EXHIBIT 10.161

                            JOINT VENTURE AGREEMENT
                   OUTER CONTINENTAL SHELF - GULF OF MEXICO

      This Agreement,  made and  entered into  as this  16th day  of December,
1996, ("the Effective Date"), by  Shell Deepwater Development Inc. (SDDI)  and
SOI Finance Inc. (SOIFI), hereinafter collectively referred  to as "Shell" and
Reading & Bates Development Co. (RB), hereinafter referred to singularly as  a
"Party" and jointly as "Parties."

      WHEREAS, the Parties are interested in exploring, appraising, developing
and  operating  offshore  continental  shelf  leases  for  the  production  of
hydrocarbons and the transportation therefrom by pipeline or otherwise.

      NOW, THEREFORE,  in  consideration of  the premises  and  of the  mutual
promises exchanged and contained within  this Agreement, the Parties agree  to
explore,  appraise, develop and  operate the Contract  Leases lying within the
Contract Area of the Gulf of Mexico for the production of Hydrocarbons and the
transportation  therefrom by pipeline or otherwise  according to the following
provisions:

                             ARTICLE 1 - EXHIBITS

All  references in  this Agreement to  Exhibits without  further qualification
shall mean the  Exhibits listed below and attached to this Agreement.  Each of
the Exhibits listed below are made part of  this Agreement and shall be deemed
incorporated into the body of this Agreement by this reference, as if the full
text of each Exhibit were contained within the text of this Agreement.  If any
provision  of any Exhibit is inconsistent  with any provision contained in the
body of this  Agreement, the provisions  in the body  of this Agreement  shall
prevail.

      1.1.1 Exhibit A   Contract Area
      1.1.2 Exhibit A-1 East Boomvang Leases
      1.1.3 Exhibit A-2 North Boomvang Leases
      1.1.3 Exhibit A-3 East Bequia, Leases
      1.1.4 Exhibit B-1 Assignment Form - Record Title
      1.1.5 Exhibit B-2 Assignment Form - Overriding Royalty Interest
      1.1.6 Exhibit C   Geophysical Data License Agreement dated September 16,
            1996
      1.1.7 Exhibit D   Form  of  Joint  Operating  Agreement  (including it's
            Exhibits)

                            ARTICLE 2 - DEFINITIONS

As used  in the Agreement, the  following terms defined in  this Article shall
have the meanings here ascribed to them.

2.0   Affiliate(s).   Any company  that is  owned or  controlled  by or  under
      common control with a Party, with ownership or control existing of fifty
      percent (50%)  or more of  the stock  of such company  that carries  the
      right  to  vote  for  directors  is  owned  or controlled,  directly  or
      indirectly, by the particular Party; or any parent company that owns  or
      controls,  directly or indirectly,  fifty percent  (50%) or more  of the
      stock having the right to vote for directors of such Party.

2.1   Agreement.  Shall mean this  Joint Venture Agreement, together with  its
      attached Exhibits.

2.2   Appraisal Well.  An Appraisal  Well shall be defined as a  Well targeted
      to  be drilled  into  a  Producible Reservoir  with  a  primary goal  of
      determining  the  economic viability  of  developing  and producing  the
      Producible Reservoir.

2.3   Commitment  Well.  The  Appraisal Well required  under Subsection 7.1 of
      this  Agreement  and  the  optional exploration  wells  contemplated  in
      Subsections 7.2 and 7.3 of this Agreement.

2.4   Confidential  Information.    Shall  mean  all  proprietary  geophysical
      (including  the  Geophysical  Survey  Data),   geological,  geochemical,
      reservoir, drilling, production, cost  or engineering and technical data
      owned  or developed  by  the Parties  or any  logs or  other information
      pertaining to  the progress, tests or results of any Well drilled or any
      other operation  conducted relating  to operations conducted  within the
      Contract Area.  The term shall also include (but my not be limited to):

            Certain commercial, contractual or financial information,

            Analyses, compilations,  maps,  models, interpretations  or  other
            documents that  reflect or incorporate Confidential Information;

            Both originals and copies of  geological and geophysical data, and
            well  logs directly related  to the  Contract Area; and  all other
            subsurface,  seismic and  related  data acquired  or derived  from
            operations conducted pursuant to this Agreement.

2.5   Contract Area.   The area outlined  on the attached plat,  Exhibit A, in
      the East Breaks Area, Gulf of Mexico.

2.6   Contract  Prospect and or Leases.   The eight  (8) blocks falling within
      the Contract Area shown on  Exhibit A and identified by lease  number on
      Exhibits A-1, A-2, and A-3 and consisting of the following leases:

      2.6 a East Boomvang Prospect and/or Leases.  The  area comprised of East
            Breaks  Blocks 688  and 732  which fall  within the  East Boomvang
            portion of  the  Contract Area  outline  shown  on Exhibit  A  and
            identified by lease numbers on Exhibit A-1.

      2.6 b North  Boomvang  Prospect  and/or  Leases.    The  area  comprised
            of  East  Breaks  Blocks 642, 643 and  644  which  fall within the
            North  Boomvang portion  of the  Contract Area  outline  shown  on
            Exhibit A and identified by lease numbers on Exhibit A-2.

      2.6 c East Bequia  Prospect  and  or  Leases.    The  area  comprised of
            East  Breaks  Blocks  645,  646  and  690  which  fall  within the
            East  Bequia  portion  of  the  Contract  Area  outline  shown  on
            Exhibit A and identified by lease numbers on Exhibit A-3.

2.7   Development Operations  Shall mean all operations conducted pursuant  to
      a Development Plan.

2.8   Development Plan.  As defined in the Joint Operating Agreement.

2.9   Development Well.  As defined in the Joint Operating Agreement.

2.10  Exhibit.  As defined in Article 1 - Exhibits

2.11  Geophysical Data License Agreement.  The non-exclusive License Agreement
      dated September 16,  1996 to govern use of, rights  to, and ownership of
      the  Geophysical Survey  Data and which  was executed by  the parties on
      that  date.   If  there is  any  conflict between  the  Boomvang License
      Agreement and this Agreement, this Agreement shall control.

2.12  Geophysical Survey Data.  That portion of SDDI's proprietary 3-D Seismic
      Survey  covering the following  nine (9) block  area: East Breaks Blocks
      642, 643, 644, 645, 686, 687, 688, 689 and 732.

2.13  Joint Operating  Agreement.  The  Joint Operating Agreement  which shall
      govern  the  joint  exploration,  development  and  operations  of  each
      Prospect  in  the  Contract  Area  individually for  the  production  of
      hydrocarbons  therefrom.  A separate Joint  Operating Agreement shall be
      executed for each Prospect prior to conducting  joint operations on that
      Prospect.  The form of Joint Operating Agreement to be  used is attached
      to this  Agreement as Exhibit  D. If there  is any conflict  between the
      Joint Operating  Agreement  for any  Prospect and  this Agreement,  this
      Agreement shall control.

2.14  Keeper Well.   A well that  will not be initially  plugged and abandoned
      but is intended to be utilized and  designed for appraisal, development,
      or production purposes.

2.15  Operator. RB  is  hereby designated  as Operator  of  the East  Boomvang
      Leases as identified in Exhibit A.

2.16  Party or  Parties   (to  this  Agreement):  Shall mean  Shell  Deepwater
      Development Inc, SOI Finance Inc. and/or Reading & Bates Development Co.
      singularly or collectively,  as the case  may be,  with respect to  this
      Agreement.

2.17  Primary Objective  Interval.    For  any  Commitment  Well  the  Primary
      Objective  Interval shall mean the shallower of  the total footage to be
      drilled (as measured  in true vertical depth) or the  penetration by the
      drill  bit sufficient to  test the base of  the stratigraphic of seismic
      bright spot  events.  Said depth and  seismic event(s) for each prospect
      are set forth below:

PROSPECT                DEPTH (TVD) SEISMIC EVENT(S)

East Boomvang           10,000'           Bright Spots 30, 40 and 45 #
North Boomvang          10,000'           Bright Spots 30 and 40 #
East Bequia             10,500'           Bright Spot 25 *

      #     As found in Shell's EB 688 #1 Well
      *     As found in Mobil's EB 689 #1 Well

2.18  RB's Earned Interest.   That portion of Shell's leasehold  and rights to
      production to  be delivered to RB  in accordance with Article  9 of this
      Agreement.

2.19  Shallow  Hazards Data.   Data  derived from  the shallow  hazards survey
      referenced in 
      Article 4.

2.20  Sidetrack.  The directional control and intentional  deviation of a Well
      so as  to change the bottom  hole location whether  or not it is  to the
      original Primary Objective Interval.

2.21  Shell's Retained Interest.   That portion of the leasehold and rights to
      production to be retained by Shell  in accordance with Articles 9 and 10
      of this Agreement.

2.22  Standard Log Evaluation Program.   For the Commitment Wells required  in
      Subsection 7.1  of this Agreement,  the Standard Log  Evaluation Program
      shall be defined as:

      -     MWD
      -     Phaser Induction
      -     Long-Spaced Sonic
      -     LDT-CNL (Litho Density Tool - Compensated Neutron Log)
      -     FMS (Formation Microscanner)
      -     SHDT - Dual Dipmeter (High Resolution)
      -     RFT - Repeat Formation Test 
      -     SWC - Sidewall Core *
      -     VSP - Vertical Seismic Profile

      *     Only in those zones of interest as indicated by hydrocarbon shows.

2.23  Substitute Well.   For any Commitment  Well, a Substitute Well  shall be
      defined as a Well drilled to the same Primary Objective Interval (unless
      mutually  agreed otherwise)  as planned  for in the  original Commitment
      Well for which it is a substitute.

2.24  Well.  For any Commitment Well, a Well shall be defined as the drilling,
      Standard  Log Evaluation  Program and  plugging  and abandonment  of the
      original straight hole; or the drilling, Standard Log Evaluation Program
      and  the temporary  plugging and  abandonment of  the original  straight
      hole.

2.25  Working Interest.  Shall mean the leasehold or operating rights interest
      of each  Party in and to each Lease within a Contract Area (expressed as
      a percentage).

                          ARTICLE 3 - CONFIDENTIALITY

Pursuant to this Agreement, the Parties  will from time to time make available
to each other certain Confidential Information.   The Confidential Information
will be made  available for the  purpose of evaluating  the Contract Area  and
Contract  Leases,  planning operations,  determining  whether  to develop  the
Leases  and whether  to participate  in Development  Operations.   The Parties
shall use the Confidential Information  solely for the aforesaid purposes  and
shall maintain the confidential nature of such information.

3.1   Each  Party agrees to deliver  such Confidential Information relating to
      the Contract Area as may be required by the other Party pursuant to this
      Agreement upon request or as otherwise provided and mutually agreed.

3.2   The  Parties  agree  to  keep,   save  and  hold  as  confidential   all
      Confidential  Information disclosed hereunder  relating to  the Contract
      Area.

3.3   Except as otherwise provided  herein, the Confidential Information shall
      not  be disclosed  or revealed  by any  Party, its  employees, officers,
      Affiliates, consultants or agents  and representatives to any individual
      or entity  not a party hereto without prior written consent of the other
      Party.  Any incidental disclosure  of a business or technical  nature to
      which any Party's  employees or  agents are exposed  by virtue to  their
      exposure  to  the Confidential  Information  shall  be subject  to  this
      Agreement.

3.4   All Confidential Information made available  to any party shall be  done
      on an "as is" basis without any warranties either express or implied, as
      to the accuracy,  validity or utility of such information.   In no event
      shall  any Party be  liable for  any incidental, consequential  or other
      damages arising out of or resulting from  the Confidential.  Information
      conveyed or  otherwise made available  through this Agreement.   Parties
      receiving Confidential  Information shall  conduct at their  own expense
      and rely solely  on their own  independent investigation and  evaluation
      of,  and appraisal  and judgement  with respect  to, the  geological and
      geophysical   characteristics  of  the   Contract  Area,  the  estimated
      hydrocarbon  reserves recoverable  therefrom,  and  expense  assumptions
      applicable thereto.

3.5   Any  Party  may make  Confidential  Information  available to  geologic,
      and/or  geophysic  consultants,  reputable  engineering  firms,  service
      firms, gas transmission  and crude oil purchasing  companies for reserve
      and other technical evaluations  and to reputable financial institutions
      for study  prior  to commitment  of  funds and  shall notify  the  other
      Parties of such disclosure.  Any third party permitted such access shall
      first  agree in writing to neither disclose  such data to others nor use
      such data except for the purpose for which it is disclosed.

3.6   Disclosure of  the Confidential Information shall be  restricted to only
      those employees of  the Parties or of other entities  as provided for in
      this Article 3 who have a need to know such information to carry out the
      purposes of this Agreement.

3.7   Each party  shall  have  the  right  to  make  Confidential  Information
      available  to  bona fide  prospective  purchasers or  assignees  of such
      party's Working Interest in any Leases which is the subject of such data
      provided that such Party has  given the other Parties at least  ten (10)
      days prior written notice identifying the prospective purchaser, stating
      when and where such data or information will be disclosed and describing
      the data  or  information to  be disclosed.    Disclosure shall  include
      copies  or tracings supplied to a  bona fide prospective purchaser.  Any
      third party  permitted  such access  shall  first  agree in  writing  to
      neither disclose  such data to others  nor use such data  except for the
      purpose  for which it is disclosed.   Any Party may provide Confidential
      Information  to  its  Affiliates,  provided its  Affiliates  accept  and
      maintain such  information subject to the  confidentiality provisions of
      this Agreement.

3.8   No Party shall  distribute any information or  photographs regarding the
      Contract Area to the press or other media without the prior agreement of
      the participating Parties in  the operation which is the subject  of the
      release.  When all parties have reviewed such material,  and issuance of
      the  material  has  received  approval  of  the  participating  Parties,
      Operator shall  have the principal  responsibility for its  issuance and
      each other party may issue  such approved material without  restriction.
      The only  exception to the foregoing  shall be that  in the event  of an
      emergency involving  extensive property damage, operations failure, loss
      of human  life,  or other  clear emergency,  Operator  is authorized  to
      furnish such minimum, strictly factual information as shall be necessary
      to satisfy the  legitimate public interest on the part  of the media and
      duly  constituted authorities if  time does not  permit the obtaining of
      prior approval of the information so furnished.

