Exhibit 10.3

                      AIRCRAFT PREPAID LEASE/USE AGREEMENT


     THIS AIRCRAFT LEASE/USE AGREEMENT (this "Lease") is made and entered on the
29th day of January,  2004 by and between Tidelands Oil and Gas Corporation it's
successors  and or assigns  having an address of 1862 W.  Bitters - Bldg No. 1 -
San Antonio,  Texas 78248 (hereinafter referred to as "Lessee"),  and Royis Ward
an individual having principal offices at 2242 So. Hwy. #83, Crystal City, Texas
78839  (hereinafter  referred to as  "Lessor"),  with  respect to the  following
facts:

     A.   Lessor is the owner of the following described aircraft and

               engine(s): MAKE & MODEL: BEECHCRAFT
                                        ----------

               KING AIR AIRCRAFT SERIAL NO.: LJ 369
               --------                      ------

               ENGINE TYPE AND SIZE: PRATT/WHITNEY
                                     -------------

               PT6A-20 REGISTRATION NO.: N20LA
               -------                   -----

together with the manufacturer's specified equipment and the equipment described
in  Exhibit  "A"  attached  hereto  and  made a part by  reference  (hereinafter
referred to collectively as the "Aircraft").

     B. Lessor  wishes to lease make use to Lessee,  and Lessee  wishes to lease
and make use from Lessor on an  exclusive  basis,  the  Aircraft  subject to the
terms and conditions, and for the consideration set forth herein.

     NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, the parties hereto agree as follows:

                                    ARTICLE I

     1. Agreement to Lease and Term.

         (a)  Lessor  hereby  agrees  to lease and make use of the  Aircraft  to
Lessee  and  Lessee  hereby  agrees to lease and make use of the  Aircraft  from
Lessor on an exclusive basis,  for the Term (as hereinafter  defined) and on the
other terms and conditions set forth in this Lease.  Lessee acknowledges that it
has inspected the Aircraft and is fully  satisfied with and accepts the Aircraft
in its current condition.

         (b) The  terms  of  this  Lease/use  agreement  shall  be for a  period
commencing  on January  29,  2004,  and ending on a date to be  determined  (the

<PAGE>

"Term")  based upon the time the Lessee has flown an  accumulated  total time of
600 hours.

     2. Prepaid Rent

         1.  Lessee has paid in  advance  the sum of  $300,000.00  to Lessee and
Lessee has agreed  that this sum  represent  to Lessor a base  hourly rent of US
$500.00 per hour in ADVANCE for the exclusive lease/use of the aircraft.

         2.  Delivery.  The Aircraft  will be delivered to Lessee at location in
the State of Texas of their choice upon at least 12 hours notice to Lessor.  The
Aircraft  will be  delivered  duly  certified  as  airworthy,  will  include  an
unexpired  airworthiness  certificate  and shall  have all  systems,  equipment,
radios and appliances in working order.

         3. Return. Lessee shall return the Aircraft to Lessor at the same point
of pickup in Texas on the date set for termination of Lessee usage of aircraft..
Lessee agrees that it will return the Aircraft to Lessor in the same and as good
a condition  as when  accepted by Lessee,  normal  wear  excepted.  In the event
Lessee does not return the  Aircraft  in such  condition,  Lessor  will  provide
written notice to Lessee of reasonable repairs necessary to restore the Aircraft
to such condition in accordance with Article III hereof.

                                   ARTICLE II

     1.  Representations  and  Warranties Of Lessee.  The Lessee  represents and
warrants to Lessor that:

         (a) the  Lessee is a  corporation,  or other form of entity and is duly
organized,   validly   existing  and  in  good  standing   under  its  place  of
incorporation;

         (b) Lessee has all  requisite  power and authority to own its property,
operate its  business,  enter into this Lease and  consummate  the  transactions
herein  contemplated,  and  by  proper  corporate  or  other  action,  has  duly
authorized  the  execution  and  delivery of this  Lease/Use  agreement  and the
consummation of the transactions herein contemplated; and

         (c) this Lease is a valid  obligation  of Lessee  and is  binding  upon
Lessee in accordance  with its terms;  the execution by Lessee of this Lease and
the  consummation by Lessee of the transactions  contemplated  hereby do not and
will not result in a breach of any of the terms or provisions  of, or constitute
a default or a condition  which upon notice or lapse of time or both would ripen
into a default  under any  indenture,  Lease,  instrument or obligation to which
Lessee  is a  party;  and does not and  will  not to the  knowledge  of  Lessor,
constitute a violation of any order, rule or regulation  applicable to Lessee of
any  court  or  of  any  federal  or  state  or  municipal  regulatory  body  or
administrative  agency  or other  governmental  body  having  jurisdiction  over
Lessee.

