EXHIBIT 10.124

                        MORTGAGE AND SECURITY AGREEMENT

       THIS  MORTGAGE AND  SECURITY AGREEMENT  (the "Mortgage") dated  as of
  this 18th day of October, is by and among READING & BATES DEVELOPMENT CO.,
  a Delaware corporation  whose mailing  address is 901  Threadneedle, Suite
  100, Houston,  Texas   77079, and  whose federal  taxpayer  identification
  number is 73-0797067 (hereinafter referred to as "Borrower"), and  ENSERCH
  EXPLORATION,  INC.,  a  Texas corporation  whose  mailing address  is 4849
  Greenville  Avenue, Suite  1500, Dallas,  Texas  75206, and  whose federal
  taxpayer identification number  is 75-2556975 (the "Lender"), here present
  who accepts this Mortgage.

                                    Recitals

       WHEREAS, By  assignments dated  effective May  1, 1995  and  entitled
  "Assignment and Bill of Sale"( the "Assignments"), Lender has assigned  to
  Borrower certain leasehold   interests in certain  parcels of oil  and gas
  leasehold  acreage  (which  interests  and  leases  are more  particularly
  described  in Exhibit  "A" attached  hereto)  in  exchange for  Borrower's
  agreement to pay to Lender the sum  of Eighteen Million Two Hundred  Fifty
  Thousand  and No/100($18,250,000.00)  Dollars (the  "Loan"), of  which Six
  Million Two  Hundred Fifty  Thousand and  No/100 ($6,250,000.00)  has been
  paid and  the remainder  is evidenced by that  certain Promissory  Note of
  even date  herewith executed  by  Borrower and  payable to  Lender in  the
  principal  amount of  Twelve Million  and No/100  ($12,000,000.00) Dollars
  (the "Note");

       WHEREAS,  in  order  to  secure the  full  and  punctual payment  and
  performance  of the Indebtedness (as hereafter  defined), the Borrower has
  agreed to execute  and deliver this Mortgage and  to grant a mortgage lien
  and  continuing security interest  in and to the  Collateral (as hereafter
  defined);

        NOW, THEREFORE, in  consideration of  the premises, the Borrower  and
  Lender agree as follows:

                                   ARTICLE 1.

                                 General Terms

       Section  1.1  Definitions.    As used  in  this  Mortgage, the  terms
  "Assignments," "Borrower," "Lender," "Loan," "Mortgage," and "Note"  shall
  have  the  meanings  indicated above.    As  used in  this  Mortgage,  the
  following additional terms shall have the meanings indicated:

        "Accounts" means all "accounts" (as  defined in the UCC) now owned or
  hereafter acquired by  the Borrower (including without limitation accounts
  resulting from the sale of Hydrocarbons at the well head) now or hereafter
  arising  in  connection  with  the  sale  or  other  disposition  of   any
  Hydrocarbons, and further means all rights accrued, accruing or to  accrue
  to  receive payments of any  and every kind under all Contracts, including
  without limitation bonuses,  rents and royalties which are payable  out of
  or  measured   by  production   of  any  Hydrocarbons   or  are  otherwise
  attributable to the Mineral Properties and all other revenues owing to the
  Borrower  in connection  with the  Mineral Properties,  including revenues
  from  the treatment, transportation  or storage of Hydrocarbons  for third
  parties. 

       "Advances"  has the meaning  set forth in Section  4.23 ("Advances by
  Lender") of this Mortgage.

       "Collateral" has the meaning set forth in Section 2.2 ("The  Security
  Interests") of this Mortgage".

       "Collateral  Documents"  means  collectively all  mortgages, pledges,
  security agreements and other documents by which the Borrower grants Liens
  and security interests in immovable or movable property to the Lender.

       "Contracts"  means all  contracts, agreements,  operating agreements,
  farm-out  or farm-in  agreements, sharing  agreements, limited  or general
  partnership  agreements,  area  of  mutual  interest  agreements,  mineral
  purchase agreements,  contracts for the  sale, exchange, transportation or
  processing of Hydrocarbons, rights-of-way, easements, surface leases, salt
  water  disposal   agreements,  service  contracts,  permits,   franchises,
  licenses, pooling or unitization agreements, unit designations and pooling
  orders now in effect or hereafter  entered into by the  Borrower affecting
  any of the Mineral Properties, Equipment or Hydrocarbons now or  hereafter
  covered  hereby, or  which  are  useful or  appropriate in  drilling  for,
  producing, treating, handling, storing, transporting or marketing oil, gas
  or  other  minerals  produced  from any  lands  affected  by  the  Mineral
  Properties.

       "Default" means the  occurrence of any of the events  specified as an
  Event of  Default, whether or not  any requirement for  notice or lapse of
  time or other condition precedent has been satisfied.

       "Equipment" means  all equipment now  owned or  hereafter acquired by
  the Borrower and now or  hereafter located on or  used or held for  use in
  connection with the Mineral Properties or in connection with the operation
  thereof  or  the treating,  handling,  storing, transporting,  processing,
  purchasing,  exchanging or  marketing  of Hydrocarbons,  including without
  limitation all  wells, rigs, platforms, constructions,  extraction plants,
  facilities,  gas   systems  (for   gathering,   treating,  injection   and
  compression),  water  systems  (for  treating,  disposal  and  injection),
  compressors, casing, tubing, rods, flow lines, pipelines, derricks, tanks,
  separators, pumps,  machinery, tools  and all  other movable  property and
  fixtures now or hereafter  located upon and dedicated to be used  (or held
  for use) in connection with any  of the Mineral Properties,  together with
  all  additions,   accessories,  parts,  attachments,  special   tools  and
  accessions  now  and  hereafter  affixed  thereto  or  used in  connection
  therewith, and all replacements thereof and substitutions therefor.

       "Event of Default" has the meaning set  forth in Section 5.1 ("Events
  of Default") of this Mortgage.

       "General Intangibles" means all  "general intangibles" (as defined in
  the  UCC) now owned or hereafter  acquired by the Borrower  related to the
  Mineral  Properties, the Equipment  or the Hydrocarbons, the  operation of
  the Mineral Properties or the Equipment (whether the Borrower is  operator
  or  non-operator),  or  the  treating,  handling,  storing,  transporting,
  processing, purchasing, exchanging  or marketing of Hydrocarbons, or under
  which the  proceeds of  Hydrocarbons arise or are  evidenced or  governed,
  including, without limitation,  (i) all contractual rights and obligations
  or indebtedness owing to the Borrower (other than Accounts) from  whatever
  source arising  in connection with the  sale or  other disposition of  any
  Hydrocarbons,  including all  rights to  payment owed  or received  by the
  Borrower  pursuant   to  a   "take-or-pay"  provision   or  gas  balancing
  arrangement,  (ii) all  Contracts  and  other general  intangibles  now or 
  hereafter arising  in connection with  or resulting from Contracts,  (iii)
  all insurance  proceeds and  unearned insurance premiums  affecting all or
  any  part  of  the  Collateral,  and (iv)  all  things  in action,  rights
  represented  by judgments,  claims arising  out of  tort and  other claims
  relating to the Collateral, including the right to assert and otherwise to
  be the plaintiff  and proper party  of interest to commence  and prosecute
  such action (whether  as claims,  counterclaims or otherwise,  and whether
  involving  matters arising  from casualty,  condemnation, indemnification,
  negligence,  strict  liability,  other tort,  contract  or  in  any  other
  manner).

       "Hydrocarbons"  mean  all   oil,  gas,  casinghead  gas,  condensate,
  distillate,  other liquid and gaseous hydrocarbons,  sulfur, and all other
  minerals, whether similar  to the foregoing or not, produced,  obtained or
  secured  from or  allocable to  the Mineral  Properties, and  any products
  refined,  processed, recovered  or  obtained therefrom,  including  oil in
  tanks.

       "Indebtedness" means the Note, that certain Payment Agreement of even
  date herewith by and between Borrower and Lender (the "Payment Agreement")
  and all other  present and future amounts, liabilities and  obligations of
  the Borrower to the Lender or to any successor or transferee thereof under
  or pursuant to the Note or the Payment Agreement, this Mortgage, the other
  Collateral Documents  or otherwise,  whether said  amounts, liabilities or
  obligations  are liquidated  or  unliquidated, now  existing  or hereafter
  arising,  direct or indirect, primary  or secondary,  fixed or contingent,
  and irrespective  of the manner  in which same may  be incurred, including
  without limitation  all promissory notes  heretofore or hereafter executed
  by the Borrower in favor of  Lender, in principal, interest,  deferral and
  delinquency charges,  prepayment premiums,  costs and  attorneys' fees, as
  therein stipulated, and under and pursuant to all  amendments, supplements
  and  restatements to  any of  said  documents, together  with any  and all
  renewals and  extensions of  such loans, advances,  debts, obligations and
  liabilities or  any  part thereof.    The  Indebtedness  includes  without
  limitation  all Advances  and  other  amounts for  which the  Borrower  is
  obligated under the terms of this Mortgage. 

       "Lien" means any interest in property securing an obligation owed to,
  or a claim by, a Person other than the owner of the property, whether such
  interest is based on jurisprudence, statute or contract, and including but
  not limited  to the  lien or security  interest arising  from a  mortgage,
  encumbrance, pledge, security agreement, conditional sale or trust receipt
  or a lease, consignment or bailment for security purposes. The term "Lien"
  shall  include   reservations,   exceptions,   encroachments,   easements,
  servitudes, usufructs, rights-of-way, covenants, conditions, restrictions,
  leases and other title exceptions and encumbrances affecting property.  

       "Mineral Properties" means the right, title  and interest of Borrower
  in those certain interests described in Exhibit "A" hereto in the oil, gas
  and  mineral leases  described in  Exhibit "A"  hereto, together  with all
  interests  of the  Borrower with  respect to  all unitization  and pooling
  agreements  and orders now or hereafter existing or  which relate to those
  certain interests  described in  Exhibit  "A", and  all interests  of  the
  Borrower  in agreements and rights  pertaining to the use or occupation of
  the subsurface depths that relate to those certain interests described  in
  Exhibit "A".

       "Mortgage" means this Mortgage and Security Agreement, as  amended or
  supplemented from time to time. 

       "Mortgaged  Property"  has  the  meaning  set  forth  in  Section 2.1
  ("Hypothecation") of this Mortgage.

       "Permitted Liens"  means the Security Interests;  any other Liens  in
  favor  of the Lender;  any validly perfected mechanic's  and materialman's
  lien  filed as  of the  date  of this  Mortgage; the  Lien created  by the
  Financing  Statement executed by  Borrower, as debtor, in  favor of Lender
  and  other  parties, as  Secured Party,  securing  certain  obligations of
  Borrower under the Operating Agreement dated effective May 1, 1995;  Liens
  permitted  by  the  Lender in  writing  to be  created  or  assumed or  to
  otherwise exist on the  Collateral (including without limitation the Liens
  permitted by the provisions of Section 4.3 ("Liens") hereof).

       "Person"  means  any   individual,  corporation,  partnership,  joint
  venture,   association,  joint   stock  company,   trust,   unincorporated
  organization, government  or any agency  or political subdivision thereof,
  or any other form of entity.

       "Proceeds" means  all cash and  non-cash proceeds of,  and all  other
  profits,  rentals  or  receipts,   in  whatever  form,  arising  from  the
  collection,  sale,  lease,   exchange,  assignment,  licensing   or  other
  disposition   of,  or  realization  upon,  Collateral,  including  without
  limitation all claims of the  Borrower against third parties  for loss of,
  damage to  or destruction of, or  for proceeds payable  under, or unearned
  premiums  with  respect  to,  policies  of insurance  in  respect  of, any
  Collateral, and any condemnation or  requisition payments with respect  to
  any Collateral, and including  proceeds of all such proceeds, in each case
  whether now existing or hereafter arising.