3.9   It is  mutually  agreed that  in  order to  comply  with bylaws  of  the
      Offshore Oil Scouts Association, the Operator may furnish the  following
      Well information at weekly Offshore Oil Scout meetings:

      3.9.1 Well Location:

      Proposed surface location
      Surveyed surface location with X & Y
      Proposed bottom hole location
      KB and water depth
      OCS number and Well number
      Actual bottom  hole  location (must  be  reported  within two  weeks  of
      reaching Total Depth of the Well)

      3.9.2 Well operations

      Rig move in date
      Spud date
      Weekly drilling depth
      Casing depths, cement, EMW's
      Mud weight, sidewall cores, cores, RT's (only that they were taken)
      Logs (only the depths and time which they were run) 
      Date Total Depth is reached
      Date rig is released

      3.9.3 Well Completion Information

      Any Media release or public  filing of Well completion information  will
      be furnished at weekly Scout meetings

3.10  Provisions for the use and  disclosure of Confidential Information shall
      not apply  to information that was in the public knowledge or literature
      at the time  of disclosure or which  the Parties agree was  already in a
      parties possession  at  the time  of  disclosure without  obligation  of
      confidentiality.

3.11  Provisions  for use  and  disclosure of  Confidential Information  shall
      cease to  apply  if the  Confidential Information  becomes  part of  the
      public knowledge  without fault of  either Party,  or is disclosed  to a
      Party without obligation of confidentiality by a  third party having the
      right to do so.

3.12  For the purposes of these provisions, specific disclosure made hereunder
      shall not be deemed to be within the exceptions at Article 3.10 and 3.11
      above  merely because they  are embraced  by general disclosures  in the
      public  knowledge or  literature or  in the  Party's possession  and any
      combination of  features disclosed hereunder shall not  be deemed within
      the  above exceptions  merely  because individual  features  are in  the
      public knowledge or literature or in the Party's possession.

3.13  This Agreement shall not be construed  to grant any Party any license or
      other right to use the Confidential Information  except for the purposes
      of this Agreement.

3.14  In  no event shall  the obligation to  keep the Confidential Information
      confidential  exceed two  (2) years  from the  termination date  of this
      Agreement  or  the  Joint  Operating  Agreement.    The  confidentiality
      provisions  of  this  Agreement  shall  be  binding  on  either  Party's
      successors and assigns.

3.15  The Parties  represent and warrant that  they have the right  to provide
      the Confidential  Information which  they disclose  under the terms  and
      conditions of this Agreement without  violating the legal rights of,  or
      its contractual obligations to, any third party.

3.16  Restrictions  on  Confidentiality  shall   not  apply  to  any  required
      disclosures to or required by governmental agencies or stock exchanges.

                       ARTICLE 4 - SHALLOW HAZARDS DATA

SDDI  has conducted  a shallow  hazards survey  in  the Gulf  of Mexico.   The
shallow hazards survey covers East Breaks protraction blocks 688 and 732.

4.1   Strictly as an accommodation, SDDI agrees to provide raw and interpreted
      Shallow Hazards Data and reports to RB.

4.2   THE SHALLOW HAZARDS  DATA IS PROVIDED  ON AN "AS  IS" BASIS WITHOUT  ANY
      WARRANTIES  EITHER EXPRESS OR  IMPLIED, AS TO  THE ACCURACY, VALIDITY OR
      UTILITY OF SUCH INFORMATION.

4.3   RB agrees  to return all Shallow  Hazards Data to SDDI  within 180 days.
      In  the event RB does not return  all such Shallow Hazards Data to SDDI,
      SDDI shall  have the election to  either 1) require RB  to reacquire the
      missing  Shallow  Hazards  Data, or  2)  require  RB,  to  pay SDDI  the
      replacement cost of the Shallow Hazards Data. 

4.4   The 180 day period referred to in Subsection 4.3, above, may be extended
      by mutual agreement in writing.

                      ARTICLE 5 - GEOPHYSICAL SURVEY DATA

SDDI has  acquired a proprietary  3-D seismic  survey in the  Gulf of  Mexico.
SDDI has  granted certain rights to  RB covering nine (9)  blocks comprised of
East Breaks Blocks 642, 643, 644, 645, 686, 687, 688, 689 and 732, hereinafter
referred to as "Geophysical  Survey Data" under  the terms of the  Geophysical
Data License  Agreement executed  by both  Parties on September  16, 1996  and
attached as Exhibit C.

5.1   Said Geophysical Data License Agreement shall govern the use, rights to,
      and ownership of the Geophysical Survey Data.

5.2   The  Geophysical  Data  License  Agreement prohibits  RB  from  selling,
      trading  or   showing  the  Geophysical  Survey  Data  and  governs  the
      confidentiality of the data.

5.3   Said  Geophysical Data License  Agreement provides for  SDDI to have the
      right to sell the Geophysical Survey Data.

5.4   Upon  the execution  of  the Geophysical  Data  License Agreement,  SDDI
      delivered to  RB one copy of  the Geophysical Survey Data  and RB hereby
      confirms receipt of said Geophysical Survey Data.

                             ARTICLE 6 - OPERATOR

RB  is hereby  designated as  Operator for  all phases,  including Development
Operations and  production within the  Contract Area pursuant to  the terms of
this Agreement.

6.1   RB has  been designated as Lease  Operator of the two  (2) East Boomvang
      Prospect Leases.

6.2   Within fifteen (I 5) days  of receiving a written request from  RB, SDDI
      shall  deliver to  RB four  (4) executed  Designation of  Operator forms
      designating RB as Operator for any requested  lease(s) in North Boomvang
      or East Bequia Prospects.

6.3   In the event RB reduces any Working Interest earned under this Agreement
      through  sales or trades  to a level  which is less  than SDDI's Working
      Interest, then SDDI shall have the option to become Operator.

                ARTICLE 7 - DRILLING PROGRAM - COMMITMENT WELLS

7.1   By executing this Agreement, RB commits to drill and evaluate (using the
      Standard  Log Evaluation program)  one (1) Appraisal  Well and Sidetrack
      (if  Sidetrack is warranted)  to the  Primary Objective Interval  at its
      sole  risk and  liability, and  to pay  100% of  all costs  (permitting,
      drilling,  evaluation,  testing  and  plugging/abandonment  or temporary
      abandonment of the Well) on the East Boomvang Prospect.

      7.1.1 RB shall use its best efforts as a prudent Operator to conduct the
            Standard LogEvaluation  Program.  Drill stem  tests and production
            tests are  not deemed to  be part  of the Standard  Log Evaluation
            Program.   A decision  to test  the East Boomvang  Appraisal Well,
            expand  the Standard Log Evaluation  Program or sidetrack the well
            shall be entirely RB's and the costs borne by RB.

      7.1.2 It is anticipated that said Appraisal  Well will be a Keeper Well.
            In  the   event  that  the  Well  is  temporarily  abandoned,  any
            additional expenditures thereafter decided upon by RB and SDDI (to
            complete  the  Well  for  appraisal,  development   or  production
            purposes, to  plug/abandon, etc) shall  be shared under  the Joint
            Operating Agreement if applicable.

      7.1.3 The  parties agree  to meet  to select  a mutually  agreeable well
            location and well plan for said Appraisal Well.  In the event SDDI
            and RB fail to reach mutual agreement on a well location or on any
            item described in the well plan,   the final decision for the well
            location and/or well plan shall rest with RB.

7.2   Subsequent to a notification  of intent to Develop  under Article 8,  RB
      has  the right but not the obligation to  drill and evaluate at its sole
      cost,  risk  and  liability,  one  (1)  Exploration  Well on  the  North
      Boorrivang Prospect to the Primary Objective Interval.

      7.2.1 RB  agrees to pay  100% of  all Costs (hazard  survey, permitting,
            drilling,  evaluating, testing,  Standard Log  Evaluation Program,
            temporary  abandonment  of  the Well  or  plugging/abandonment  if
            required).

      7.2.2 RB. shall  use its best efforts  as a prudent  Operator to conduct
            the  Standard  Log Evaluation  Program.    Drill  stem  tests  and
            production tests  are not deemed  to be  part of the  Standard Log
            Evaluation  Prograrn.    A  decision to  test  the  North Boomvang
            Exploration Well,  expand the Standard Log  Evaluation Program, or
            sidetrack the well shall  be entirely RB's and the  costs borne by
            RB.

      7.2.3 In  the  event  that  the  Well  is  temporarily   abandoned,  any
            additional expenditures thereafter decided upon by SDDI and RB (to
            complete  the  Well  for  appraisal,  development  or   production
            purposes, to plug/abandon,  etc) shall be shared  according to the
            Joint Operating Agreement if applicable.

7.3   Subsequent  to a notification  of intent to develop  under Article 8, RB
      has the right but  not the obligation to drill and evaluate  at its sole
      cost,  risk and liability, one  (1) Exploration Well  on the East Bequia
      Prospect to the Primary Objective Interval.

      7.3.1 RB  agrees to pay  100% of  all costs (hazard  survey, permitting,
            drilling,  testing, evaluating,  Standard Log  Evaluation Program,
            temporary  abandonment of  the  Well  or  plugging/abandonment  if
            required).

      7.3.2 RB shall use its best efforts as a prudent Operator to conduct the
            Standard Log Evaluation Program.  Drill  stem tests and production
            tests are not  deemed to be  part of the  Standard Log  Evaluation
            Program.   A decision  to test  the East Bequia  Exploration Well,
            expand the Standard  Log Evaluation Program, or sidetrack the well
            shall be entirely RB's and the costs borne by RB.
 
      7.3.3 In  the  event  that  the  Well  is  temporarily  abandoned,   any
            additional expenditures thereafter decided upon by SDDI and RB (to
            complete   the  Well  for  appraisal,  development  or  production
            purposes, to plug/abandon, etc)  shall be shared according  to the
            Joint Operating Agreement if applicable.

7.4   The Commitment Well required under Subsection 7.1  of this Agreement and
      the optional Commitment Wells contemplated under Subsections 7.2 and 7.3
      shall  be spudded  by RB  within six  (6) months  of the selection  of a
      mutually agreeable drillsite unless spudding  of the Well is delayed  by
      rig  unavailability, rig  upgrades, permitting  or other  reasons beyond
      RB's reasonable  control.  In  such event,  SDDI and  RB shall  mutually
      agree upon a practicable drilling schedule.

                         ARTICLE 8 - OPTION TO DEVELOP

Within thirty (30)  days after the cessation of operations associated with the
Appraisal  Well  or  Sidetrack  (if  Sidetrack  is warranted)  required  under
Subsection 7.1 RB shall elect to either:

(i)         Notify SDDI in writing of its intention  to develop (i.e., propose
            a development plan to the MMS  and conduct Development Operations)
            the East Boomvang Prospect or

(ii)        Terminate  this Agreement, upon  which RB shall  have no rights to
            the East Boomvang Leases.

(iii)       In  the  event  RB  needs additional time  to make its election to
            develop,  RB  may  request an extension.  Approval of an extension
            by SDDI shall not be unreasonably withheld.

                         ARTICLE 9 - WORKING INTEREST

9.1   In the event  RB notifies SDDI  of its intent  to develop East  Boomvang
      Prospect  under Article  8, RB  shall have  earned an  assignment of  an
      undivided 50% Working Interest in the East Boomvang leases.

      9.1.1 Within ninety (90) days of SDDI's receipt  of RB's notification of
            its  intent to  Develop the  East Boomvang  Prospect, Shell  shall
            prepare and deliver  to RB assignments  conveying RB's 50%  earned
            leasehold interest in the East Boomvang Leases.

      9.1.2 In the  event RB notifies SDDI  of its intent to  develop the East
            Boomvang Prospect under Article 8,  SDDI may elect to remain  as a
            50% Working  Interest  partner, such  election to  be made  within
            sixty (60) days  of receipt of RB's notification of  its intent to
            develop East Boomvang.  In the event SDDI needs additional time to
            make its election, SDDI may request an extension.  Approval  of an
            extension  by RB shall not be unreasonably withheld.  In the event
            of  such  election, all  Operations  subsequent  to the  temporary
            abandonment of  the Appraisal  Well required under  Subsection 7.1
            will be conducted under a Joint Operating Agreement in the form of
            Exhibit  D and  the  Parties shall  execute  said Joint  Operating
            Agreement  within  thirty  (30)  days of  such  election  by SDDI.
            Section  24.2.3 (b)  of such Joint  Operating Agreement  shall not
            apply  unless  or  until  the  Fabrication  AFE  for  the  Initial
            Production System has  been approved by an  Election under Section
            12.8 of such Joint Operating Agreement.

      9.1.3 SDDI shall  bear  and  pay one  hundred  percent (100  %)  of  the
            rentals, delay rentals  or minimum royalties for the East Boomvang
            Leases until such time as RB has earned a Working Interest in said
            leases and  Shell  has conveyed  RB's Working  Interest  to RB  in
            accordance  with  Subsection  9.1.1  above  or  Subsection   10.1.
            Thereafter, RB  shall pay its proportionate share of such rentals,
            delay rentals or minimum royalties for the East Boomvang Leases.

      9.1.4 In the  event an additional well  is spudded on the  East Boomvang
            Leases prior  to the Election by  SDDI to remain as  a 50% Working
            Interest partner, the  Parties agree that the additional well will
            be drilled  as  a  fight hole  and  no information  on  the  well,
            including  but not limited  to, logs, surveys  will be provided to
            SDDI until after SDDI's Article 9.1.2 election is made.

      9.1.5 In regard  to wells  proposed under  a Joint  Operating Agreement,
            prior to RB utilizing a drilling  rig owned by RB's affiliate, the
            parties will  establish a mutually  agreeable day rate  based upon
            the average commercial rates  for a similar specification drilling
            rig prevailing in the immediate area.

      9.1.6 In  order to  facilitate early  production, the  parties recognize
            that  orders for certain  long lead time  components may be placed
            prior to SDDI's election to participate as  a 50% Working Interest
            partner under Subsection 9.1.2 or formal approval of a Fabrication
            AFE under Subsection 12.8 of the Joint Operating Agreement.

            Within thirty (30) days of RB's election  to develop under Article
            8 (i), RB may deliver the following documents to SDDI:

      a.    A preliminary development plan  substantially in the form required
            by Subsection 12.5 of the Joint Operating Agreement.

      b.    A  list of  identified  long lead  time  components with  delivery
            times.

      c.    An Interim  Fabrication  AFE for  the  identified long  lead  time
            components.

      Any  election by SDDI  to remain as  a 50% Working  Interest owner under
      Subsection  9.1.2 after receipt  of such  documents will include  a firm
      commitment to pay SDDI's  share of the Interim Fabrication  AFE for long
      lead time components.