     2. Representations and Warranties of Lessor.

Lessor represents, covenants and warrants as follows:

<PAGE>

         (a) At the  time of  delivery  to  Lessee,  the  Aircraft  shall  be in
airworthy  condition  with all  systems,  equipment,  radios and  appliances  in
working  order.  Lessor  represents and warrants to Lessee that (i) the Aircraft
has a current,  valid  Certificate of Airworthiness  issued by the United States
Federal Aviation Administration  ("FAA"), (ii) all Airworthiness  Directives and
all Service  Bulletins  designated  as  mandatory  by the  manufacturer,  as are
applicable to the Aircraft, have been complied with, (iii) any existing services
agreements and navigational aids subscriptions  related to the Aircraft,  are in
full  force and effect and will be paid  through  the end of the Term,  (iv) the
Aircraft  is duly  registered  in the name of Lessor  at the FAA Civil  Aviation
Registry,  and  Lessor  shall  not  deregister  the  Aircraft,  and (v) based on
Lessor's current actual  knowledge,  and without having conducted an independent
investigation  of the  truth or  accuracy  of the  statement  entered  by others
contained therein,  the maintenance  records for the Aircraft as are required by
the FAA retained for the Aircraft  accurately reflect the maintenance history of
the Aircraft.

         (b) Prior to delivery Lessor shall provide the following:  -Signed copy
of this Lease

     -The Current Certificate of Airworthiness

     -Original U.S Registration

     -List of Navigation and Emergency Equipment accompanying the Aircraft

         (c) Lessor is the owner of the full legal and  beneficial  title to the
Aircraft  and has full right to lease the  Aircraft  to Lessee  pursuant  to the
terms hereof.

         Lessor is an individual is duly authorized to enter into this Lease/Use
Agreement.

         Lessor  has all  requisite  power and  authority  to own its  property,
operate its business,  enter into this  Lease/Use  agreement and  consummate the
transactions herein  contemplated,  and by proper corporate or other action, has
duly  authorized the execution and delivery of this Lease/Use  agreement and the
consummation of the transactions herein contemplated.

         (d) This Lease is a valid  obligation  of Lessor  and is  binding  upon
Lessor in accordance  with its terms;  the execution by Lessor of this Lease and
the  consummation by Lessor of the transactions  contemplated  hereby do not and
will not result in a breach of any of the terms or provisions  of, or constitute
a default or a condition  which upon notice or lapse of time or both would ripen
into a default  under any  indenture,  lease,  instrument or obligation to which
Lessor  is a  party;  and does not and  will  not to the  knowledge  of  Lessor,
constitute a violation of any order, rule or regulation  applicable to Lessor of

<PAGE>

any  court  or  of  any  federal  or  state  or  municipal  regulatory  body  or
administrative  agency  or other  governmental  body  having  jurisdiction  over
Lessor.

         (e) Lessor  warrants that during the term of this Lease,  if no default
has occurred,  Lessee's quiet enjoyment of the Aircraft shall not be interrupted
by  Lessor  or anyone  claiming  through  or under  Lessor,  including,  without
limitation, any assignee of any of them.

                                   ARTICLE III

     1. Title and Use.

         (a) Title to the Aircraft  shall  remain with Lessor,  and the Aircraft
shall remain under US Registry.