       "Proceeds  of  Runs"  has  the  meaning  set  forth  in  Section  2.3
  ("Assignment") of this Mortgage.

       "Security Interests"  means the security interests  in the Collateral
  granted hereunder securing the Indebtedness.

       "UCC" means  the  Uniform  Commercial Code,  Commercial  Laws-Secured
  Transactions (Louisiana  Revised Statutes  10:9-101 through  9-605) in the
  State of  Louisiana, as  amended from  time to  time; provided  that if by
  reason of mandatory  provisions of  law, the perfection  or the  effect of
  perfection  or non-perfection of the Security  Interests in any Collateral
  is governed by the Uniform  Commercial Code as in effect in a jurisdiction
  other than Louisiana, "UCC" means the Uniform Commercial Code as in effect
  in such other jurisdiction for purposes of the provisions hereof  relating
  to such perfection or effect of perfection or non-perfection.

                                   ARTICLE 2.

                          Liens and Security Interests

       Section 2.1   Hypothecation.   (a)  In  order to secure the  full and
  punctual payment  and performance of all  present and future Indebtedness,
  the  Borrower   does  by   these  presents   specially  mortgage,  affect,
  hypothecate, pledge and  assign unto and in favor  of the Lender, to inure
  to the use  and benefit of the  Lender, the following described  property,
  to-wit:

       (1)   The Mineral Properties, together with all profits, products and
  proceeds, whether now  or hereafter existing or arising, from  the Mineral
  Properties. 

       (2)   The  Borrower's   rights   in   the  improvements   and   other
  constructions  now  or   hereafter  located  on  the  Mineral  Properties,
  including without  limitation the  Equipment, to the extent  (i) any  such
  property  should constitute or be deemed  to constitute immovable property
  for  the  purposes  of  Louisiana  law, including  without  limitation any
  buildings, platforms, structures, towers, rigs or other immovable property
  or  component parts thereof, or  (ii) any such  property that is otherwise
  susceptible of mortgage  pursuant to Louisiana Civil Code Article  3286 or
  Louisiana Mineral Code Article 203.

       The descriptions  of the Mineral Properties  contained in Exhibit "A"
  are qualified by  the explanations contained in Exhibit 1  attached hereto
  and made a part hereof.

       All of  the foregoing property and  rights covered by and  subject to
  this Mortgage  are  herein collectively  referred  to  as  the  "Mortgaged
  Property."

       SUBJECT, however, to  (i) the restrictions, exceptions, reservations,
  conditions, limitations and other matters, if any, set forth or  specified
  in the specific  descriptions of such properties and interests  in Exhibit
  "A"  (including  all presently  existing royalties,  overriding royalties,
  payments  out of  production  and  other burdens  which are  specified  in
  Exhibit  "A" and  which  are  taken into  consideration in  computing  any
  percentage, decimal or fractional interests set forth in Exhibit "A"), and
  (ii) the  condition that  the Lender  shall not  be liable  in any respect
  hereunder  for  the  performance  of  any covenant  or  obligation  of the
  Borrower in respect of the Mortgaged Property.

       The Mortgaged Property is to remain  so specially mortgaged, affected
  and hypothecated  unto and in favor  of Lender  until the  full and  final
  payment or  discharge of  the  Indebtedness, and  Borrower is  herein  and
  hereby bound and obligated  not to sell or alienate the Mortgaged Property
  to the prejudice of this act.

       (b)   In the  event that  the Borrower acquires  additional undivided
  interests in  some or all of  the Mineral Properties, this  Mortgage shall
  automatically  encumber  such additions  or  increases  to  the Borrower's
  interest  in  the  Mineral  Properties without  need  of  further  act  or
  document.   Further, in the event  the Borrower  becomes the  owner of  an
  interest in any part of the land  described either in Exhibit A or  in the
  documents described in Exhibit A or otherwise subject to or covered by the
  Mineral  Properties,  this  Mortgage  shall  automatically  encumber  such
  ownership  interest  of  the  Borrower without  need  of  further  act  or
  document.

       Section 2.2 The Security Interests.   In order to secure the full and
  punctual payment and performance  of all present and  future Indebtedness,
  the Borrower hereby grants to the Lender a continuing security interest in
  and to all  right, title and interest of the Borrower in, to and under the
  following property, whether now owned or existing or hereafter acquired or
  arising and regardless of where located:

          (1)   the Mineral Properties;

          (2)   the Accounts;

          (3)   the Hydrocarbons;

          (4)   the Equipment; 

          (5)   the General Intangibles (including the Contracts);

          (6)   all engineering, seismic,  reserve, production,  accounting,
  title  and legal  data, reports  and all  books and  records  in any  form
  (including,  without limitation,  customer  lists, credit  files, computer
  programs, tapes, disks, punch cards, data processing software, transaction
  files, master files,  printouts and other computer  materials and records)
  of the Borrower pertaining to any of the Mineral Properties or Collateral;
  and

          (7)   all  Proceeds and products  of all or any  of the Collateral
  described in clauses 1 through 6 hereof.

       The term "Collateral" means  each and all of  the items and  property
  rights  described  in  clauses  1-7  above,  together  with the  Mortgaged
  Property.

       Section  2.3  Assignment.   To further  secure the full  and punctual
  payment and performance of all present and future Indebtedness,  up to the
  maximum amount outstanding at any time and from  time to time set forth in
  Section 2.5 ("Maximum Amount") below, the Borrower does hereby absolutely,
  irrevocably  and unconditionally pledge, pawn, transfer  and assign to the
  Lender all monies which  accrue after 8:00  a.m. Central Time, U.S.A.,  on
  the date of this Mortgage, attributable to the  Borrower's interest in the
  Mineral Properties and all present and future rents therefrom (which rents
  include without limitation  all royalties, delay rentals, shut-in payments
  and  other payments  which are  rentals under  Title  31 of  the Louisiana
  Revised Statutes)  and all  proceeds of  the Hydrocarbons (which  proceeds
  include  without   limitation  all  payments   for  Hydrocarbons  not  yet
  delivered, such as those received pursuant to "take or pay"  arrangements)
  and of the  products obtained, produced or processed from  or attributable
  to  the Mineral  Properties  now  or hereafter  (which monies,  rents  and
  proceeds  are referred to herein as the "Proceeds of Runs").  The Borrower
  hereby authorizes and directs  all obligors or  payors of any Proceeds  of
  Runs to pay and deliver to Lender, upon request therefor by Lender, all of
  the Proceeds of  Runs accruing to the Borrower's interest  without further
  inquiry as to the rights of the Lender to receive the same and without any
  further action or consent on the part of Borrower; provided, however, that
  Lender hereby agrees that  it shall not request that the Proceeds  of Runs
  be paid directly to Lender unless and until there has occurred an Event of
  Default.   The  Borrower   agrees  that   such  obligors  shall   have  no
  responsibility to see to the application of any funds so paid to Lender.

       Section 2.4 Condemnation.  The Borrower hereby assigns to the  Lender
  any and all awards  that may be given  or made in  any proceedings by  any
  legally constituted authority to condemn or expropriate the Collateral, or
  any  part thereof, under power  of eminent domain, and if  there is such a
  condemnation or expropriation, the Lender may, at its election, either pay
  the net proceeds thereof toward the payment of the Indebtedness or pay the
  net proceeds thereof to the Borrower.

       Section  2.5  Maximum   Amount.  (a)  The   maximum  amount   of  the
  Indebtedness that  may be outstanding  at any  time and from  time to time
  that this Mortgage secures, including without limitation as a mortgage and
  as a collateral  assignment, and including any Advances made  and included
  within the  Indebtedness, is  Fifteen Million  and No/100 ($15,000,000.00)
  Dollars.

       (b)   The  Borrower  acknowledges  that  this  Mortgage  secures  all
  Indebtedness  under or pursuant  to the Note, the  Payment Agreement, this 
  Mortgage or the other Collateral Documents, whether such loans or advances
  made or incurred  by the Lender are optional  or obligatory by the Lender.
  This  Mortgage is  and shall  remain effective until  all of  the amounts,
  liabilities  and   obligations,  present   and  future,   comprising   the
  Indebtedness   have  been  incurred   and  are  extinguished.     When  no
  Indebtedness  secured  by   this  Mortgage  exists,  this  Mortgage  shall
  terminate, Borrower shall have no  further obligation hereunder and Lender
  shall promptly cause this Mortgage to be released of record.

       Section  2.6 Delivery of  Transfer Orders.  Independent  of the other
  provisions and authorities herein  granted, the Borrower agrees to execute
  and deliver any and all transfer orders, letters in lieu thereof, division
  orders and other instruments that may be  requested by Lender or that  may
  be  required  by any  purchaser  of any  Hydrocarbons for  the  purpose of
  effectuating payment  of the  Proceeds of  Runs to Lender.   If under  any
  existing sales agreements, other than  division orders or transfer orders,
  any Proceeds of Runs are required to be paid by the purchaser or any other
  payor to  the Borrower  so  that under  such existing  agreements  payment
  cannot be made  of such Proceeds of Runs to Lender, upon the occurrence of
  an Event of Default, the Borrower's interest in all Proceeds of Runs under
  such sales  agreements and  in all  other Proceeds of Runs  which for  any
  reason may be paid to the Borrower  shall, when received by the  Borrower,
  constitute  trust funds in  the Borrower's hands and  shall be immediately
  paid over to Lender.

       Section 2.7  Change of Purchaser.  Should any Person now or hereafter
  purchasing or taking Hydrocarbons fail to make payment promptly to  Lender
  of  the Proceeds  of Runs,  Lender shall  have the  right to  make,  or to
  require  Borrower  to make,  a  change  of connection  and  the  right  to
  designate or approve the purchaser with those facilities a new  connection
  shall be made,  and Lender  shall have no liability  or responsibility  in
  connection  therewith so  long as  ordinary  care is  used in  making such
  designation.

       Section 2.8 Application.   All Proceeds of Runs  from time to time in
  the  hands  of Lender  shall  be  applied  by it  toward  the payment  and
  prepayment of all Indebtedness at such times and in  such manner as Lender
  deems advisable, may be held by Lender pending a resolution of any dispute
  as to Lender's right to collect such Proceeds of Runs, or may be delivered
  by  Lender to  the Borrower  without in  any way  reducing  or paying  the
  Indebtedness.

       Section 2.9 Payment of Proceeds.  In the event  that, for any reason,
  the Lender, upon the occurrence  of an Event of Default, should elect with
  respect  to all  or  particular  Mineral Properties  or Contracts  not  to
  exercise immediately  its right  to  receive Proceeds  of Runs,  then  the
  purchasers or other Persons obligated to make such payment shall  continue
  to make payment to the Borrower until such time as written demand has been
  made upon  them by the Lender that  payment be made direct  to the Lender.
  Such failure to  notify such purchasers or other  Persons shall not in any
  way  waive, remit  or  release the  right  of the  Lender to  receive  any
  payments not theretofore  paid over to the  Borrower before the  giving of
  written notice.  In this  regard, in the event payments are made direct to
  the Lender,  and then, at the  request of the  Lender payments are,  for a
  period  or  periods  of time,  paid  to  the  Borrower,  the  Lender shall
  nevertheless have  the right,  effective upon  written notice,  to require
  future payments be again made to it.