9.2   In  the event  RB drills  and  evaluates a  Well on  the North  Boomvang
      Prospect pursuant to Article 7.2, RB shall have earned  an assignment of
      an undivided 65% Working Interest in the North Boomvang Leases.
 
      9.2.1 Within thirty (30) days after the release from location of the rig
            that drilled the Well on the North  Boomvang Prospect, Shell shall
            prepare and  deliver to RB  assignments conveying RB's  65% earned
            leasehold interest in the North Boomvang Leases.

      9.2.2 All  future  Operations  on  the  North  Boomvang  Leases will  be
            conducted under a Joint Operating Agreement in the form of Exhibit
            D and  the Parties  shall execute  said Joint Operating  Agreement
            concurrent with  conveyance of RB's  Earned Interest in  the North
            Boomvang Leases.

      9.2.3 SDDI  shall  bear  and pay  one  hundred  percent (100  %)  of the
            rentals, delay rentals or minimum royalties for the North Boomvang
            Leases until such time as RB has earned a Working Interest in said
            leases and  Shell  has conveyed  RB's Working  Interest  to RB  in
            accordance  with Subsection 9.2.1 above.  Thereafter, RB shall pay
            its proportionate share  of such rentals, delay rentals or minimum
            royalties for the North Boomvang Leases.

9.3   In the event  RB drills and evaluates a Well on the East Bequia Prospect
      pursuant to  Article  7.3, RB  shall  have earned  an  assignment of  an
      undivided 65% Working Interest in the East Bequia Leases.

      9.3.1 Within thirty  (3 0) days after  the release from location  of the
            rig  that drilled  the Well  on the  East Bequia,  Prospect, Shell
            shall prepare  and deliver  to RB  assignments conveying RB's  65%
            earned leasehold interest in the East Bequia Leases.

      9.3.2 All future Operations on the East Bequia  Leases will be conducted
            under a Joint Operating Agreement in the form of Exhibit D and the
            Parties shall  execute said  Joint Operating Agreement  concurrent
            with conveyance of RB's Earned Interest in the East Bequia Leases.

      9.3.3 SDDI  shall  bear and  pay  one hundred  percent  (100  %) of  the
            rentals, delay rentals  or minimum royalties  for the East  Bequia
            Leases until such time as RB has earned a Working Interest in said
            leases and  Shell  has conveyed  RB's Working  Interest  to RB  in
            accordance with Subsection 9.3.1 above.  Thereafter, RB shall  pay
            its proportionate  share of such rentals, delay rentals or minimum
            royalties for the East Bequia Leases.

                             ARTICLE 10 - FARMOUT

In the  event RB  notifies SDDI  of its  intent to develop  the East  Boomvang
Prospect under Article8, and  SDDI does not elect  to remain as a  50% Working
Interest partner in East Boomvang  underArticle 9.1.2, SDDI agrees to  farmout
its Working Interest in East Boomvang to RB under thefollowing terms:

10.1  Shell, within ninety  (90) days of  SDDI's receipt  of RB's election  to
      develop  the East  Boomvang Prospect,  shall prepare  and deliver  to RB
      assignments conveying 100% of Shell's rights, title and interest in East
      Boomvang Leases.

10.2  SDDI shall  retain  a three  percent  of  eight-eighths (3%  of  8/8ths)
      overriding royalty interest in the East Boonivang Leases.

10.3  After cumulative production of 200  BCF from the East Boonivang  Leases,
      SDDI may elect as follows:

      10.3.1      convert the  three percent  of eight-eighths (3%  of 8/8ths)
                  overriding  royalty  interest  in   Subsection  10.2  to  an
                  undivided   twenty  five  percent  (25%)  Working  Interest.
                  Within  thirty  (30)  days  after such  election,  RB  shall
                  prepare  and deliver  to  SDDI assignments  conveying a  25%
                  leasehold interest in the East Boonivang Leases.

      10.3.2      escalate the  three percent of eight-eighths  (3% of 8/8ths)
                  overriding  royalty interest  in Subsection  10.2 to  a five
                  percent of  eight-eighths (5% of  8/8ths) overriding royalty
                  interest.

10.4  If  pursuant to  Subsection 10.3.1,  SDDI elected  to convert  the three
      percent of eight-eighths (3% of  8/8ths) overriding royalty interest  in
      Subsection 10.3.1  to an  undivided  twenty five  percent (25%)  Working
      Interest,  then after  cumulative production  of 350  BCF from  the East
      Boomvang  Leases,  the  undivided  twenty  five  percent  (25%)  Working
      Interest  shall  increase  to an  undivided  thirty  five percent  (35%)
      Working  Interest.   Within. thirty  (30) days  after such  increase, RB
      shall  prepare and  deliver to  SDDI assignments  conveying to  SDDI the
      increased leasehold interest in the East Boonivang Leases .

10.5  This volume based Working Interest conversion shall  only be prospective
      (i.e., in the event the payout  account is negative.  SDD1 shall not  be
      required to pay its share of previous  unrecouped expenditures, if any).
      Therefore, SDDI  as a new Working Interest owner, shall only be entitled
      to  its  proportionate  share  of revenue  and  be  responsible  for its
      proportionate  share of  expenses  subsequent to  the effective  date of
      SDDI's Working Interest conversion as set out in Section 10.3.

10.6  The  overriding royalty interest  set out in  Subsection 10.2 and 10.3.2
      shall be calculated and paid in the  same manner and at the same time as
      royalties to the Minerals Management Service.

                    ARTICLE 11 - SUSPENSION AND TERMINATION 

11.1  In the event  of, and  upon SDDI's  receipt of  notice from  RB that  RB
      elects not to develop the  East Boomvang Prospect under Article 8,  this
      Agreement shall ipso facto terminate.

11.2  In the event RB elects to  develop the East Boonivang Prospect  pursuant
      to  Article 8,  and SDDI  does  not elect  to  remain as  a 50%  Working
      Interest partner in East Boomvang  under Article 9.1.2, RB will  proceed
      with   Development  Operations;  however   it  may  suspend  Development
      Operations at its sole election.

11.3  In  the event RB elects to Develop  the East Boonivang Prospect pursuant
      to Article 8, but suspends Development Operations pursuant to Subsection
      11.2  for a period of 180 days  or more, this Agreement shall terminate.
      Should RB  need additional time  to commence Development  Operations, RB
      may request an extension of the 180 day period.  It is intended that the
      approval for an extension shall not be unreasonably withheld by SDDI.

11.4  In the  event of termination pursuant  to Subsections 1  1. I or 1  1. 3
      above, the Parties agree as follows:

      11.4.1      This  Agreement shall terminate and RB shall not have earned
                  any interest in SDDI's leasehold  and RB rights to earn  any
                  interests in  SDDI's leasehold shall terminate;  however, RB
                  shall  continue  to  be  bound by  the  confidentiality  and
                  indemnity provisions in force between the Parties.

      11.4.2      Within thirty (30) days of  RB's election to terminate under
                  this  Article  11,  RB shall  prepare  and  deliver to  SDDI
                  assignments  conveying  the  relevant Worldng  Interests  in
                  SDDI's leasehold  that SDDI may have  previously assigned to
                  RB under this Agreement.

      11.4.3      Within fifteen (15) days of RB's election to terminate under
                  this  Article  11,  RB  shall prepare  and  deliver  to SDDI
                  Designation of Operator  forms designating SDDI as  Operator
                  for  all leases  to which  SDDI previously designated  RB as
                  Operator.

      11.4.4      The Geophysical  Data License Agreement  shall terminate and
                  RB  shall return all  data and all  documents generated from
                  such data to SDDI which was previously furnished to RB under
                  the Geophysical Data License Agreement.

      11.4.5      SDDI,  at its  sole election, may  take over  any previously
                  drilled but not plugged  and abandoned well(s) and equipment
                  under this Agreement.   In the event SDDI does  not elect to
                  take  over  such well(s)  and equipment,  RB shall  plug and
                  abandon any well(s) prior to termination of this Agreement.

                     ARTICLE 12 - AREA OF MUTUAL INTEREST

In the  event all  or  a portion  of the  North  Boomvang and/or  East  Bequia
Prospects expire, RB and SDDI shall establish a 50/50 area of mutual interest.

12.1  If, other than in conjunction  with RB, SDDI or another party  acting on
      behalf of SDDI, acquires a lease covering North Boomvang Prospect and/or
      East Bequia  Prospect at  the 1998  Western Gulf  of Mexico  Lease Sale,
      hereinafter sometimes  referred to  as "AMI Obligation",  then RB  shall
      have  the right,  but  not  the  obligation, to  acquire  from  SDDI  an
      undivided 50.00% of the interest acquired by SDDI.  RB shall be notified
      in  writing by  SDDI within  fifteen (15)  days of such  acquisition and
      shall have thirty (30) days after receipt of such notice  to advise SDDI
      whether or  not RB elects  to acquire its  50.00% share of  the interest
      acquired by  SDD1.   If  RB  elects to  exercise  its right  under  this
      Agreement, the  consideration owed by RB  to SDDI shall equal  50.00% of
      the consideration paid by SDDI for such interest.

12.2  If,  other than in conjunction with SDD1,  RB or another party acting on
      behalf of RB, acquires a  lease covering North Boomvang Prospect  and/or
      East Bequia  Prospect at the 1998 Western Gulf of Mexico Lease Sale (AMI
      Obligation), then SDDI shall have the right,  but not the obligation, to
      acquire from  RB an undivided  50.00% of  the interest  acquired by  RB.
      SDDI shall be notified in writing by RB within fifteen (15) days of such
      acquisition and shall have thirty (30) days after receipt of such notice
      to advise RB whether  or not SDDI elects to acquire  its 50.00% share of
      the interest acquired by RB.  If SDDI elects to exercise its right under
      this Agreement, the consideration owed by SDDI to  RB shall equal 50.00%
      of the consideration paid by RB for such interest.

12.3  All  future  operations  would  be  conducted  under  a  Joint Operating
      Agreement in  the form of Exhibit  D and the Parties  shall execute said
      Joint  Operating Agreement within  thirty (30)  days of any  election to
      acquire under the AMI Obligation.

                         ARTICLE 13 - DEVELOPMENT PLAN

In  the  event SDDI  elects  to retain  a  50% working  interest  in the  East
Boonivang Leases as provided in  Subsection 9.1.2, the Development Plan  shall
be  proposed in  accordance with  the East  Boomvang Prospect  Joint Operating
Agreement.

In the event SDDI does not exercise its election to retain a working  interest
in the East  Boonivang Leases, as provided  in Article 10,  RB agrees to  hold
periodic technical meetings with SDDI  to allow SDDI to review and  have input
into  RB's  plans for  development  of  the  East Boomvang  Leases,  it  being
understood that the final decisions with  respect to same shall be reserved to
RB.

                      ARTICLE 14 - CO-DEVELOPMENT BETWEEN
                 EAST BOOMVANG, NORTH BOOMVANG AND EAST BEQUIA

14.1  The Parties  will  attempt  to  co-develop successful  wells  from  East
      Boomvang,  North Boonivang and  East Bequia together  to the extent such
      co-development  is feasible and practical.   In such co-development, the
      Parties agree to utilize gas throughput  as a means to allocate the cost
      of  shared or  common  transportation  pipelines,  gathering  facilities
      and/or  subsea production  system,  hereinafter referred  to as  "Common
      Development Facilities and Pipelines".

14.2  In  the event RB  desires to co-develop  East Boonivang, North Boonivang
      and/or  East  Bequia, SDDI  and  RB may  not  have a  consistent Working
      Interest throughout all  three prospects.  Therefore, the  Parties agree
      that  in the  event (i)  SDDI elects  not to  retain its  entire Working
      Interest in East Boonivang under Article  10 hereof, and (ii) that North
      Boonivang  and/or East  Bequia share  Common Development  Facilities and
      Pipelines  with the  East  Boomvang  development,  SDDI shall  have  the
      following election:

      14.2.1      Farmout its  Working Interest in North  Boomvang and/or East
                  Bequia to RB under mutually agreeable terms.

      14.2.2      Pay  its Working  Interest Share  of well  and  subsea costs
                  directly attributable  to North Boomvang  and/or East Bequia
                  plus pay a mutually agreeable  processing/transportation fee
                  to RB which  will be intended to reimburse RB  over time for
                  its  cost  of  all  the Common  Development  Facilities  and
                  Pipelines (based upon mutually agreeable reserve evaluation)
                  which are attributable (utilizing gas throughput)  to SDDI's
                  allocated  proportionate  share   of  the  costs  (including
                  financing costs).

                 ARTICLE 15 - WELL AND PRODUCTION INFORMATION

15.1  SDDI shall have the right to take its production in kind.   SDDI's share
      of any gas production is committed to a gas contract with Coral Energy.

15.2  Irrespective of SDDI's elections as set out above, except as provided in
      Article 9.1.4,  SDDI shall receive  all well and  production information
      (including data  from down hole  pressure gauges)  at the same  time and
      manner as a Working Interest owner.

                           ARTICLE 16 - UNITIZATION

Where  applicable, it is the intent  of the parties to  secure MMS approval to
unitize  prior  to commencement  of  Development  Operations.   To  facilitate
unitization, the  Parties plan to seek  MMS involvement as early  as three (3)
months following cessation of operations  associated with the drilling of  any
Commitment Well.

                        ARTICLE 17 - SURFACE FACILITIES

In the event SDD1 does not exercise its election to retain  a working interest
in the East  Boomvang Leases as provided in Subsection 9.1.2 and RB installs a
facility for surface processing of  production from the East Boomvang  Leases,
RB  agrees to  allow SDDI  to have  access to  such facility  in the  order of
priority follows:

      a.    production from the East Boomvang Leases;
      b.    joint RB/SDDI production from non-East Boomvang leases;
      c.    RB or SDDI non-East Boomvang leases; and
      d.    Third party production;

and  RB agrees that  SDDI will be charged  a lower fee  than other third party
production, subject to applicable law.

In the  event  SDDI owns  a  working interest,  priority  access to  any  such
facility  shall  be subject  to  the terms  of any  Joint  Operating Agreement
executed between RB and SDD1.

                         ARTICLE 18 - PLATFORM ACCESS

RB has been in contact with various owners of platforms which could serve as a
processing facility, therefore the contingency set forth in paragraph 12(b) of
that certain Letter Agreement dated July 12, 1996 between Shell  Offshore Inc.
and  RB, regarding RB's  successful negotiation  of platform access  is hereby
removed.