         (b)  Lessee  shall  have  complete  use  of the  Aircraft,  restricted,
however, to the ordinary purposes of Lessee's business and pleasure. Lessee will
not use, operate,  maintain or store the aircraft in violation of this Lease, or
any applicable  law or regulation  federal or state,  or any reasonable  written
instructions  furnished  therefore  by  Lessor.  Furthermore,  Lessee  shall not
operate the Aircraft in any manner, which would contravene the uses and purposes
stipulated in the insurance  policies  discussed herein in Article VIII.  Lessee
will operate,  maintain and use the Aircraft in accordance  with all  applicable
limitations specified in all manufacturer and flight maintenance manuals for the
Aircraft and in accordance with all FAA pronouncements for the Aircraft.  Lessee
shall take all steps necessary to prevent any seizure, confiscation or detention
of the Aircraft by any government authority.  Except for the Aircraft Management
and Operating  Agreement  between BAM Denton  Management  Ventures,  L.L.C.  and
Lessee of even date herewith; nothing herein shall authorize Lessee or any other
person to operate the Aircraft on behalf of Lessor or to incur any  liability or
obligation on behalf of Lessor.

                                   ARTICLE IV

     1. Operation. During the term of this Lease, Lessor will be the operator of
this Aircraft and Lessee is responsible only for the following operating costs:

         (a) Fuel, oil and associated taxes;

     2.  Maintenance.  Lessor covenants and agrees to maintain the Aircraft,  at
Lessor's  cost  and  expense,  in  an  airworthy  condition  with  all  systems,
equipment,  radios,  and appliances in working order, and in compliance with the
manufacturer's   recommended   maintenance  program.  In  the  event  repair  or
maintenance  is  required  during the time when Lessee is in  possession  of the
Aircraft  in  order to keep  the  Aircraft  in the  condition  described  in the

<PAGE>

preceding sentence,  Lessor is entitled to commission the execution of such work
at  Lessor's  expense,  so long as all such  work is  performed  (a) by  persons
licensed to perform  such work by the FAA,  and (b) in  accordance  with FAA and
manufacturers' standards.  Lessee is not entitled to any reimbursement resulting
from Lessee's  improper use of the Aircraft,  from improper  maintenance  of the
Aircraft, or from any breach of this Lease by Lessee. Repairs, replacements, and
rebuilding,  needed due to damage to the Aircraft occurring during the Term, are
the responsibility of Lessor and are governed by Article VIII hereof.  Lessor is
not liable to Lessee for any delays or loss of use of the  Aircraft  as a result
of  downtime  for repair or  maintenance;  Lessor is not  liable to Lessee,  any
sublessee,  or  any  other  person  associated  with  Lessee  for  any  special,
incidental,  or consequential  damages,  including  without  limitation for lost
profits, resulting from unavailability of the Aircraft for use during the Term.

                                    ARTICLE V

     1. Insurance.

         a.  Lessor  shall  secure and  maintain in effect  throughout  the Term
insurance policies with U.S. Aircraft Insurance Group, Global/AAU,  AIG Aviation
Insurance,  or another  insurance  carrier  acceptable  to Lessee,  insuring the
interests of Lessor as follows:

            (i) Full hull coverage,  including all risks, both in flight and not
in flight, and including coverage for war risk, terrorism, and allied perils, in
the  amount of at least  SIX  HUNDRED  THOUSAND  AND  NO/100  U.S.  DOLLARS  (US
$600,000.00)  and naming  Lessor as the sole loss  payee.  In the event that any
damage  to the  Aircraft  occurs  during  the  Term,  Lessor  agrees  to pay the
deductible amount as provided for in such policy;

            (ii) Liability  insurance in the amount of at least ONE MILLION U.S.
DOLLARS  (US  $1,000,000.00)  in coverage  for single  limit  bodily  injury and
property  damage,  including  coverage for passengers and including  contractual
liability  coverage  for  the  liability  and  indemnity   obligations   assumed
hereunder,  and including coverage for war risk,  terrorism,  and allied perils,
and naming Lessor as an additional insured; and

            (iii) Coverage for worldwide limits of geographic operations.

         b. All policies providing insurance required by this Lease must:

            (i) Provide  thirty (30) days' (five (5) days for war risk)  advance
written notice to Lessee,  (x) prior to cancellation of any insurance  coverage,
(y) prior to any material change restricting or reducing existing coverage,  and
(z) prior to any mortgage, pledge,  hypothecation,  sale, assignment or transfer
of Lessee's interests in such insurance coverage;

<PAGE>

            (ii) Provide  that if the insurer  cancels  such  insurance  for any
reason  whatsoever,  then  such  insurer  must  promptly  notify  Lessee of such
cancellation,  and further  providing that such cancellation is not effective as
to Lessee for thirty (30) days after Lessor's receipt of such notice;