       Section 2.10 Limitation of Liability.  The Lender and its  successors
  and assigns are hereby  absolved from all liability for failure to enforce 
  collection of the Proceeds  of Runs and  from all other responsibility  in
  connection therewith,  except the  responsibility of  each to  account (by
  application upon the Indebtedness or otherwise) to the Borrower for  funds
  actually received.   The  Borrower agrees to indemnify  and hold  harmless
  Lender against any and all liabilities, actions, claims, judgments, costs,
  charges and attorneys' fees  by reason of the  assertion that such parties
  received,  either before or after  payment and performance  in full of the
  Indebtedness, funds from the production of Hydrocarbons or the Proceeds of
  Runs claimed  by third  persons  (and/or funds  attributable to  sales  of
  production  which (i) were made at  prices in excess of  the maximum price
  permitted by  or (ii)  were otherwise  made in  violation of  laws, rules,
  regulations and/or orders governing such sales), and the Lender shall have
  the  right  to  defend  against any  such  claims  or  actions,  employing
  attorneys  of Lender's own  selection and if not  furnished with indemnify
  satisfactory to  them, the Lender shall  have the right to  compromise and
  adjust any  such claims,  actions and  judgments, and  in addition  to the
  rights to  be indemnified  as herein  provided, all  amounts  paid by  the
  Lender in compromise, satisfaction or discharge of any such claim, actions
  or  judgments, and all court costs, attorneys' fees  and other expenses of
  every character expended by the Lender pursuant to the provisions of  this
  Section shall be a demand obligation (which obligation the Borrower hereby
  expressly promises to pay) owing by the Borrower to such parties and shall
  bear interest, from the date expended until paid, at the rate described in
  Section 4.23 ("Advances by Lender") hereof.

       Section 2.11 Duty to Perform.  Nothing herein contained shall detract
  from or limit the obligation of the Borrower to make prompt payment of the
  Indebtedness at the time and in the manner provided  herein.  The Borrower
  will do and  perform every act required of it by this Mortgage at the time
  or times and in the manner specified.

       Section  2.12    No  Liability.   The  foregoing  mortgage Liens  and
  Security Interests are granted  as security only and shall not subject the
  Lender to, or transfer  or in any way affect or modify,  any obligation or
  liability of  the Borrower with  respect to  any of the  Collateral or any
  transaction in connection therewith.

       Section 2.13  Priority.  Notwithstanding any  other provision in this
  Mortgage, Lender hereby agrees that this Mortgage shall in all respects be
  subordinate to that Permitted Lien granted by  Borrower in favor of Lender
  and  other  parties under  and pursuant  to Article  6.3 of  the Operating
  Agreement dated effective  May 1,  1995 to which Lender  and Borrower  are
  parties.

                                   ARTICLE 3.

                         Representations and Warranties

       The   Borrower  represents   and   warrants  to   the   Lender  (such
  representations  and warranties  are  limited  to the  best  of Borrower's
  knowledge with respect to Sections 3.1, 3.2, 3.3, 3.7, 3.8 and 3.9) that:

       Section 3.1  Title.  The Collateral (including without limitation the
  Mineral Properties) is accurately, completely, adequately and sufficiently
  described herein and in Exhibit "A" as required by all applicable laws for
  this Mortgage  to create a Lien on all of  the Collateral.  The execution,
  delivery and performance of  this Mortgage and the  creation of the  liens
  hereunder do  not violate any provision  of or constitute a  default under
  any operating agreement or other instrument affecting or comprising any of 
  the  Collateral  or  to which  the  Borrower is  a  party.   The  Borrower
  represents  and warrants  to the  Lender that  (a) the  Mineral Properties
  described  in  Exhibit  "A"  hereto  are   valid,  subsisting  leases  and
  contracts, in  full force and effect,  (b) all producing wells  located on
  the  lands  described  in  Exhibit  "A" have  been  drilled,  operated and
  produced in conformity with all applicable laws, rules and regulations  of
  all regulatory  authorities having  jurisdiction, and  are  subject to  no
  penalties on account  of past production, and that  such wells are in fact
  bottomed  under and  are  producing from,  and the  well bores  are wholly
  within, lands described in Exhibit "A" (or in the case of wells located on
  properties  unitized  therewith,  such  unitized  properties),   (c)  upon
  approval of the Assignments by the  United States of America Department of
  Interior, Minerals Management Service, the Borrower, to the extent of  the
  interest specified in Exhibit "A", shall have legal, valid and  defensible
  title  to  each  property  right  or  interest  constituting  the  Mineral
  Properties and  the respective  gross working  interests  and net  revenue
  interests  of the  Borrower in  and to  the Hydrocarbons  as set  forth on
  Exhibit "A" hereto, and the Borrower's percentage interests in the Mineral
  Properties, cash flow, net income and other distributions and  in the cost
  of  exploration, development and  production, all as set  forth in Exhibit
  "A"  hereto, are true and  correct in all material respects and accurately
  reflect  the  respective  interests  to  which  the  Borrower  is  legally
  entitled, (d) the Borrower is  not obligated, by virtue  of any prepayment
  under any contract providing for the sale by  the Borrower of Hydrocarbons
  which contains a "take or pay" clause or under any similar arrangement, to
  deliver  Hydrocarbons  at some  future  time without  then  or  thereafter
  receiving  full  payment  therefor  and  (e)  no  agreement,  contract  or
  instrument set  forth in  Exhibit "A" contains any  provision which  would
  prevent the practical realization of the  benefits of this Mortgage  as to
  the  Collateral. With  respect to all wells  existing on  the date hereof,
  such shares of production and expenses are not subject to change (pursuant
  to non-consent provisions of operating agreements described in Exhibit "A"
  or  otherwise) except,  and  only to  the  extent that,  such  changes are
  expressly described in Exhibit "A".  

       Section  3.2  No  Liens Except  for  Permitted  Liens.    Other  than
  financing  statements   or  other  similar   or  equivalent  documents  or
  instruments with respect to the Security Interests and the other Permitted
  Liens, no financing statement, mortgage, security  agreement or similar or
  equivalent  document  or  instrument  covering all  or  any  part  of  the
  Collateral has  been executed by  the Borrower.   No Collateral  is in the
  possession of  any Person  (other than the Borrower)  asserting any  claim
  thereto  or security  interest  therein,  except that  the Lender  or  its
  designee may have possession of Collateral as contemplated hereby.

       Section  3.3  Rents;  Royalties.   All  rents,  royalties  and  other
  payments (except for those which  are being contested in good faith and by
  appropriate  proceedings  and  for  which  the  Borrower  has  established
  adequate reserves and so long as the payment of same is not a condition to
  be  met in order  to maintain  an oil,  gas and/or other mineral  lease or
  other agreement  in force)  due and payable under  the Mineral  Properties
  which  are  productive  of oil  and/or  gas  (or  are  included  in  units
  productive of  oil  and/or gas)  and  all other  oil, gas  and/or  mineral
  leases, contracts  and other  agreements forming a part  of the  Mortgaged
  Property,  have been  and  are being  properly  and timely  paid,  and the
  Borrower  is not  in default  with  respect to  any  obligations (and  the
  Borrower is not  aware of any default by  any third party with  respect to
  such  third party's  obligations) under such  leases, contracts  and other
  agreements,  or otherwise attendant  to the ownership or  operation of the
  Collateral, where  such default  could adversely  affect the  ownership or 
  operation  of  the  Collateral  to  which such  obligations  relate.   The
  Borrower is not currently  accounting (and does not anticipate accounting)
  for  any royalties,  or  overriding  royalties or  other payments  out  of
  production, on a basis  (other than delivery in kind) where such  payments
  are  based other  than on  proceeds received  by  Borrower from  sale; the
  Borrower  has advised the Lender in writing of situations, if any, where a
  contingent liability to account in such manner may exist.

       Section 3.4  No Limitations on  Payments for Production.   Except  as
  otherwise specifically disclosed to the Lender in writing with respect  to
  any particular part  of the Mineral Properties, (i) neither  Borrower, nor
  its predecessors in title,  have received prepayments (including,  but not
  limited  to,  payments for  gas  not  taken  pursuant  to  "take  or  pay"
  arrangements) for  any Hydrocarbons  produced or to be  produced from  the
  Mineral  Properties  after  the  date  hereof; (ii)  none  of  the Mineral
  Properties is  subject to  any contractual  or  other arrangement  whereby
  payment for production  is to be  deferred for a substantial  period after
  the month in which such production is delivered (i.e., in the  case of oil
  not in excess of sixty (60) days, and in the case of gas not  in excess of
  ninety (90)  days); (iii) none of  the Mineral Properties  is subject to a
  gas sales  contract which contains  terms which  are not customary in  the
  industry; (iv)  none of the  Mineral Properties is subject  at the present
  time to any regulatory  refund obligation and,  to the best of  Borrower's
  knowledge, no  facts exist which  might cause the same to  be imposed; (v)
  none of  the Mineral Properties is subject to an  arrangement or agreement
  under  which any  purchaser or  other Person  is entitled to  "make-up" or
  otherwise  receive deliveries of  Hydrocarbons at any time  after the date
  hereof without paying at  such time the full  contract price therefor; and
  (vi) no Person is entitled  to receive any portion of the interest  of the
  Borrower in any Hydrocarbons or to receive cash or other payments from the
  Borrower  to  "balance" any  disproportionate  allocation  of Hydrocarbons
  under  any operating agreement,  gas balancing and storage  agreement, gas
  processing or dehydration agreement,  or other similar agreements.  Lender
  acknowledges that Borrower may  be obligated  to escrow a  portion of  the
  proceeds  of  the   Hydrocarbons  for  certain  plugging  and  abandonment
  obligations.

       Section  3.5  Consents  and   Preferential  Rights.    There  are  no
  preferential purchase rights  held by third parties affecting any  part of
  the  Collateral  or rights  of third  parties  to prohibit  the  pledge or
  mortgage of any  part of the Collateral without  the consent of such third
  parties, other than as set out in the Operating Agreement dated  effective
  May 1, 1995 to which Lender and Borrower are parties.

       Section  3.6  No Inconsistent  Agreements.    The  Borrower  has  not
  performed any acts or signed any agreements which might prevent the Lender
  from enforcing any of the terms of this Mortgage or which would limit  the
  Lender in any such enforcement.  

       Section  3.7  Status  of  Contracts.    All  of  the  Contracts   and
  obligations of the Borrower that relate to  the Mineral Properties (i) are
  in  full  force  and  effect  and  constitute  legal,  valid  and  binding
  obligations of the  Borrower, and  (ii) neither the Borrower  nor, to  the
  knowledge of  the Borrower,  any other  party to the Contracts  (a) is  in
  breach of or default, or with the  lapse of time or the giving  of notice,
  or both,  would be  in  breach or  default,  with respect  to any  of  its
  obligations thereunder  or (b) has given  or threatened to  give notice of
  any default under or inquiry into any possible default under, or action to
  alter,  terminate,  rescind  or  procure a  judicial  reformation  of  any
  Contract. 

       Section 3.8 Accounts.   The Accounts represent bona fide  obligations
  of the respective account debtors, which obligations are free and clear of
  any set off,  compensation, counterclaim, defense, allowance or adjustment
  other than discounts for prompt payment shown on the invoice, and arose in
  the ordinary course of the Borrower's business.

       Section 3.9 Status  of Equipment.  The Equipment, fixtures  and other
  tangible personal property  forming a part of  the Collateral are  in good
  repair and  condition and  are adequate  for the normal  operation of  the
  Collateral  in accordance  with  prudent industry  standards; all  of such
  Collateral is located  on the Mineral Properties, except for  that portion
  thereof which is located elsewhere (including that usually located on  the
  Mineral Properties but now temporarily located elsewhere) in the course of
  the normal operation of the Mineral Properties.

       Section 3.10 Name.  The corporate name of the  Borrower as it appears
  in its  Articles of  Incorporation is  as it  appears  on page  1 of  this
  Mortgage.  

