SECOND AMENDMENT AND MODIFICATION AGREEMENT
                                TO LOAN AGREEMENT


     This Second  Amendment and  Modification  Agreement to Loan  Agreement (the
"Agreement") is effective as of the 1st day of May, 1997 in Tulsa,  Oklahoma, by
and  between  THE  HOME-STAKE  OIL  &  GAS  COMPANY,  an  Oklahoma   corporation
("Borrower"),  whose  mailing  address,  principal  place of business  and chief
executive  offices  are at 2800  First  National  Tower,  Tulsa,  Oklahoma,  and
BOATMEN'S NATIONAL BANK OF OKLAHOMA, formerly known as BANK IV Oklahoma, N.A., a
national banking  association  (the "Bank"),  whose address is 515 South Boulder
(or P.O. Box 2360, 74101), Tulsa, Oklahoma 74103.


                                 R E C I T A L S

     A. Borrower and the Bank  previously  made,  executed and entered into that
certain Third Amended and Restated  Loan  Agreement  dated as of the 29th day of
March, 1995 (the "Original Loan Agreement"),  as amended by that First Amendment
and  Modification  Agreement  to Loan  Agreement  dated May 1, 1996 (the  "First
Modification")   (the  Original  Loan   Agreement,   as  amended  by  the  First
Modification,  is  hereinafter  referred  to as  the  "Loan  Agreement"),  which
described and defined a financing  arrangement wherein the Borrower was entitled
to  borrow  and the  Bank  agreed  to lend  (i) up to the  principal  amount  of
$500,000.00,  in the form of a  revolving  line of credit as  evidenced  by that
certain  Promissory  Note (the  "Revolving  Note") dated May 1, 1996 in the face
amount  of  $500,000.00  by the  Borrower  in  favor of the  Bank,  and (ii) the
principal  amount of  $5,591,413.00  in the form of a term loan, as evidenced by
that  certain  Promissory  Note (the "Term  Note") dated May 1, 1996 in the face
amount of  $5,591,413.00  by the  Borrower in favor of the Bank.  As of the date
hereof,  there is outstanding the principal  amount of  $2,966,860.00  under the
Term Note and $0.00 in principal is  outstanding  under the Revolving  Note plus
interest  accrued in accordance with the terms thereof.  (Except as specifically
defined herein, all capitalized terms used herein shall have the same meaning as
set forth in the Loan Agreement.)

     B.  Repayment of the Term Note and Revolving  Note,  along with any and all
other  Indebtedness  of  Borrower  to the Bank,  is secured by a first  priority
security  interest in and to the Collateral as defined in the Loan Agreement and
the Security Instruments.

     C.  Borrower has  requested  that the Bank renew and extend the maturity of
the  Revolving  Note  and  the  Term  Note  to  May 1,  1998  and  May 1,  1999,
respectively,  and modify certain covenants as provided herein,  and the Bank is
willing to do so subject to the terms and  conditions  set forth herein,  and in
connection therewith,  the parties desire to amend and modify the Loan Agreement
and other Loan Documents as set forth herein.

     NOW, THEREFORE, in consideration of the foregoing recitals, the conditions,
covenants,  representations  and warranties set forth herein, and for other good
and valuable consideration,  the receipt,  sufficiency and adequacy of which are
hereby acknowledged, the parties hereby mutually agree as follows:

                                        1

<PAGE>


     1.  Renewal  Revolving  Note.  Concurrently  with  the  execution  of  this
Agreement, Borrower shall execute and deliver to the Bank that certain Extended,
Modified and Renewed Promissory Note (the "Renewal Revolving Note") of even date
herewith in the face amount of $500,000.00 due and payable at maturity on May 1,
1998,  such  Renewal  Revolving  Note to be in the form as shown in Exhibit  "A"
attached hereto and made a part hereof, thereby evidencing Borrower's obligation
to repay advances  under the Revolving Loan and thereby  amending and modifying,
but not extinguishing the indebtedness of, the Revolving Note. All references in
the Loan Agreement and the Loan Documents to the term "Revolving  Note" shall be
amended  throughout to be deemed to refer to the Renewal  Revolving Note and all
references in the Loan Agreement and the Loan  Documents to the term  "Revolving
Loan" shall be deemed  amended  throughout to refer to the loan evidenced by the
Renewal Revolving Note.