            (iii) Provide that the insurers  must promptly  notify Lessor in the
event that any premium or installment of premiums is not paid when due;

            (iv)  Provide  that in the  case of  damage  or  destruction  of the
Aircraft, the insurers may not effect settlement of any claim thereunder without
first obtaining Lessor's prior written consent;

            (v) Provide that Lessor is named on a Breach of Warranty Endorsement
for  physical  damage  coverage  and that  payment  of any claim must be made to
Lessor; and that such Breach of Warranty  Endorsement must provide,  among other
things,  that no act or  omission  of  Lessee or any other  person  affects  the
obligation of the insurer to pay the full amount of any aircraft physical damage
loss the interests of Lessor; and

            (vi) Provide for a Breach of Warranty Endorsement for liability; and
such Breach of Warranty  Endorsement must provide,  among other things,  that no
act or omission Lessee or any other person invalidates any liability coverage of
Lessor.

     2.  Loss.  In the  event of loss or damage to the  Aircraft,  Lessee  shall
immediately  report such loss or damage to Lessor,  to the  insurance  companies
underwriting such risk and to any and all applicable governmental agencies, both
federal and state, and shall furnish such information and execute such documents
as may be required  and  necessary to collect the  proceeds  from the  insurance
policies. In this event, the rights, liabilities, and obligations of the parties
hereto are as follows:

            (i) In the event that the Aircraft is lost,  or  disappears  for any
reason  including  but not  limited  to theft,  or  confiscation  or  seizure or
detention by any  government,  or  embezzlement,  secretion or conversion by any
other person, or is damaged beyond repair,  the proceeds of the insurance policy
or policies must be paid to Lessor. In such event this Lease does not terminate,
and Lessee's  obligation to pay further rent  hereunder  does not end, until the
insurance proceeds or other compensation amounts are paid to Lessor.  Lessor has
no obligation to replace the Aircraft after any such loss or disappearance.

            (ii) In the event that the  Aircraft is  partially  damaged,  Lessor
shall, at his sole cost and expense, fully repair the Aircraft in order that the
Aircraft  is placed in as good as or the same  condition  as it was prior to the
damage and as required  under  applicable  regulations,  including FAR ss.43.13.
Lessor  has the  right to  approve  all  repairs,  which  approval  shall not be

<PAGE>

unreasonably  withheld or delayed.  In the event there are valid and collectible
insurance proceeds available to pay for the partial damage to the Aircraft those
proceeds must be used to pay for such repairs.

            (iii) Lessor is solely entitled to benefits of any payment of monies
by third parties or their insurance carrier for partial damage to or destruction
of the  Aircraft.  Any sums of money from third  persons or their  insurers  for
partial  damage to the  Aircraft is to be payable to Lessor to be used to effect
the repair of the  Aircraft.  In the event the Aircraft is totally  destroyed by
third parties,  Lessor is entitled to any sums of money received from said third
parties or their insurers for the destruction of the Aircraft. Nothing herein is
to be construed to effect or in any way  jeopardize  any right of subrogation of
the Aircraft  insurer to the extent of any payment made by the Aircraft  insurer
under the Aircraft insurance required herein against said third parties or their
insurers.

            (iv) In the event the Aircraft is lost, or disappears for any reason
including  but not limited to theft,  confiscation,  seizure or detention by any
government, or embezzlement, secretion, or conversion by any other person, or if
the Aircraft is totally destroyed or irreparably damaged or permanently rendered
unfit for use from any cause  whatsoever,  and further in the event there exists
no valid and collectible  insurance under any insurance policy, Lessee shall pay
to Lessor,  within forty-five (45) days from the date of the loss or damage, the
sum of money  equivalent to the hull  coverage  requirement  in Section  1(a)(i)
above,  whereupon this Lease  terminates and Lessor has no obligation to replace
the Aircraft.  The insolvency,  bankruptcy,  or failure of any insurance company
issuing the insurance required  hereunder,  the failure of any insurance company
to pay claims accruing,  or any exclusion to or insufficiency of coverage,  does
not affect,  negate, or waive any of the provisions of this Lease. Provided that
Lessee  fully and  promptly  pays,  or causes to be paid,  to Lessor all sums of
money due to Lessor hereunder,  Lessee is not liable to Lessor for any delays or
loss of use of the Aircraft.  Lessee is not liable to Lessor or any other person
associated with Lessor for any special,  incidental,  or consequential  damages,
including without limitation for lost profits.