       Section 3.11  Taxpayer Identification  Number.  The  federal taxpayer
  identification number of the Borrower is as follows: -73-0797067.

       Section 3.12 Chief  Executive Office.  The chief executive  office of
  the Borrower  is located  at 901 Threadneedle, Suite  200, Houston,  Texas
  77079.

       Section 3.13  Filing Location.  When UCC  financing statement(s) have
  been filed in  the offices of a Louisiana Clerk of Court  (or, in the case
  of  Orleans Parish,  the Recorder  of  Mortgages), the  Security Interests
  shall  constitute perfected security  interests in  the Collateral  to the
  extent that a security interest therein may be perfected  by filing in the
  Uniform Commercial Code records of Louisiana, prior to all other Liens and
  rights of others therein except for the Permitted Liens to the extent that
  such priority is afforded by the UCC or otherwise.

                                   ARTICLE 4.

                                   Covenants

       The Borrower covenants and agrees as follows:

       Section 4.1 Taxes.  The Borrower will pay and discharge promptly when
  due all  taxes, license  fees,  assessments  and governmental  charges  or
  levies imposed upon  it or upon its income  or upon the Collateral  or any
  part thereof (including production, severance, windfall profit, excise and
  other  taxes assessed  against or measured  by the  production of,  or the
  value or  proceeds of production of,  Hydrocarbons; provided, however, the
  Borrower  shall not be required to pay any such tax, assessment, charge or
  levy if the  amount, applicability or validity thereof shall  currently be
  contested in  good faith  by appropriate  proceedings diligently conducted
  and if the contesting party shall  have set up reserves  therefor adequate
  under  generally  accepted   accounting  principles  (provided  that  such
  reserves may be set up under generally accepted accounting principles).

       Section  4.2 Insurance.   The Borrower will procure  and maintain for
  the benefit of the Lender and Borrower original paid-up insurance policies
  against  such liabilities,  casualties, risks  and contingencies,  in such
  amounts and form and substance, with such financially sound and  reputable
  companies, and with such expiration dates, as are reasonably acceptable to
  the Lender, and containing  a noncontributory standard mortgagee clause or 
  its equivalent  in favor of  the Lender.   The Borrower will  at all times
  maintain costs of regaining control of well insurance or similar insurance
  to  the  extent  customary  in the  industry  in  the  pertinent  area  of
  operations.  Each policy shall contain an agreement by  the insurer not to
  cancel or amend the policy  without giving the Lender at least thirty (30)
  days' prior written notice of its intention to do so.  Upon request of the
  Lender, the Borrower will furnish or cause  to be furnished to the  Lender
  from time to time  a summary of the insurance coverage of  the Borrower in
  form and substance reasonably satisfactory to the Lender and if  requested
  will furnish the Lender  original certificates of insurance and/or  copies
  of the  applicable policies and  all renewals  thereof.  In  the event the
  Borrower should,  for any  reason whatsoever, fail to  keep the  corporeal
  (tangible)  Collateral or  any part thereof  so insured,  or to  keep said
  policies so  payable, or  fail to  deliver to  the Lender  the original or
  certified policies  of insurance  and the  renewals therefor  upon demand,
  then the Lender, if it so elects, may itself  have such insurance effected
  in such amounts and with such companies as it may deem  proper and may pay
  the  premiums  therefor  (as  an  Advance as  defined  hereinbelow).   The
  Borrower will  notify the  Lender immediately in writing  of any  material
  blowout, fire  or other  casualty to or accident  involving the  Mortgaged
  Property, the Equipment or the Hydrocarbons, whether or not such  blowout,
  fire, casualty or accident is covered by insurance.  Further, the Borrower
  will  notify  promptly  the  Borrower's  insurance company  and  submit an
  appropriate claim  and proof of  claim to the insurance company  if such a
  casualty or accident  occurs.  In  the event  of any loss on  any of  such
  policies, the Lender may,  at its election, either apply the net  proceeds
  thereof toward  the payment  of the Indebtedness  or pay  the net proceeds
  thereof to  the  Borrower,  either wholly  or  in  part,  and  under  such
  conditions as the Lender may determine to enable the Borrower to repair or
  restore the Collateral. 

       Section 4.3   Liens.  The Borrower will  not create, incur, assume or
  permit to exist any Lien on any portion  of the Collateral, except for (i)
  the Lien  and Security  Interests  hereof and  the Permitted  Liens,  (ii)
  taxes, assessments or governmental charges or levies if the same shall not
  at the  time be delinquent  or thereafter can be paid  without penalty, or
  are  being   contested  in  compliance  with  the  preceding  Section  4.1
  ("Taxes"),  (iii) defects or  irregularities of title and  Liens which are
  not such  as to  interfere materially with the  development, operation  or
  value of the Mortgaged Property or  the title thereto, (iv)  those imposed
  by law, such  as carriers', warehousemen's and mechanics' liens  and other
  similar liens  arising in  the  ordinary course  of business  which  would
  secure  obligations not more than ninety  (90) days past due  or which are
  being  contested  in  good  faith  by  appropriate proceedings  diligently
  conducted and for which adequate reserves shall have been set aside on its
  books,  (v) those  arising  out  of pledges  or deposits  under  workmen's
  compensation  laws, unemployment  insurance,  old age  pensions,  or other
  social  security  or retirement  benefits,  or  similar  legislation, (vi)
  utility easements,  building restrictions  and such  other encumbrances or
  charges against real property  as are of a  nature generally existing with
  respect to properties of a similar character as the Mortgaged Property and
  which do not in any material way affect the merchantability of the same or
  interfere with the use thereof and the business of the Borrower, and (vii)
  those consented to in writing by the Lender.

       Section 4.4 Sale.   Except for (i)  sales of severed Hydrocarbons  in
  the ordinary  course of the Borrower's  business on  the best terms  which
  would be available in  bona fide and arms  length transactions with  third
  parties  not affiliated with the Borrower (which in the case of production
  which is subject to price controls or is sold in accordance with customary 
  industry  practice  pursuant  to long  term  purchase contracts,  shall be
  determined giving  consideration to such  matters), (ii) dispositions made
  in connection with  a permitted (as provided below) release,  surrender or
  abandonment  of a lease, or (iii) in  the absence of an  Event of Default,
  collection of  Accounts  and General  Intangibles, the  Borrower will  not
  sell, convey, lease or otherwise transfer or dispose of all or any portion
  of the  Collateral without  the written consent of  Lender (which  consent
  shall not be unreasonably withheld).

       Section  4.5 Compliance with  Laws and Covenants.   The Borrower will
  observe  and comply  with  all  laws, statutes,  codes,  acts, ordinances,
  orders, judgments, decrees, injunctions, rules, regulations, certificates,
  franchises, permits, licenses, authorizations, directions and requirements
  of  all   federal,  state,   county,  municipal   and  other  governments,
  departments,  commissions,  boards,  courts,  authorities,  officials  and
  officers  domestic  or  foreign,  applicable  to the  Borrower  or  to the
  Collateral, except those being contested in good faith.

       Section 4.6 Payment of Debts.  The Borrower will  cause all debts and
  liabilities of any character (including, without limitation, all debts and
  liabilities for labor, material and equipment used or furnished for use on
  the  Mortgaged  Property)  incurred  in  the  operation,  maintenance  and
  development of the Collateral  to be  paid within ninety  (90) days  after
  same becomes due.  The Borrower may, however,  delay paying or discharging
  any  such  debts  and  liabilities  so long  as  the  validity thereof  is
  contested  in  good   faith  and  by  appropriate  proceedings  diligently
  conducted and  the Borrower has established adequate  reserves therefor in
  accordance with  generally accepted accounting  principles and so long  as
  the  payment of same is not a condition to be  met in order to maintain an
  oil, gas and/or mineral lease in force.

       Section 4.7 Operation  of the Mortgaged Property.  Whether or not the
  Borrower is the operator  of the Mortgaged Property, the Borrower will, at
  the Borrower's own expense, (a) do all things necessary to keep unimpaired
  the Borrower's rights in the Mortgaged Property (subject to any  permitted
  abandonment provisions hereinbelow), (b) use its best efforts to cause the
  lands  described in  Exhibit  "A" to  be maintained,  developed, protected
  against  drainage,  and   continuously  operated  for  the  production  of
  hydrocarbons in a good and workmanlike manner as would a prudent operator,
  and  in  accordance  with  generally  accepted  practices  and  applicable
  operating agreements, and  (c) cause to be paid,  promptly as and when due
  and payable, all rentals and royalties payable in respect of the Mortgaged
  Property, and all  expenses incurred in or  arising from the operation  or
  development  of the  Mortgaged Property.   The  Borrower will  observe and
  comply with all terms and  provisions, express or implied,  of the Mineral
  Properties, and all agreements and contracts of  any type relating to  the
  Mortgaged Property,  in order to keep  the same in  full force and effect,
  including, without limitation,  maintenance of productive capacity of each
  well or unit comprising  the Mortgaged Property, and will not, without the
  prior written consent,  which consent shall not be  unreasonably withheld,
  of  the Lender,  surrender, abandon  or release  (or otherwise  reduce its
  rights under) any such  lease, in whole or  in part, so  long as any  well
  situated  thereon (whether  or  not such  well is  located on  the Mineral
  Properties),  or located  on any unit  containing all or any  part of such
  leases, is capable (or  is subject to being made capable through drilling,
  reworking or other  operations which it would be economically  feasible to
  conduct) of producing hydrocarbons in commercial quantities (as determined
  without  considering the effect of this  Mortgage); provided, however that
  the Borrower  may, to the  extent expressly  required by the  terms of any
  such lease  under a "Pugh  clause" or similar provision, or  to the extent
  otherwise required by law,  confirm to the  lessor thereof that the  lease
  has by its  terms terminated as to any  specified portion thereof on which
  no  such well  exists.  Without  the express prior written  consent of the
  Lender, which  consent shall not be  unreasonably withheld,  Borrower will
  not abandon or  consent to the abandonment of  any well producing from the
  Mortgaged Property (or properties unitized therewith) so long as such well
  is  capable  (or  is  subject to  being  made  capable  through  drilling,
  reworking or other  operations which it would be commercially  feasible to
  conduct) of producing hydrocarbons in commercial quantities (as determined
  without considering the  effect of this Mortgage but considering  the cost
  of such drilling, reworking  and other operations).  The Borrower will not
  without the  express prior  written consent of the  Lender, which  consent
  shall not be unreasonably withheld, elect not to participate in a proposed
  operation on  the Mortgaged  Property where the effects  of such  election
  would be the forfeiture  either temporarily (i.e., until a certain sum  of
  money is  received out  of the forfeited  interest) or  permanently of any
  interest in the Mortgaged Property.