                             ARTICLE 19 - NOTICES

19.1  Any notice  provided for or permitted  to be given shall  be in writing,
      properly addressed  to the  Party to  whom the notice  is directed  with
      postage  and  charges  prepaid,  and,  delivered by  the  United  States
      certified  mail/return receipt  requested or  by  commercial mail/return
      receipt   requested  or   by   personal  delivery/receipt   or  by   fax
      transmission/confirmation of receipt requested.

19.2  A notice  delivered by mail or in person shall be deemed properly served
      when actually  received by  the Party  to whom  the notice  is directed.
      Actual receipt of  the notice shall be established by  the date on which
      the receipt accompanying the notice  was signed by the receiving  Party.
      A  notice delivered by  fax shall be  deemed properly served twenty-four
      (24) hours after receipt is confirmed (excluding Saturdays, Sundays, and
      Federal Holidays).

19.3  The address  of each Party set  forth below shall be  its proper address
      until such time as such Party gives all other Parties notice of change:

      Reading & Bates Development Co.    Shell Deepwater Development Inc.
      Attention: President               SOI Finance Inc.
      901 Threadneedle, Suite 200        Attention: Manager Contracts
      Houston, Tx 77079                  Street: 701 Poydras Street (71039)
      Tel (713) 496-5000                 Post Office Box 60833
      Fax (713) 496-0186                 New Orleans, LA 70160
                                         Tel  (594) 588-6701
                                         Fax  (504) 588-6699

                     ARTICLE 20 - ASSIGNMENTS

20.1  All  assignments shall  be  prepared utilizing  the  form of  assignment
      attached hereto as Exhibits B-1 and B-2.

                      ARTICLE 21 - SUCCESSORS AND ASSIGNS

This Agreement shall  be binding upon and inure to the  benefit of the parties
and their  respective  heirs, successors  and  assigns  and shall  continue  a
covenant running  with each Contract  Lease within  the Contract  Area.   Each
Party  shall incorporate  in any  assignment  of an  interest in  the Contract
Leases a provision that such assignment is subject to this Agreement.

                          ARTICLE 22 - APPLICABLE LAW

THIS AGREEMENT  SHALL BE INTERPRETED  ACCORDING TO  THE LAWS OF  THE STATE  OF
LOUISIANA.

                     ARTICLE 23 - HEADINGS FOR CONVENIENCE

The headings and table of contents  used in this Agreement are for convenience
only and shall be disregarded in construing this Agreement.

                          ARTICLE 24 - MISCELLANEOUS


Reference  herein  to  the  plural  of  a  noun  or  pronoun  shall,  whenever
appropriate, include  the singular  and vice  versa.   This  Agreement is  not
intended to benefit or  create any rights  in any entity not  a Party to  this
Agreement.

         ARTICLE 25 - TERM OF AGREEMENT AND ADMINISTRATIVE PROVISIONS

Notwithstanding  the provisions of  Article 1  1 herein, this  Agreement shall
remain in effect until:

      (a)   with respect to the East Boomvang Leases, until the earlier of the
            cessation  of production  from such  leases or  the  execution and
            delivery of the Joint Operating  Agreement by the Parties covering
            such Leases;

      (b)   with  respect to the  North Boomvang  Leases and the  East Bequia,
            Leases,  until earlier  of the  expiration of  the leases,  or the
            execution and delivery of  the Joint Operating Agreement  or Joint
            Operating Agreements  by the Parties covering  such North Boomvang
            Leases and/or East Bequia Leases.

Termination of this Agreement shall not   relieve any Party from any liability
accrued or incurred prior to such termination.

                         ARTICLE 26 - ENTIRE AGREEMENT

This  Agreement, including  attached  Exhibits contains  every obligation  and
understanding  between the  parties  relating to  the Contract  Area, Contract
Leases,   SDD1  property,  Confidential  Information,  Shallow  Hazards  Data,
Geophysical  Survey  Data,   and  any  exploration,  appraisal,   development,
operation, production or joint operations  (as defined herein) and performance
hereunder and supersedes all previous agreements between  the parties relating
to these.  This Agreement can be modified only in writing properly executed by
duly authorized  representatives of the Parties.   Failure of either  party to
insist on strict performance by the other of any provision hereunder shall not
be  deemed or  construed  to in  any  way  affect the  right  to require  such
performance.

                      ARTICLE 27 - COUNTERPART EXECUTION

This Agreement  may  be executed  by  signing the  original or  a  counterpart
thereof.   If  this Agreement  is executed  in counterparts,  all counterparts
taken  together shall have the  same effect as  if the Parties  had signed the
same instrument.

IN  WITNESS WHEREOF,  the  undersigned parties  have  executed this  Agreement
effectiveDecember 16, 1996.

                                  SHELL DEEPWATER DEVELOPMENT INC.

WITNESS:                      By: ________________________

______________________
______________________        Its: _______________________ 



                                  SOI FINANCE INC.

WITNESS:                      By: _________________________

______________________
______________________        Its: ___________________



                                   READING & BATES DEVELOPMENT CO.

WITNESS:                      By: _________________________

______________________
______________________        Its: _________________________


                                 EXHIBIT "A-1"
                           ATTACHED TO SDDI/SOIFI/RB
                            JOINT VENTURE AGREEMENT
                            DATED DECEMBER 16, 1996
                             EAST BOOMVANG LEASES 

Lease             Block       Effective   Expiration      Gross 
Number            Number      Date        Date            Acres
OCS-G 09191       688         11/01/87    10/31/97        5760
OCS-G 09194       732         10/01/87    09/30/97        5760

                   ORRI Ownership         Lease
Royalty           Company     ORRI        Ownership

1/8 USA           SOIFI       25% *       100%
1/8 USA           SOIFI       25% *       100%

*SOIFI 25% ORRI burdens SDDI's Working Interest only.

                                 EXHIBIT "A-2"
                           ATTACHED TO SDDI/SOIFI/RB
                            JOINT VENTURE AGREEMENT
                            DATED DECEMBER 16, 1996
                             NORTH BOOMVANG LEASES

Lease           Block       Effective   Expiration        Gross 
Number          Number      Date        Date              Acres
OCS-G 09183     642         10/01/87    09/30/97          5760
OCS-G 09184     643         10/01/87    09/30/97          5760
OCS-G 09185     644         10/01/87    09/30/97          5760

                   ORRI Ownership         Lease
Royalty           Company     ORRI        Ownership
1/8 USA           SOIFI       25% *       100%
1/8 USA           SOIFI       25% *       100%
1/8 USA           SOIFI       25% *       100%

    *SOIFI 25% ORRI burdens SDDI's Working Interest only.

                                 EXHIBIT "A-3"
                           ATTACHED TO SDDI/SOIFI/RB
                            JOINT VENTURE AGREEMENT
                            DATED DECEMBER 16, 1996
                              EAST BEQUIA LEASES

Lease           Block       Effective   Expiration        Gross
Number          Number      Date        Date              Acres
OCS-G 09186     645         10/01/87    09/30/97          5760
OCS-G 09187     646         10/01/87    09/30/97          5760
OCS-G 10319     690         10/01/88    09/30/98          5760

                   ORRI Ownership         Lease
Royalty           Company     ORRI        Ownership
1/8 USA           SOIFI       25% *       100%
1/8 USA           SOIFI       25% *       100%
1/8 USA           SOIFI       25% *       100%

      *SOIFI 25% ORRI burdens SDDI's Working Interest only.

                                 EXHIBIT "B-1"
                           ATTACHED TO SDDI/SOIFI/RB
                            JOINT VENTURE AGREEMENT
                            DATED DECEMBER 16,1996

                                ASSIGNMENT FORM
                  PARTIAL ASSIGNMENT OF RECORD TITLE INTEREST
                       IN FEDERAL OCS OIL AND GAS LEASE 

KNOW ALL MEN BY THESE PRESENTS:

      That  SHELL DEEPWATER  DEVELOPMENT INC.,  a Delaware  corporation, whose
address  is P. 0.  Box 60833,  New Orleans, Louisiana  70160-1933 (hereinafter
called  'Assignor"),  for and  in  consideration  of the  sum  of Ten  Dollars
($10.00)  and  other  good  and   valuable  consideration,  the  receipt   and
sufficiency of which is hereby acknowledged, does  hereby assign, transfer and
convey  unto READING &  BATES DEVELOPMENT  CO., a Delaware  corporation, whose
address    is  901  Threadneedle, Houston,  Texas  77079  (hereinafter  called
"Assignee"),  an  undivided  ___________   percent  (______  %) of  Assignor's
percent (_____%)  right, title and interest in and to that certain Oil and Gas
Lease covering  submerged  land in  the  Gulf  of Mexico  (hereinafter  called
"Lease"), more particularly described as follows:

      OCS-G ____________ Oil and Gas Lease effective _________________, by and
      between the United States of America  as Lessor and Shell Offshore  Inc.
      as  Lessee, covering all of Block  _____,  East Breaks,  as shown on OCS
      Official Protraction Diagram NG 15-1, containing 5,760 acres.

      As a result  of this Assignment, record title interest  in said Lease is
      now held as follows:

            SHELL DEEPWATER DEVELOPMENT INC. _____________ %
            READING & BATES DEVELOPMENT CO. ______________ %

      This  Assignment and  Assignee's  rights hereunder  are  subject to  the
provisions of that certain Joint Venture Agreement dated December 16, 1996, by
and between SHELL  DEEPWATER DEVELOPMENT INC., SOI FINANCE INC.  and READING &
BATES DEVELOPMENT CO.

      Assignee assumes,  and agrees to be bound by, all of the obligations and
liabilities  of Assignor as  to the interest  herein assigned, accruing  on or
after the effective date hereof.   The terms and provisions of this Assignment
shall inure  to the  benefit of, and  be binding  upon the parties  hereto and
their respective successors and assigns.  Assignor agrees to indemnify, defend
and hold Assignee harmless from  and against any and all liabilities  accruing
prior to  the effective date  of such  Joint Venture Agreement  and the  Joint
Operating Agreement referred to in such Joint Venture Agreement.

      TO  HAVE  AND  TO  HOLD  said  interest  herein  unto  Reading  &  Bates
Development Co., its successors and assigns,  forever, subject to the terms of
said Lease.

      This Assignment is made without  warranty of title, express or  implied,
and without any recourse against Assignor in the event of any failure of title
to said  Leases or  any  part thereof,  except  that Assignor  warrants  title
against all  claims by, through or  under Assignor but not  otherwise and that
the  title  transferred  hereunder  is  free   and  clear  of  all  liens  and
encumbrances  (other than the  royalty provisions contained  in such lease and
the overriding  royalty  interest being  transferred by  SOI  Finance Inc.  to
Assignee concurrently with this Assignment).

      IN WITNESS WHEREOF, this Assignment is executed by Assignor and Assignee
on the dates set  forth below, but shall be  effective for all purposes  as of
December 16, 1996 at 7:00 a.m.

WITNESSES:                    ASSIGNOR:

                              SHELL DEEPWATER DEVELOPMENT INC.

____________________          By:_______________________
                                   R. W. Robison, Jr.
____________________               Attorney-in-Fact

                              Date:______________________ 


WITNESSES:                    ASSIGNEE:

                              READING & BATES DEVELOPNENT CO.

____________________          By:________________________

____________________          Title:_____________________

                              Date:______________________


                                 EXHIBIT "B-2"
                           ATTACHED TO SDDI/SOIFI/RB
                            JOINT VENTURE AGREEMENT
                            DATED DECEMBER 16,1996


                   ASSIGNMENT OF OVERRIDING ROYALTY INTEREST
                       IN FEDERAL OCS OIL AND GAS LEASE


KNOW ALL MEN BY THESE PRESENTS:

      That  SOI FINANCE INC.,  a Delaware corporation, whose  address is P. 0.
Box 61933, New Orleans,  Louisiana 70161-1933 (hereinafter called "Assignor"),
for and in consideration of the sum of Ten Dollars ($10.00) and other good and
valuable  consideration,  the  receipt  and sufficiency  of  which  is  hereby
acknowledged,  does hereby assign,  transfer and  convey unto READING  & BATES
DEVELOPMENT CO.,  a Delaware corporation,  whose address is  901 Threadneedle,
Houston,    Texas     77079     (hereinafter    called     "Assignee"),     an
undivided______________ percent(______%) overriding royalty interest in and to
that certain Oil and  Gas Lease covering submerged land in  the Gulf of Mexico
(hereinafter called "Lease"), more particularly described as follows:

      OCS-G_____ , Oil and Gas  Lease effective covering all of Block  ______,
      East Breaks,  as  shown on  OCS Official  Protraction  Diagram NG  15-1,
      containing 5,760 acres.

      As a result of this Assignment the overriding royalty interests conveyed
hereby shall be extinguished by confusion and merge into the working interests
out of which  each was  carved, such that  the record  title interest in  said
Lease remains as follows:

      SHELL DEEPWATER DEVELOPMENT INC.   ______%
      READING & BATES DEVELOPMENT CO.    ______%

      This  Assignment  and Assignee's  rights  hereunder are  subject  to the
provisions of that certain Joint Venture Agreement  dated December 16,1996, by
and between SHELL DEEPWATER  DEVELOPMENT INC., SOI FINANCE INC.  and READING &
BATES DEVELOPMENT CO.

      Assignee assumes, and agrees to be  bound by, all of the obligations and
liabilities of Assignor  as to the  interest herein  assigned, accruing on  or
after the effective date hereof.  The terms and provisions  of this Assignment
shall inure to  the benefit  of, and be  binding upon the  parties hereto  and
their respective successors and assigns.  Assignor agrees to indemnify, defend
and  hold Assignee harmless from and against  any and all liabilities accruing
prior to the effective date of  the Joint Venture Agreement dated December 16,
1996  by and between  SHELL DEEPWATER DEVELOPMENT  INC., SOI  FINANCE INC. and
READING & BATES DEVELOPMENT CO.  Under no circumstances shall  this Assignment
be interpreted or deemed to include the assignment of any rights held or which
may  be  held  by  Assignor for  mispayments,  underpayments  or  other claims
regarding the overriding royalty interest conveyed hereby, which accrue  prior
to the effective date hereof.

      TO  HAVE AND TO HOLD said  interest herein unto Assignee, its successors 
and assigns, forever, subject to the terms of said Lease.

      Assignor hereby warrants title to  the property it is conveying  against
the claims and demands of  all persons lawfully claiming the same  by, through
or under such Assignor, but not otherwise.