     2. Renewal Term Note.  Concurrently  with the execution of this  Agreement,
Borrower shall execute and deliver to the Bank that certain  Extended,  Modified
and Renewed  Promissory  Note (the "Renewal Term Note") of even date herewith in
the face  amount of  $2,966,860.00  due and  payable at maturity on May 1, 1999,
such Renewal Term Note to be in the form as shown in Exhibit "B" attached hereto
and made a part hereof,  thereby evidencing  Borrower's  obligation to repay the
Term  Loan  and  thereby  amending  and  modifying,  but not  extinguishing  the
indebtedness  of, the Term Note.  All  references in the Loan  Agreement and the
Loan Documents to the term "Term Note" shall be amended  throughout to be deemed
to refer to the Renewal Term Note and all  references in the Loan  Agreement and
the Loan Documents to the term "Term Loan" shall be deemed amended throughout to
refer to the loan evidenced by the Renewal Term Note. All references in the Loan
Agreement and the Loan Documents to the term "Notes" shall be amended throughout
to be deemed to refer to the Renewal Revolving Note and the Renewal Term Note.

     3. Line of Credit  Commitment.  The last  sentence of paragraph  2.3 of the
Loan Agreement is hereby amended in its entirety to read as follows:

     This  commitment  shall  expire,  unless  earlier  terminated at 2:00 p.m.,
Tulsa, Oklahoma time on May 1, 1998.

     4.  Ratification  of  Mortgage  and  Security  Interests.  Borrower  hereby
ratifies,  confirms  and  reaffirms  all  security  interests,  liens  and other
encumbrances created under the Loan Agreement,  the Security  Instruments,  this
Agreement,  and all other Loan Documents as security for repayment of Borrower's
Indebtedness (as that term is defined in Paragraph 3.6 of the Loan Agreement, as
amended and  modified by this  Agreement  to  contemplate  the matters  provided
therein or herein) and all other unreleased security  agreements,  mortgages and
deeds of trust in favor of the Bank,  all of which shall  continue in full force
and effect and with the same priority as security for repayment and satisfaction
of the  Indebtedness  and all extensions,  modifications  and renewals  thereof,
including  but not  limited to the Renewal  Term Note and the Renewal  Revolving
Note.

                                        2

<PAGE>



     5. Modification,  Ratification,  Representations and Warranties.  The terms
and provisions of the Loan  Agreement and all other Loan  Documents  executed in
connection therewith shall be deemed amended,  modified,  and changed throughout
so as to reflect consistently the matters provided herein. As extended, amended,
modified,  renewed or changed consistent  herewith,  the terms and provisions of
the Loan Agreement and all other Loan  Documents  shall remain in full force and
effect and Borrower  hereby  ratifies,  reaffirms and reasserts,  as of the date
hereof except as specifically  amended herein,  all covenants,  representations,
warranties,  agreements  and  statements  contained  therein.  Further,  and  in
addition to the  representations,  warranties and covenants  hereby ratified and
reaffirmed,  Borrower,  as applicable,  certifies,  covenants,  represents,  and
warrants to and with the Bank as follows:

          a.  Borrower is validly  organized  and existing and in good  standing
     under and by virtue of the laws of the State of  Oklahoma  and  Borrower is
     duly  qualified to do business  and is in good  standing in every state and
     jurisdiction in which it does or will do business.