       Section 4.8 Pooling and Unitization.  The Borrower has the right, and
  is hereby authorized, to pool or unitize  all or any part of any  tract of
  land  described  in  Exhibit  "A",  insofar as  relates  to  the Mortgaged
  Property, with  adjacent lands, leaseholds and  other interests,  when, in
  the reasonable judgment of the  Borrower, it is necessary  or advisable to
  do  so  in  order  to  form  a  drilling unit  to  facilitate  the orderly
  development of that part of the Mortgaged Property affected thereby, or to
  comply  with  the  requirements  of  any  law  or  governmental  order  or
  regulation relating to the spacing of wells or proration of the production
  therefrom; provided, however, that the Hydrocarbons produced from any unit
  so  formed  shall  be  allocated among  the  separately  owned  tracts  or
  interests  comprising the  unit in  proportion to  the  respective surface
  areas  thereof;  and  provided  further  that the  Borrower  shall  not be
  entitled to form  any such unit without the  written consent of the Lender
  (which consent shall  not be unreasonably withheld)  if the effect of such
  formation would be to decrease  the amount of Hydrocarbons  which would be
  subject  to this Mortgage.   Any unit so formed may relate  to one or more
  zones or horizons, and a unit formed for a particular zone or horizon need
  not  conform in area  to any  other unit  relating to a different  zone or
  horizon, and a unit formed  for the production of oil need  not conform in
  area with  any unit formed  for the production of gas.   Immediately after
  formation of  any such unit, the  Borrower shall furnish  to the  Lender a
  true  copy of  the  pooling  agreement, declaration  of pooling  or  other
  instrument creating  such unit,  in  such number  of counterparts  as  the
  Lender may reasonably request.  The interest in any such unit attributable
  to the  Mortgaged Property  (or any part thereof)  included therein  shall
  become  a part of the Mortgaged Property  and shall be subject to the Lien
  hereof in the same manner and with the same effect as though such unit and
  the  interest  of the  Borrower  therein  were  specifically  described in
  Exhibit  "A".    The  Borrower  may  enter  into  pooling  or  unitization
  agreements not hereinabove authorized only with the prior  written consent
  of the Lender.

       Section  4.9  Contracts.   The  Borrower  will  not  enter  into  any
  operating agreement,  other than  the Operating  Agreement dated effective
  May 1,  1995  entered  into by  and  between  Lender, Borrower  and  other
  parties,  or  other   Contract  which  materially  adversely  affects  the
  Collateral  or the Mineral  Properties, or  which is  not in  the ordinary
  course of business.  The Borrower will promptly  take all action necessary
  to enforce or secure the observance or performance of any  term, covenant,
  agreement  or condition to be observed or performed by third parties under
  any  Contract, or  any part  thereof, or  to exercise  any of  its rights, 
  remedies, powers and privileges under any Contract, all in accordance with
  the respective terms thereof.  The Borrower will not do or permit anything
  to be done to the  Collateral that may violate the terms of  any insurance
  covering the Collateral or any part thereof.

       Section 4.10  Condition of  Equipment.   The Borrower  will maintain,
  preserve and keep the Equipment at all  times in thorough repair and  good
  working  order and  condition,  and from  time to  time  make all  needful
  repairs,  renewals  and  additions  so  that its  value  and  the Security
  Interests shall at no time become impaired.

       Section  4.11 Accounts Collection.   The Borrower shall  use its best
  efforts to  cause to be collected  from its account  debtors, as  and when
  due,  any and  all  amounts  owing under  or  on account  of  each Account
  (including,  without  limitation,  Accounts  which  are  delinquent,  such
  Accounts to be collected in  accordance with lawful collection procedures)
  and shall apply forthwith upon  receipt thereof all such amounts as are so
  collected to  the outstanding balance  of such  Account.   Subject to  the
  rights of the Lender hereunder if an Event of  Default shall have occurred
  and be  continuing,  the Borrower  may  allow in  the ordinary  course  of
  business as adjustments  to amounts owing under its Accounts  an extension
  or renewal  of the time or  times of payment, or  settlement for less than
  the  total  unpaid  balance,  which  the  Borrower  finds  appropriate  in
  accordance with sound business  judgment in accordance with the Borrower's
  ordinary  course of  business  consistent with  its  historical collection
  practices.    The  costs  and  expenses  (including,  without  limitation,
  attorneys'  fees) of collection,  whether incurred by the  Borrower or the
  Lender, shall be borne by the Borrower.

       Section 4.12 Governmental Accounts.  If the Collateral is or  becomes
  subject  to  the  Federal  Assignment  of Claims  Act,  the  Borrower will
  immediately   notify  the  Lender  thereof  in  writing  and  execute  all
  instruments  and take all steps required by the Lender to comply with that
  act.

       Section  4.13 Accounts Aging.  The Borrower will from time to time at
  the  request of  the Lender  furnish the  Lender with  a  schedule of  the
  Accounts which  shall include  the  names and  addresses of  each  account
  debtor.  The Lender shall also have the right to make test verification of
  the  Accounts or any portion thereof.   The Borrower at  its expense shall
  furnish  to the  Lender from time  to time  upon request  by the  Lender a
  listing and aging of all Accounts.

       Section 4.14 Right of Inspection and Information.  The Borrower  will
  permit any officer, employee  or agent of the Lender to visit  and inspect
  the Collateral, examine the books of record and  accounts of the Borrower,
  take copies and extracts therefrom, and discuss the affairs, finances  and
  accounts  of the Borrower  with the  Borrower's officers,  accountants and
  auditors,  and  the  Borrower  will  furnish  information  concerning  the
  Collateral,  including   schedules  of   all  internal   and  third  party
  information identifying  the Collateral  (such as, for  example, lease and
  well names  and numbers assigned by  the Borrower or  the operator  of any
  Mineral Properties, division orders and payment names and numbers assigned
  by purchasers  of the Hydrocarbons, and internal  identification names and
  numbers used by  the Borrower in accounting  for revenues, costs and joint
  interest  transactions attributable  to  the Mineral  Properties),  all on
  reasonable notice, at such reasonable times without hindrance or delay and
  as often as the Lender may reasonably  desire.  The Borrower will  furnish
  to the Lender promptly upon  request and in the form and content specified
  by  the Lender  lists  of  purchasers of  Hydrocarbons and  other  account 
  debtors, schedules of Equipment  and other data concerning the  Collateral
  as the Lender may from time to time specify. 

       Section  4.15 Financial  Statements and Reports.   The  Borrower will
  furnish to the Lender promptly upon the request of the Lender, all regular
  financial  statements,   reports,  budgets  and  such   other  information
  regarding the business and affairs and financial condition of the Borrower
  as  the Lender may reasonably request.  All  financial statements shall be
  in such detail as  the Lender may reasonably request and shall  conform to
  generally accepted  accounting principles  applied on  a consistent basis,
  except only  for such  changes in accounting principles  or practice  with
  which the independent certified public accountants concur.

       Section 4.16 Further Assurances.  The Borrower will keep the Lien  of
  this Mortgage  valid and unimpaired except  for the Permitted Liens.   The
  Borrower will promptly (and in no event later than  thirty (30) days after
  written notice from the Lender  is received) (i) correct any defect, error
  or omission  which may be  discovered in the contents of  this Mortgage or
  any  financing  statement  relating   thereto  or  in  the  execution   or
  acknowledgment of this Mortgage  or any financing statement; (ii) execute,
  acknowledge,  deliver  and  record  such  further  instruments (including,
  without  limitation,  further  security agreements,  financing statements,
  continuation  statements and  assignments  of accounts,  contract  rights,
  general  intangibles and  proceeds) and  do such  further acts  as may  be
  necessary, desirable or proper to carry out more effectively the  purposes
  of  this Mortgage  and to  more fully  identify and  subject to  the Liens
  hereof  any property  intended  to be  covered hereby,  including  without
  limitation  any   renewals,  additions,  substitutions,  replacements   or
  accessions to the Collateral;  and (iii) execute, acknowledge, deliver and
  record any  document or  instrument (including  specifically any financing
  statement) and  obtain  any consents  necessary, desirable  or  proper  to
  perfect,  protect or  preserve the  Lien and Security  Interests hereunder
  against the rights or interests of third persons.  

       Section 4.17  Notice of Changes.   The Borrower  will not change  its
  name, identity,  federal tax identification  number or corporate structure
  in any manner unless it shall  have given the Lender at least thirty  (30)
  days' prior written notice thereof. 

       Section   4.18  Filing.     The  Borrower   agrees  that   a  carbon,
  photographic,  facsimile,  photostatic  or  other  reproduction  of   this
  Mortgage  or  of  a  financing statement  is  sufficient  as  a  financing
  statement.   This Mortgage may be effective as a financing statement filed
  as  a fixture  filing with  respect to  all  fixtures included  within the
  Collateral,  and  shall  also be  effective  as  the  financing  statement
  covering minerals or the like (including oil and gas) and accounts subject
  to subsection  (5) of Section  9-103 of  the UCC, as  amended, and similar
  provisions (if any) of the  UCC as enacted in any other state where filing
  may be appropriate.  The mailing address  of the Borrower and the  address
  of  the Lender  from which  information concerning the  Security Interests
  evidenced  hereunder may be  obtained are the respective  addresses of the
  Borrower and the Lender set forth in Article 6.  The  Lender shall pay all
  costs of or incidental to  the recording or filing of this Mortgage and of
  any financing,  amendment, continuation,  termination or  other statements
  concerning the Collateral.

       Section  4.19 Collateral Indemnity.   If the validity  or priority of
  this Mortgage (except with respect to the Permitted Liens) or  any rights,
  security interests or other interests created or evidenced hereby shall be
  attacked,  endangered  or  questioned  or  if  any  legal proceedings  are
  instituted with  respect thereto,  the Borrower  will give prompt  written
  notice thereof  to the Lender and  at the Borrower's  own cost and expense
  will diligently  endeavor  to cure  any defect  that may  be developed  or
  claimed, and will take all necessary and  proper steps for the defense  of
  such legal proceedings, and the Lender (whether or not named as a party to
  legal proceedings with respect thereto) is hereby authorized and empowered
  to take  such additional steps as  in its judgment  and discretion  may be
  necessary or proper  for the defense of any  such legal proceedings or the
  protection  of the validity or  priority of this Mortgage  and the rights,
  security interests  and other interests  created or evidenced hereby,  and
  all expenses so  incurred of every kind  and character shall be considered
  Advances  as provided in  Section 4.23 ("Advances by  Lender") hereof, and
  shall be a part of the Indebtedness.

       Section 4.20 Environmental Indemnity.  To the extent of its interests
  in  the Mineral Properties,  the Borrower will defend,  indemnify and hold
  Lender and its directors, officers, agents and employees harmless from and
  against all claims, demands, causes of action, liabilities, losses,  costs
  and  expenses (including,  without limitation,  costs of  suit, reasonable
  attorneys'  fees  and  fees  of  expert  witnesses)  arising  from  or  in
  connection with (i) the  presence in, on or under or the  removal from the
  Collateral of  any  hazardous substances  or solid  wastes  (as  hereafter
  defined), or  any releases  or discharges of any  hazardous substances  or
  solid wastes on, under or from such property, (ii) any activity carried on
  or undertaken  on or off the  Collateral, whether prior  to or  during the
  term of this  Mortgage, and whether by the  Borrower or any predecessor in
  title or any officers, employees, agents, contractors or subcontractors of
  Borrower or  any predecessor in title,  or any third  persons at  any time
  operating the  Collateral or  occupying or present on  the Collateral,  in
  connection  with the  handling, use,  generation,  manufacture, treatment,
  removal, storage, decontamination,  clean-up, transport or disposal of any
  hazardous substances or solid wastes  at any time located or present on or
  under the Collateral or  involving the use or operation of the Collateral,
  or (iii) any breach of any  representation, warranty or covenant under the
  terms of  this Mortgage.  The  foregoing indemnity shall  further apply to
  any  residual contamination on  or under the Collateral,  or affecting any
  natural resources, and  to any contamination of the Collateral  or natural
  resources  arising  in  connection  with  the  generation, use,  handling,
  storage, transport or  disposal of any such hazardous substances  or solid
  wastes, and irrespective of whether any of such activities were or will be
  undertaken  in accordance  with  applicable laws,  regulations,  codes and
  ordinances.  The terms "hazardous substance" and "release" as used in this
  Mortgage  shall   have  the   meanings  specified   in  the  Comprehensive
  Environmental  Response,  Compensation,  and  Liability  Act  of 1980,  as
  amended  by the Superfund  Amendments and Reauthorization Act  of 1986 (as
  amended,  "CERCLA"),  and  the  terms  "solid waste"  and  "disposal"  (or
  "disposed") shall have the meanings specified in the Resource Conservation
  and Recovery  Act of  1976, as amended  by the  Used Oil  Recycling Act of
  1980, the Solid  Waste Disposal Act Amendments  of 1980, and the Hazardous
  and Solid Waste Amendments of  1984 (as amended, "RCRA"); provided, in the
  event that  the laws  of the  State of Louisiana establish  a meaning  for
  "Hazardous  Substance," "Release,"  "Solid Waste"  or "Disposal"  which is
  broader than that specified in either CERCLA or RCRA, such broader meaning
  shall apply.  Without prejudice to the survival of any other agreements of
  the Borrower hereunder,  the provisions of this Section shall  survive the
  final payment of all Indebtedness and the termination of this Mortgage and
  shall continue thereafter in full force and effect. 

