which the
         prospectus included in such registration statement, as then in effect,
         includes an untrue statement of a material fact or omits to state a
         material fact required to be stated therein or necessary to make the
         statements therein, in the light of the circumstances then existing,
         not misleading, and at the request of any such seller, prepare and
         furnish to such seller a reasonable number of copies of a supplement to
         or an amendment of such prospectus as may be necessary so that, as
         thereafter delivered to the purchasers of such shares, such prospectus
         shall not include an untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary to
         make the statements therein, in the light of the circumstances then
         existing, not misleading;

                 (e)      cause all such Registrable Securities registered
         pursuant hereunder to be listed on each securities exchange on which
         similar securities issued by the Company are then listed;

                 (f)      provide a transfer agent and registrar for all
         Registrable Securities registered pursuant to such registration
         statement and a CUSIP number for all such Registrable Securities, in
         each case not later than the effective date of such registration; and

                 (g)      comply with all applicable rules and regulations of
         the Commission, and make available to its security holders, as soon as
         reasonably practicable, an earnings statement covering the period of
         at least 12 months, but not more than 18 months, beginning with the
         first month after the effective date of the Registration Statement,
         which earnings statement shall satisfy the provisions of Section 11(a)
         of the Securities Act.

In connection with any underwritten offering pursuant to a registration
statement filed pursuant to Section 2 hereof, the Company will enter into an
underwriting agreement reasonably necessary to effect the offer and sale of
Common Stock, provided such underwriting agreement contains customary
underwriting provisions.

                 6.       Indemnification.

                 (a)      The Company will, with respect to any registration,
         qualification or compliance undertaken pursuant to the rights granted
         in this Agreement, indemnify each Holder, each of its officers,
         directors and partners, and each person controlling such Holder within
         the meaning of Section 15 of the Securities Act, if Registrable
         Securities of such Holder are included in the securities with respect
         to which registration, qualification, or compliance has been effected
         pursuant to this Agreement, against all expenses, claims, losses,
         damages, and liabilities (or actions, proceedings, or settlements in
         respect thereof) arising out of or based on any untrue statement (or
         alleged untrue statement) of a material fact contained in any
         prospectus, offering circular, or other document filed by the Company
         (including any related registration statement, notification, or the
         like) incident to any such registration, qualification, or compliance,
         or based on any omission (or alleged omission) to state therein a
         material fact required to be stated therein or necessary to make 

                                      -9-
<PAGE>   
         the statements therein not misleading, or any violation by the Company
         of the Securities Act or any rule or regulation thereunder applicable
         to the Company and relating to action or inaction required by the
         Company in connection with any such registration, qualification, or
         compliance, and will reimburse each such Holder, each of its officers,
         directors, partners and each person controlling such Holder, for any
         legal and any other expenses reasonably incurred in connection with
         investigating and defending or settling any such claim, loss, damage,
         liability, or action, provided that the Company will not be liable in
         any such case to the extent that any such claim, loss, damage,
         liability, or expense arises out of or is based on any untrue statement
         or omission based upon written information furnished to the Company by
         such Holder and stated to be specifically for use therein. It is agreed
         that the indemnity agreement contained in this Section 6(a) shall not
         apply to amounts paid in settlement of any such loss, claim, damage,
         liability, or action if such settlement is effected without the consent
         of the Company (which consent has not been unreasonably withheld).

                 (b)      Each Holder (an "Indemnifying Holder") will, if
         Registrable Securities held by the Indemnifying Holder are included in
         the securities as to which such registration, qualification, or
         compliance is being effected, indemnify the Company, each of its
         directors, officers, partners, each person who controls the Company
         within the meaning of Section 15 of the Securities Act, each other
         such Holder (an "Indemnified Holder"), and each of their officers,
         directors, and partners, and each person controlling such Indemnified
         Holder, against all claims, losses, damages and liabilities (or
         actions in respect thereof) arising out of or based on any untrue
         statement (or alleged untrue statement) of a material fact contained
         in any such registration statement, prospectus, offering circular, or
         other document, or any omission (or alleged omission) to state therein
         a material fact required to be stated therein or necessary to make the
         statements therein not misleading, and will reimburse the Company and
         such Indemnified Holders, directors, officers, partners or control
         persons for any legal or any other expenses reasonably incurred in
         connection with investigating or defending any such claim, loss,
         damage, liability, or action, in each case to the extent, but only to
         the extent, that such untrue statement (or alleged untrue statement)
         or omission (or alleged omission) is made in such registration
         statement, prospectus, offering circular, or other document in
         reliance upon and in conformity with written information furnished to
         the Company by the Indemnifying Holder and stated to be specifically
         for use therein; provided, however, that the obligations of the
         Indemnifying Holder hereunder shall not apply to amounts paid in
         settlement of any such claims, losses, damages, or liabilities (or
         actions in respect thereof) if such settlement is effected without the
         consent of such Holder (which consent shall not be unreasonably
         withheld); and provided further that the liability of an Indemnifying
         Holder pursuant to this Section 6(b) in connection with a registration
         shall be limited to the net proceeds from the sale of the Registrable
         Securities of such Indemnifying Holder pursuant to such registration.