          b.  The  execution  and  delivery  of this  Agreement  and  all  other
     documents  to be executed and  delivered  by Borrower to the Bank  pursuant
     hereto,  and the due observance  and  performance by Borrower of its terms,
     provisions  and  covenants  are within  Borrower's  powers,  have been duly
     authorized,  will not contravene or violate any law or term or provision of
     Borrower's  Certificate  of  Incorporation  or  By-laws  or  any  corporate
     resolution  of its  shareholders  or  directors  and will  not  contravene,
     violate or constitute a default under any contract, indenture, agreement or
     undertaking  to which Borrower is a party or by the terms of which Borrower
     or any of its property or assets is bound.

          c.  Borrower's  financial  statements  dated as of December  31, 1996,
     copies of which have been  furnished  to the Bank,  have been  prepared  in
     conformity with GAAP, show all material liabilities,  direct and contingent
     (to the  extent  required  by GAAP to be  reflected  therein),  and  fairly
     present the financial condition of Borrower as of such date and the results
     of its operations for the period then ended,  and since such date there has
     been no material  adverse  change in the business,  financial  condition or
     operations of Borrower.

          d. The Collateral is free of title defects,  subject to no lien of any
     kind except liens in favor of the Bank or  otherwise  permitted by the Loan
     Agreement.

          e. Except as set forth on Exhibit "C" attached  hereto and made a part
     hereof, there is no action, suit, investigation or proceeding threatened or
     pending  before any  Tribunal  against or  affecting  the  Borrower  or any
     properties  or  rights  of the  Borrower  or any  claim  thereof  which  if
     adversely  determined,   would  result  in  a  liability  of  greater  than
     $100,000.00,  or would otherwise  result in any material  adverse change in
     the business or condition, financial or otherwise, of the Borrower.

                                        3

<PAGE>



          Further,  the Borrower is not in default with respect to any judgment,
     order, writ,  injunction,  decree, rule or regulation of any Tribunal,  the
     default of which would  materially  impair the  ability of the  Borrower to
     carry on its business substantially as now conduct. Exhibit "G" to the Loan
     Agreement is hereby amended consistent herewith.

     6. Obligations Unaffected.  Except as otherwise specified herein, the terms
and conditions  hereof shall in no manner impair,  limit,  restrict or otherwise
affect the  obligations  of Borrower to the Bank pursuant to and as evidenced by
the Loan Documents.  As a material inducement to the Bank to execute and deliver
this Agreement, Borrower hereby acknowledges that there are no claims or offsets
against,  or  defenses  or  counterclaims  to,  the terms or  provisions  of the
obligations  created  or  evidenced  by the Loan  Documents,  including  but not
limited to the Renewal Term Note and the Renewal Revolving Note. In the event of
a conflict  between the terms and conditions of this Agreement and the terms and
conditions  of the  other  Loan  Documents,  the terms  and  conditions  of this
Agreement shall control.

     7. "Loan Documents" and "Loan Agreement". The term "Loan Documents" as used
in the Loan  Agreement  shall be  interpreted  to include  this  Agreement,  the
Renewal  Revolving Note and all of the other  documents  heretofore or hereafter
creating,  evidencing,  securing and/or  relating to the Secured  Obligations of
Borrower  to the Bank as  contemplated  or  referenced  herein.  The term  "Loan
Agreement" as may be used in any of the Loan  Documents  shall be interpreted to
mean the Loan Agreement,  together with and as modified by this  Agreement.  The
term  "Secured  Obligations"  as used in the Loan  Agreement  or any other  Loan
Documents shall be interpreted to include the Renewal Revolving Note and Renewal
Term Note in addition to all other obligations described therein.

