EXHIBIT 10.2

                        AGREEMENT FOR THE ALLOCATION OF
                 THE CONSOLIDATED FEDERAL INCOME TAX LIABILITY
                           AND STATE AND LOCAL TAXES
                            AMONG THE MEMBERS OF THE
                        SANTA FE ENERGY RESOURCES, INC.
                                AFFILIATED GROUP                              

                 This AGREEMENT, dated as of November 19, 1996, is by and
between Santa Fe Energy Resources, Inc., a Delaware corporation ("SFER") and
the members of SFER's consolidated group identified below.

                                R E C I T A L S

                 WHEREAS, Santa Fe Energy Resources, Inc. ("SFER") and its
respective subsidiaries constitute an affiliated group for federal income tax
purposes (the "SFER Group");

                 WHEREAS, the SFER Group has filed a consolidated federal
income tax return for the taxable years ending December 31, 1990, 1991, 1992,
1993, 1994 and 1995, and intends to file a consolidated federal income tax
return for subsequent years; and

                 WHEREAS, it is the desire of the parties hereto that the
federal income tax liability  of the SFER Group be allocated for all purposes
as herein provided,

                 WHEREAS, Monterey Resources, Inc. ("Monterey") and those
subsidiaries of Monterey which are signatory hereto ("Monterey Subsidiaries")
are members of a group of corporations of which SFER is the common parent and
which file certain consolidated, combined or unitary state or local tax
returns; and

                 WHEREAS, the parties desire to set forth their agreement with
regard to the sharing of the burden of taxes due with respect to such returns
effective immediately as to estimated taxes and tax returns filed for periods
including the date hereof;

                 NOW, THEREFORE, in consideration of the premises and the
mutual undertakings and covenants herein contained, the parties hereto agree as
follows:
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                            Article 1 - Definitions

                 For purposes of this Agreement:

                 1.1      "Affiliated group" means an affiliated group as
defined in section 1504(a) of the Code.

                 1.2      "Code" means the Internal Revenue Code of 1986, as
amended and in effect from time to time, or any law which may be a successor
thereto.  A reference to any section of the Code means such section as in
effect from time to time and any comparable provision of the Code or any
successor law.

                 1.3      "Consolidated return year" means a taxable year to
which this Agreement applies and for which a consolidated federal income tax
return is filed or required to be filed by the SFER Group.

                 1.4      "Consolidated tax liability" means, with respect to
any consolidated return year, the consolidated federal income tax (including
alternative minimum tax and environmental tax) liability of the SFER Group.

                 1.5      "Member" means, with respect to any consolidated
return year, an includible corporation (as defined in section 1504(b) of the
Code) in the SFER Group.

                 1.6      "Monterey Company" means Monterey and the Monterey 
Subsidiaries.

                 1.7      "Parent" means any Member that directly owns stock
that possesses more than 50 percent of the total voting power of the stock of
another Member.  If any Member other than SFER has no Parent as defined in the
previous sentence (e.g., if all of the stock of such Member is owned in equal
shares by two other Members), the Chief Financial Officer of SFER shall
designate a Parent for such Member.

                 1.8      "Regulation" or "Treas. Reg." means a regulation in
effect from time to time under the Code.  A reference to any section of the
Regulations means such section as in effect from time to time and any
comparable regulation under the Code or any successor law.

                 1.9      "Separate return tax liability" means the tax
liability described in Article 2.1.

                 1.10     "Separate Returns" shall mean each return of Separate
Taxes of an Monterey Company to the appropriate jurisdiction.

                 1.11     "Separate Taxes" means state and local taxes imposed
on any Monterey Company other than SFER Combined Taxes.

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                 1.12     "Subgroup" means a Parent (other than SFER), its
Subsidiaries, and all corporations as to which its relationship is that of
Parent as set forth in Article 1.7.

                 1.13     "Subsidiary" means, with respect to any Parent, a
Member, the majority of whose voting stock is owned directly by such Parent or
for which such Parent has been designated the Parent by the Chief Financial
Officer of SFER.

                 1.14     "SFER Combined Return" shall mean each consolidated,
combined or unitary return of SFER Combined Taxes to the appropriate
jurisdiction.

                 1.15     "SFER Combined Taxes" means state or local taxes for
which liability is computed on a consolidated, combined or unitary basis among
one or more of the SFER Companies and one or more of the Monterey Companies.