                 (c)      Each party entitled to indemnification under this
         Section 6 (the "Indemnified Party") shall give notice to the party
         required to provide indemnification (the "Indemnifying Party")
         promptly after such Indemnified Party has actual knowledge of any
         claim as to which indemnity may be sought, and, except as provided in
         the following sentence, shall permit the Indemnifying Party to assume
         the defense of such claim or any litigation resulting 

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         therefrom; provided that counsel for the Indemnifying Party, who shall
         conduct the defense of such claim or any litigation resulting
         therefrom, shall be approved by the Indemnified Party (whose approval
         shall not unreasonably be withheld); provided further that the
         Indemnified Party may participate in such defense at its own expense;
         and provided further that the failure of any Indemnified Party to give
         notice as provided herein shall not relieve the Indemnifying Party of
         its obligations under this Agreement, to the extent such failure is not
         materially prejudicial. After the Indemnifying Party assumes the
         defense of such claim or litigation, the Indemnifying Party shall not
         be liable to the Indemnified Party under this Section 6 for any legal
         or other expenses subsequently incurred by such Indemnified Party in
         connection with the defense thereof, other than reasonable costs of
         investigation, unless the named parties to any such proceeding
         (including any impleaded parties) include both the Indemnified Party
         and the Indemnifying Party and representation of both parties by the
         same counsel would be inappropriate due to actual or potential
         differing interests between them. No Indemnifying Party, in the defense
         of any such claim or litigation, shall, except with the consent of each
         Indemnified Party, consent to entry of any judgment or enter into any
         settlement that does not include as an unconditional term thereof the
         giving by the claimant or plaintiff to such Indemnified Party of a
         release from all liability in respect to such claim or litigation. Each
         Indemnified Party shall furnish such information regarding itself or
         the claim in question as an Indemnifying Party may reasonably request
         in writing and as shall be reasonably required in connection with
         defense of such claim and litigation resulting therefrom.

                 (d)      If the indemnification provided for in this Section 6
         is held by a court of competent jurisdiction to be unavailable to an
         Indemnified Party with respect to any loss, liability, claim, damage,
         or expense referred to therein, then the Indemnifying Party, in lieu
         of indemnifying such Indemnified Party hereunder, shall contribute to
         the amount paid or payable by such Indemnified Party as a result of
         such loss, liability, claim, damage, or expense in such proportion as
         is appropriate to reflect the relative fault of the Indemnifying Party
         on the one hand and of the Indemnified Party on the other in
         connection with the statements or omissions that resulted in such
         loss, liability, claim, damage, or expense as well as any other
         relevant equitable considerations.  The relative fault of the
         Indemnifying Party and of the Indemnified Party shall be determined by
         reference to, among other things, whether the untrue or alleged untrue
         statement of a material fact or the omission to state a material fact
         relates to information supplied by the Indemnifying Party or by the
         Indemnified Party and the parties' relative intent, knowledge, access
         to information, and opportunity to correct or prevent such statement
         or omission.

                 (e)      Notwithstanding the foregoing, to the extent that the
         provisions on indemnification and contribution contained in the
         underwriting agreement entered into in connection with the
         underwritten public offering are in conflict with the foregoing
         provisions, the provisions in the underwriting agreement shall
         control.

                 7.       Information by Holder.   Each Holder of Registrable
Securities shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification, or compliance referred to in this Agreement.