     8. Bank's legal Fees,  Costs and  Expenses.  In  consideration  of and as a
condition  precedent to the Bank's  agreement to the  execution,  amendments and
modifications  described  herein,  Borrower agrees to and shall pay promptly all
fees,  including  but not limited to the Bank's  attorneys'  fees,  expenses and
charges  with respect to and in  connection  with this  Agreement  and all other
documents  contemplated  hereby,  including  but not limited to,  recording  and
filing fees, and fees and expenses of counsel employed by the Bank in connection
with  the  documentation  and  closing  of  the  transactions,   amendments  and
modifications  contemplated  hereby,  and Borrower hereby agrees to pay promptly
all hereafter  incurred  fees,  including  but not limited to  attorneys'  fees,
expenses  and  charges  of the Bank  which are  incidental  to the  enforcement,
defense,  amendment,  modification,  extension,  renewal  or  change of the Loan
Agreement, this Agreement or any other Loan Documents.

     9.  Separability.  If any  provision of this  Agreement  and the other Loan
Documents is held invalid or  unenforceable  for any reason,  such invalidity or
unenforceability  shall  not  affect  the  other  provisions  hereof,  and  this
Agreement  and the other Loan  Documents  shall be construed  and enforced as if
such provision had not been included herein.


                                        4

<PAGE>



     10. Binding Effect.  Except as otherwise  expressly  provided herein,  this
Agreement  will remain in effect  until all of  Borrower's  obligations  to Bank
under this Agreement have been fully discharged. This Agreement shall be binding
upon Borrower and its successors and assigns,  and shall inure to the benefit of
the Bank, its successors and assigns.

     11.   Headings.   The  headings  used  herein  are  for   convenience   and
administrative  purposes only and do not  constitute  substantive  matters to be
considered in construing the terms and provisions of this Agreement.

     12.  Governing  Law. This  Agreement  shall be governed and  interpreted in
accordance with the laws of the State of Oklahoma.

     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as
of the day and year first above written.

                            THE HOME-STAKE OIL & GAS COMPANY,
                            an Oklahoma corporation


                            By: /s/ Chris K. Corcoran
                               -------------------------------------------
                               Chris K. Corcoran, Executive Vice-President

                                                                "BORROWER"





                            BOATMEN'S  NATIONAL BANK OF
                            OKLAHOMA, formerly known as
                            BANK IV  Oklahoma,  N.A., a
                            national            banking
                            association


                            By: /s/ Robert O. Laird
                               -------------------------------------------
                               Robert O. Laird, Vice President
                                                                    "BANK"


                                        5

<PAGE>



                                   EXHIBIT "A"


                 EXTENDED, MODIFIED AND RENEWED PROMISSORY NOTE
                            (Renewal Revolving Note)

$500,000.00                                                      Tulsa, Oklahoma
                                                                     May 1, 1997

     1. FOR VALUE RECEIVED the undersigned, THE HOME-STAKE OIL & GAS COMPANY, an
Oklahoma  corporation  ("Maker"),  promises  to pay to the  order  of  BOATMEN'S
NATIONAL BANK OF OKLAHOMA,  formerly known as BANK IV OKLAHOMA, N.A., a national
banking association ("Payee"),  the principal amount of this Note or such amount
thereof as shall be advanced  and  outstanding,  together  with  interest on the
unpaid balance of such amount at the rate  hereinafter  set forth.  This Note is
issued  pursuant to that certain Third Amended and Restated Loan  Agreement (the
"Original Loan Agreement") dated March 29, 1995 as amended by that certain First
Amendment and Modification  Agreement to Loan Agreement (the "First  Amendment")
dated May 1, 1996 and that certain Second Amendment and  Modification  Agreement
to Loan Agreement  (the "Second  Amendment") of even date herewith (the Original
Loan Agreement as amended by the First Amendment and the Second  Amendment being
referred to as the "Loan Agreement") by and between Payee, as Lender,  and Maker
as Borrower, and is subject to the provisions therein set forth. The obligations
represented by this Note are secured by the Loan Documents described in the Loan
Agreement.