     3.  Certificate and Policy.  Lessor shall provide Lessee with copies of all
certificates of insurance  respecting the Aircraft subject to this Lease as soon
as the same can be obtained,  but in no case later than the commencement date of
this Lease.  Lessor shall further  provide Lessee a certified copy of the policy
of  insurance  on the  Aircraft as soon as it is  available  from the  insurance
carrier.  If Lessor provides a certificate that does not evidence the coverage's
required  herein,  or that is faulty in any respect,  such does not constitute a
waiver of Lessor's obligations to obtain the proper insurance.

     4.  Waiver of  Subrogation.  Lessee  waives any and all rights of  recovery
against Lessor, his employees,  agents and  representatives,  for any loss of or
damage in connection with the possession,  use or operation of the Aircraft,  to
the  extent  that such loss or damage is  insured  against  under any  insurance
policy in force at the time of such loss or damage.  Lessee  must give notice to

<PAGE>

the appropriate  insurance  carrier that the foregoing  waiver of subrogation is
contained in this Lease must obtain an  endorsement  to its policies  containing
such  waiver  of  subrogation,  and must  provide  to  Lessor a  Certificate  of
Insurance  evidencing  the waiver of subrogation is contained in this lease must
obtain an endorsement to its policies  containing such waiver of subrogation and
must  provide to Lessor a  Certificate  of  Insurance  evidencing  the waiver of
subrogation.

                                   ARTICLE VI

     1.  Default by Lessee.  The  following  events shall  constitute  events of
default by Lessee hereunder:

         (a) Any  representation  or warranty made by Lessee hereunder or in any
document or  certificate  furnished to Lessor by Lessee in  connection  herewith
shall prove to have been false in any material  respect when made or  furnished;
or

         (b) Lessee  ceases  doing  business as a going  concern,  a petition is
filed by or against Lessee under the bankruptcy act or any amendment  thereof, a
receiver is  appointed  for Lessee or its  property,  Lessee  commits any act of
bankruptcy,  makes an assignment for the benefit of its  creditors,  or offers a
composition or extension of any of its indebtedness, or becomes insolvent.

         (c) Lessee fails to perform any of its agreements  contained  herein or
in any other  document  executed  in  connection  herewith,  including,  but not
limited to,  failure to timely pay rent or failure to provide  insurance  on the
Aircraft and to deliver satisfactory evidence of such insurance naming Lessor as
an additional insured and loss-payee as required herein.

     2.  Default by Lessor.  The  following  events shall  constitute  events of
default by Lessor hereunder:

         (a) Any  representation  or warranty made by Lessor hereunder or in any
document or certificate  furnished to Lessee in connection  herewith shall prove
to have been false in any material respect when made or furnished; or

         (b) Lessor  ceases  doing  business as a going  concern,  a petition is
filed by or against Lessor under the bankruptcy act or any amendment  thereof, a
receiver is  appointed  for Lessor or its  property,  Lessor  commits any act of
bankruptcy,  makes an assignment for the benefit of its  creditors,  or offers a
composition or extension of any of its indebtedness, or becomes insolvent.

         (c) Lessor fails to perform any of its agreements  contained  herein or
in any other  document  executed  in  connection  herewith,  including,  but not
limited  to,  failure  to  timely  provide  and pay for all  maintenance  on the
Aircraft, upon five (5) days written notice from Lessor to Lessee.

<PAGE>

                                   ARTICLE VII

     1. Remedies of Lessor. Subject to the cure periods set forth in Article IX,
Section 1, above, upon the occurrence of any incurred event of default by Lessee
and at any time thereafter so long as the same shall be continuing,  Lessor may,
at its option,  declare this Lease to be in default and at any time  thereafter,
so long as Lessee shall not have  remedied all  outstanding  defaults,  have and
exercise  all  remedies  provided  at law  and  in  equity,  including,  without
limitation, the following:

         (a) Declare the entire  amount of rent  hereunder  immediately  due and
payable without notice or demand to Lessee;

         (b) Recover from Lessee an amount  equal to the unpaid  balance due and
to become due during the term of this Lease;