                 1.16     "SFER Company" means SFER and each of its direct or
indirect subsidiaries other than a Monterey Company.

                   Article 2 - Separate Return Tax Liability

                 2.1      For each consolidated return year, each Member shall
compute its separate return tax liability for the portion of the year in which
it is a Member.  "Separate return tax liability" means, with respect to any
consolidated return year, the federal income tax liability (including
alternative minimum tax and environmental tax) which (1) in the case of a
Member that is not a Parent, is computed as if the Member had filed a separate
federal income tax return and (2) in the case of a Parent, is computed as if
the Parent had filed a consolidated federal income return with the Members of
its Subgroup.  In computing separate return tax liability, each Member or
Parent, as the case may be, shall follow the tax elections and other tax
positions adopted or prescribed by SFER and shall take into account the
adjustments and modifications set forth in Article 2.2.

                 2.2      In computing separate return tax liability, each
Member shall take into account the following adjustments and modifications:

                 (a)      Dividends from any Member of the SFER Group shall be 
                          eliminated;

                 (b)      Gains or losses on intercompany transactions and
                          intercompany distributions between any Members of the
                          SFER Group shall be deferred and recognized pursuant
                          to Treas. Reg. Sections  1.1502-13 and Code section
                          267 and the regulations thereunder regardless of
                          whether both Members involved are included in the
                          hypothetical separate return of the Member or Parent;

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                 (c)      All carryforwards of tax credits, net operating
                          losses, capital losses, charitable contributions and
                          other similar items shall be determined under Article
                          3;

                 (d)      No carrybacks of credits, deductions, losses or
                          similar items shall be taken into account;

                 (e)      Any credits, deductions or other items of any Member
                          that are limited or otherwise adjusted when its
                          Parent takes such items into account in computing its
                          separate return liability shall be adjusted as
                          provided in Article 4;

                 (f)      All ordinary income shall be subject to tax at the
                          highest effective tax rate applicable to taxable
                          ordinary income of corporations and all capital gains
                          shall be subject to tax at the highest effective tax
                          rate applicable to capital gains of corporations;

                 (g)      Any exemption or similar item that must be prorated
                          or apportioned among the component Members of a
                          controlled group of corporations (e.g., the $40,000
                          exemption in section 55(d)(2) of the Code, the
                          $25,000 limitation in section 38(c)(1)(B) of the
                          Code, and the $2,000,000 amount in section 59A(a)(2))
                          shall not be taken into account; and

                 (h)      Other adjustments specified by the senior tax officer 
                          of SFER ("Tax Officer") which, in its reasonable 
                          judgement, will result in each member incurring a fair
                          and reasonable share of the SFER Group's consolidated 
                          federal income tax liability.

                 2.3      Each Member (other than SFER) shall pay its separate
return tax liability to its Parent on or before the due date (without
extensions) of the SFER consolidated federal income tax return for the
appropriate consolidated return year.  Such payment shall be reduced by the
estimated tax payments made by such Member pursuant to Article 5.  For
administrative or other reasons, a Parent may direct or allow such payment to
be made after the prescribed date.  If all relevant information necessary to
determine the amount of the payment is not available by that date, the payment
shall be based on estimates, and adjustments shall be made when sufficient
information is available or as soon as practicable after the SFER consolidated
federal income tax return for the appropriate consolidated return year is
filed.

                           Article 3 - Carryforwards

                 3.1      The adjustment to separate return tax liability
specified in Article 2.2(c) shall be determined as provided in this Article.

                 3.2      In computing separate return tax liability for the
first consolidated return year to which this Agreement applies to a Member,
such Member shall have available as a carryforward

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only the following items:  carryforwards of credits, deductions and other
similar items that would be available to the Member if the Member were not a
Member of the SFER Group; but only to the extent that the Member previously has
not been compensated or has not received benefit for such item.  Any such
available carryforward shall be utilized in the order and according to the
priorities designated in the Code and regulations.  For subsequent consolidated
return years, a Member's available carryforwards shall be increased by
carryforwards generated in consolidated return years and shall be reduced by
carryforwards used by the Member in previous consolidated return years and
carryforwards that have expired according to the restrictions and limitations
of the Code.

