FIRST AMENDMENT AND MODIFICATION AGREEMENT
                     TO AMENDED AND RESTATED LOAN AGREEMENT


         This First Amendment and Modification Agreement to Amended and Restated
Loan Agreement (the  "Agreement")  is executed as of the 1st day of May, 1999 in
Tulsa,  Oklahoma,  by and  between  HOME-STAKE  OIL & GAS  COMPANY  an  Oklahoma
corporation  (formerly  known as The Home-Stake Oil & Gas Company)  ("Borrower")
and NATIONSBANK, N.A., a national banking association (the "Bank").

                                 R E C I T A L S

     A.  Borrower has had and  currently  has a financing  arrangement  with the
Lender as  currently  set forth and  provided  under that  certain  Amended  and
Restated Loan  Agreement  dated as of March 31, 1998 made,  executed and entered
into between Borrower and Lender (the "Loan Agreement").

     B.  Borrower's  indebtedness  to the  Lender  as  provided  under  the Loan
Agreement is currently  evidenced by the  following  promissory  notes,  each of
which represents a renewal and extension of a prior note:

          (1) that  certain  Promissory  Note (the "Term  Note") dated March 31,
     1998 in the original principal amount of $6,600,000,  the principal balance
     of which is $4,950,000.00 as of the date hereof,  interest having been paid
     to date; and

          (2) that certain  Promissory Note (the  "Revolving  Note") dated March
     31, 1998 in the original  principal amount of $5,000,000.00,  the principal
     balance of which is $825,000.00 as of the date hereof, interest having been
     paid to date.

     C. Repayment of the Notes,  together with all other obligations of Borrower
to the  Bank,  is  secured  by a  first  priority  security  interest  in and to
Borrower's Collateral as defined in the Loan Agreement and Security Agreement.

     D.  Borrower  has  requested  that the Bank  extended  the  maturity of the
Revolving Loan and the Term Note 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. 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:

                                       -1-

<PAGE>



     This commitment shall expire, unless earlier terminated at 2:00 p.m. Tulsa,
     Oklahoma,  time on May 1, 2000,  unless the Lender and Borrower agree to an
     extension hereof; provided however, that nothing herein shall constitute an
     agreement on the part of the Lender to grant an extension hereof.

2. Renewal Note.  Concurrently  with the execution of this  Agreement,  Borrower
shall execute and deliver to the Bank that certain Promissory Note (the "Renewal
Revolving Note") of an even date herewith in the face amount of $5,000,000.00 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.

3.  Renewal  Term  Note.  Concurrently  with the  execution  of this  Agreement,
Borrower shall execute and deliver to the Bank that certain Promissory Note (the
"Renewal   Term  Note")  of  an  even  date  herewith  in  the  face  amount  of
$4,950,000.00  in the form as shown in Exhibit  "B"  attached  hereto and made a
part hereof,  thereby evidencing  Borrower's  obligation to repay advances under
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.  Further all references in
the Loan  Agreement  and the other Loan  Documents to the term "Notes"  shall be
amended  throughout  to refer  collectively  to the  "Renewal  Term Note and the
Renewal  Revolving  Note  and  all  references  to the  term  "Loans"shall  mean
collectively  the loans  evidenced  by the  Renewal  Term  Note and the  Renewal
Revolving Note.

4.  Ratification of Security  Interests/Additional  Collateral.  Borrower hereby
ratifies,  confirms  and  reaffirms  all  security  interests,  liens  and other
encumbrances  created under the Loan Agreement,  the Mortgage and all other Loan
Documents as security for repayment of Borrower's  Indebtedness (as that term is
defined in the Loan  Agreement) 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  Revolving Note and
Renewal Term Note.  Further, as a condition precedent to the execution hereof by
the  Lender,  Borrower  shall  make,  execute  and  deliver to the  Lender  such
Amendments  to Mortgages or Deeds of Trust in form and  substance  acceptable to
the  Lender  whereby  the  Security  Instruments  shall  be  amended  throughout
consistent herewith.