     2.   Principal   Amount.   FIVE  HUNDRED   THOUSAND   AND  NO/100   DOLLARS
($500,000.00).

     3. Payments. All accrued interest on the unpaid balance of this Note is due
and payable on the first day of each calendar month, commencing June 1, 1997 and
continuing on the first day of each month  thereafter until May 1, 1998 at which
time all principal and accrued and unpaid  interest  shall be due and payable to
Payee in full.  Interest  on this Note shall  accrue  from the date of the first
advance under this Note and any payment shall be applied first to the payment of
interest then due and second to the reduction of unpaid principal.

     4.  Interest  Rate.  Interest  shall  accrue on the  outstanding  principal
balance at the "Prime Rate" minus one percent  (-1%) per annum.  The term "Prime
Rate" means that rate of interest computed as an average of corporate loan rates
quoted by a certain number of the nation's largest banks, as announced from time
to time in the Wall Street Journal,  Southwest Edition, as the "prime rate". The
Prime Rate shall be adjusted  daily as  announced,  calculated on the basis of a
year of 360 days and a month of 30 days.  Changes  in the rate  charged  on this
Note are effective,  without notice,  on the same day as the effective change in
the Prime Rate as established  from time to time. In any case where a payment of
principal and/or interest on this Note, or any part thereof,  is due on a day on
which the Bank is not open for normal banking business, the undersigned shall be
entitled to delay such  payments  until the next  succeeding  business  day, but
interest shall continue to accrue until the payment is in fact made.

                                       -1-

<PAGE>



     5. Interest Rate After Maturity.  Matured and unpaid principal,  whether by
acceleration  or  otherwise,  shall  bear  interest  at the Prime Rate plus five
percent (5%) per annum.

     6. Prepayment Penalties.  This Note may be prepaid, in whole or in part, at
any time, without premium or penalty.

     7. Default.  If the principal or any  installment of interest due upon this
Note is not paid as and  when  the same  becomes  due and  payable  (whether  by
demand,  extension,  acceleration  or otherwise),  or any party now or hereafter
liable (directly or indirectly) for payment of this Note makes an assignment for
benefit of  creditors,  has an order for relief  entered under the United States
Bankruptcy  Code,  as  amended,  seeks the  benefits  of any  other  bankruptcy,
insolvency or reorganization law, or becomes insolvent, or any receiver, trustee
or like  officer is  appointed  to take  custody,  possession  or control of any
property of any such party, or upon the occurrence of any event of default under
the Loan Agreement or any other Loan Documents, the holder hereof may, after the
expiration  of any grace or notice  period as  provided  in the Loan  Agreement,
without  further notice and without  presentment or demand for payment,  declare
all of the unpaid balance hereof to be immediately  due and payable.  Such right
of  acceleration  is cumulative  and in addition to any other right or rights of
acceleration  under the Loan  Agreement  and any other  writing now or hereafter
evidencing or securing payment of any of the indebtedness evidenced hereby.

     8.  Costs and  Attorneys'  Fees.  If this Note is placed in the hands of an
attorney for  collection,  or suit is brought on same,  or the same is collected
through  Bankruptcy or other  judicial  proceeding,  or the Payee is required to
defend the  priority  of the  security,  then the  undersigned  shall pay all of
Payee's  reasonable costs and expenses including but not limited to a reasonable
amount as attorneys' fees.

     9.  Waivers.  Maker and any party  which  may be or become  liable  for the
payment  of any  sums of money  payable  on this  Note  (including  any  surety,
endorser or  guarantor)  severally  waive  presentment  and demand for  payment,
protest,  notice of  protest  and  nonpayment,  and notice of the  intention  to
accelerate, and agree that their liability on this Note shall not be affected by
any renewal or extension in the time of payment hereof, by any indulgences or by
any release or change in any security  for the payment of this Note,  regardless
of the number of such renewals, extensions, indulgences, releases or changes.