                 3.3      In computing separate return tax liability, a Parent
may take into account, to the extent allowable under the Code and regulations,
only carryforwards available to itself under the principles of Article 3.2,
carryforwards described in Article 3.2 that are available to the Members of its
Subgroup and carryforwards generated by Members of its Subgroup during
consolidated return years to which this Agreement applies.  Nothing in this
provision shall be construed as allowing a Parent to take into account any item
more than once.

                 3.4      If a Member uses an available carryforward in
computing its separate return tax liability, but the item has not yet been used
in the current year by its Parent in computing the Parent's separate return tax
liability or as a carryback by its Parent pursuant to Article 6, either as a
result of limitations specified in the Code or regulations or as a result of a
limitation placed on such Parent by its Parent pursuant to Article 4, the
Member's separate return tax liability shall be increased by the difference
between the tax liability computed with and without the limited carryforward.
The limited carryforward shall no longer be available as a carryforward to the
Member, but it shall be available to the Member's Parent as a carryforward to
subsequent years.  Upon the use of such carryforward by the Member's Parent in
a subsequent year, the Member's separate return tax liability shall also be
reduced by the separate return tax savings realized by the Parent as a result
of the use of the carryforward.  If such reduction in the Member's separate
return tax liability exceeds the Member's separate return tax liability before
the reduction, the difference shall be paid by the Parent to the Member at the
time specified in Article 2.3.

                 3.5      If a carryforward expires prior to its use by a
Member or by the Member's Parent in computing separate return tax liability,
the Member that generated the carryforward shall not be compensated for the
item.  If a Member ceases to be a Member of the SFER Group prior to the
Member's or its Parent's use of a carryforward, the Member shall not be
entitled to compensation for the carryforward regardless of whether the item
was used by any other Member of the SFER Group.

                    Article 4 - Adjustments for Limitations

                 4.1      The adjustment to separate return tax liability
specified in Article 2.2(e) shall be determined as provided in this Article.

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                 4.2      If any item generated in the current year and
utilized on a separate return basis in the current year by a Parent's
Subsidiary (regardless of whether the item was generated by the Subsidiary
itself or a Member of the Subsidiary's Subgroup) cannot be used by the Parent
either currently in the Parent's computation of its separate return tax
liability or as a carryback pursuant to Article 6, the Subsidiary's separate
return tax liability shall be increased by the adjustment specified in Article
4.3.

                 4.3      The adjustment referred to in Article 4.2 shall equal
the increase in the Subsidiary's separate return tax liability that would arise
if the item on the Subsidiary's return were reduced by the amount not usable by
the Parent that would be allocable to the Subsidiary and Members of its
Subgroup under the principles of the Code and the Regulations.  That is, in
most cases, the unused item would be allocated between the Parent and its
Subsidiaries according to the relative proportion of the total of such items
generated by the Parent and each Subsidiary's Subgroup.  Where the Code does
not provide a method of allocating such item, the allocation method shall be
determined by the Tax Officer.  The amount reallocated to the Subsidiary shall
not be allowed as a carryforward to the Subsidiary.

                 4.4      After an adjustment is made under Article 4.2 to any
Subsidiary, such Subsidiary shall then make a similar adjustment with respect
to its Subsidiaries under the principles of this Article.  If such adjustment
is made, the Subsidiary shall promptly compensate its Subsidiaries when it
receives a benefit from its Parent under Article 4.5 upon the Parent's use of
the item as a carryforward.

                 4.5      When a Parent uses an item referred to in Article 4.2
as a carryforward, the Subsidiary's separate return tax liability for the
carryforward year shall be reduced by the separate return tax savings realized
by the Parent.  If such reduction exceeds the Subsidiary's separate return tax
liability before the reduction, the difference shall be paid by the Parent to
the Subsidiary at the time specified in Article 2.3.  If a Member ceases to be
a Member of the SFER Group prior to its Parent's use of an item covered by this
Article, the Member shall not be entitled to compensation for such item
regardless of whether the item was used by any other Member of the SFER Group.

                       Article 5 - Estimated Tax Payments

                 5.1      Each Member shall pay to its Parent quarterly
installments of estimated tax. The amount of such payments for the first,
second, third and fourth installments shall cumulatively equal 25 percent, 50
percent, 75 percent and 100 percent, respectively, of the estimated full-year
separate return tax liability (including the minimum tax and environmental tax),
as adjusted under Article 5.2. Settlement for such payment shall be made on or
before, or as soon as practicable after, the due date of the applicable
estimated tax payment to be paid by SFER.