      IN WITNESS WHEREOF, this Assignment is executed by Assignor and Assignee
on  the dates set forth below,  but shall be effective for  all purposes as of
December 16, 1996 at 7:01 am.

WITNESSES:                          ASSIGNOR:

                                    SOI FINANCE INC.

______________________              By:__________________________
                                          R. W. Robison, Jr.
______________________                    Attorney-in-Fact

                                    Date:_________________________


WITNESSES:                          ASSIGNEE:

                                    READING & BATES DEVELOPMENT CO.

_____________________               By:__________________________

_____________________               Title:_________________________

                                    Date:_________________________


                                  EXHIBIT "C"

                           Attached to SDDI/SOIFI/RB
                         Joint Venture Agreement dated
                               December 16, 1996

                      GEOPHYSICAL DATA LICENSE AGREEMENT


Article I.
                              Contracting Parties
      THIS AGREEMENT is entered  into in New Orleans, Louisiana this  16th day
of September 1996  by and between Shell Offshore Inc.  ("SOI") and Reading and
Bates Development Co. (the "Licensee").

Article II.

                        General Scope of the Agreement

            WITNESSETH:
            WHEREAS,  SOI has acquired possession  of results of the specified
proprietary geophysical  surveys  (the "Survey")  in  the  Gulf of  Mexico  as
Detailed in Attachment One and is willing to grant certain rights with respect
to  such Data  (the "Data") to  Reading and  Bates Development  Co. under such
terms and conditions hereinafter set forth; and

            WHEREAS, the Licensee desires to obtain the non-exclusive right to
use  the Data,  as specified  herein  and as  detailed by  Supplement to  this
Agreement, and adopted by reference  as if incorporated herein, on such  terms
and conditions as herein set forth;

            IT IS FURTHER UNDERSTOOD AND  AGREED that nothing herein shall  be
construed to  grant any Licensee any  ownership interest in (1)  the Data, (2)
any copy of the Data, or (3) any copyright to the Data. 

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


Article III.

                          Provisions of the Agreement

            1.    Non-Exclusive  License.    In consideration  of  the  mutual
covenants and  agreements referenced in this Agreement, SOI offers to grant to
Licensee a non-exclusive license to use  the Data as specified in Article III.
12.

            2.    Confidentiality.    Licensee   acknowledges  that  the  Data
constitute valuable and highly confidential information that  is not generally
available and is  proprietary to SOI.  Except as expressly otherwise permitted
hereunder, Licensee agrees to keep the Data strictly confidential, and to take
appropriate steps to  ensure that its  employees and  agents keep it  strictly
confidential,  and  to  make  no  use  thereof  except  as permitted  by  this
Agreement.  Failure of Licensee to maintain the Data licensed herein  strictly
confidential shall result in the termination of this license and forfeiture of
any and all Data licensed hereunder  and any Supplement or copies of  any such
Data or Supplements.

            3.    Control  of  Data;  Related  Parties.   Except  as  provided
herein,  Licensee shall  not  sell, convey,  deliver,  trade, exchange,  lend,
disclose, show or otherwise share  the Data, or structure maps,  stratigraphic
interpretations  or  any  other  interpretations based  on  the  Data,  or any
reprocessed or redisplayed versions of the  Data, to or with any party without
the  express  prior  written  approval  of  SOI,  except under  the  following
conditions:

            Licensee  may indicate its  possession of the  Data to visitors of
            Licensee and only  under the following  conditions.  Licensee  may
            show limited profiles through the Data set on electronic media and
            may refer to the data  owner as Shell Offshore Inc.   Licensee may
            not  reveal  the geographic  location represented  by the  Data or
            provide  details that  identify the  geographic location,  such as
            tying well locations.

            Licensee is  encouraged to and may  demonstrate technology applied
            to the  Data by Licensee, by showing both SOI versions of the Data
            delivered to the Licensee and modified Data produced by Licensee's
            own processes.   Licensee may  not reveal location  represented by
            the Data or provide details that identify  location, such as tying
            well  locations.    Licensee  may show  volume  renderings,  event
            oriented data, or  time slice data  on electronic media such  as a
            workstation  screen,  at  Licensee's  premises   only.    However,
            Licensee  may not  produce hardcopy  prints of  volume renderings,
            event oriented data, or time slice data  without the prior written
            permission of SOI.  Licensee may not show volume renderings, event
            oriented data, or time slice data at any other  venue, without the
            prior specific written permission of SOI.  Licensee must offer SOI
            the same opportunity to view  Licensee modified data as any  other
            viewer.  Licensee shall  take such security as may be necessary to
            protect  the Data  licensed herein  from access  from unauthorized
            persons through  electronic media  such as Internet.   Failure  to
            secure  the Data from such  unauthorized access shall constitute a
            breach  of this  Agreement  resulting in  forfeiture  of all  data
            licensed and such other penalties as authorized by law.

            Licensee may publish and is  encouraged to publish details of  the
            technology  applied to  the Data  by Licensee,  by using  both SOI 
            versions of the Data delivered  to the Licensee and modified  Data
            produced by  Licensee's own processes.   Licensee  may not  reveal
            location  represented by the Data or provide details that identify
            location, such as tying well locations.   Licensee may not publish
            volume renderings, event oriented data, or time slice data without
            the prior  written permission of SOI.   Licensee must offer  at no
            expense to SOI reprints of published materials containing Data  or
            modified Data obtained hereunder.

      Any  Company or Organization  owning, directly or  indirectly, au of the
equity interest in the Licensee and wholly-owned  subsidiaries of the Licensee
shall  have the  same rights to  the Data  as has  the Licensee  provided such
company, subsidiary or affiliate agrees to abide in  writing by the provisions
of  this  Agreement  and  any  Supplements.     The  Licensee  shall  maintain
appropriate controls over the dissemination of Data by any party to whom it is
furnished  in accordance with the provisions of  this paragraph 3 and shall be
responsible for any unauthorized use or  dissemination of the Data by any such
party.  The Data or modified Data  cannot be sold without the prior consent of
SOI and only upon such terms and conditions as agreed by SOI in writing.

            4.    Valid  Regulations.    The  Data were  obtained  under  U.S.
Geological Survey or Minerals Management Service Permits,  and the use thereof
is governed by  statute and by regulations published in  the Federal Register.
By execution of this document  Licensee acknowledges notification by SOI  that
both SOI and Licensee are bound by such permits and regulations.

            5.    Transfer of Data.  This Agreement and the rights to the Data
granted hereunder and  any Supplement are intended to be for  the sole use and
benefit  of the Licensee and  may not be sold,  transferred or assigned to, or
placed under  the direct or  indirect control  of any other  person or  entity
without  the  prior  written  consent  of  SOI  whether  by  means  of merger,
consolidation, stock or asset sale, liquidation or otherwise.

            6.    Entire  Agreement.    This  Agreement,   together  with  the
Supplement hereto,  and any  invoices issued  pursuant  hereto represents  the
entire agreement between the parties in relation to the subject  matter hereof
and shall  not be  amended  or altered  without the  written  consent of  both
parties.

            7.    Representations  and   Warranties.     Notwithstanding   any
provision  in this Agreement  to the  contrary, conveyance of  a non-exclusive
license of the Data shall be without warranty, express, statutory, or implied.
Licensee specifically assumes all cost,  risk, and expense, despite any  fault
or negligence of SOI as to any use made of, or decisions based upon, the Data,
and  agrees that  SOI shall  have  no liability  to  Licensee as  a result  of
Licensee's use of the Data.

            8.    Independent Evaluation.  Licensee acknowledges  that SOI has
not  made any statements or  representations concerning the quality, condition
or accuracy of the Data  or the present or future value to be derived from the
Data.

            9.    Remedies.   With  respect  to  any  claim  against  SOI  the
remedies of the Licensee  hereunder shall be limited to  a return of the  Data
and no direct, indirect, punitive or consequential damages shall be available.
This Agreement  shall be construed  under the laws  of the State  of Louisiana
with venue in New Orleans,  Louisiana.  The parties hereby further  agree that
any dispute  arising out of this  Agreement shall be resolved  pursuant to the
Federal Arbitration Act which is referenced herein and adopted as if copied in
extenso herein,  and agree to binding  arbitration of any such  disputes.  The
parties further hereby adopt the Rules of the American Arbitration Association
to govern such proceedings. 

            10.   Term.  This Agreement shall  be effective from the date  set
forth above and  shall continue in effect until terminated  by either party on
10 days  written notice to  the other.   However, any  provisions relating  to
confidentiality, restrictions  on  the  use and  remedies  shall  survive  any
termination of this Agreement or any Supplement.

            11.   Counterparts.  This Agreement may be executed in two or more
counterparts, all of which shall be  considered one and the same agreement and
all shall become effective when  two or more counterparts have been  signed by
each of  the parties and delivered  to the other parties,  it being understood
that all parties need not sign the same counterpart.

            12.   Description of Data.  The data are  from SOI's East Boomvang
3D Survey  and cover East Breaks  protraction area blocks 642,  643, 644, 645,
686, 687, 688, 689, and 732.  The seismic  deliverable shall be in SEGY format
after bandpass,  gain  and integration.    The  interpretation file  shall  be
included with the seismic deliverable.

      IN WITNESS WHEREOF, the parties hereto have  executed this Agreement the
day and year first above written.

                                          SHELL OFFSHORE INC.

__________________________

__________________________    By:_________________________________
                                           M. R. Kuzio
                                 Chief Geophysicist Shelf Division,
                                        Shell Offshore Inc.

                              READING & BATES DEVELOPMENT CO.
__________________________

__________________________    By:_______________________________
                                    Name:   
                                    Title:


                       FORM OF JOINT OPERATING AGREEMENT
                               TABLE OF CONTENTS


ARTICLE                CONTENTS                               PAGE

1.                    Contract Application                      1
2.                    Definitions                               1
3.                    Exhibits                                  7
4.                    Selection of Operator                     7
5.                    Rights and Duties of Operator             10
6.                    Expenditures and Annual Operating Plan    12
7.                    Confidentiality of Data                   18
8.                    Voting, Elections & Notices               21
9.                    Geophysical Operations                    25
10.                   Exploratory Operations                    26
11.                   Appraisal Operations                      31
12.                   Development Plan                          38
13.                   Development Operations                    45
14.                   Facilities and Gathering Systems          51
15.                   Disposition of Hydrocarbon Production     52
16.                   Non-consent Operations                    53
17.                   Withdrawal from Agreement                 62
18.                   Abandonment and Salvage                   64
19.                   Rentals, Royalties and Minimum Royalties  65 
20.                   Taxes                                     66
21.                   Insurance and Bonds                       67
22.                   Liability, Claims, Lawsuits and
                        AlternateDisputeResolution              68
23.                   Contributions                             69
24.                   Assignments and Preferential Right to
                        Purchase                                71
25.                   Force Majeure                             74
26.                   Aministrative Provisions                  74


                                  EXHIBIT "D"

                    Attached to SDDI/SOIFI/RB Joint Venture
                       Agreement dated December 16, 1996

                           JOINT OPERATING AGREEMENT
                   OUTER CONTINENTAL SHELF - GULF OF MEXICO


      THIS AGREEMENT is made  effective as of the __________________________by
and between Shell Deepwater Development  Inc. and Reading & Bates  Development
Co.,  the signers  hereof, herein  referred to  collectively as  "Parties" and
individually as "Party."

      WHEREAS, the Parties are  owners of one or more OCS  oil and gas Leases,
identified in Exhibit  " A-1" (Description  of Leases) and  desire to  jointly
explore, develop and operate  these Leases lying within the  Contract Area for
the production of Hydrocarbons.

      NOW, THEREFORE,  in  consideration of  the premises  and  of the  mutual
promises exchanged and contained within  this Agreement, the Parties agree  to
jointly explore,  develop  and operate  the  Contract  Area according  to  the
following provisions:

                                   ARTICLE 1
                             CONTRACT APPLICATION

1.1   Application in General: This Agreement applies to the joint exploration,
development  and  operation  of  the  Contract  Area  for  the  production  of
Hydrocarbons  therefrom  and the  transportation  of  same  by pipeline(s)  or
otherwise from the Contract Areas.

1.2   Application to Contract Area: This Agreement shall apply to the Contract
Area as  defined in Article  2 below.   Unless otherwise provided for  in this
Agreement, all the rights and obligations in and under the Lease(s) comprising
the Contract Area,  all joint property and all Hydrocarbons  produced from the
Contract Area  shall  be owned  jointly  by  the Parties  according  to  their
respective Working Interests in the Contract Area.

                                   ARTICLE 2
                                  DEFINITIONS

As used in this Agreement (or in the Exhibits attached  hereto), the initially
capitalized terms listed below shall have the following meanings:

2.1   Additional Testing, Coring or Logging: shall mean any testing (excluding
production testing), coring  or logging which is in addition  to that approved
by virtue of any previously approved AFE.

2.2   Affiliate:  shall mean  any  corporation, limited  liability company  or
partnership  (including  a  limited  partnership)  or  other entity  owned  or
controlled  by a Party  to this  Agreement.  The  term "Affiliate" of  a Party
includes any parent corporation, partnership or other  entity that directly or
indirectly owns  or controls fifty  percent (50%) or  more of  the outstanding
stock (or other interests) having  the right to vote for directors  of a Party
to  this Agreement, and  also includes  any other corporation,  partnership or
other entity in  which the parent  corporation directly or indirectly  owns or
controls  fifty percent (50%) of the voting  stock (or other interests) in the
other corporation.

-     Ownership  or control by a  Party is deemed to exist  if a Party to this
      Agreement directly or indirectly owns or controls fifty percent (50%) or
      more  of the outstanding  stock of the  corporation having the  right to
      vote for directors of the corporation [or fifty percent (50%) or more of
      the interests in the partnership or other entity].

-     The stock  (or  interests in  a partnership  or other  entity) owned  or
      controlled by  a  Party shall  include all  stock  (or other  interests)
      directly  or indirectly owned  or controlled  by any  other corporation,
      partnership or  other entity  owned or  controlled by  a  Party to  this
      Agreement.

2.3   Agreement: shall mean this Joint Operating  Agreement, together with its
attached Exhibits.

2.4   Annual Operating Plan: shall mean  the operational plan and estimate  of
Costs for joint  operations in the next ensuing calendar  year as described in
Article 6.7 (Annual Operating Plan).

2.5   Appraisal  Operations:  shall mean  all  operations  conducted within  a
Contract Area  subsequent to Exploratory  Operations and proposed  pursuant to
Article  11.0   (Appraisal Operations).   The  terms Appraisal  Operations and
Appraisal Well are interchangeable throughout this Agreement.