     10.  Right of  Offset.  Any  indebtedness  due from  holder  hereof  to the
undersigned or any party hereto including, but without limitation,  any deposits
or credit  balances due from holder,  is pledged to secure  payment of this Note
and any other  obligation to holder of the undersigned or any party hereto,  and
may at any time while the whole or any part of such  obligation  remains unpaid,
either before or after maturity hereof, be appropriated,  held or applied toward
the payment of this Note or any other obligation to holder of the undersigned or
any party hereto.

     11.  Governing  Law.  This Note has been  executed  and  delivered in Tulsa
County, Oklahoma and shall be governed by and construed according to the laws of
the State of Oklahoma.

                                       -2-

<PAGE>


     12.  Extension.  This  Note  extends,  modifies  and  renews  (but does not
extinguish the indebtedness  represented by) that certain  Promissory Note dated
May 1,  1996  by the  Maker  in  favor  of the  Payee  in  the  face  amount  of
$500,000.00.


                                 THE HOME-STAKE OIL & GAS COMPANY,
                                 an Oklahoma corporation



                                 By:___________________________________________
                                    Chris K. Corcoran, Executive Vice-President


                                       -3-

<PAGE>



                                   EXHIBIT "B"


                 EXTENDED, MODIFIED AND RENEWED PROMISSORY NOTE
                               (Renewal Term Note)

$2,966,860.00                                                    Tulsa, Oklahoma
                                                                     May 1, 1997

     1. FOR VALUE RECEIVED the undersigned, THE HOME-STAKE OIL & GAS COMPANY, an
Oklahoma  corporation  ("Maker"),  promises  to pay to the  order  of  BOATMEN'S
NATIONAL BANK OF OKLAHOMA,  formerly known as BANK IV OKLAHOMA, N.A., a national
banking association ("Payee"),  the principal amount of this Note, together with
interest on the unpaid balance of such amount at the rate hereinafter set forth.
This Note is issued  pursuant to that certain  Third  Amended and Restated  Loan
Agreement (the "Original  Loan  Agreement")  dated March 29, 1995, as amended by
that certain First Amendment and  Modification  Agreement to Loan Agreement (the
"First  Amendment")  dated May 1, 1996 and that  certain  Second  Amendment  and
Modification  Agreement to Loan Agreement (the "Second  Amendment") of even date
herewith (the Original Loan Agreement as amended by the First  Amendment and the
Second  Amendment  being  referred  to as the "Loan  Agreement")  by and between
Payee,  as Lender,  and Maker as  Borrower,  and is  subject  to the  provisions
therein set forth.  The obligations  represented by this Note are secured by the
Loan Documents described in the Loan Agreement.

     2.  Principal  Amount.  TWO MILLION NINE HUNDRED  SIXTY-SIX  THOUSAND EIGHT
HUNDRED SIXTY AND NO/100 DOLLARS ($2,966,860.00).

     3.  Payments.  All  accrued  interest  on the  unpaid  balance of this Note
together with principal  payments of ONE HUNDRED  FOURTEEN  THOUSAND ONE HUNDRED
TEN  DOLLARS  ($114,110.00)  each are due and  payable  on the first day of each
calendar month,  commencing June 1, 1997 and continuing on the first day of each
month  thereafter until May 1, 1999, at which time all principal and accrued and
unpaid interest shall be due and payable to Payee in full. Interest on this Note
shall accrue from the date of this Note and any payment  shall be applied  first
to the  payment  of  interest  then due and  second to the  reduction  of unpaid
principal.

     4.  Interest  Rate.  Interest  shall  accrue on the  outstanding  principal
balance at the "Prime Rate" minus one-half  percent (-1/2%) per annum.  The term
"Prime  Rate"  means that rate of interest  computed as an average of  corporate
loan  rates  quoted  by a certain  number  of the  nation's  largest  banks,  as
announced from time to time in the Wall Street Journal, Southwest Edition as the
"prime rate". The Prime Rate shall be adjusted daily as announced, calculated on
the  basis of a year of 360 days  and a month  of 30 days.  Changes  in the rate
charged  on this  Note are  effective,  without  notice,  on the same day as the
effective change in the Prime Rate as established from time to time. In any case
where a payment of principal  and/or interest on this Note, or any part thereof,
is due on a day on which the Bank is not open for normal banking  business,  the
undersigned  shall be entitled to delay such payments until the next  succeeding
business day, but interest shall continue to accrue until the payment is in fact
made.