         (c) Cause Lessee, at Lessee's expense, to return the Aircraft to Lessor
at Denton  Air  Center,  Denton,  Texas,  and if Lessee  fails to do so  Lessor,
through its  employees,  agents or attorneys,  may enter upon the premises where
the Aircraft is located and take immediate possession of the same without demand
or legal  process  and free of all  rights of  Lessee,  in which case the Lessee
authorizes  Lessor or its agents to enter upon any  premises  where the Aircraft
may be found for the purpose of repossessing  the same, and Lessee  specifically
waives any right of action it might otherwise have arising out of such entry and
repossession  whereupon all rights of the Lessee in the Aircraft shall terminate
immediately.  No such retaking of possession  shall  constitute a termination of
this Lease unless Lessor so notifies Lessee in writing; and/or

         (d)  Terminate  this Lease and retain  all prior  payments  of rent and
retake possession of the Aircraft as hereinbefore provided.

     2. Remedies of Lessee. Subject to the cure periods set forth in Article IX,
Section 2, above, upon the occurrence of any incurred event of default by Lessor
and at any time thereafter so long as the same shall be continuing,  Lessee may,
at its option,  declare this Lease to be in default and at any time  thereafter,
so long as Lessor shall not have remedied all  outstanding  defaults,  terminate
this Lease by returning the Aircraft to Lessor as required herein,  and have and
exercise all remedies provided at law and in equity.

     3.  Nonexclusive.  Exercise by either party of the rights  specified  above
shall not prejudice  that party's right to pursue any other remedy  available at
law or in equity.  The failure of either party to strictly enforce any provision
of this Lease  shall not be  construed  as a waiver  thereof and shall not later
preclude such party from  demanding  performance  in  accordance  with the terms
hereof.

                                  ARTICLE VIII

     4. Indemnification of Lessor.  Lessee agrees to indemnify and hold harmless
Lessor and its  successors  and  permitted  assigns from and against any and all
loss,  damage,  injury or death  claims,  demands and liability of every nature,

<PAGE>

including  reasonable  attorney's  fees,  arising from or in connection with the
possession, use or operation of the Aircraft by Lessee.

                                   ARTICLE.IX

     5. Pilots.  Lessee  agrees that the  Aircraft  will at all times during the
term of this Lease be operated by duly  qualified  pilots  employed  and paid or
contracted for by Lessor. Lessor warrants that each of the pilots who will pilot
such  Aircraft  shall  be duly  qualified  pilots,  whose  licenses  are in good
standing  and  who  meet  the  requirements  established  and  specified  by the
insurance  policies  required  to be  maintained  pursuant  to the terms of this
Lease.

                                    ARTICLE X

     6. Lessee's Right to Assign.  Each party agrees not to assign this Lease or
any interest  therein without the prior written consent of the other, and Lessee
shall  not part  with  the  possession  of the same  either  by  voluntary  act,
operation of law or otherwise. Lessee may sublease the Aircraft to affiliates of
Lessee so long as Lessee first obtains Lessor's  written consent,  which consent
shall not be unreasonably  withheld. Any such sublease does not excuse Lessee or
its sublessee from complying with all the provisions hereof, and prior to use of
the   Aircraft  by  sublessee   Lessee  must  provide   Lessor  with  a  written
acknowledgment from the insurers providing the coverage's required under Section
VIII that such sublease does not affect,  limit,  or alter the required hull and
liability insurance coverage's.

                                   ARTICLE XI

     7.  Notices.  All notices  provided  for herein shall be deemed to be given
upon delivery of the same in writing,  to the recipient thereof after depositing
in the U.S. mail, postage prepaid,  certified mail, return receipt requested and
addressed  to the party to be served at the  address set forth on the first page
hereof, or to such other address as may be designated by such party in a written
notice to the other party pursuant to the terms of this Section.

                                   ARTICLE XII

     8. Taxes.  During the terms of this Lease,  Lessee shall be responsible for
its  prorated  portion  of taxes  (except  those  measured  by the net income of
Lessor),  fines,  fees or  penalties  arising out of this Lease or the  Lessee's
operation of the aircraft (i.e., in the case of sales and use taxes, Lessee will
be responsible for taxes and assessments levied against, and constituting a lien
against the Aircraft which arise during the term of the Lease).