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                 5.2      The computation of separate return tax liability for
purposes of Article 5.1 shall be based on the most recent update of the current
year profit plan.  The following additional adjustments to separate return
tax liability shall be made for estimated tax purposes:

                 (a)      Carryforwards of credits (except the minimum tax
                          credit), losses, and deductions and currently
                          generated credits shall be taken into account only to
                          the extent permitted by the Member's Parent according
                          to the Parent's estimate as to the amount of such
                          credits that were previously utilized or will be
                          utilized by the Parent in computing its separate
                          return tax liability, or, where SFER is the Parent,
                          according to SFER's estimate as to the amount of such
                          credits that were previously utilized or will be
                          utilized on a consolidated basis in the current year;
                          and

                 (b)      Other adjustments specified by the Tax Officer shall
                          be taken into account.

                 5.3      Interest and penalties imposed on the SFER Group as a
result of the underpayment of estimated tax shall be allocated to the Members
to which the underpayment is attributable and shall be paid to SFER by such
Members.  For purposes of all such allocations of interest and underpayment
penalties, the Chief Financial Officer of SFER shall determine to which Member
or Members the underpayment is attributable.  Such determination of the Chief
Financial Officer shall be final.  A payment of such interest and penalties
shall not be considered a payment of estimated tax.

                             Article 6 - Carrybacks

                 6.1      Any item that (a) cannot be used by a Member in
computing separate return tax liability for the year in which the item is
generated but (b) can be carried back by the Member on a separate return basis,
shall be treated for purposes of this Agreement as provided in this Article.

                 6.2      If the item referred to in Article 6.1 is actually
carried back to a previous year (e.g., if Form 1139 or 1120X is filed with the
Internal Revenue Service), whether the return was filed by the SFER Group, the
common Parent of the affiliated group of which the Member was an includible
corporation in such previous year, or the Member itself, the item shall not be
used by any Member of the SFER Group in computing separate return tax
liability.  The Member that generated the item shall be entitled to any refund
(including interest) received by any Member of the SFER Group from the Internal
Revenue Service as a result of the carryback.  If the item results in a refund
to a corporation that is not a party to this Agreement, the right of the Member
that generated the carryback to receive such refund shall depend on the
Member's tax allocation or other agreement with the refund recipient.

                 6.3      If the item referred to in Article 6.1 is not
actually carried back, the Member shall be entitled to receive from its Parent
the reduction in the Parent's separate return tax liability resulting from the
current use of the item or the future use of the item as a carryforward.  The

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payment for this item shall be made at the time specified in Article 2.3 for
the year in which the item is used by the Member's Parent in computing separate
return tax liability.

                            Article 7 - Adjustments

                 7.1      If any adjustment in consolidated tax liability is
made as a result of an audit by the Internal Revenue Service, the granting of a
claim for refund, a final decision by a court, the carryback or carryforward of
a loss, deduction or credit or any other similar circumstance, the tax refund
or liability resulting therefrom shall be allocated in accordance with the
principles of this Agreement as if such adjustments had been taken into account
in the year to which they relate.

                 7.2      Any interest and penalties paid by SFER with respect
to the adjustments referred to above shall be allocated at or near the time of
payment to the Members that generated the items giving rise to the adjustments.
In the case of penalties and other items that are computed by reference to a
consolidated deficiency (e.g., the negligence penalty imposed under section
6653 of the Code), the Chief Financial Officer of SFER, upon the advice of the
Tax Officer, shall have authority to allocate all or part of the liability for
such item (including the interest thereon) to the Member or Members whose
action or inaction resulted in the imposition of the penalty or similar item.

                 7.3      Interest received by SFER with respect to such
adjustments shall be allocated to its appropriate Subsidiaries according to the
principles of this Agreement and shall be paid by SFER to its Subsidiaries and
by such Subsidiaries to their Subsidiaries and so on only after the underlying
items could properly have been used by the Subsidiaries in computing their
respective separate return tax liabilities.

                 7.4      The allocations under Articles 7.2 and 7.3 shall,
when appropriate, take into account the offsetting effects of positive and
negative adjustments.  For example, if a $100 deficiency attributable to one
Member is offset by a $60 overpayment of another Member so that the SFER Group
pays interest only on a net $40 deficiency, the interest paid by the deficiency
Member under Article 7.2 shall be based on a deficiency of $100 and an interest
receipt based on an overpayment of $60 shall be allocated to the overpayment
Member under Article 7.3.  The Tax Officer of SFER shall determine when it is
appropriate to make such offsetting adjustments for interest paid and received.