5. Net Worth.  Paragraph 5.17 of the Loan Agreement is hereby amended to read as
follows:

                                       -2-

<PAGE>



          5.17 Net  Worth.  The  Borrower  shall not permit its Nets Worth to be
     less  than  $15,000,000.00  at  any  time  prior  to  the  payment  of  the
     Indebtedness in full.

6. Year 2000.  The Borrower  has (i)  initiated a review and  assessment  of all
areas within its  business and  operations  (including  those  affected by major
suppliers  and  vendors)  that  could be  adversely  affected  by the "Year 2000
Problem" (that is, the risk that computer  applications used by the Borrower (or
its major suppliers and vendors) may be unable to recognize and perform properly
date-sensitive  functions  involving  certain  dates prior to and any date after
December 31, 1999),  (ii)  developed a plan and timeline for addressing the Year
2000  Problem on a timely  basis,  and (iii) to date,  implemented  that plan in
accordance  with that  timetable.  The  Borrower  reasonably  believes  that all
computer applications  (including those of its major suppliers and vendors) that
are material to its business  and  operations  will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a failure
to do so could not reasonably be expected to have material  adverse effect.  The
Borrower will promptly notify the Lender in the event the Borrower  discovers or
determines that any computer application (including those of its major suppliers
and vendors)  that is material to its business and  operations  will not be Year
2000  compliant on a timely basis,  except to the extent that such failure could
not reasonably be expected to have a material adverse effect.

7. 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 through 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 the Borrower hereby ratifies,  reaffirms and reasserts as of the date
hereof all  covenants,  representations,  warranties,  agreements and statements
contained therein.  Further, and in addition to the representations,  warranties
and covenants  hereby ratified and reaffirmed,  Borrower  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  Articles 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.


                                       -3-

<PAGE>



         c. The Certificate of Officers dated as of March 1, 1998 made, executed
         and delivered by Borrower to the Bank continues to be in full force and
         effect and none of the resolutions  attached thereto have been amended,
         modified or repealed  in any  respect and all such  resolutions  are in
         full  force  and  effect  as of the date  hereof  and the  Articles  of
         Incorporation and Bylaws of the Borrower, copies of which were attached
         to such Certificate,  have not been modified,  amended or changed as of
         the date hereof, and are in full force and effect in all respects as of
         the date hereof.

         d. Borrower's financial statements dated as of December 31, 1998 copies
         of which  have been  furnished  to the  Bank,  have  been  prepared  in
         conformity  with  GAAP,  show  all  material  liabilities,  direct  and
         contingent,  and fairly present the financial condition of the Borrower
         as of such date and the results of their 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 the Borrower.

         e. The  Borrower has full power,  authority  and legal right to own and
         operate the  properties  which it now owns and operates and to carry on
         the lines of business in which it is now engaged,  and the Borrower has
         good title to the Collateral  free of all Title Defects,  subject to no
         Lien of any kind  except  Liens in favor  of the  Lender  or  otherwise
         permitted by this Agreement. The Borrower has full power, authority and
         legal  right to execute  and  deliver  and to perform  and  observe the
         provisions of this Agreement and the other Loan Documents.

         f. With respect to the Mortgaged Property,  Borrower is entitled to not
         less than that  portion  of the net  revenue  interest  as is set forth
         opposite the name of such  property on Exhibit "C" attached  hereto and
         made a part hereof and payments are being  received from  purchasers of
         production  with  respect to said  interests  and no such  payments are
         subject to any suspension.

8. 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 the 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  Revolving  Note or Renewal Term 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.

9. "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, the Renewal Term Note and all of the other documents  heretofore
or hereafter creating, evidencing,  securing and/or relating to the Indebtedness
of the Borrower to the Bank as contemplated or referenced herein.

