SPECIAL LOAN AGREEMENT


     This  Agreement  is made and entered  into as of November 8, 1999,  between
HOME-STAKE OIL & GAS COMPANY, an Oklahoma corporation (the "Borrower"), and BANK
OF OKLAHOMA, NATIONAL ASSOCIATION, a national banking association (the "Bank");

     WHEREAS,  the Borrower has applied to the Bank to obtain two separate loans
described as follows:

a)   a "Term Loan" in the principal sum of  $3,400,000.00 to be evidenced by the
     promissory  note of the  Borrower in such amount to be payable to the order
     of the Bank in 33 consecutive  monthly  installments of principal,  each in
     the amount of  $100,000.00,  due and payable on the last day of each month,
     commencing  December 31, 1999,  and a final  installment  due September 30,
     2002,  in the  amount of all  remaining  unpaid  principal,  together  with
     interest on the unpaid  balances of principal at an annual rate of interest
     equal from day to day to  three-fourths  of one percent per annum less than
     that annual rate of interest from time to time established and announced by
     Chase Manhattan Bank of New York, New York ("Chase Bank") as its prime rate
     of interest (the "Chase Prime Rate");

b)   a "Revolving  Credit Loan" to be  evidenced by the  promissory  note of the
     Borrower in the principal  amount of Five Million  Dollars  ($5,000,000.00)
     payable  to the  order  of the  Bank on  November  30,  2000,  and  bearing
     interest,  payable  monthly  on the  last  day of  each  month,  commencing
     December 31, 1999,  and at maturity on November 30, 2000, at an annual rate
     of  interest  equal from day to day to one  percent per annum less than the
     Chase Bank Prime Rate; and

c)   the promissory  note  evidencing the Term Loan is referred to herein as the
     "Term Note" and the promissory note evidencing the Revolving Credit Loan is
     referred to herein as the "Revolving Credit Note." Each reference herein to
     the Term Loan,  the Revolving  Credit Loan,  the Term Note or the Revolving
     Credit Note shall include a reference to each renewal, extension, deferral,
     rearrangement,  substitution  and  change in form  thereof  or in the terms
     thereof  which  may be from time to time and for and upon any term or terms
     effected by agreement between the Borrower and the Bank; and

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     WHEREAS,  the  Borrower  and the Bank have agreed upon the above  described
terms of each  Note and each  Loan and  additional  representations,  covenants,
warranties and agreements set forth herein.

     NOW, THEREFORE, in consideration of the mutual  representations,  covenants
and  undertakings  stated herein the Borrower and the Bank  represent,  warrant,
covenant and agree to and with each other as more fully hereinafter stated.

                       I. Representations of the Borrower

     1.1 Due Organization and Corporate Capacity.  The Borrower is a corporation
duly  organized  and  existing  under  and by virtue of the laws of the State of
Oklahoma  and its  corporate  charter  and  franchise  is in good  standing  and
unimpaired  in the State of Oklahoma.  The  governing  documents of the Borrower
authorize  the Borrower to conduct all the business and  transactions  currently
conducted  and  transacted  by it and  the  execution  by the  Borrower  of this
Agreement,  the above described  promissory  notes and all other documents to be
executed  by the  Borrower  in  connection  with  the  Loans do not and will not
violate,  contravene or be otherwise  prohibited by any term or provision of the
Articles or Certificate of Incorporation or By-laws of the Corporation.

     1.2 Due Authorization.  The execution of this Agreement and the Notes, when
executed on behalf of the Borrower by its Chairman of the Board,  President  and
Chief  Executive  Officer  are and shall be,  when  executed,  within  authority
clearly  established  by the governing body of the Borrower and the execution of
such documents (collectively the "Loan Documents") on behalf of the Borrower and
its due observance of, compliance with and performance of the terms,  provisions
and undertakings  stated and to be stated therein do not and will not violate or
contravene any term or provisions of any of the Borrower's  governing  documents
or  constitute  a  breach  of or  default  under  any term or  provision  of any
indenture,  encumbrance or other undertaking by which the Borrower or any of its
properties are bound.