       Section 4.21 Release  of Collateral.  The Lender  may at any time and
  without notice  to the Borrower,  release any part of  the Collateral from 
  the  effect of this Mortgage, or  grant an extension or  deferment of time
  for the  discharge of  any obligation  hereunder (or  other Indebtedness),
  without affecting the liability of the Borrower hereunder.

       Section  4.22  Taxation   of  Mortgage.    In  the  event   that  any
  governmental  authority shall  impose  any  taxation of  mortgages  or the
  indebtedness they secure,  the Borrower  agrees to  pay such  governmental
  taxes, assessments or  charges either to the governmental authority  or to
  the Lender, as provided by law.

       Section 4.23 Advances by Lender.  The Borrower authorizes the  Lender
  in the Lender's discretion to  advance any sums necessary  for the purpose
  of  paying  (i)  insurance  premiums,  (ii)  taxes, forced  contributions,
  service  charges, local  assessments and  governmental charges,  (iii) any
  Liens  or  encumbrances  affecting  the  Collateral  (whether superior  or
  subordinate to the Lien of this Mortgage) other than Permitted Liens, (iv)
  necessary repairs and maintenance expenses or (v) any other amounts  which
  are covered  by Section  4.16 ("Further Assurances") or  which the  Lender
  deems  necessary and appropriate  to preserve the validity  and ranking of
  this Mortgage,  to cure any Defaults  or to prevent  the occurrence of any
  Default,  or  otherwise authorized  by  this  Mortgage  (collectively, the
  "Advances")  of  whatever kind;  provided,  however,  that  nothing herein
  contained  shall  be construed  as  making such  Advances obligatory  upon
  Lender,  or  as  making Lender  liable  for any  loss,  damage,  or injury
  resulting from the nonpayment thereof.  The Borrower covenants and  agrees
  that  within  five  (5) days  after  demand  therefor by  the  Lender, the
  Borrower will  repay the  Advances to the Lender,  together with  interest
  thereon  at the  rate of  twelve (12%)  percent per  annum  from the  date
  incurred.   All such  Advances (and  interest) shall  be included  in  the
  Indebtedness  secured  hereby,  subject  to  the  maximum  amount  of  the
  Indebtedness set forth above in Section 2.5 ("Maximum Amount").

                                   ARTICLE 5.

                              Default and Remedies

       Section  5.1 Events of Default.  Any of the following events shall be
  considered an "Event of Default" as that term is used herein:

       (a)   Principal and  Interest Payments.   The Borrower  fails to make
  payment  of any principal  or interest installment on  the Indebtedness to
  the Lender  within fifteen (15) days  after the same  shall become due and
  payable.

       (b)   Representations and Warranties.  Any representation or warranty
  made by the Borrower proves to have been incorrect in any material respect
  as  of  the  date thereof;  or  any representation,  statement  (including
  financial  statements),  certificate  or  data  furnished or  made  by the
  Borrower  (or any officer,  accountant or attorney of  the Borrower) under
  this Mortgage, proves to have been untrue in any material adverse respect,
  as of the  date as of  which the  facts therein set forth  were stated  or
  certified.

       (c)   Insurance.  The Borrower  fails  to  maintain at  any  time the
  insurance required by this Mortgage.

       (d)   Alienation or  Encumbrance of Collateral.   The Borrower sells,
  conveys or  otherwise transfers or  disposes of all or any  portion of the 
  Collateral or grants any mortgage, security interest or other Lien  (other
  than Permitted Liens) affecting all or any  portion of the Collateral,  or
  permits  any  judgment,  Lien  (other  than   Permitted  Liens)  or  other
  encumbrance against all or any portion of the Collateral.

       (e)   Covenants.    The  Borrower   defaults  in  the  observance  or
  performance  of any  of  the  covenants or  agreements contained  in  this
  Mortgage to  be kept or  performed by  the Borrower (other  than a default
  under  Subsections  (a) through  (d) hereof),  and such  default continues
  unremedied for a period of 30 days after the notice thereof being given by
  the Lender to the Borrower.

       (f)   Involuntary   Bankruptcy  or   Receivership  Proceedings.     A
  receiver, conservator, liquidator or trustee of the Borrower, or of any of
  its property (including  the Collateral), is appointed by order  or decree
  of any court or agency or supervisory authority having jurisdiction; or an
  order  for  relief  is  entered  against the  Borrower  under  the Federal
  Bankruptcy Code; or the Borrower is adjudicated bankrupt or insolvent;  or
  any material  portion of  the property (including the  Collateral) of  the
  Borrower  is sequestered by court  order and such order  remains in effect
  for more than 60  days; or a petition is filed against  the Borrower under
  any  state, reorganization, arrangement, insolvency, readjustment of debt,
  dissolution, liquidation or  receivership law of any jurisdiction, whether
  now or hereafter in  effect, and such petition is not dismissed  within 60
  days.

       (g)   Voluntary  Petitions.   The  Borrower files  a case  under  the
  Federal Bankruptcy  Code or  seeking  relief under  any provision  of  any
  bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
  dissolution or  liquidation  law  of  any  jurisdiction,  whether  now  or
  hereafter in  effect, or consents to  the filing of  any case  or petition
  against it under any such law. 

       (h)   Assignments for Benefit  of Creditors.   The Borrower  makes an
  assignment for  the benefit of its  creditors', or  admits in writing  its
  inability to  pay its debts  generally as they become due,  or consents to
  the appointment of a receiver, trustee or liquidator of the Borrower or of
  all or any part of its property (including the Collateral).

       (i)   Undischarged  Judgments.  Judgment for the  payment of money in
  excess of $1,000,000  (which is not covered  by insurance) is  rendered by
  any  court  or  other  governmental  body against  the  Borrower,  and the
  Borrower  does not  discharge the  same  or provide  for its  discharge in
  accordance with its  terms, or procure a  stay of execution thereof within
  30  days from the date of entry  thereof, and within said 30-day period or
  such longer period during which execution of such judgment shall have been
  stayed,  appeal therefrom  and cause  the execution  thereof to  be stayed
  during  such appeal  while  providing  such reserves  therefor as  may  be
  required under generally accepted accounting principles.

       (j)   Attachment.   A  writ or  warrant  of executory  process, fieri
  facias,  attachment or  any similar process shall  be issued  by any court
  against the Collateral, and such writ or warrant is not released or bonded
  within 10 days after its entry.

       (k)   Condemnation.    The Collateral,  or  any  portion  thereof, is
  condemned or  expropriated under  power of eminent domain  by any  legally
  constituted governmental authority. 

       Section 5.2 Remedies.  (a) Upon the happening of any Event of Default
  specified  in the  preceding Section  (other than  Subsections (f)  or (g)
  thereof), the  Lender may  by written notice to  the Borrower  declare the
  entire  principal amount  of all  Indebtedness then  outstanding including
  interest  accrued  thereon  to  be immediately  due  and  payable  without
  presentment,  demand, protest,  notice  of  protest or  dishonor  or other
  notice of default of any kind, all of which are hereby expressly waived by
  the Borrower.

       (b)   Upon  the  happening  of  any Event  of  Default  specified  in
  Subsections  (f) or  (g) of  the preceding  Section, the  entire principal
  amount  of all  obligations  then outstanding  including  interest accrued
  thereon shall, without notice or action by the  Lender, be immediately due
  and  payable without  presentment, demand,  protest, notice of  protest or
  dishonor or other notice of default of  any kind, all of which are  hereby
  expressly waived by the Borrower.

       (c)   Upon the  occurrence of any  Event of Default,  the Lender  may
  take  such  action, without  notice or  demand, as  it deems  advisable to
  protect and  enforce its  rights against  the Borrower  and in  and to the
  Collateral, including, but not limited to, the following actions, each  of
  which may be pursued concurrently or otherwise,  at such time and in  such
  order  as  the  Lender  may  determine, in  its  sole  discretion, without
  impairing  or otherwise  affecting the  other rights  and remedies  of the
  Lender: (i) institute  proceedings for  the complete  foreclosure of  this
  Mortgage in which case the Collateral or any part thereof may be  sold for
  cash  or upon  credit  in one  or  more portions;  or (ii)  to  the extent
  permitted  and  pursuant  to the  procedures  provided by  applicable law,
  institute proceedings for the partial foreclosure of this Mortgage for the
  portion  of  the  Indebtedness  then  due  and  payable,  subject  to  the
  continuing Lien of  this Mortgage for the balance of the  Indebtedness not
  then due; or  (iii) institute an action, suit  or proceeding in equity for
  the specific performance of any covenant, condition or agreement contained
  in  this Mortgage;  or  (iv)  apply for  the  appointment  of  a  trustee,
  receiver, liquidator or conservator of the Collateral,  without regard for
  the adequacy  of the security for the Indebtedness and  without regard for
  the solvency of the Borrower or of any person, firm or other entity liable
  for the payment of the Indebtedness; (v) exercise its rights under Section
  2.3 ("Assignment")  hereof; or  (vi)  pursue such  other remedies  as  the
  Lender may have under applicable law.

       (d)   The proceeds or avails  of any sale made under or by  virtue of
  this Section, together with  any other sums which then may  be held by the
  Lender under this  Mortgage, whether under the provisions of  this Section
  or  otherwise, shall be applied in such  manner as the Lender, in its sole
  discretion, shall determine.

       (e)   Upon  any sale  made under  or by  virtue of this  Section, the
  Lender  may bid for and acquire the Collateral  or any part thereof and in
  lieu of paying cash therefor may make settlement for the purchase price by
  crediting  upon  the Indebtedness  the  net  sales  price  after deducting
  therefrom the  expenses of the  sale and the costs  of the action  and any
  other sums which the Lender is authorized to deduct under this Mortgage.

       Section  5.3 General Authority  and Power of Attorney.   The Borrower
  hereby irrevocably  appoints the  Lender its agent and  attorney in  fact,
  with  full  power of  substitution,  in the  name of  the Borrower  or the
  Lender, for the  sole use and benefit of the Lender, but at the Borrower's
  expense, to exercise, at any time and from time to time  while an Event of 
  Default has occurred and is continuing, all or any of the following powers
  with respect to all or any of the Collateral:

                   (i)     to  endorse the  name  of the  Borrower  upon any
  check,  draft  or  other  instrument  payable to  the  Borrower evidencing
  payment upon any Accounts or General Intangible,

                   (ii)    to  demand, sue  for,  collect, receive  and give
  acquittance for any and all Accounts and other monies due or to become due
  for or as Collateral or by virtue thereof,

                   (iii)   to  settle,  compromise,  compound,  prosecute or
  defend any action or proceeding with respect to any of the Collateral, and

                   (iv)    to  extend the time  of payment of any  or all of
  the  Collateral and  to  make  any allowance  and other  adjustments  with
  reference thereto.