                                       -4-

<PAGE>



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  "Indebtedness"  as used in the Loan Agreement or any other
Loan Documents  shall be  interpreted to include the Renewal  Revolving Note and
the Renewal Term Note in addition to all other obligations described therein.

10.  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  the  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.

11.  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.

12.  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, its successors and assigns, as applicable, and shall inure to the
benefit of the Bank, its successors and assigns.

13.  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.

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

15.  ARBITRATION.  ANY  CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING  BUT  NOT  LIMITED  TO  THOSE  ARISING  OUT  OF OR  RELATING  TO  THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT  AND ANY OTHER LOAN  DOCUMENTS OR ANY RELATED
INSTRUMENTS,  AGREEMENTS OR  DOCUMENTS,  INCLUDING ANY CLAIM BASED ON OR ARISING
FROM AN ALLEGED TORT,  SHALL BE DETERMINED BY BINDING  ARBITRATION IN ACCORDANCE
WITH THE FEDERAL  ARBITRATION  ACT (OR IF NOT APPLICABLE,  THE APPLICABLE  STATE
LAW),  THE RULES OF PRACTICE AND  PROCEDURE  FOR THE  ARBITRATION  OF COMMERCIAL
DISPUTES OF  J.A.M.S./ENDISPUTE  OR ANY SUCCESSOR  THEREOF  ("J.A.M.S.") AND THE

                                       -5-

<PAGE>



"SPECIAL RULES" SET FORTH BELOW, IN THE EVENT OF ANY INCONSISTENCY,  THE SPECIAL
RULES SHALL CONTROL.  JUDGMENT UPON ANY ARBITRATION  AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION.  ANY PARTY TO THIS INSTRUMENT,  AGREEMENT OR DOCUMENT
MAY BRING AN ACTION,  INCLUDING  A SUMMARY OR  EXPEDITED  PROCEEDING,  TO COMPEL
ARBITRATION OF ANY  CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT  APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.

     A. SPECIAL RULES.  THE ARBITRATION  SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S  DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT,  AGREEMENT
OR DOCUMENT AND  ADMINISTERED  BY J.A.M.S.  WHO WILL APPOINT AN  ARBITRATOR;  IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN  ARBITRATION  ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE  COMMENCED  WITHIN  90  DAYS  OF THE  DEMAND  FOR  ARBITRATION;  FURTHER  THE
ARBITRATOR  SHALL  ONLY,  UPON A SHOWING OF CAUSE,  BE  PERMITTED  TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.

     B. RESERVATION OF RIGHTS.  NOTHING IN THIS  ARBITRATION  PROVISION SHALL BE
DEEMED TO (I) LIMIT THE  APPLICABILITY OF ANY OTHERWISE  APPLICABLE  STATUTES OF
LIMITATIONS OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT;  OR (II) BE A WAIVER BY BANK OF THE  PROTECTION  AFFORDED  TO IT BY 12
U.S.C.  SEC. 91 OR ANY  SUBSTANTIALLY  EQUIVALENT  STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO)  SETOFF  OR (B)  TO  FORECLOSE  AGAINST  ANY  REAL  OR  PERSONAL  PROPERTIES
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER.  BANK MAY  EXERCISE  SUCH SELF HELP RIGHTS,  FORECLOSE  UPON SUCH
PROPERTY OR OBTAIN SUCH  PROVISIONAL  OR ANCILLARY  REMEDIES  BEFORE,  DURING OR
AFTER THE  PENDENCY  OF ANY  ARBITRATION  PROCEEDING  BROUGHT  PURSUANT  TO THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT.  NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE  INSTITUTION OR MAINTENANCE OF AN ACTION FOR  FORECLOSURE OR PROVISIONAL
OR  ANCILLARY  REMEDIES  SHALL  CONSTITUTE  A WAIVER OF THE RIGHT OF ANY  PARTY,
INCLUDING  THE  CLAIMANT  IN ANY SUCH  ACTION,  TO  ARBITRATE  THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.