2.6   Appraisal Well: shall mean any well proposed and drilled as an Appraisal
Operation.

2.7   Authorization for Expenditure (AFE): shall mean any written proposal  in
sufficient detail made  by a Party for the purpose  of describing an operation
being proposed  and  estimating the  costs  to be  incurred.   The  AFE,  when
executed by  a Party, evidences  that Party's Election  to participate in  the
proposed operation and grants the Operator  the authority to commit or  expend
funds, pursuant  to  this Agreement,  for  the  account of  the  Participating
Parties.  Any AFE which proposes more than one operation shall be considered a
separate AFE as to each operation  only for those operations for which Parties
are permitted separate Elections under the terms of this Agreement.

2.8   Confidential Data:  shall mean all proprietary  geophysical, geological,
geochemical,  drilling or engineering  data owned or  developed by the Parties
relating  to operations conducted  within the Contract  Area.   The term shall
also include (but may not be limited to):

-     certain commercial, contractual or financial information;

      analyses, compilations, maps, models, interpretations or other documents
      that reflect or incorporate Confidential Information;

      both originals and copies of  geological and geophysical data, and  well
      logs; and,
      all other subsurface, seismic and related data  acquired or derived from
      operations conducted pursuant to this Agreement.

      The provisions of this Agreement with respect to Confidential Data shall
not be  applicable to "Confidential Work  Product" as that term  is defined in
Exhibit "G" (Integrated Project Team and Technology Sharing).

2.9   Contract Area: shall mean the OCS Leases described on  Exhibit "A-1", as 
to all depths.

2.10  Cost(s): shall mean the monetary amount of all expenses incurred  by the
Operator  and the  Participating Parties for  (or on  account of)  any and all
operations conducted pursuant to this Agreement.

2.11  Deepen or Deepening: shall mean any operation  to drill an existing well
(includingsidetracking a well) deeper than the stratigraphic equivalent of the
deepest formation previously encountered in such well.

2.12  Deeper Drilling: shall  mean the  drilling of a  well below the  deepest
Producible Reservoir penetrated by a Producible Well within a Contract Area.

2.13  Development Operations: shall mean  all operations conducted pursuant to
a Development Plan.

2.14  Development Phase: shall mean Development Operations associated with the
installation of a Production System within a Contract Area.

2.15  Development Plan: shall mean the plan for installing a Production System
and developing and producing Hydrocarbons from a Contract Area as described in
Article 12 (Development Plan).   The Development Plan  (as defined herein)  is
not the Development  Plan as required  by the MMS  under 30 CFR  250.34(a) nor
under the DOCD required under 30 CFR 250.34(d) (1).

2.16  Development  Well: shall mean  any well proposed  within a Contract Area
subsequent to the approval of a Development Plan for such Contract Area.

2.17  Disproportionate Spending Settlement: shall  mean tile settlement of all
or a portion of the percentage recoupment by a  Non-Participating Party paying
a disproportionate amount of Costs in the next ensuing operation  in which the
Non-Participating Party makes an Election to participate.

2.18  Election:  shall mean a decision by a  Party to either participate or to
become  a Non-Participating Party  in a proposed  operation (including the AFE
associated with  the operation).  An Election to participate is evidenced by a
Party's execution of the  AFE.  An Election not to  participate (become a Non-
Participating Party) is evidenced either by a Party's written response against
a  proposal  or such  Party's failure  to timely  execute  the AFE  within the
applicable time limit specified in this Agreement, or both.

2.19  Exploratory  Operations:  shall  mean  the first  well  drilled,  or its
substitute, in  the  Contract Area  as described  in  Article 10  (Exploratory
Operations).

2.20  Exploratory  Well:  shall  mean  any well  proposed  and  drilled  as an
Exploratory Operation.

2.21  Fabrication AFE:  shall mean the individual  AFEs collectively submitted
pursuant to an approved Development Plan for the construction and installation
of a Production System.

2.22  Facilities:  shall mean  all  production equipment  beyond the  wellhead
connections (excluding  Production Systems and Subsea  Production Systems, but
including injection  and  disposal wells)  installed for  the  benefit of  the
Contract  Area to handle  or service Hydrocarbon  production from the Contract
Area.   Facilities also include  (but are  not limited to)  the flowlines  and
gathering lines that transport the Hydrocarbons from  the wellhead but exclude
pipelines used to transport Hydrocarbons to shore.

2.23  Final  Design  AFEs:  shall   mean  the  individual  AFEs,  collectively
submitted  pursuant to an  approved Development Plan  pursuant to Article 12.5
(Content of the Development Plan). 

2.24  General Matters: shall mean any matter decided by a vote  of the Parties
in accordance  with  Article 8.2  (Voting Procedures  on  General Matters  and
Elections).   A proposal as  a General Matter may  or may not  include an AFE;
depending on  the type of  proposal.  If  the nature of the  proposal requires
that  an AFE  be submitted  with the  proposal, an  affirmative vote  for such
proposal  shall  be evidenced  by  a  Party's execution  of  the  AFE for  the
proposal.

2.25  Geophysical Operations: shall mean geophysical surveys proposed pursuant
to Article 9 (Geophysical Operations).

2.26  Hydrocarbons: shall  mean  the oil  and gas  and  associated liquid  and
gaseous  by-products (except  helium) which  may be  produced from  a wellbore
located on the Contract Area.

2.27  Integrated   Project  Team:   shall  mean   the  group   of  management,
supervisory, technical  and support  personnel from  the  Parties assigned  to
assist the Operator with preparing a Development Plan for a Contract Area, and
for the planning, design, engineering and installation  of a Production System
for a Contract Area as further provided for in Exhibit "G" (Integrated Project
Team and  Technology Sharing Provisions).  The IPT shall be formed pursuant to
Article 12.0 (Development Plan).

2.28  Joint  Account: shall mean  the Operator's  account showing  the charges
paid and credits received in the conduct of the operations hereunder and which
are to be shared by the Parties as provided in this Agreement.

2.29  Lease: shall mean each of the OCS federal oil and gas Leases (or portion
thereof) identified on Exhibit "A-1" attached hereto.

2.30  Non-Consent  Operations:  shall mean  Exploratory  Operations, Appraisal
Operations or Development Operations for which one or more Parties, having the
contractual  right to do so, makes or is  deemed to have made, an Election not
to participate in the proposed operation; and  where the Participating Parties
proceed  to conduct  the operation  at their  sole Cost  and risk  pursuant to
provisions of Article 16 (Non-Consent Operations).

2.31  Non-Operating Party: shall mean any  Party to this Agreement other  than
the Operator (or a substitute Operator).

2.32  Non-Participating Party:  shall mean  any Party  to this  Agreement who,
having the contractual right  to do so,  makes or is deemed  to have made,  an
Election not  to participate in the  proposed operation and who  is subject to
the provisions of Article 16 (Non-Consent Operations).

2.33  Non-Participating  Party's  Share:  shall  mean  the  share  of  Working
Interest and Costs  that a Non-Participating  Party would have assumed  if all
Parties had made an Election to participate in the proposed operation.

2.34  Objective Depth:  shall mean, for any  well, the shallower of  the total
footage to  be drilled (as measured in true vertical depth) or the penetration
by  the drill bit sufficient to test  the stratigraphic equivalent base of the
deepest target  formation  or interval.   Said  depth,  formation or  interval
(together with  a bottomhole location) shall be set forth in the proposed Well
Plan and AFE.

2.35  Operator: shall mean the Party identified in Article 4.1 (Designation of
the Operator) designated  to conduct all  operations pursuant to the  terms of
this Agreement.   The  term shall  also refer to  any successor  or substitute
Operator selected pursuant to Article 4.2 (Substitute Operator) or Article 4.5
(Selection of Successor Operator).

2.36  Participating Interest: shall mean a Participating Party's percentage of
participation  in  the  Costs,   risks  and  benefits  (including   rights  to
Hydrocarbons) of an operation conducted  pursuant to this Agreement; that  is,
the proportion that  the Party's Working  Interest bears to the  total Working
Interest  of all the  Participating Parties  (unless a different  Cost sharing
basis has been agreed upon by the Participating Parties in such operation).

2.37  Participating  Party:  shall  mean  a Party  who  makes  an  Election to
participate  in sharing  the Costs,  risks and  benefits (including  rights to
Hydrocarbons) of an operation  conducted pursuant to  this Agreement.  If  the
Parties have agreed upon a  different Cost sharing arrangement, those  Parties
shall be considered Participating Parties for all purposes of this Agreement.

2.38  Producible Reservoir: shall mean a Hydrocarbon accumulation into which a
Producible Well has been drilled and which is separated from and not in oil or
gas communication with any other accumulation and  identified as a Hydrocarbon
bearing  accumulation expected to  be developed under  any Development Plan or
any other accumulation from which Hydrocarbons are ultimately produced.

2.39  Producible  Well: shall mean  a well  producing hydrocarbons or,  if not
producing,  a  well that  shall  meet,  according to  either  the  MMS or  the
Participating Parties, the "well producibility criteria" set forth in Title 30
CFR  250.11 (effective  May 31,  1988) or  any succeeding  order issued  by an
appropriate governmental authority.

2.40  Production  System: shall  mean  an offshore  structure (whether  fixed,
compliant,  subsea  or  floating),   and  all  associated  components  thereof
including  the associated  Facilities, flowlines,  gathering lines  and risers
which are  used for  the production  of Hydrocarbons  from the  Contract Area.
This term shall also include the following defined terms:

      Subsea Production System: shall mean an offshore subsea structure (i.e.,
      where multiple wells or a single well could be utilized) or template and
      the components  thereof (including flowlines and  control systems) which
      are attached to the seafloor for use in obtaining Hydrocarbon production
      from  a well  not drilled  from a  Production System  and routed  to the
      Production System;

      Initial  Production System:  shall  mean the  Production System  for the
      Contract Area included in the first approved Development Plan;

      Subsequent Production System:  shall mean any new or expanded Production
      System proposed after the installation  of the Initial Production System
      for the Contract Area.

2.41  Sidetrack  or Sidetracking:  shall mean  any operation  to directionally
control and/or  intentionally deviate a  well so  as to change  the bottomhole
location  to  another bottomhole  location not  deeper than  the stratigraphic
equivalent of the original Objective Depth, unless such  intentional deviation
is done  to  straighten the  hole,  drill around  junk  or to  overcome  other
mechanical difficulties.

2.42  Subsequent Exploratory  Operation: shall  mean any  operations conducted
subsequent to  an Exploratory Well  reaching its Objective Depth  but prior to
the plugging and abandonment of such Exploratory Well.

2.43  Well Plan: shall mean  a plan for any proposed Exploratory, Appraisal or
Development  Well which contains  at least the  information defined in Article
10.2.1 (Well Plan's Minimum Specifics).

2.44  Withdrawing Party: shall mean a Party that withdraws from this Agreement
under the  conditions defined  in Article  17.1 (Right  of  Withdrawal) or  is
deemed to have withdrawn under Article 16.2 (Acreage Forfeiture Provisions).

2.45  Working Interest: shall mean the leasehold interest of each Party in and
to each Lease within the Contract  Area (expressed as the percentage described
in Article I of Exhibit "A-2" attached hereto).

                                   ARTICLE 3
                                   EXHIBITS

3.1   Exhibits: All references in this Agreement to "Exhibits" without further
qualification shall  mean  the Exhibits  listed  below  and attached  to  this
Agreement.   Each  of the  Exhibits  listed below  are  made  a part  of  this
Agreement and shall be deemed incorporated into the body of  this Agreement by
this  reference, as  completely  as if  the  full text  of  each Exhibit  were
contained within the text of this Agreement.  If the provisions  of any of the
Exhibits  conflict with any  provisions of  this Agreement, the  provisions of
this Agreement shall prevail with exception of Exhibits "C," "D," and "G'.

      Exhibit "A-1"    Contract Area
      Exhibit "A-2"    Contract Area, Working Interests of the Parties,
                         Operator and Representatives
      Exhibit "B"       Offshore Insurance Provisions
      Exhibit "C"       Accounting Procedure
      Exhibit "D"       Gas Balancing Agreement
      Exhibit "E"       Certification of Nonsegregated Facilities
      Exhibit "F"       News Release Guidelines
      Exhibit "G"       Integrated Project Team and Technology Sharing
      Exhibit "H"       Dispute Resolution Procedure
      Exhibit "I"       Memorandum of Joint Operating Agreement

                                   ARTICLE 4
                             SELECTION OF OPERATOR

4.1   Designation  of  the  Operator:  Reading  &  Bates  Development  Co.  is
designated  as the  Operator  for  the Contract  Area  and shall  conduct  all
operations within such  Contract Area  for the Joint  Account of the  Parties.
This designation  of  operatorship is  subject  to  approval by  the  Minerals
Management  Service (MMS) and  the Parties agree to  promptly execute and file
such documents  as may be  required to  gain approval of  this designation  of
operatorship.

4.2   Substitute Operator:  If the Operator becomes  a Non-Participating Party
in a Non-Consent  Operation, any Participating  Party may  be selected by  the
Participating  Parties as a  General Matter  and designated as  the substitute
Operator, with  the  same authority,  rights, obligations  and  duties as  the
Operator, except when:

      (a)   the drilling and  other contracts for equipment  and Facilities to
            be utilized on the Non-Consent Operation are not assignable; or
      (b)   the operation is conducted from a Production System being operated
            by the Operator.

If no substitute Operator is designated by the Participating Parties, then the
Operator, at its option, shall conduct such Non-Consent Operations at the sole
risk, Costs  and expense of  the Participating  Parties and  subject to  their
control, supervision  and direction.   If  the  Operator conducts  Non-Consent
Operations on behalf of the Participating Parties (when the Operator is a Non-
Participating Party), the Operator shall furnish  the Participating Parties an
estimate of the Costs of the Non-Consent Operation.  The Operator shall not be
required  to proceed  with such  Non-Consent Operations  unless and  until the
Costs thereof  have been advanced to  it by the Participating  Parties, to the
end that  the Operator need  not expend  any of  its own funds  for such  Non-
Consent Operation.    If a  Non-Consent Operation  conducted  by a  substitute
Operator  is completed  or results  in a  producing well,  said well  shall be
turned over to  the Operator for future operations within  thirty (30) days of
completion of such operations. 