                 7.5      (a) Any direct out-of-pocket expenses (e.g., travel
expenses, attorneys' fees, experts' fees, etc.) incurred by the SFER Group in
connection with proposed or actual adjustments of the type contemplated in this
Article; and (b) that portion of the SFER Group's legal, accounting,
secretarial, bookkeeping, data processing, salaries, fees and all other
expenses allocable to such proposed or actual adjustments or otherwise incurred
by the SFER Group in connection with such proposed or actual adjustments shall
be borne by the Members to which the adjustments relate. SFER shall determine
the expenses that are allocable to such proposed or actual adjustments in any
reasonable manner determined by SFER in its sole discretion. In cases where such
expenses relate to more than one 

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Member, the Chief Financial Officer of SFER shall determine how such expenses
shall be allocated to the appropriate Members.

                       Article 8 - State and Local Taxes

                 8.1      SEPARATE RETURNS.

                 A.       Responsibility.  After consultation with SFER and the
senior tax officer of SFER ("Tax Officer") Monterey and each Monterey
Subsidiary shall be solely responsible for the preparation of all Separate
Returns and the payment of all Separate Taxes.  Accordingly, Monterey or the
appropriate Monterey Subsidiary shall be entitled to the benefit of all refunds
of such Separate Taxes, and SFER shall not have any obligations with respect to
such Separate Taxes.

                 B.       Consultation.   Monterey or the appropriate Monterey
Subsidiary shall provide SFER with all information necessary to keep SFER
apprised of all matters pertaining to the Separate Returns of the Monterey
Companies and shall consult with SFER and keep SFER fully advised as to the
resolution of disputes with taxing authorities concerning such Separate Taxes,
including any matters relating to audits in connection with Separate Returns of
the Monterey Companies.  The decision of the Tax Officer will be determinative
of any position the Monterey Companies takes with respect to matters affecting
such returns as well as any audits thereof.

                 8.2      SFER COMBINED RETURNS.

                 A.       Payment to SFER.  For each year in which any Monterey
Company is included in any SFER Combined Return, each Monterey Company included
in such return shall pay to SFER an amount equal to the Separate Taxes that
would have been incurred by such Monterey Company if it had filed a Separate
Return with respect to such jurisdiction less any payments theretofore made
pursuant to paragraph B hereof.

                 B.       Estimated Payments.  Each Monterey Company shall pay
to SFER quarterly installments of the amounts estimated to be due SFER pursuant
to paragraph A of Article 8.2.  Such estimated payments shall be determined on
such basis and made at such times as SFER and Monterey may mutually agree or,
absent such agreement, as if the Monterey Companies were filing Separate
Returns in the applicable jurisdictions.

                 C.       Adjustments.  If, as a result of the adjustment of
the separate taxable income of a Monterey Company, the amount due SFER by such
Monterey Company included in such return shall be redetermined, such Monterey
Company shall remit to SFER or SFER shall refund to such Monterey Company the
amount of the resulting underpayment or overpayment, as the case may be,
together with interest at the statutory rate provided by the jurisdiction in
which such adjustment arose.

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                 D.       Utilization of Losses.  No Monterey Companies shall
be entitled to reimbursement from SFER for any losses or credits which are
includable in an SFER Combined Return unless such losses or credits result in a
"current benefit" to SFER or any SFER Company, in which case such Monterey
Company shall be entitled to receive from SFER the amount of such benefit.  For
the purposes hereof, a "current benefit" shall be the difference in the SFER
Combined Tax determined with and without utilization of the loss or credit
attributable to the affected Monterey Company.

                 8.3      Termination.  The provisions of this Article 8 shall
terminate as to a Monterey Company with respect to each jurisdiction upon such
corporation's ceasing to be eligible for inclusion in the SFER Combined Return
for such jurisdiction, but shall continue to apply with respect to any period
in which the income of such Monterey Company is included in the SFER Combined
Return.  SFER and the terminating Monterey Company shall be liable for the
payments, adjustments and reimbursements required under Article 8.2 with
respect to such periods.