                                       -6-

<PAGE>




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

                HOME-STAKE OIL & GAS COMPANY
                an Oklahoma corporation,


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


                NATIONSBANK, N.A., a national banking association


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


                                       -7-

<PAGE>



                                INDEX OF EXHIBITS

Exhibit A   -    $5,000,000.00 Promissory Note - Renewal Revolving Note

Exhibit B   -    $4,950,000.00 Promissory Note - Renewal Term Note

Exhibit C   -    Net Revenue Interest *

-------------------------------------

*  Omitted.  Registrant  agrees  to  furnish  supplementally  a copy of any such
omitted Exhibits to the Securities and Exchange Commission upon its request.



                                       -8-

<PAGE>



                                   EXHIBIT "A"

                                 PROMISSORY NOTE
                            (RENEWAL REVOLVING NOTE)

$5,000,000.00                                                        May 1, 1999

1. FOR VALUE RECEIVED the undersigned, HOME-STAKE OIL & GAS COMPANY, an Oklahoma
corporation,  promises  to pay to the order of  NATIONSBANK,  N.A.  an  Oklahoma
corporation  ("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  Amended and Restated  Loan  Agreement  (the  "Original
Agreement")  dated  as of  March  31,  1998 as  amended  by that  certain  First
Amendment  and  Modification  Agreement  (the  "First  Amendment")  of even date
herewith, by and between Payee, as Lender, and Maker as Borrower, and is subject
to the provisions  therein set forth.  The Original  Agreement as amended by the
First  Amendment  thereto and as the same may be further amended and modified is
hereinafter referred to as the "Agreement".  The obligations represented by this
Note are secured by the Loan Documents described in the Agreement.

2. Principal Amount. FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00).

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, 1999 and
continuing on the first day of each month thereafter until May 1, 2000, 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  (1.00%)  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.

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%).

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,

                                       -9-

<PAGE>



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 Agreement or any other Loan Documents, the holder hereof may, without 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  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
Probate, Bankruptcy or other judicial proceeding, or 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. Renewal. This Note is an amendment, modification, extension and renewal (but
not an  extinguishment  of) that certain  Promissory  Note dated as of March 31,
1998 in the face amount of  $5,000,000.00  made by the  undersigned  in favor of
Maker.

12.  ARBITRATION.  ANY  CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING  BUT  NOT  LIMITED  TO  THOSE  ARISING  OUT  OF OR  RELATING  TO  THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT  AND ANY OTHER LOAN  DOCUMENTS OR ANY RELATED
INSTRUMENTS,  AGREEMENTS OR  DOCUMENTS,  INCLUDING ANY CLAIM BASED ON OR ARISING
FROM AN ALLEGED TORT,  SHALL BE DETERMINED BY BINDING  ARBITRATION IN ACCORDANCE
WITH THE FEDERAL  ARBITRATION  ACT (OR IF NOT APPLICABLE,  THE APPLICABLE  STATE
LAW),  THE RULES OF PRACTICE AND  PROCEDURE  FOR THE  ARBITRATION  OF COMMERCIAL
DISPUTES OF  J.A.M.S./ENDISPUTE  OR ANY SUCCESSOR  THEREOF  ("J.A.M.S.") AND THE
"SPECIAL RULES" SET FORTH BELOW, IN THE EVENT OF ANY INCONSISTENCY,  THE SPECIAL
RULES SHALL CONTROL.  JUDGMENT UPON ANY ARBITRATION  AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION.  ANY PARTY TO THIS INSTRUMENT,  AGREEMENT OR DOCUMENT
MAY BRING AN ACTION,  INCLUDING  A SUMMARY OR  EXPEDITED  PROCEEDING,  TO COMPEL
ARBITRATION OF ANY  CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT  APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.