             The  aforesaid mandate  and power  of attorney,  being coupled
  with an  interest,  is irrevocable  so  long as  any of  the  Indebtedness
  remains outstanding.

              Section 5.4 Accounts and Contracts.  While an Event of Default
  has occurred  and is continuing, (i)  the Borrower  will make no  material
  change to the terms of any Account  or Contract without the prior  written
  permission of the Lender, and (ii) the Borrower upon request of the Lender
  will promptly notify (and  the Borrower hereby authorizes the Lender so to
  notify)  each  account  debtor  in  respect  of  any  Account  or  General
  Intangible that such Collateral has been assigned to the Lender hereunder,
  and that any payments  due or to become due in  respect of such Collateral
  are to be made directly to the Lender or its designee.

              Section 5.5 Sale. Upon the occurrence of an Event of  Default,
  the  Lender may exercise all  rights of a secured party  under the UCC and
  other applicable law  (including the Uniform Commercial Code as  in effect
  in  another  applicable jurisdiction)  and, in  addition, the  Lender may,
  without being required to give any notice, except as herein provided or as
  may be required by mandatory provisions of law, sell the Collateral or any
  part thereof at public sale, for cash, upon credit or for future delivery,
  and at  such price  or prices as  the Lender  may deem  satisfactory.  The
  Lender may be the purchaser of any or all of the Collateral so sold at any
  public sale.   The Borrower  will execute and deliver  such documents  and
  take such other action as the Lender deems necessary or advisable in order
  that any such sale may be made in compliance with law.  Upon any such sale
  the  Lender shall  have the right  to deliver, assign and  transfer to the
  purchaser thereof the Collateral so sold.  Each purchaser at any such sale
  shall hold the Collateral so sold to it absolutely and free from any claim
  or right of whatsoever  kind and the Borrower, to the extent  permitted by
  law, hereby  specifically waives all  rights of appraisal which  it has or
  may have  under any law now  existing or hereafter  adopted.  The Borrower
  agrees that ten (10) days'  prior written notice of the time  and place of
  any  sale  or  other  intended  disposition  of  any  of  the   Collateral
  constitutes  "reasonable  notification"  within  the  meaning  of  Section
  9-504(3) of  the UCC.   The notice (if  any) of such sale  shall state the
  time and place fixed for such sale.  Any such public sale shall be held at
  such time  or times within  ordinary business  hours and at  such place or
  places as the Lender may fix in the notice of such sale.  At any such sale
  the  Collateral may  be sold  in  one lot  as an  entirety or  in separate
  parcels, as the  Lender may determine.  The  Lender shall not be obligated
  to make  any  such sale  pursuant to  any such  notice.   The Lender  may, 
  without notice or publication, adjourn  any public sale or  cause the same
  to  be adjourned from time to  time by announcement at  the time and place
  fixed  for the  sale, and such  sale may be  made at any time  or place to
  which the  same may be so  adjourned.  In case  of any sale  of all or any
  part of the Collateral on credit or for future delivery, the Collateral so
  sold may be retained by the Lender until the  selling price is paid by the
  purchaser thereof, but the Lender shall not incur any liability in case of
  the failure of  such purchaser to  take up and pay  for the Collateral  so
  sold and, in  case of any such failure, such  Collateral may again be sold
  upon like notice. 

              Section  5.6 Set-Off.   Upon  the occurrence  of any  Event of
  Default,  the Lender  shall have  the right  to set-off  any funds  of the
  Borrower in the  possession of the Lender against  any amounts then due by
  the Borrower to the Lender pursuant to the Mortgage.

              Section  5.7   Confession  of  Judgment.     For  purposes  of
  foreclosure under  Louisiana executory  process procedures,  the  Borrower
  hereby acknowledges  the Indebtedness and  confesses judgment in favor  of
  Lender for the full amount of the Indebtedness.

              Section 5.8  Expenses.  The Borrower  will pay  all reasonable
  expenses,  including  but  not  limited  to  reasonable  attorneys'  fees,
  incurred in connection  with the full protection and preservation  of, and
  foreclosure, collection or  other realization of or on, the  Collateral or
  this  Mortgage,  or  in connection  with  the  enforcement of  any  of the
  Borrower's  obligations or  the  Lender's rights  and remedies  set  forth
  herein, whether or not suit or any foreclosure proceedings are filed.  All
  insurance expenses  and all expenses  of protecting, storing, warehousing,
  appraising,  preparing for  sale, handling,  maintaining and  shipping the
  Collateral, any and all excise, property, sales, and use taxes imposed  by
  any  federal,  state or  local  authority on  any  of the  Collateral, all
  expenses  in  respect  of  periodic  appraisals  and  inspections  of  the
  Collateral to the extent the same may be requested from time to time,  and
  all expenses in respect of  the sale or other disposition thereof shall be
  borne and paid  by the Borrower.   All such expenses  shall be treated  as
  Advances as  provided in  Section 4.23 ("Advances by  Lender") hereof  and
  thus included in the Indebtedness secured hereby.

              Section 5.9 Keeper.  In the event  the Collateral, or any part
  thereof, is  seized as  an incident  to an  action for  the recognition or
  enforcement  of  this Mortgage  by  executory  process,  ordinary process,
  sequestration, writ  of fieri  facias or otherwise, the  Borrower and  the
  Lender agree  that the court  issuing any such order  shall, if petitioned
  for by Lender, direct the applicable sheriff to appoint as a keeper of the
  Collateral, the  Lender or any agent  designated by  Lender or any  person
  named  by  the  Lender  at  the  time  such  seizure  is  effected.   This
  designation is pursuant to Louisiana Revised  Statutes 9:5131 through 5135
  and 9:5136 through 5140.2, as the same may be amended, and Lender shall be
  entitled to all the rights and benefits afforded thereunder.  It is hereby
  agreed  that the keeper shall  be entitled to  receive as compensation, in
  excess of its reasonable costs and expenses incurred in the administration
  or preservation  of the  Collateral, an  amount equal  to 3%  of the gross
  revenues  of  the  Collateral,  which shall  be  included as  Indebtedness
  secured by this Mortgage.  The designation of keeper made herein shall not
  be deemed to require Lender to provoke the appointment of such a keeper.

              Section 5.10  Waivers.   The Borrower waives in  favor of  the
  Lender any and all homestead exemptions and other exemptions of seizure or
  otherwise to which  Borrower is or may  be entitled under the constitution 
  and  statutes of  the State  of  Louisiana insofar  as  the Collateral  is
  concerned.  The  Borrower further waives: (a) the benefit  of appraisement
  as provided in Louisiana Code of Civil Procedure Articles 2332, 2336, 2723
  and 2724, and all other laws conferring the same; (b) the demand and three
  days'  delay accorded by  Louisiana Code of Civil  Procedure Articles 2639
  and 2721;  (c) the notice  of seizure required by Louisiana  Code of Civil
  Procedure  Articles 2293 and 2721;  (d) the three  days' delay provided by
  Louisiana Code  of Civil  Procedure Articles 2331  and 2722;  and (e)  the
  benefit of  the other  provisions  of Louisiana  Code of  Civil  Procedure
  Articles 2331, 2722 and 2723, not specifically mentioned above.

              Section 5.11 Authentic Evidence.  Any  and all declarations of
  facts made by authentic act before a notary public in the presence  of two
  witnesses by a person declaring that such facts lie within  his knowledge,
  shall constitute  authentic evidence  of  such facts  for the  purpose  of
  executory  process.    The  Borrower  specifically  agrees  that  such  an
  affidavit by a representative  of the Lender as  to the existence, amount,
  terms and maturity of the Indebtedness  and of a default  thereunder shall
  constitute authentic evidence  of such facts for the purpose  of executory
  process.

              Section  5.12  Assemble   Collateral.    For  the  purpose  of
  enforcing any and all rights and remedies  under this Mortgage the  Lender
  may (i) require the Borrower to, and  the Borrower agrees that it will, at
  its expense and upon the  request of the Lender, forthwith assemble all or
  any part of the Collateral as directed by the Lender and make it available
  at a place designated by the Lender  which is, in its opinion,  reasonably
  convenient to the Lender and  the Borrower, whether at the premises of the
  Borrower  or  otherwise,  and   Lender  shall  be  entitled   to  specific
  performance of this obligation, (ii) to the extent permitted by applicable
  law  of this or any other state, enter, with or without process of law and
  without breach of the peace, any premise where any of the Collateral is or
  may be  located, and without charge  or liability to  it seize  and remove
  such  Collateral from  such premises,  (iii) have  access to  and use  the
  Borrower's books and records relating to the Collateral, and (iv) prior to
  the  disposition of the Collateral, store or transfer it without charge in
  or by means  of any storage or transportation  facility owned or leased by
  the  Borrower, process, repair  or recondition it or  otherwise prepare it
  for  disposition in  any  manner  and  to  the  extent  the  Lender  deems
  appropriate  and, in connection with such preparation and disposition, use
  without charge  any trademark, trade name,  copyright, patent or technical
  process used by the Borrower.

              Section  5.13  Limitation  on Duty  of  Lender.    Beyond  the
  exercise of reasonable care in the custody thereof,  the Lender shall have
  no duty  as  to any  Collateral in  its possession  or control  or in  the
  possession or control  of any agent or bailee or  any income thereon.  The
  Lender shall be deemed to have exercised reasonable care in the custody of
  the Collateral in  its possession if the Collateral is  accorded treatment
  substantially equal to that which it  accords its own property,  and shall
  not  be  liable  or responsible  for  any loss  or damage  to  any  of the
  Collateral, or for  any diminution in the value  thereof, by reason of the
  act or omission of any warehouseman, carrier, forwarding agency, consignee
  or other agent or bailee selected by the Lender in good faith.

              Section 5.14 Appointment of Agent.  At  any time or times,  in
  order to comply with any legal requirement in any jurisdiction, the Lender
  may appoint a bank or trust company or one or more other Persons with such 
  power and authority as may be necessary for the effectual operation of the
  provisions hereof and may be specified in the instrument of appointment.

                                   ARTICLE 6.

                                 Miscellaneous

              Section 6.1 Notices.  Any notice or demand which, by provision
  of this  Mortgage, is required or  permitted to be given  or served to the
  Borrower or the Lender shall be deemed to have been sufficiently given and
  served  for all  purposes  (if  mailed) three  calendar days  after  being
  deposited, postage prepaid, in the United States Mail, or (if delivered by
  express courier) one  business day after being delivered to  such courier,
  or (if delivered in person) the same day as delivery, in each case if made
  addressed  to (i) the  address of  such party  shown on  page 1  hereof or
  (ii) Borrower or Lender  at such different address(es) as shall  have been
  designated by written  notice actually received by Borrower or  Lender, as
  applicable at  least ten (10) days in advance of  the date upon which such
  change of address shall be effective under this Section 6.1.

              Section  6.2  Amendment.     Neither  this  Mortgage  nor  any
  provisions hereof may be changed, waived, discharged or  terminated orally
  or in any  manner other than by an  authentic instrument in writing signed
  by the party against whom enforcement of the  change, waiver, discharge or
  termination is sought.

              Section  6.3 Invalidity.  In the event that any one or more of
  the provisions contained in  this Mortgage shall, for  any reason, be held
  invalid,  illegal  or  unenforceable  in  any  respect,  such  invalidity,
  illegality  or unenforceability shall  not affect  any other  provision of
  this Mortgage.

              Section  6.4 Waivers.  No course of dealing on the part of the
  Lender, its officers, employees, consultants or agents, nor any failure or
  delay by the  Lender with respect to exercising  any of its rights, powers
  or privileges under this Mortgage shall operate as a waiver thereof.