<PAGE>

                                  ARTICLE XIII

     9. Arbitration.  Any claim arising out of or relating to this Lease, or the
breach thereof,  shall be settled by binding  arbitration in the City of Denton,
State of Texas,  U.S.A. in accordance with the commercial  Arbitration  Rules of
the American Arbitration Association then in effect, and judgment upon the award
entered by the  arbitrator(s)  may be entered in any court  having  jurisdiction
thereof.

There  will  be one  arbitrator,  which  shall  be  appointed  by  the  American
Arbitration  Association.  The arbitrator  will be an individual  skilled in the
legal and business  aspects of the subject  matter of this  Agreement and of the
dispute.  The  arbitrator  will have no power to change any of the provisions of
this Agreement and his  jurisdiction is limited  accordingly.  The arbitrator is
not empowered to award treble, consequential,  incidental,  special, or punitive
damages. Costs of the arbitration will be assessed by the arbitrator against any
or all of the  parties,  and will be paid  promptly  by the party or  parties so
assessed.  Provided,  however,  Lessor is not required to seek  arbitration as a
condition  precedent to taking or retaking  possession of the Aircraft,  with or
without a court order,  or to seeking any  injunctive  relief  against Lessee as
Lessor may deem necessary in order to enforce its rights and remedies under this
Lease.

                                   ARTICLE XIV

     10. Miscellaneous.


         (a) Modification.  Only a written  instrument  executed by both parties
hereto may modify this Lease.

         (b)  Binding  Effect.  This  Lease  shall be binding  upon the  parties
hereto, their successors, permitted assigns and legal representatives.

         (c) Entire Agreement. The terms and conditions of this Lease constitute
the entire  agreement and supersede all previous  negotiations,  representations
and agreements between the parties, whether written or oral.

         (d)  Applicable  Law;   Venue.   This  Lease  shall  be  construed  and
performance  shall be governed under the laws of the State of Texas. Any lawsuit
or other  court  proceeding  between or among  Lessor and Lessee  relating to or
arising out of this Lease or the subject  matter  hereof shall be brought in the
federal or state  courts  located  in  Denton,  Texas.  The  foregoing  does not
prohibit  Lessor  from  pursuing  legal  recourses  in  any  other  court  where
jurisdiction  may be  proper  in  order  to take  or  retake  possession  of the
Aircraft.

         (e) Counterparts.  This Lease may be executed in separate counterparts,
each of which when so executed and delivered shall be an original,  but all such
counterparts shall together constitute one and the same instrument.

<PAGE>

         (f) Survival of Representations and Warranties. All representations and
warranties  contained herein and made by either party to the other shall survive
the execution of this Lease.

         (g) Assignment. This Lease shall inure to the benefit of and be binding
upon each of the parties hereto and their respective successors and assigns.




"Lessor"                                "Lessee"

ROYIS WARD                              TIDELANDS OIL AND GAS CORP



By: /s/ Royis Ward                      By: /s/ Michael Ward
   ---------------------------             ---------------------------

                                        Title: PRESIDENT
                                              -------------------------

                                        Witness: /s/
                                                -----------------------



     1. Truth in Leasing.  (SEE FEDERAL  AVIATION  REGULATION FAR 91.23.) LESSOR
CERTIFIES  THAT  THE  VENDOR  OF  THIS  AIRCRAFT  A  BEECHCRAFT  KING  AIR  B90,
MANUFACTURER'S  SERIAL NO. LJ-369 CURRENTLY REGISTERED WITH THE FEDERAL AVIATION
ADMINISTRATION  AS N20LA HAS  REPRESENTED  TO LESSOR THAT THE  AIRCRAFT HAS BEEN
MAINTAINED AND EFFECTED UNDER FAR 91 FROM THE DATE OF  MANUFACTURE,  TO THE DATE
HEREOF (INCLUDING DURING THE 12 MONTH PERIOD PRECEDING THE DATE OF THIS LEASE.



Witness: /s/
        ---------------------------











<PAGE>

                                   Exhibit "A"
                                Ser. No.: LJ-369

DUAL FLIGHT DIRECTOR 108'S
DUAL HIS/RMI
DUAL TRANSPONDERS
PRIMUS COLOR RADAR WX l0A
APOLLO 618 LORAN
M4-C AUTO PILOT
AIR CONDITIONING (FREON)
CLUB SEATING