                                      -10-

<PAGE>




     A. SPECIAL RULES.  THE ARBITRATION  SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S  DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT,  AGREEMENT
OR DOCUMENT AND  ADMINISTERED  BY J.A.M.S.  WHO WILL APPOINT AN  ARBITRATOR;  IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN  ARBITRATION  ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE  COMMENCED  WITHIN  90  DAYS  OF THE  DEMAND  FOR  ARBITRATION;  FURTHER  THE
ARBITRATOR  SHALL  ONLY,  UPON A SHOWING OF CAUSE,  BE  PERMITTED  TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.

     B. RESERVATION OF RIGHTS.  NOTHING IN THIS  ARBITRATION  PROVISION SHALL BE
DEEMED TO (I) LIMIT THE  APPLICABILITY OF ANY OTHERWISE  APPLICABLE  STATUTES OF
LIMITATIONS OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT;  OR (II) BE A WAIVER BY BANK OF THE  PROTECTION  AFFORDED  TO IT BY 12
U.S.C.  SEC. 91 OR ANY  SUBSTANTIALLY  EQUIVALENT  STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO)  SETOFF  OR (B)  TO  FORECLOSE  AGAINST  ANY  REAL  OR  PERSONAL  PROPERTIES
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER.  BANK MAY  EXERCISE  SUCH SELF HELP RIGHTS,  FORECLOSE  UPON SUCH
PROPERTY OR OBTAIN SUCH  PROVISIONAL  OR ANCILLARY  REMEDIES  BEFORE,  DURING OR
AFTER THE  PENDENCY  OF ANY  ARBITRATION  PROCEEDING  BROUGHT  PURSUANT  TO THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT.  NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE  INSTITUTION OR MAINTENANCE OF AN ACTION FOR  FORECLOSURE OR PROVISIONAL
OR  ANCILLARY  REMEDIES  SHALL  CONSTITUTE  A WAIVER OF THE RIGHT OF ANY  PARTY,
INCLUDING  THE  CLAIMANT  IN ANY SUCH  ACTION,  TO  ARBITRATE  THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.

13.  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.

                          HOME-STAKE OIL & GAS COMPANY,
                             an Oklahoma corporation


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


                                      -11-

<PAGE>



                                   EXHIBIT "B"

                                 PROMISSORY NOTE
                               (RENEWAL TERM NOTE)

$4,950,000.00                                                        May 1, 1999

1. FOR VALUE RECEIVED the undersigned, HOME-STAKE OIL & GAS COMPANY, an Oklahoma
corporation,  promises  to pay to the order of  NATIONSBANK,  N.A.,  an Oklahoma
corporation  ("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  Amended and Restated  Loan  Agreement  (the  "Original
Agreement")  dated  as of  March  31,  1998 as  amended  by that  certain  First
Amendment  and  Modification  Agreement  (the  "First  Amendment")  of even date
herewith, by and between Payee, as Lender, and Maker as Borrower, and is subject
to the provisions  therein set forth.  The Original  Agreement as amended by the
First  Amendment  thereto and as the same may be further amended and modified is
hereinafter referred to as the "Agreement".  The obligations represented by this
Note are secured by the Loan Documents described in the Agreement.

2. Principal Amount. FOUR MILLION NINE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($5,060,000.00).

3. Payments.  Principal hall be due and payable in monthly  installments each in
the amount of One Hundred Ten Thousand and no/100 Dollars  ($110,000.00)  plus a
payment of all unpaid interest accrued hereunder, said principal and interest to
be due and payable monthly,  commencing June 1, 1999 and continuing on the first
(1st) day of each month thereafter until May 1, 2001 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-half  percent (.50%) 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.

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

                                      -12-

<PAGE>



(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  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  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
Probate, Bankruptcy or other judicial proceeding, or 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. Renewal. This Note is an amendment, modification, extension and renewal (but
not an  extinguishment  of) that certain  Promissory  Note in the face amount of
$6,600,000.00  dated as of March 31,  1998 made by the  undersigned  in favor of
Maker.