              Section 6.5 Cumulative Rights.  The rights and remedies of the
  Lender  under  this  Mortgage  and  the   Collateral  Documents  shall  be
  cumulative, and  the exercise or  partial exercise  of any  such right  or
  remedy shall not preclude the exercise of any other right or remedy.

              Section 6.6 Titles of Articles, Sections and Subsections.  All
  titles or headings to articles,  sections, subsections or other  divisions
  of this  Mortgage or the  exhibits hereto are only for  the convenience of
  the parties and shall not be construed to  have any effect or meaning with
  respect  to the other  content of such articles,  sections, subsections or
  other divisions, such other content being controlling as to the  agreement
  between the parties hereto.

              Section 6.7  Singular and  Plural.  Words used  herein in  the
  singular,  where the  context so permits, shall  be deemed  to include the
  plural and  vice versa.  The  definitions of words  in the singular herein
  shall apply  to such words when  used in the  plural where the  context so
  permits and vice versa.

              Section  6.8 Termination.   Upon  full and  final  payment and
  performance of the Indebtedness and the payment or redemption of the Note,
  or  upon Lender's  acquisition of  the Mineral  Properties (other  than by
  reason of an  Event of Default hereunder), this Mortgage  shall terminate, 
  and the Lender shall pay to the Borrower all amounts then remaining in the
  possession  of  the  Lender  from  collections  on  or  proceeds  of   the
  Collateral.  Upon request  of the Borrower, the  Lender shall execute  and
  deliver  to  the Borrower  at  the  Borrower's  expense  such  termination
  statements  as  the  Borrower  may reasonably  request  to  evidence  such
  termination. 

              Section 6.9  Successors and Assigns.   (a)  All covenants  and
  agreements contained  by or  on behalf  of the Borrower  in this  Mortgage
  shall  bind its successors and assigns  and shall inure to  the benefit of
  the Lender and its successors and assigns.

              (b)   This Mortgage is  for the benefit of the Lender  and for
  such other  Person or Persons as  may from time to  time become or  be the
  holder  of the Note and the other Indebtedness, and this Mortgage shall be
  transferrable and  negotiable, with the  same force and effect  and to the
  same extent as  the Note may  be transferrable, it being  understood that,
  upon the  transfer or assignment by the Lender of  the Note (to the extent
  transfer  is permitted thereby), the legal holder of  such Note shall have
  all of the rights granted to the Lender under this Mortgage.  

              (c)   The  Borrower  hereby  recognizes and  agrees  that  the
  Lender  may, from  time to time, one  or more  times, transfer all  or any
  portion  of the Indebtedness to one or more third parties.  Such transfers
  may include, but not  be limited to, sales  of participation interests  in
  such Indebtedness in  favor of one or more third party  lenders.  Upon any
  transfer  of  all or  any  portion  of the  Indebtedness,  the  Lender may
  transfer and  deliver any or all  of the Collateral  to the  transferee of
  such Indebtedness  and such Collateral  shall secure  any and  all of  the
  Indebtedness  in favor of  such a transferee then  existing and thereafter
  arising, and after any such transfer has taken place,  the Lender shall be
  fully discharged from  any and all future liability and  responsibility to
  the  Borrower  with  respect   to  such  Collateral,  and  the  transferee
  thereafter shall be vested  with all  the powers, rights  and duties  with
  respect to such Collateral.

              Section 6.10 Governing  Law.  This Mortgage is made  under and
  shall be  construed in  accordance with  and governed  by the  laws of the
  United States of America and the State of Louisiana.

              Section  6.11  Certificates.    The  production  of  mortgage,
  conveyance, tax research  or other certificates is waived by  consent, and
  the Borrower and the Lender agree to hold me, Notary, harmless for failure
  to procure and attach same.

              Section  6.12   No  Paraph.    The  notes  and  other  written
  obligations  that  comprise  a  part  of the  Indebtedness  have  not been
  presented to me, Notary, for purposes of being paraphed herewith.

              THUS DONE AND PASSED as of  the day and in the month and  year
  hereinabove first  written, in  the presence of  the undersigned witnesses
  who hereunto sign their names with the Borrower and Lender and me, Notary,
  after due reading of the whole.

  WITNESSES:                    READING & BATES DEVELOPMENT CO.


  _________________________     By:________________________________
  Name:____________________        D. C. Toalson
           (Please Print)          President 


  _________________________     ENSERCH EXPLORATION, INC.
  Name:____________________
           (Please Print)
                                      By:________________________________
                                         R. L. Kincheloe
                                         Senior Vice President
                                         Offshore and International
   
                 _____________________________________________
                             Notary Public

                 My Commission Expires:_______________________ 


                                   EXHIBIT 1
                       TO MORTGAGE AND SECURITY AGREEMENT
                       BY READING & BATES DEVELOPMENT CO.

              The Borrower and the Lender hereby agree and affirm that  this
  Introduction  to  Description  of  Properties  is  an  explanation of  the
  terminology, format and information contained in Exhibit "A" and that this
  instrument shall be construed as a whole with reference to the entirety of
  its provisions (including all Exhibits).

        0.1   This instrument covers the Borrower's entire interest in
              each of the  mineral servitudes, mineral leases, mineral
              royalties and other mineral rights described in  Exhibit
              A, as now owned or as hereafter acquired.  The inclusion
              of  the  Borrower's  "Net  Revenue  Interest,"  "Working
              Interest"  and  undivided  leasehold interests,  by  the
              listing of percentage,  decimal or fractional numbers or
              otherwise,   as   well  as   the   inclusion  of   depth
              limitations, spacing unit  designations and  agreements,
              well  names  and   well  arabic  numbers,  are  in  some
              instances for purposes of certain representations of the
              Borrower  contained in this instrument and are generally
              for  descriptive  purposes.    The   inclusion  (or  the
              inaccuracy thereof)  of this  information is  not in any
              way a limitation  or restriction on the  interest of the
              Borrower being subjected  to the lien and encumbrance of
              this  instrument.    In  the  event  that  the  Borrower
              acquires additional undivided  interests in some  or all
              of such mineral or leasehold rights, this Mortgage shall
              automatically  encumber such  additions or  increases to
              the  Borrower's interest  in  such mineral  or leasehold
              rights without need of further act or document.

        0.2   References in Exhibit "A" to  instruments on file in the
              public  records  are  made  for  all  purposes.   Unless
              provided otherwise, all recording references  in Exhibit
              "A" are  to the  official real  property records of  the
              parish or  parishes in  which the  mortgaged property is
              located and in which records of such documents are or in
              the  past   have  been  customarily  recorded,   whether
              Conveyance Records,   Oil and Gas Records, Mineral Lease
              Records, Oil and Gas Lease Records or other records.

        0.3   A  statement herein  that a  certain  interest described
              herein is  subject to the terms of  certain described or
              referred  to  agreements,  instruments or  other matters
              shall not  operate to subject such  interest to any such
              agreement,  instrument  or  other matter  except  to the
              extent that  such  agreement, instrument  or  matter  is
              otherwise  valid and presently subsisting nor shall such
              statement be  deemed to constitute  a recognition by the
              parties hereto  that any  such agreement,  instrument or
              other  matter  is  valid  and  presently  subsisting  or
              binding against the Lender. 


                                  EXHIBIT "A"
                     TO MORTGAGE AND SECURITY AGREEMENT BY 
                    READING & BATES DEVELOPMENT CO.

                              PROPERTY DESCRIPTION


  1.    LEASE OCS-G 8504.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        June  1,  1986, by  and  between the  United  States of  America, as
        Lessor, and Placid  Oil Company, et al., as Lessees,  bearing Serial
        No. OCS-G 8504 covering all of Block 209, Green Canyon, OCS Official
        Protraction Diagram, NA 15-3.

                      Working Interest            13.333333%
                      Net Revenue Interest        11.616868%

  2.    LEASE OCS-G 7049.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        June 1,  1984,  by and  between  the United  States of  America,  as
        Lessor, and Placid  Oil Company, et al., as Lessees,  bearing Serial
        No. OCS-G 7049 covering all of Block 254, Green Canyon, OCS Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.000000%
                       Net Revenue Interest        17.3506665%

  3.    LEASE OCS-G 8010.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        July  1, 1985,  by  and between  the United  States  of America,  as
        Lessor, and Placid  Oil Company, et al., as Lessees,  bearing Serial
        No. OCS-G 8010 covering all of Block 298, Green Canyon, OCS Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.00000%
                       Net Revenue Interest        17.35066%

  4.    LEASE OCS-G 8012.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        July  1,  1985, by  and between  the  United States  of  America, as
        Lessor, and Placid  Oil Company, et al., as Lessees,  bearing Serial
        No. OCS-G 8012 covering all of Block 342, Green Canyon, OCS Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.00000%
                       Net Revenue Interest        17.35066%

  5.    LEASE OCS-G 8876.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        June 1,  1987, by  and  between the  United  States of  America,  as
        Lessor, and Hunt Petroleum  Corporation, et al., as Lessees, bearing
        Serial  No. OCS-G 8876 covering all of Block  297, Green Canyon, OCS
        Official Protraction Diagram, NA 15-3.

                       Working Interest            20.000000%
                       Net Revenue Interest        16.833333%

  6.    LEASE  OCS-G 13171.   That certain  Oil and  Gas Lease  of Submerged
        Lands under the Outer Continental Shelf Lands Act made and effective
        as of May 1, 1991,  by and between the United States of  America, as
        Lessor, and Exxon Corporation, as Lessees, bearing Serial  No. OCS-G
        13171  covering  all  of  Block  341,  Green  Canyon,  OCS  Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.000000%
                       Net Revenue Interest        17.500000%

  7.    LEASE OCS-G  13696.   That certain  Oil and  Gas Lease  of Submerged
        Lands under the Outer Continental Shelf Lands Act made and effective
        as of July 1, 1992, by and between the United States of  America, as
        Lessor,  and Exxon Corporation, as Lessees, bearing Serial No. OCS-G
        13696  covering  all  of  Block  210,  Green  Canyon,  OCS  Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.000000%
                       Net Revenue Interest        17.500000%

  8.    LEASE OCS-G 8000.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        July  1, 1985,  by and  between  the United  States  of America,  as
        Lessor, and Placid  Oil Company, et al., as Lessees,  bearing Serial
        No. OCS-G 8000 covering all of Block 213, Green Canyon, OCS Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.00000%
                       Net Revenue Interest        17.35066%

  9.    LEASE OCS-G 8006.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        July  1, 1985,  by  and between  the  United States  of  America, as
        Lessor, and Placid  Oil Company, et al., as Lessees,  bearing Serial
        No. OCS-G 8006 covering all of Block 258, Green Canyon, OCS Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.00000%
                       Net Revenue Interest        17.35066%

  10.   LEASE OCS-G 8005.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as of
        July  1,  1985, by  and  between the  United  States of  America, as
        Lessor, and  Amerada Hess,  et al., as Lessees,  bearing Serial  No.
        OCS-G 8005  covering all  of Block 253, Green  Canyon, OCS  Official
        Protraction Diagram, NA 15-3.

                       Working Interest            20.000000%
                       Net Revenue Interest        16.500000%


  1.    WELLS:
                                        WORKING           REVENUE
                                        INTEREST          INTEREST

        A.    OCS-G 7049 #3             20.00000%         17.350665%
        B.    OCS-G 7049 #4             20.00000%         17.350665%
        C.    0CS-G 7049 #4ST1          20.00000%         17.350665%
        D.    0CS-G 7049 #5             20.00000%         17.350665%


  2.    TEMPLATE:

        That certain three well  drilling template acquired, inter  alia, by
        Seller for use in connection with the drilling of  the OCS-G 7049 #5
        Well.