     1.3 Financial  Statements.  All of the financial statements of the Borrower
furnished by it to the Bank in  connection  with its  application  for the Loans
are, as of the  respective  dates thereof and in respect of the periods  covered
thereby,  substantially  true and correct and were prepared in  accordance  with
generally accepted principles of accounting.  Such statements do not contain any

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materially  false  or  misleading  information  nor  omit or fail to  state  any
material  fact(s)  required to be stated in order to make any of such statements
not materially false or misleading.

                            II. Use of Loan Proceeds

     2.1 Term Loan  Proceeds.  The  proceeds of the Term Loan are intended to be
applied  by having  the Bank  purchase  from  Bank of  America,  N.A.  the loans
heretofore  made by it and its  predecessors  to the  Borrower  and  secured  by
mortgage and deed of trust  indentures and security  interests  covering oil and
gas  properties of the  Borrower.  Such loans will be purchased by the Bank from
Bank of America,  N.A. for the amount of unpaid  principal and accrued  interest
and unpaid charges,  if any, in respect  thereof,  and will be without  recourse
upon Bank of America,  N.A. which shall assign to the Bank all promissory  notes
of the Borrower presently payable to that Bank and all mortgages, deeds of trust
and other documents creating or evidencing any security interests created by the
Borrower.  The  Borrower  agrees  with the Bank  that upon  acquisition  of such
documents by the Bank from Bank of America,  N.A. that the Notes of the Borrower
evidencing  the Term Loan and the  Revolving  Credit  Loan shall be deemed to be
fully  secured  by such liens and  security  interests  created  or  purportedly
created by the loan  documents  to be obtained by the Bank from Bank of America,
N.A.

     Subsequent  to the  acquisition  by the Bank of the above  referenced  loan
documents  held by Bank of America,  N.A. the Borrower will execute  appropriate
documents  with the Bank to confirm to the Bank that the Notes became secured by
such Bank of America,  N.A. loan documents as and when the same were acquired by
the Bank. This may be deemed necessary or appropriate by counsel for the Bank to
require the recording  and filing of  supplemental  mortgage,  deed of trust and
related  documents at the expense of the  Borrower,  in which event the Borrower
shall execute and deliver to the Bank such  documents  and  agreements as may be
reasonably required as hereinafter provided.

     2.2 The Revolving  Credit Loan. The Loan evidenced by the Revolving  Credit
Note is  primarily  intended  to provide  funding  for the  Borrower  to acquire
additional oil and gas properties and for general working capital purposes.

     a)   In addition  to the  interest  required to be paid upon the  Revolving
          Credit Note the Borrower  hereby  agrees to pay to the Bank a "standby
          fee"  computed upon the amounts to which the Borrower has not utilized

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          this  credit  at an annual  rate of  interest  equal to  three-eighths
          (3/8ths) of one percent per annum. Within ten days following the close
          of each  quarter-annual  period the Bank will invoice the Borrower for
          the  amount of such fee which  shall be based upon the  average  daily
          amount of the available  Revolving Credit not utilized by the Borrower
          over each day of the quarter-annual period.

     b)   The  Borrower  shall not be  entitled  to receive any advance of funds
          under the  Revolving  Credit at any time if, at such time there  shall
          have occurred and remained unremedied any event which would, of itself
          or but for the giving of any notice or lapse of any time, constitute a
          default or event of default under the terms of the Term Loan Note, the
          Revolving Credit Note, this Loan Agreement or any supplement hereto or
          expressed in any extension,  deferral,  modification,  substitution or
          replacement of either or both of the Notes.

     c)   During the term of the  Revolving  Credit Loan the  Borrower  shall be
          entitled to obtain  letters of credit to be issued by the Bank for the
          account of the Borrower as advances  under the  Revolving  Credit Loan
          and for each such letter of credit the Borrower shall pay to the Bank,
          at the time of issue,  a fee in an amount  equal to two percent of the
          maximum amount of credit stated in the letter of credit. The amount of
          each letter of credit,  when  issued,  shall  reduce the amount of the
          Revolving  Credit available under the Revolving Credit Loan so long as
          such letter of credit is outstanding and, for purposes of the 3/8th of
          one percent  stand-by fee  applicable  to the utilized  portion of the
          Revolving  Credit  Loan,  such  fee  shall  not be  applicable  to the
          outstanding amount of each letter of credit.