12.  ARBITRATION.  ANY  CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING  BUT  NOT  LIMITED  TO  THOSE  ARISING  OUT  OF OR  RELATING  TO  THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT  AND ANY OTHER LOAN  DOCUMENTS OR ANY RELATED
INSTRUMENTS,  AGREEMENTS OR  DOCUMENTS,  INCLUDING ANY CLAIM BASED ON OR ARISING
FROM AN ALLEGED TORT,  SHALL BE DETERMINED BY BINDING  ARBITRATION IN ACCORDANCE
WITH THE FEDERAL  ARBITRATION  ACT (OR IF NOT APPLICABLE,  THE APPLICABLE  STATE
LAW),  THE RULES OF PRACTICE AND  PROCEDURE  FOR THE  ARBITRATION  OF COMMERCIAL
DISPUTES OF  J.A.M.S./ENDISPUTE  OR ANY SUCCESSOR  THEREOF  ("J.A.M.S.") AND THE
"SPECIAL RULES" SET FORTH BELOW, IN THE EVENT OF ANY INCONSISTENCY,  THE SPECIAL
RULES SHALL CONTROL.  JUDGMENT UPON ANY ARBITRATION  AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION.  ANY PARTY TO THIS INSTRUMENT,  AGREEMENT OR DOCUMENT

                                      -13-

<PAGE>


MAY BRING AN ACTION,  INCLUDING  A SUMMARY OR  EXPEDITED  PROCEEDING,  TO COMPEL
ARBITRATION OF ANY  CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT  APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.

     A. SPECIAL RULES.  THE ARBITRATION  SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S  DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT,  AGREEMENT
OR DOCUMENT AND  ADMINISTERED  BY J.A.M.S.  WHO WILL APPOINT AN  ARBITRATOR;  IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN  ARBITRATION  ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE  COMMENCED  WITHIN  90  DAYS  OF THE  DEMAND  FOR  ARBITRATION;  FURTHER  THE
ARBITRATOR  SHALL  ONLY,  UPON A SHOWING OF CAUSE,  BE  PERMITTED  TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.

     B. RESERVATION OF RIGHTS.  NOTHING IN THIS  ARBITRATION  PROVISION SHALL BE
DEEMED TO (I) LIMIT THE  APPLICABILITY OF ANY OTHERWISE  APPLICABLE  STATUTES OF
LIMITATIONS OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT;  OR (II) BE A WAIVER BY BANK OF THE  PROTECTION  AFFORDED  TO IT BY 12
U.S.C.  SEC. 91 OR ANY  SUBSTANTIALLY  EQUIVALENT  STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO)  SETOFF  OR (B)  TO  FORECLOSE  AGAINST  ANY  REAL  OR  PERSONAL  PROPERTIES
COLLATERAL, OR (C) OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS
(BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF
A  RECEIVER.  BANK MAY  EXERCISE  SUCH SELF  HELP  RIGHTS,  FORECLOSE  UPON SUCH
PROPERTY OR OBTAIN SUCH  PROVISIONAL  OR ANCILLARY  REMEDIES  BEFORE,  DURING OR
AFTER THE  PENDENCY  OF ANY  ARBITRATION  PROCEEDING  BROUGHT  PURSUANT  TO THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT.  NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE  INSTITUTION OR MAINTENANCE OF AN ACTION FOR  FORECLOSURE OR PROVISIONAL
OR  ANCILLARY  REMEDIES  SHALL  CONSTITUTE  A WAIVER OF THE RIGHT OF ANY  PARTY,
INCLUDING  THE  CLAIMANT  IN ANY SUCH  ACTION,  TO  ARBITRATE  THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.

13.  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.

                          HOME-STAKE OIL & GAS COMPANY,
                             an Oklahoma corporation


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

                                      -14-

<PAGE>