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                 8.       Rule 144 Reporting.   With a view to making available
the benefits of certain rules and regulations of the Commission that may permit
the sale of the Restricted Securities to the public without registration, the
Company agrees to use its Commercially Reasonable Efforts to:

                 (a)      make and keep public information regarding the
         Company available as those terms are understood and defined in Rule
         144 under the Securities Act, at all times from and after 90 days
         following the effective date of the first registration under the
         Securities Act filed by the Company for an offering of its securities
         to the general public;

                 (b)      file with the Commission in a timely manner all
         reports and other documents required of the Company under the
         Securities Act and the Exchange Act at any time after it has become
         subject to such reporting requirements; and

                 (c)      so long as a Holder owns any restricted Registrable
         Securities, furnish to the Holder forthwith upon written request a
         written statement by the Company as to its compliance with the
         reporting requirements of Rule 144 (at any time from and after 90 days
         following the effective date of the first registration statement filed
         by the Company for an offering of its securities to the general
         public), and of the Securities Act and the Exchange Act (at any time
         after it has become subject to such reporting requirements), a copy of
         the most recent annual or quarterly report of the Company, and such
         other reports and documents so filed as a Holder may reasonably
         request in availing itself of any rule or regulation of the Commission
         allowing a Holder to sell any such securities without registration.

                 9.       Transfer or Assignment of Registration Rights.   The
rights to cause the Company to register securities granted to Santa Fe by the
Company under this Agreement may be transferred or assigned by Santa Fe only to
a transferee or assignee of Registrable Securities representing no less than
10% of the Company's then outstanding shares of Common Stock.  Any transfer or
assignment of the registration rights granted under this Agreement shall be
conditioned upon (i) the Company's being given written notice at the time of or
within a reasonable time after said transfer or assignment, stating the name
and address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned and
(ii) the assumption in writing by the transferee or assignee of the obligations
of a Holder under this Agreement.

                 10.      Allocation of Registration Opportunities.   In any
circumstance in which all of the Registrable Securities requested to be
included in a registration on behalf of the Holders cannot be so included as a
result of limitations of the aggregate number of shares of Registrable
Securities that may be so included, the number of shares of Registrable
Securities that may be so included shall be allocated among the Holders
requesting inclusion of shares pro rata on the basis of the number of shares of
Registrable Securities held by such Holders.  The Company shall not limit the
number of Registrable Securities to be included in a registration pursuant to
this Agreement in order to include shares held by stockholders with no
registration rights or, with respect to 

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<PAGE>   
registrations under Section 2 hereof, in order to include in such registration
securities registered for the Company's own account or securities other than
Registrable Securities.

                 11.      Delay of Registration.   No Holder shall have any
right to take any action to restrain, enjoin, or otherwise delay any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.

                 12. Termination of Registration Rights. The right of any Holder
to request registration or inclusion in any registration pursuant to Section 2
or 3 hereof shall terminate on such date as all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may immediately be
sold under Rule 144 during any 90-day period.

                 13.      Miscellaneous.

                 13.1     GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.

                 13.2     SUCCESSORS AND ASSIGNS.  Except as otherwise provided
herein, this Agreement shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

                 13.3     ENTIRE AGREEMENT.  This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof.

                 13.4     NOTICES, ETC.  All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, or otherwise delivered by hand
or by messenger, including Federal Express or similar courier services,
addressed (a) if to a Holder, to such Holder c/o Santa Fe at 1616 South Voss,
Suite 1000, Houston, Texas 77057, Attention: President, or at such other
address as such Holder shall have furnished to the Company in writing, or (b)
if to the Company, to 5201 Truxtun, Suite 100, Bakersfield, California 93309,
Attention: Chief Executive Officer, or at such other address as the Company
shall have furnished to the Holders.  Each such notice or other communication
shall for all purposes of this Agreement be treated as effective or having been
given when delivered if delivered personally, or, if sent by mail or courier,
at the earlier of its receipt or 48 hours after the same has been deposited in
a regularly maintained receptacle for the deposit of the United States mail,
addressed and mailed as aforesaid.

                 13.5     COUNTERPARTS.  This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all of the
Holders, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

                                      -13-
<PAGE>   
                 13.6     SEVERABILITY.  Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect such provision in any other jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.

                 13.7     TITLES AND SUBTITLES.  The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                 13.8     AMENDMENT.  Except as expressly provided herein, this
Agreement may be amended only upon the written consent of the Company and the
Holders of at least seventy-five percent (75%) of the Registrable Securities
then subject to this Agreement.

                                      -16-
<PAGE>   
                 IN WITNESS WHEREOF, this Agreement has been executed effective
as of the date first set forth above.


                                        MONTEREY RESOURCES, INC.

                                        By: /s/ R. GRAHAM WHALING
                                                R. Graham Whaling,
                                                Chief Executive Officer

                                        SANTA FE ENERGY RESOURCES, INC.

                                        By: /s/ JAMES L. PAYNE
                                                James L. Payne,
                                                Chief Executive Officer

                                      -17-