4.3   Resignation of Operator:  The Operator may resign at any  time by giving
written notice  to  the Parties;  provided, however,  the  Operator shall  not
resign during  a  Force Majeure  situation described  in  Article 25.1  (Force
Majeure).  If the Operator no longer  owns an interest in a Contract Area, the
Operator  shall be  deemed to  have resigned  without any  action by  the Non-
Operating Parties other than the selection of a successor Operator.

4.4   Removal of Operator:  The Operator may be removed either  as a result of
an  assignment of all  or a  portion of the  Operator's Working Interest  in a
Contract Area or for good cause under the following circumstances.

      4.4.1 Removal Upon Assignment: If the Operator assigns  all or a portion
      of  it's Working  Interest in  a Contract  Area (excluding  any interest
      assigned to an Affiliate) which  reduces the Operator's Working Interest
      in  a Contract Area  to less than  the Working Interest  of another Non-
      Operating   Party,  whether   accomplished   by   single  or'   multiple
      assignments, then the Operator may be  removed by vote of the Parties as
      a General Matter.   Provided however, the Operator shall not  be removed
      solely  on the  basis  of a  reduced Working  Interest when  the reduced
      Working  Interest is equal  to or larger  than the next  largest Working
      Interest of a Party.

      4.4.2 Removal for Cause  by Vote: The Operator may be  removed for cause
      by vote of the  Parties as a General Matter if  the Operator commits any
      of the following acts:

         (a)      the Operator becomes insolvent or unable to pay its debts as
                  they  mature,  makes  an   assignment  for  the  benefit  of
                  creditors,  commits any  act of  bankruptcy or  seeks relief
                  under laws providing for the relief of debtors; or,

         (b)      a   receiver  is   appointed   for  the   Operator  or   for
                  substantially all of its property and/or affairs; or,

         (c)      the Operator commits an  act of gross negligence or  willful
                  misconduct; or,

         (d)      the Operator  is unable to  meet the standards  of operation
                  contained   in  Articles  5.2   (Workmanlike  Conduct),  5.3
                  (Drilling), 5.4 (Liens and Encumbrances) and 5.6 (Reports to
                  Government Agencies); or,

         (e)      the  Operator commits  a  substantial breach  of a  material
                  provision of  this Agreement and  fails to cure  same within
                  thirty (30)  days after  receipt of  notice of  such breach.
                  However, if the breach specified in the notice  is of such a
                  nature  that it  reasonably cannot  be corrected  within the
                  thirty  (30) day period, and the Operator within said period
                  begins corrective action  or steps to correct the breach and
                  thereafter  diligently  carries  such corrective  action  to
                  completion, the Operator shall not be removed.

4.5   Selection of  Successor Operator:  Upon resignation  or  removal of  the
Operator; a successor Operator shall  be selected by the Parties as  a General
Matter.   If the resigned or  removed Operator fails to vote  or votes only to
succeed itself,  then the successor  Operator shall  be selected as  a General
Matter after excluding the vote  of the resigned or removed Operator.   In the
event there are  only two Parties  to this Agreement, the  Non-Operating Party
shall become the Operator.

4.6   Effective Date of Resignation or Removal: The  resignation or removal of
the  Operator shall become effective at 7:00 am. on the first day of the month
following a  period of ninety  (90) days  after said notice,  unless a  longer 
period  of time  is required  to obtain  approval by  the Minerals  Management
Service.   Prior  to the  successor Operator's  assumption  of the  Operator's
duties,  the previous  Operator (the  "outgoing  Operator") shall  continue to
exercise its authorities and meet its duties as Operator.  Upon selection of a
successor Operator, the outgoing Operator shall  be bound by the terms of this
Agreement  as a  Non-Operating  Party.   The  resignation  or  removal of  the
outgoing Operator  shall not prejudice any rights,  obligations or liabilities
which  accrued during  the  period when  the  outgoing Operator  acted as  the
Operator.   If  the outgoing  Operator  resigns or  is  removed, it  shall  be
entitled to  charge the  Joint Account  for the reasonable  Costs incurred  in
connection with the change of operatorship.

4.7   Delivery of Property: On the effective date of resignation or removal of
the  Operator, the outgoing  Operator shall deliver  to the successor Operator
possession  of everything jointly  owned by  the Parties, including  all funds
relating  to the Joint  Account, all joint  Hydrocarbons, all joint equipment,
materials  and appurtenances  used  in conducting  operations  and all  books,
records and inventories relating to joint operations  (other than those books,
records and inventories maintained by the outgoing Operator as the  owner of a
Working  Interest).    Upon  such delivery,  the  outgoing  Operator  shall be
discharged from  all future  rights  and obligations  as  the Operator.    The
outgoing Operator shall further  use its reasonable efforts to transfer to the
successor Operator, effective as of the  effective date of such resignation or
removal, its rights as the  Operator under all contracts exclusively  relating
to joint operations and the successor Operator shall assume all obligations of
the Operator thereunder.   As soon as practicable after  the effective date of
such resignation  or removal,  the Parties shall  audit the Joint  Account and
conduct an  inventory of all  joint property  and all joint  Hydrocarbons, and
such inventory shall be used in the return of and the accounting for the joint
property  and the  joint  Hydrocarbons by  the outgoing  Operator.   All Costs
incurred  in connection with such audit and  inventory shall be charged to the
Joint Account.

                                   ARTICLE 5
                         RIGHTS AND DUTIES OF OPERATOR

5.1   Exclusive Right to Operate:  Except as otherwise provided,  the Operator
shall have the exclusive right and duty to conduct (or cause  to be conducted)
all  operations pursuant to  this Agreement.   With the exception  of any team
formed pursuant to this Agreement, the number of employees or contractors used
by the Operator in conducting  operations hereunder, their selection, and  the
hours of labor and the compensation for services performed shall be determined
by the Operator, and all such employees or contractors shall  be the employees
or  contractors, respectively, of  the Operator.   The Operator shall contract
for  and employ  any drilling  rigs, tools,  machinery, equipment,  materials,
supplies  and personnel reasonably  necessary for the  Operator to conduct the
operations provided for in this Agreement.

5.2   Workmanlike  Conduct: The  Operator shall  conduct all  operations  in a
proper  and  workmanlike  manner  in accordance  with  methods  and  practices
customarily  used in sound oil and gas field  practice and with that degree of
diligence  reasonably  and  ordinarily  exercised by  an  experienced  prudent
operator   engaged  in  a   similar  activity   under  the  same   or  similar
circumstances.   The Operator  shall not be  liable to the  Parties for losses
sustained or liabilities incurred as a result of its actions  as the Operator,
except such  as may result  from its  gross negligence or  willful misconduct.
Unless  otherwise provided, Operator  shall consult with  the Parties and keep
them all informed of all important matters.

5.3   Drilling:  The Operator may  have all  drilling operations  conducted by
qualified and responsible independent contractors who are not affiliated  with
the  Operator and  are employed  under competitive  contracts.   A competitive
contract is a contract containing current terms, rates and  provisions that do
not exceed those  generally prevailing on  the OCS in the  Gulf of Mexico  for
operations involving drilling rigs of an equivalent type, operating in similar
environments, and  equipped to  the Operator's standard  conditions which  are
capable  of drilling  the proposed  well(s) within the  time schedule  for the
operations to be conducted.  The Operator may employ its equipment, personnel,
Operator owned drilling rig, workover  rig or snubbing unit in the  conduct of
such  operations  in accordance  with  Exhibit "C"  (Accounting  Procedure) or
pursuant  to a  written  agreement among  the Participating  Parties.   If the
Operator's equipment, personnel,  drilling rig, workover rig  or snubbing unit
are employed in conducting operations  under this Agreement, the terms,  rates
and provisions  for  use shall  be consistent  with  then current  competitive
contracts prevailing in the OCS in the deepwater Gulf of Mexico.   Prior to RB
utilizing a drilling rig owned by RB's affiliate, the parties will establish a
mutually  agreeable day  rate based upon  the average  commercial rates  for a
similar specification drilling rig prevailing in the immediate area.

5.4   Liens  and Encumbrances:  The Operator  shall use reasonable  efforts to
keep  the Leases, Production  Systems, Facilities and  other equipment and any
jointly owned Hydrocarbons free from all liens  and encumbrances [except those
provided for in Article 6.3 (Security Rights) ] which might arise by reason of
the operations conducted under this Agreement.

5.5   Records: The Operator shall keep accurate books, accounts and records of
operations  hereunder in compliance  with the Accounting  Procedure in Exhibit
"C" (Accounting Procedure).  Unless otherwise provided  for in this Agreement,
all records of  the Joint Account shall be available  to a Non-Operating Party
at all reasonable  times during the Operator's normal office hours pursuant to
the provisions contained in Exhibit "C" (Accounting Procedure).

5.6   Reports to Government  Agencies: The Operator shall make  timely reports
to all governmental authorities  that it has  a duty to  make as Operator  and
shall furnish  copies of  such  reports to  the  Participating Parties.    The
Operator shall give timely  written notice to the Parties of litigation and/or
administrative proceedings of which it has notice affecting a Contract Area or
operations hereunder.

5.7   Information to Participating  Parties: The Operator  shall, in a  timely
manner, furnish each Participating  Party the following information pertaining
to each well being drilled (provided such information was obtained or received
by Operator):

      (a)   copy  of the application  for permit  to drill and  all amendments
            thereto;
      (b)   daily drilling and workover  reports; daily mud checks, mud  logs,
            lithological,  and  Hydrocarbon  information;  daily   casing  and
            cementation  tallies   and  cumulative   Costs  incurred   on  the
            operation;
      (c)   complete report of all core analysis;
      (d)   copies  of  any  logs  or surveys  as  run  (including  a complete
            "library tape" of the digitally recorded data);
      (e)   copies of well test results, bottomhole pressure  surveys, gas and
            condensate analyses or similar information;
      (f)   copies of  reports  made to  or notices  or  orders received  from
            regulatory agencies;
      (g)   48 hours advance notice  of logging, coring or  testing operations
            (or,  if conditions  do not  permit such  advance notice,  as much
            advance notice as is reasonably possible);
      (h)   upon written request, and  if sufficient quantities are available,
            samples  of cutting and sidewall  cores marked as  to depth, to be
            packaged and shipped at expense of the requesting Party;
      (i)   copies of the drilling prognosis;
      (j)   if  conventional cores  are taken,  the requesting Party  shall be
            allowed access to inspect and evaluate said cores and; 
      (k)   samples of gas, condensate  and oil, if sufficient  quantities are
            available.

Upon written request, the Operator shall use its reasonable efforts to furnish
to  a  requesting Participating  Party  any  additional available  information
(including a complete slabbed section of all recovered cores, if requested and
available),  acquired by  the  Operator  for  the Participating  Parties,  not
otherwise  furnished   under  this  Article  (not   including  any  derivative
information independently developed at Operator's sole Cost and expense).  The
Costs of gathering and furnishing such  additional available information shall
be charged to the requesting Participating Party.

5.8   Completed Well Information:  Operator shall, in a timely manner, furnish
to  each participating  Party  the following  information  pertaining to  each
completed well:

      (a)   monthly report of production and injection;
      (b)   copies of reports made to regulatory agencies;
      (c)   report on status of wells not producing and not abandoned;
      (d)   Hydrocarbon status report;
      (e)   bottomhole pressure data;
      (f)   composite  of  all logs  run  (e.g.,  TDT, Carbon-Oxygen,  Spinner
            Surveys, Casing Collar, etc.); and,
      (g)   reports of inventory.

5.9   Information to Non-Participating Parties:  The Operator shall furnish to
each Non-Participating  Party copies of  all non-confidential reports  made to
regulatory agencies.  A Non-Participating  Party shall be entitled to  receive
the information specified  in Articles 5.7 and  5.8 only after fulfilling  the
requirements specified in Article 16 (Non-Consent Operations).   A Party which
has  permanently  relinquished  all  of its  Working  Interest  in  either the
Contract Area or a specific Contract Area shall not be entitled to receive any
information  specified in  Articles 5.7  and 5.8  above with  respect  to such
relinquished interest.

5.10  Cost Information: Within one hundred  twenty (120) days after completion
of a Non-Consent Operation, the Operator shall furnish all Parties an itemized
statement of  the Cost of  such operations and  an inventory of  the equipment
pertaining thereto  or, at its  option, the  Operator in lieu  of an  itemized
statement of such Costs  may submit a detailed statement of  monthly billings.
For the  purposes of calculating  recoupment of Costs  pursuant to  Article 16
(Non-Consent  Operations),  the  Operator  shall  furnish  to  all  Parties  a
quarterly statement showing operating expenses and the  proceeds from the sale
of Hydrocarbon production from the wells from which recoupment is being made.

5.11  Managing Production: All Parties  shall cooperate and use  due diligence
to avoid gas imbalances resulting  in pipeline penalties under the  provisions
of the applicable transportation tariffs  of any transporting pipelines.   Any
additional costs imposed  on Operator as a  result of gas  pipeline imbalances
with transporters shall  be borne by the individual Parties  in the proportion
that each individual Party's over  and under deliveries caused such  imbalance
penalty,  except where  the  imbalance is  caused by  the gross  negligence or
willful misconduct of Operator.   For purposes  of this Article, gas  pipeline
imbalances shall be defined as the difference between gas nominations accepted
by the gas transporter and the actual volume delivered to  the gas transporter
for each Party's account.

                                   ARTICLE 6
                    EXPENDITURES AND ANNUAL OPERATING PLAN

6.1   Basis of  Charges  to the  Parties: Except  as  otherwise provided,  the
Operator shall pay all Costs of joint  operations and each Participating Party
shall reimburse the Operator, in proportion to its Participating Interest, for 
the Costs of  each joint  operation.   The Operator  shall have  the right  to
require each Participating Party to advance its  respective share of estimated
expenditures,  as  provided in  Exhibit  "C"  (Accounting  Procedure).   Funds
received  by  the  Operator  under  this  Agreement  may  be  commingled  with
Operator's  own funds.   All charges, credits  and accounting for expenditures
shall be made pursuant to Exhibit "C" (Accounting Procedure), attached hereto.