                       Article 9- Indemnification by SFER

               9.1        Provided that each Monterey Company has paid its 
Separate Return Tax Liability pursuant to Article 2 (after taking into account
any adjustments thereto pursuant to Article 7), its Separate Taxes pursuant to
Section 8.1 hereof, and its share of combined return state and local tax
liabilities pursuant to Section 8.2, hereof, SFER shall indemnify and hold
harmless each Monterey Company against any of the following items to the extent
not attributable to the Monterey Company under the principles of this agreement:
(i) any and all income and franchise tax liabilities (including without
limitation, any joint and severable liability for taxes of SFER or any other
member of the SFER Group pursuant to Treasury Regulation Section 1.1502-6 or any
similar provision of state or local tax law), (ii) any interest and penalties
with respect thereto, (iii) any liabilities arising under any tax sharing
agreements or arrangements that SFER or any member of the SFER Group may have
with Santa Fe Pacific Corporation, and (iv) any and all costs, expenses or fees
incurred in connection with the assessment or collection of such taxes, interest
or penalties.

                      Article 10 - Miscellaneous Provisions

                10.1      Each Member shall be required to make tax elections
and adopt tax provisions adopted or prescribed by SFER.

                10.2      It is understood and acknowledged that, in accordance
with Treas. Reg. Section  1.1502-77, SFER will be the agent for all Members of
the SFER Group with respect to all matters referred to therein and SFER has the
power, without the consent of any Member, to exercise the authority with
respect to the matters set forth therein, including, without limitation, making
or revoking any elections.  SFER shall have authority to compromise or concede
any tax issues for any consolidated return year.  In addition, it is
acknowledged and agreed that SFER has the power and authority to make all
decisions and take any actions with respect to all matters affecting Separate
Returns or Combined Returns or any other matter affecting state or local taxes.
Notwithstanding 

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anything in this Agreement to the contrary, SFER's control of any contest or
proceeding involving any issue or adjustment (a "Monterey Issue") that could
affect the liability of Monterey or any Monterey Company under this Agreement
shall be subject to the following terms: (i) SFER will diligently and reasonably
contest each Monterey Issue, without regard to the indemnification provided
herein, and not settle, compromise or concede any Monterey Issues, unless the
aggregate amounts for which Monterey would be liable to SFER under this
Agreement as a result of all such concessions, settlements or compromises for
the particular tax year does not exceed $100,000; and (ii) SFER will consult
with Monterey as to the conduct of the contest of each Monterey Issue, will
provide Monterey with copies of all protests, pleadings, briefs, filings,
correspondence and similar materials relative to the contest of each Monterey
Issue and will arrange for a representative of Monterey to be present at (but
not to participate in) all meetings with the relevant taxing authorities and all
hearings before any court.

                10.3      If for any reason the application of this Agreement
results in an inequitable and unintended allocation (e.g., if a Parent that
realizes a benefit from an item generated by a Subsidiary in one year is not
the same Parent that realizes the detriment when the item is used by the
Subsidiary in a different year), the Tax Officer shall have the authority to
reallocate items to eliminate or reduce the inequity, provided such
reallocation is based on the principles of this Agreement.

                10.4      If a Member ceases to be a Member of the SFER Group,
this Agreement shall apply with respect to any period in which the income of
the terminating Member is included in the SFER consolidated federal income tax
return.  The terminating Member shall remain liable to SFER for payments
required under this Agreement, including, but not limited to, payments of tax
and estimated tax for periods in which the Member's income is included in the
SFER consolidated return and payments attributable to adjustments referred to in
Article 7.1 and to interest and penalties referred to in Articles 5.3 and 7.2.
Additionally, the terminating Member shall cooperate and provide reasonable
access to books, records and other information needed in connection with audits,
administrative proceedings, litigation and other similar matters related to
periods in which the Member was a Member of the SFER Group. A Member that ceases
to be a Member of the SFER Group shall not be entitled to any compensation or
reimbursement with respect to any tax refund, benefit or other similar item
realized by the SFER Group after the Member leaves the SFER Group or with
respect to any carryforward not used by the Member or its Parent prior to the
Member leaving the SFER Group. Federal income taxes will be calculated for the
taxable period of termination on the basis of allocations made in accordance
with Treasury Regulation Section 1.1502-76(b)(2)(i) or (ii), as SFER determines.
State or local taxes will be calculated for such period using such reasonable
method as will be determined by SFER.

                10.5      If a Member acquires the assets of another Member in
a transaction described in section 381(a) of the Code, the acquiring Member
shall succeed to and assume all rights and liabilities of the acquired Member
under this Agreement.