                       III. Bank of America Loan Documents

     3.1 It is understood  and agreed  between the Borrower and the Bank that in
purchasing the obligations of the Borrower to Bank of America,  N.A. by the Bank
the  purpose of such  procedure  is to capture  the lien and  security  interest
priorities  to which  the  mortgages,  deeds of trust  and  security  agreements
(herein  the  "BA  Indentures")  are  entitled  and to  consolidate,  amend  and
supplement such indentures to substitute the obligations and indebtedness of the

                                       -4-

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Borrower to the Bank in respect of the Term Loan and the  Revolving  Credit Loan
and any related obligations of the Borrower in respect thereof. The documents to
be executed for such purpose may  substitute  different  events and  occurrences
which may constitute events of default under the BA Indentures.  Notwithstanding
any delay in the execution of such  documents the Borrower  agrees that the Term
Loan and  Revolving  Credit  Loan  shall be  secured  by the liens and  security
interests  of the BA  Indentures  immediately  upon the  purchase by the Bank of
indebtedness secured by such indentures.

                      IV. Affirmative Covenants of Borrower

     The  Borrower  covenants  and agrees  with the Bank that for so long as any
indebtedness of the Borrower in respect of the Term Loan or the Revolving Credit
Loan  or any  extension,  renewal,  rearrangement  or  other  form  of any  such
indebtedness shall remain outstanding and unpaid:

     4.1 The Borrower will promptly advise the Bank in writing of the occurrence
of any material adverse change in the financial  condition of the Borrower,  and
any proposals or program to be effected by the Borrower in respect thereof.

     4.2 The Borrower will promptly advise the Bank in writing of any pending or
threatened  claim  or  litigation   asserted  against  the  Borrower  which,  if
successfully prosecuted, would have a material adverse effect upon the financial
condition of the Borrower  materially  and adversely  affecting the  anticipated
operations of the Borrower.

     4.3  Within  forty-five  days  following  the close of each  quarter-annual
fiscal year of the Borrower the Borrower  will furnish to the Bank the following
financial statements  concerning the financial conditions of the Borrower, as of
the close of such  fiscal  period  and the  results of its  operations  for such
period,  in each case certified by a senior financial officer of the Borrower to
have  been  prepared  in  accordance  with  generally  accepted   principles  of
accounting:

     a)   a Balance Sheet or Statement of assets and liabilities as of the close
          of such period;

     b)   a  Statement  of Profit  and Loss or of Income  and  Expense  for such
          period;

     c)   a statement of changes in capital  accounts as a result of  operations
          during such period; and

     d)   any  other  similar  or  relevant  financial  statements   customarily
          prepared  for  the  Borrower   pertaining   to  its   operations   and
          transactions during such fiscal period.

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     4.4 The  Borrower  will at all times  maintain a net worth,  determined  in
accordance with generally  accepted  principles of accounting,  of not less than
fourteen million dollars.

     4.5 Within  ninety  days  following  the close of each  fiscal  year of the
Borrower  the  Borrower  will furnish to the Bank  financial  statements  of the
Borrower  equivalent  to those  specified  in Section 4.3 each of which shall be
certified by a reputable and independent  certified public accountant or firm of
such  accountants to have been prepared in accordance  with  generally  accepted
principles of accounting.

                        V. Negative Covenants of Borrower

     The Borrower  covenants and agrees that for so long as any  indebtedness of
the  Borrower  in respect of the Term Loan or the  Revolving  Credit Loan or any
extension,  renewal,  rearrangement or other form of any such indebtedness shall
remain outstanding and unpaid:

     5.1 The  Borrower  will not  create or suffer to be created or to exist any
mortgage,  deed of  trust,  security  agreement  or like  encumbrance  to become
effective upon any oil or gas properties of the Borrower not  theretofore and at
the time thereof  subject to mortgages,  deeds of trust and security  agreements
granted to the Bank to secure the  payment of any  indebtedness  evidencing  the
Term Loan,  Revolving  Credit Loan or any extension,  renewal,  continuation  or
rearrangement thereof unless the Borrower shall have advised the Bank in writing
of the  intention  of the  Borrower to create or suffer to exist such  mortgage,
deed of trust,  security  agreement or like  encumbrance and the Bank shall have
consented thereto in writing.