                                       -1-


<PAGE>

     5. Interest Rate After Maturity.  Matured and unpaid principal,  whether by
acceleration  or  otherwise,  shall  bear  interest  at the Prime Rate plus five
percent (5%) per annum.

     6. Prepayment Penalties.  This Note may be prepaid, in whole or in part, at
any time, without premium or penalty.

     7. Default.  If the principal or any  installment of interest due upon this
Note is not paid as and  when  the same  becomes  due and  payable  (whether  by
demand,  extension,  acceleration  or otherwise),  or any party now or hereafter
liable (directly or indirectly) for payment of this Note makes an assignment for
benefit of  creditors,  has an order for relief  entered under the United States
Bankruptcy  Code,  as  amended,  seeks the  benefits  of any  other  bankruptcy,
insolvency or reorganization law, or becomes insolvent, or any receiver, trustee
or like  officer is  appointed  to take  custody,  possession  or control of any
property of any such party, or upon the occurrence of any event of default under
the Loan Agreement or any other Loan Documents, the holder hereof may, after the
expiration  of any grace or notice  period as  provided  in the Loan  Agreement,
without  further notice and without  presentment or demand for payment,  declare
all of the unpaid balance hereof to be immediately  due and payable.  Such right
of  acceleration  is cumulative  and in addition to any other right or rights of
acceleration  under the Loan  Agreement  and any other  writing now or hereafter
evidencing or securing payment of any of the indebtedness evidenced hereby.

     8.  Costs and  Attorneys'  Fees.  If this Note is placed in the hands of an
attorney for  collection,  or suit is brought on same,  or the same is collected
through  Bankruptcy or other  judicial  proceeding,  or the Payee is required to
defend the  priority  of the  security,  then the  undersigned  shall pay all of
Payee's  reasonable costs and expenses including but not limited to a reasonable
amount as attorneys' fees.

     9.  Waivers.  Maker and any party  which  may be or become  liable  for the
payment  of any  sums of money  payable  on this  Note  (including  any  surety,
endorser or  guarantor)  severally  waive  presentment  and demand for  payment,
protest,  notice of  protest  and  nonpayment,  and notice of the  intention  to
accelerate, and agree that their liability on this note shall not be affected by
any renewal or extension in the time of payment hereof, by any indulgences or by
any release or change in any security  for the payment of this note,  regardless
of the number of such renewals, extensions, indulgences, releases or changes.

     10.  Right of  Offset.  Any  indebtedness  due from  holder  hereof  to the
undersigned or any party hereto including, but without limitation,  any deposits
or credit  balances due from holder,  is pledged to secure  payment of this Note
and any other  obligation to holder of the undersigned or any party hereto,  and
may at any time while the whole or any part of such  obligation  remains unpaid,
either before or after maturity hereof, be appropriated,  held or applied toward
the payment of this Note or any other obligation to holder of the undersigned or
any party hereto.

     11.  Governing  Law.  This Note has been  executed  and  delivered in Tulsa
County, Oklahoma and shall be governed by and construed according to the laws of
the State of Oklahoma.

                                       -2-

<PAGE>


     12.  Extension.  This  Note  extends,  modifies  and  renews  (but does not
extinguish the indebtedness  represented) by that certain  Promissory Note dated
May 1,  1996 by the  Maker in the  favor of the  Payment  in the face  amount of
$2,966,860.00.

                                  THE HOME-STAKE OIL & GAS COMPANY,
                                  an Oklahoma corporation



                                  By:___________________________________________
                                     Chris K. Corcoran, Executive Vice-President


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