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                10.6      If any Member of the SFER Group has items of loss,
deduction or credit which are to be carried back from a taxable year for which
such Member is not included in a consolidated return filed by SFER to a
consolidated return year for which it was so included, such Member shall
promptly inform SFER of the carryback and assist SFER in filing a proper and
timely claim for any refund which may be available in respect of such items.

                10.7      Each Member shall use the computer software, methods
and procedures designated by SFER for purposes of tax record maintenance and
tax return preparation.

                10.8      SFER shall have authority to amend this Agreement
through a collateral agreement with any Member to take into account any special
facts and circumstances of such Member. The collateral agreement shall be
effective upon execution by all affected parties and need not be executed by
Members whose rights and liabilities under this Agreement are not affected by
the collateral agreement. Any such amendment (other than any amendment in the
Agreement Concerning Taxes And Tax Indemnification Upon Spin-off) shall be
consistent with the principles of this Agreement.

                10.9      This Agreement may be unilaterally amended by SFER in
response to legislative or regulatory changes in the tax law, provided that any
such amendment is consistent with the overall general principles of this
Agreement.

                10.10     Any matter not specifically covered by this Agreement
shall be handled in the manner determined by SFER in accordance with the
general principles of this Agreement.  Any dispute concerning the
interpretation of this Agreement shall be settled by the Chief Executive
Officer, Chief Financial Officer and Tax Officer of SFER.

                10.11     Any Member of the SFER Group may, in lieu of signing
and executing this Agreement, become a party to this Agreement by resolution of
its Board of Directors accepting the provisions of this Agreement.

                10.12     This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

                10.13     This Agreement shall be binding upon and inure to the
benefit of any successor to the parties hereto as if such successor had been a
party to this Agreement; provided, nothing in this Agreement is intended to
confer any rights or impose any obligations on any third parties.

                10.14     This Agreement shall be governed by the laws of the
State of Texas and shall be construed in accordance with such laws.

                                      -12-
<PAGE>
               Article 11 - Effective Date and Transitional Rules

                 11.1     This Agreement shall become effective with respect to
the consolidated return year beginning January 1, 1996.  Estimated tax payments
made by a Member for such year prior to the execution of this Agreement shall
be treated in the same manner as payments made pursuant to Article 5. The
termination of this Agreement shall not relieve any party of any obligation
arising hereunder.

                 11.2     This Agreement supersedes all previous tax allocation
agreements between SFER and the Members of its affiliated group, and other
federal income tax allocation agreements or arrangements between the parties to
this Agreement.  Any unused carryovers from years subject to such other
agreements shall be allowed or taken into account only as provided in this
Agreement.

         IN WITNESS WHEREOF, the, parties hereto have caused this Agreement to
be duly executed and attested.


                                       SANTA FE ENERGY RESOURCES, INC.

                                       By /s/ JAMES L. PAYNE       
                                              President                
                                                                               
                                                                               
                                       MONTEREY RESOURCES, INC.               
                                                                               
                                       By /s/ R. GRAHAM WHALING    
                                              Chief Executive Officer

                                                                              
                                       SANTA FE ENERGY COMPANY OF ARGENTINA   
                                                                              
                                       By /s/ JAMES L. PAYNE        
                                              President              
                                                                              
                                      -13-
<PAGE>
                                      SANTA FE ENERGY RESOURCES (DELAWARE) LTD.
                                                                              
                                       By /s/ JAMES L. PAYNE        
                                              President              
                                                                              
                                                                              
                                       ADOBE OFFSHORE PIPELINE COMPANY        
                                                                              
                                       By /s/ JAMES L. PAYNE        
                                              President              
                                                                              
                                                                              
                                       SANTA FE PACIFIC FUELS COMPANY         
                                                                              
                                       By /s/ JAMES L. PAYNE        
                                              President


                                       SANTA FE ENERGY RESOURCES OF BOLIVIA,INC.
                                
                                       By /s/ JAMES L. PAYNE        
                                              President   
                                                                               
                                                                               
                                       SECURITY PURCHASING, INC.
                                                                               
                                       By /s/ JAMES L. PAYNE        
                                              President   

                                      -14-
<PAGE>
                                       GULF COAST AMERICAN CORPORATION
                                                                               
                                       By /s/ JAMES L. PAYNE        
                                              President   

                                      -15-