     5.2 Except as provided in the  Shareholders'  Rights Agreement of the Bank,
as amended through February 10, 1995 (copies of which have been delivered to the
Bank and which have not been  modified  or amended,  as of the date  hereof) the
Borrower will not declare, pay (except as provided below) or become obligated to
declare or pay any  dividend on any class of its capital  stock now or hereafter
outstanding,  make any distribution of cash or property to holders of any shares
of such stock, or redeem,  retire,  purchase or otherwise  acquire,  directly or
indirectly,  any  shares of any  class of its  capital  stock  now or  hereafter

                                       -6-

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outstanding;  provided,  however,  that if no Event of Default or Default  shall
then  exist,  notwithstanding  the  above,  the  Borrower  may  declare  and pay
dividends upon its outstanding shares of capital stock not in any fiscal year to
exceed  fifteen  percent (15%) of its net cash from  operations,  less scheduled
payments upon indebtedness to the Bank. For purposes of this Agreement "net cash
from  operations"  shall mean gross income (net of production  taxes) paid minus
cash paid to suppliers in the normal course of business.

     5.3 Except with prior  written  approval of the Bank the Borrower  will not
incur,  or become  obligated  to incur,  any  Funded  Indebtedness  in excess of
$500,000.00.  For the purpose of this Agreement "Funded Indebtedness" shall mean
indebtedness  evidenced by any bond(s),  debenture(s)  or promissory  note(s) or
like or similar  undertakings  but shall not include  indebtedness for operating
expenses  incurred in the ordinary  course of business and payable  according to
customary trade terms or income, ad valorem,  excise or similar taxes paid prior
to becoming  delinquent.  Funded  Indebtedness  shall not include the Term Loan,
Revolving  Credit  Loan or any other  indebtedness  which may  become due to the
Bank.

     5.4 The  Borrower  shall  provide to the Bank on or before March 15 of each
year an  engineering  report  prepared  by an  engineer  or  firm  of  engineers
acceptable  to the Bank and in form and content  acceptable  to the Bank, on all
major  producing  oil  and gas  leases,  royalties  and  minerals  owned  by the
Borrower,  including  but not limited to all of the Mortgaged  Properties.  Such
engineering  report  shall  evaluate the proved  producing  oil and gas reserves
attributable to the Borrower's  interest in the Mortgaged Property and other oil
and gas properties  owned by Borrower,  together with a forecast of the rates of
production  therefrom and expenses  attributable  thereto and the estimated cash
flow to the Borrower from such  production  for the  estimated  economic life of
such property.

                         VI. Events of Default, Remedies

     If at any time  when any  indebtedness  evidenced  by the Term  Note or the
Revolving Credit Note shall remain outstanding and unpaid any one or more of the
following events shall occur:


     a)   The Borrower  should fail to make any payment of principal or interest
          upon any  indebtedness  evidenced  by the Term  Note or the  Revolving
          Credit Note as and when the same shall become due and payable.

     b)   Any  representation  of the  Borrower  stated in this  Loan  Agreement
          should prove or be determined to be materially false and misleading or
          to have omitted any statement of fact  necessary to be stated in order
          to make any representation not materially false or misleading and such
          matter should not be remedied  within thirty days after the Bank shall
          have notified the Borrower in writing of such misrepresentation.

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     c)   The  Borrower  shall have  failed to keep,  observe or comply with any
          term or provision  of this  Agreement,  including  any  amendment  and
          supplement  hereto,  and such default shall continue  unremedied for a
          period of thirty days after the Bank shall have  notified the Borrower
          in writing of such default. This provision shall not be interpreted to
          require any  opportunity  to remedy any default  under  paragraph  6.1
          hereinabove or paragraphs 6.4 or 6.5 hereof.

     d)   The Borrower  should make any  assignment for the benefit of creditors
          or to institute any proceeding  under the  Bankruptcy  Code seeking or
          consenting  to any  relief  afforded  by such Code or any  chapter  or
          provision  thereof  or should  fail to  consent  to the  filing of any
          involuntary petition under the Bankruptcy Code or any chapter thereof.

     e)   Any involuntary proceeding should be filed against the Borrower by any
          person or entity  under the  Bankruptcy  Code  seeking  any  relief in
          respect  of  any  claim  or  claims  against  the  Borrower  and  such
          proceeding  should  not be  stayed or  dismissed  within  thirty  days
          thereafter.

     f)   Any judgment in excess of $250,000.00 should be obtained by any person
          or entity against the Borrower in any court of competent  jurisdiction
          and should not be stayed or released  within thirty days thereafter or
          should become final and no longer appealable.

     g)   Any event  should  occur which  would,  of itself or with lapse of any
          time or  giving  of any  notice,  authorize  any  person  or entity to
          accelerate the payment of any  indebtedness  of the Borrower in excess
          of  $250,000.00  or to exercise any remedy for  collection of any such
          indebtedness  or claim in respect  thereof and such default should not
          be remedied  within thirty days after the Bank shall have notified the
          Borrower of such occurrence. This paragraph shall apply to any default
          or right of acceleration  which would authorize Bank of America,  N.A.
          to exercise any remedy  under any BA Indenture  prior to the time such
          indenture and the  indebtedness  secured thereby is transferred to the
          Bank.

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     h)   If the Borrower  should fail to  reimburse  the Bank the amount of any
          drawing  honored by it under any letter of credit issued by it for the
          account of the Borrower. Notwithstanding this provision the Bank shall
          be entitled,  at its option,  to charge the amount of any such drawing
          as an amount  drawn by the  Borrower as an advance of loan funds under
          the Revolving Credit Loan.

     i)   Upon the  occurrence  of any default or event of default  specified in
          the foregoing subparagraphs,  the Bank shall be entitled to accelerate
          the maturity of the indebtedness  referred to in this Agreement and to
          exercise any right(s) and remedy(ies) available at law or in equity to
          collect such indebtedness.

                               VII. Miscellaneous

     7.1 Governing Law. This  Agreement,  each of the Notes and any further loan
documents  which  may or  shall  be  executed  by the  Borrower  and the Bank in
connection with the Term Note and the Revolving Credit Note shall be interpreted
in accordance with and governed by the laws of the State of Oklahoma.

     7.2 Bank Loan Expenses.  The Borrower will promptly  reimburse the Bank for
the reasonable attorney fees of Conner & Winters, A Professional Corporation, in
connection  with the  preparation of this Loan Agreement and any  Supplements or
amendments to be executed with the  acquisition by the Bank of the BA Indentures
and any amendments or supplements thereto and hereto to adopt such indentures to
secure the  indebtedness  of the  Borrower to the Bank  identified  in this Loan
Agreement.  If it shall be deemed  necessary or  otherwise  required to so adopt
such  indentures  that any  documents  be prepared  and filed or recorded in any
public  filing office or recording  office the Borrower will promptly  reimburse
the Bank for all reasonable expenses incurred by it for such purpose.

     7.3 The terms,  provisions,  agreements on the part of the Borrower and the
Bank under this  Agreement,  the notes and any documents  supplementary  thereto
shall be binding  upon and shall inure to the  benefit of each party  hereto and
their respective successors and assigns.

     IN WITNESS WHEREOF,  the Borrower and the Bank have executed this Agreement
as of the date and year first  hereinabove  mentioned in multiple  counterparts,
each of which shall constitute an original copy hereof.

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                                  HOME-STAKE OIL & GAS COMPANY

                                  By     /s/ Robert C. Simpson
                                      ------------------------------------------
                                      Robert C. Simpson, Chairman of the Board,
                                      President and Chief Executive Officer

                                  BANK OF OKLAHOMA, NATIONAL
                                  ASSOCIATION

                                  By     /s/ W. L. Morris
                                      ------------------------------------------
                                      W.L. Morris, Vice President

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