6.2   Authorization for  Expenditure: The Operator  shall not make  any single
expenditure or undertake any project or operation costing Two Hundred Thousand
Dollars ($200,000) or more, unless an Authorization  for Expenditure (AFE) has
either (1) been  included in a proposal  for an operation and  approved by the
Participating  Parties through their Election to participate in the operation,
or  (2) received the  approval of the  Parties as a  General Matter.   For any
single  expenditure or  project costing  in excess  of Fifty  Thousand Dollars
($50,000), but less than Two Hundred Thousand Dollars ($200,000), the Operator
need not submit an AFE, but  shall furnish written information describing  the
expenditure  to  each of  the  Participating  Parties.   In  the  event of  an
emergency and notwithstanding  the foregoing, the Operator  shall be empowered
to  immediately  make  such  expenditures   for  the  Joint  Account  of   the
Participating Parties as, in its opinion as a reasonable and prudent Operator,
are required  to deal with the  emergency.  The  Operator shall report  to the
Participating  Parties, as promptly  as possible, the  nature of the emergency
and action taken.

      6.2.1 AFE Overrun  Notice: Operator shall provide an  AFE overrun notice
      to all  Participating Parties whenever it appears (based upon Operator's
      reasonable estimate)  that the  actual total  Costs associated  with any
      separate  AFE will  exceed the  original AFE  by more  than ten  percent
      (10%).

      6.2.2 Supplemental AFE  for  Cost  Overruns for  Wells:  If  during  the
      drilling  of  Exploratory   Wells,  Subsequent  Exploratory  Operations,
      Appraisal  Wells, subsequent Appraisal Operations, Development Wells, or
      subsequent  Development  Operations, it  appears (based  upon Operator's
      reasonable  estimate)  that  the actual  Costs  will  exceed  the latest
      approved  AFE for  the well by  fifteen percent  (15%) or  three million
      dollars  ($3,000,000),  whichever  is  less,  Operator  shall  submit  a
      supplemental AFE to  the Participating Parties to make an Election as to
      their  further participation in  the well AFE.   Any Participating Party
      which becomes  a Non-Participating  Party as  to such further  operation
      under  this Article 6.2.2 shall be  subject to the provisions of Article
      16 (Non-Consent Operations) only for  the amount of such supplement,  or
      forfeiture of interest in the event of an Exploratory Operation.

      6.2.3 Supplemental AFE for Cost Overruns on Integrated Project Team AFE:
      If  it  appears (based  upon  Operator's reasonable  estimate)  that the
      actual Integrated Project Team Costs will exceed the latest approved AFE
      by  fifteen percent  (15%) or  4 million  five hundred  thousand dollars
      ($4,500,000), whichever  is less,  Operator shall submit  a supplemental
      AFE to the Participating Parties to make an Election as to their further
      participation  in the Integrated  Project Team  AFE.   Any Participating
      Party  which  becomes  a  Non-Participating  Party  as  to  such further
      operation under this Article 6.2.3 shall be subject to the provisions of
      Article  16.5.3 (Geophysical  Operations, Feasibility  Study, Integrated
      project  Team  andlor Final  Design AFE)  only  for the  amount  of such
      supplement.

      6.2.4 Supplemental  AFE for  Cost Overruns  on Final  Design AFE:  If it
      appears  (based upon  Operator's  reasonable estimate)  that the  actual
      design Costs will exceed the latest approved Final Design AFE by fifteen
      percent   (15%)  or   seven  million   five  hundred   thousand  dollars
      ($7,500,000), whichever  is less,  Operator shall submit  a supplemental
      AFE to the Participating Parties to make an Election as to their further
      participation  in the Final  Design AFE.   Any Participating Party which
      becomes a  Non-Participating Party as  to such  further operation  under
      this Article 6.2.4 shall be subject to the provisions of  Article 16.5.3
      (Geophysical  Operations, Feasibility  Study,  Integrated  Project  Team
      andlor Final Design AFE) only for the amount of such supplement.

      6.2.5 Supplemental  AFE  for Cost  Overruns  on Fabrication  AFE:  If it
      appears  (based upon  Operator's  reasonable estimate)  that the  actual
      Costs associated with  any separate AFE submitted  under the Fabrication
      AFE will exceed the latest  approved Fabrication AFE by fifteen  percent
      (15%)  or  twenty  million  dollars ($20,000,000),  whichever  is  less,
      Operator shall submit a supplemental AFE to the Participating Parties to
      make  an Election as  to their further  participation in the Fabrication
      AFE.  Any Participating Party which becomes a Non-Participating Party as
      to such further operation  under this Article 6.2.5 shall  be subject to
      the provisions  of Article  16.2  (Non-Consent Fabrication  AFE for  the
      Initial Production System).

      6.2.6 Supplemental AFE  for  Cost Overruns  on  All  Other AFEs:  If  it
      appears  (based upon  Operator's  reasonable estimate)  that the  actual
      Costs will exceed the latest  approved AFE for the operation  by fifteen
      percent (15%) or  three million dollars ($3,000,000), whichever is less,
      Operator shall submit a supplemental AFE to the Participating Parties to
      make  an Election as  to their  further participation in  the operation.
      Any Participating Party  which becomes a  Non-Participating Party as  to
      such  further operation under  this Article  6.2.6 shall be  subject, if
      applicable,  to the  provisions of  Article 16  (Non-Consent Operations)
      only for the amount of such supplement.

      6.2.7 Further Operations  During  a Force  Majeure:  No Party  shall  be
      allowed to make  an Election not to participate  in a further operations
      under Articles  6.2.2 (Supplemental  AFE for  Cost Overruns  for Wells),
      6.2.3  (Supplemental AFE FOR  Cost Overruns  on Integrated  Project Team
      AFE),  6.2.4 (Supplemental AFE  for Cost Overruns  on Final Design AFE),
      6.2.5 (Supplemental AFE for Cost  Overruns on Fabrication AFE) or  6.2.6
      (Supplemental AFE for  Cost Overruns on  All Other AFEs) during  a Force
      Majeure or other emergency as described in Article 25.1 (Force Majeure),
      but may make its Election not  to participate after termination of  such
      emergency.

6.3   Security Rights: In addition to  any other security rights and  remedies
provided by law  with respect to services rendered  or materials and equipment
furnished under this Agreement, the Parties shall  have the following security
rights:

      6.3.1 Operator's  First Lien:  Each Non-Operator  grants the  Operator a
      first lien upon  each Party's Working  Interest in the  Leases within  a
      Contract Area  (including  any interests  in  the  Leases now  owned  or
      hereafter  acquired), including  but not  limited to  (a)  all equipment
      installed  on  the Lease(s),  (b)  all  Hydrocarbons or  other  minerals
      severed and  extracted  from or  attributable  to  the Leases,  (c)  all
      accounts and proceeds of sale  (including, but not limited to,  accounts
      resulting  from the  sale  of  such  Hydrocarbons  or  other  minerals),
      contract rights and  general intangibles arising in  connection with the
      sale of such Hydrocarbons  or other minerals, (d)  fixtures and (e)  any
      and  all accessions, additions and attachments  thereto and the proceeds
      and products therefrom.  This first lien shall secure the payment of all
      charges against such Party, together  with interest thereon at the  rate
      set  forth in Exhibit  "C" (Accounting  Procedure) (or the  maximum rate
      allowed  by law, whichever  is the lesser),  reasonable attorneys' fees,
      court costs and  other directly related collection costs.   If any Party
      does  not  pay  such charges  when  due,  the  Operator  shall have  the
      additional right  to collect  from the  purchaser of  defaulting Party's
      Hydrocarbon production the proceeds from the sale  of such Party's share
      of Hydrocarbon production in the Contract Area until the amount owed has
      been paid.  Each purchaser  shall be entitled to rely on  the Operator's
      statement concerning the amount owed.

      6.3.2 Non-Operating Party's Security  Interest: Operator  grants a  like
      security interest  to the  Non-Operating  Parties to  secure payment  of
      Operator's proportionate share of expenses.  Each Party paying its share
      of  unpaid expenses  pursuant  to Section  6.5  (Unpaid Charges)  hereof
      shall, to obtain  reimbursement thereof, be  subrogated to the  security
      rights described herein.

      6.3.3 Recordation: To  provide evidence  of, and  to better protect  the
      Parties'  security rights  created hereunder,  upon request,  each Party
      agrees to  and shall execute and notarize a financing statement on a UCC
      form,  and the  Memorandum  of  Joint  Operating Agreement  attached  as
      Exhibit "I".   The  Parties hereby  authorize the  Operator to  file the
      notarized  Memorandum of  Joint  Operating Agreement  to provide  record
      notice of this Agreement in the appropriate public records.

6.4   Default: If any Party does  not pay its share of the  charges authorized
under this  Agreement when due, the  Operator may give that  Party notice that
unless payment is made within thirty  (30) days, the non-paying Party shall be
in default.   Any Party  in default shall have  no further access  to the rig,
maps,  records,  data,  interpretations   or  other  information  obtained  in
connection with operations or be allowed  to participate in meetings.  A Party
in default shall not be entitled to vote on any General Matter until such time
as the Party in default is no longer in default.  The voting interest of  each
non-defaulting  Party shall  be  counted in  the proportion  its Participating
Interest bears to the total non-defaulting Participating Interests.  As to any
operation approved  during the  time  a Party  is in  default,  such Party  in
default shall be deemed to be a  Non-Participating Party.  If a Party notifies
the Operator in  writing that all  or a portion of  such payment is  not being
made as a result of  a good faith dispute over such charges,  said Party shall
not be  considered in  default as  to the disputed  amount, provided  that any
undisputed portion of such Costs are promptly paid to the Operator.

6.5   Unpaid Charges: If any Participating Party fails to pay its share of the
charges due hereunder within thirty (30)  days after receipt of the Operator's
statement,  the  Operator  may  take  immediate  steps  to  diligently  pursue
collection and to exercise the Operator's lien and security  rights granted by
this Agreement.  The Operator  shall keep an accurate account of  amounts owed
(plus interest  and costs) by the  Party in default and  any amounts collected
against  the indebtedness.   If  a Party  is in  default and  any indebtedness
remains delinquent for  a period of three (3) months,  the other Participating
Parties  shall,  upon  the  Operator's  request,  pay  the  unpaid  amount  in
proportion that their Participating Interest bears to all paying Participating
Interests.   Each Participating Party  paying its share  of the unpaid  amount
shall  be subrogated to the Operator's lien  and security rights to the extent
of such payment.

6.6   Carved-out Interests:  The agreements creating  any overriding  royalty,
production  payment, net  proceeds  interest, carried  interest  or any  other
interest  carved out  of a Working  Interest in a  Lease(s) shall specifically
make  such interests inferior to the rights  of the Parties to this Agreement.
If any  Party whose Participating Interest  is so encumbered does  not pay its
share  of  expenses,  and  the  proceeds  from  the sale  of  its  Hydrocarbon
production  under  Article 6.3  (Security  Rights) are  insufficient  for that
purpose,  the security rights provided  for herein may  be applied against the
carved-out interests with  which such Working Interest  is burdened.   In such
event,  the  rights  of  the  owner  of  such  carved-out  interest  shall  be
subordinated to the security rights  granted by Article 6.3. Additionally,  in
the  event a Party  elects not to  participate in any  operation hereunder and
becomes a Non-Participating Party pursuant hereto, then and in that event, the
Participating Parties  shall acquire  the interests of  such Non-Participating
Party with respect to such Election, free and clear of any and all obligations
created under or pursuant to any carved-out interest as described above.

6.7   Annual Operating Plan: Beginning in the year in which a Development Plan
is approved for  a Contract  Area, and  each subsequent  year thereafter,  the
Operator shall  develop an Annual  Operating Plan.  The  Annual Operating Plan
process will be used (1) as a reporting mechanism  by which the- Operator will
inform the Non-Operating Parties of results of the previous year's activities,
(2) to review ongoing operations  and (3) to forecast activities,  anticipated
Hydrocarbon  production volumes,  operating expenses and  capital expenditures
for the remainder of the current year and the next succeeding calendar year.

      6.7.1 Development and Submission of the Annual Operating  Plan: Prior to
      May  I of each year,  the Operator will conduct  a meeting with the Non-
      Operating  Parties to  review the  results of  the previous  year.   The
      Operator  will   also  provide   the  Non-Operating  Parties   with  its
      anticipated activities for  the current and  following year and  solicit
      input regarding these activities from the Non-Operating Parties.   After
      this  meeting, the Operator  will prepare and  submit its proposed draft
      for the Annual Operating Plan prior to June I of each year.

      6.7.2 Review  of the  Annual Operating  Plan: The  Non-Operating Parties
      will  provide suggested  changes, additions or  deletions to  the Annual
      Operating Plan to the Operator and all other Parties prior to July 15 of
      each year.  The Operator  will then make any changes it  deems necessary
      and submit the  Annual Operating Plan  no later than  October I of  each
      year.

      6.7.3 Content  of Annual Operating Plan:  The Annual Operating Plan will
      include  an  estimated capital  budget,  expense  budget and  Operator's
      anticipated forecast as follows:

         6.7.3.1  Capital Budget:  The Annual Operating Plan  shall contain an
         estimated capital budget that includes the following:

         (a)   a  list  of  proposed  wells  to  be  drilled  including  their
               anticipated order, drilling time, depths,  locations, objective
               sands, type of well  (Development, Appraisal, etc.), purpose of
               well (production, injection, etc.) and estimated Costs;

         (b)   capital  workovers,  which shall  be  defined  as any  workover
               operation conducted  to  recomplete a  well to  a  new zone  or
               install artificial  lift listed  by well, with  their estimated
               Cost;

         (c)   other capital projects  requiring a  gross expenditure  greater
               than  three million  dollars ($3,000,000).   The  term "capital
               project" shall include addition  of new equipment, expansion or
               upgrades of existing equipment; and

         (d)   an estimated total amount (in aggregate) for capital projects.

         6.7.3.2  Expense Budget:  The Annual Operating Plan  shall contain an
         estimated expense budget that includes the following:

         (a)   expense workovers,  which shall  be defined as  any anticipated
               workover operation  which is  not a  capital workover  (such as
               repair work or reworks within  the same zone), listed by  well,
               with their estimated Cost;

         (b)   all expense projects requiring a gross expenditure greater than
               three million dollars ($3,000,000).  The term "expense project"
               shall include  repair, replacement, inspection  and maintenance
               of existing equipment;

         (c)   an estimated total amount  (in aggregate) for expense projects;
               and

         (d)   estimated Operations and Maintenance (O&M) expenditures for the
               year may be shown in the aggregate.  O&M expenses shall include
               the  ongoing, everyday  expenditures  necessary to  operate the
               field.

         6.7.3.3  Operator  Forecasts  and  Informational  Items:  The  Annual
         Operating Plan shall contain  the Operator's reasonable forecasts and
         projections  (but are recognized  as forecasts and projections  only)
         including the following information:

         (a)   production forecasts;

         (b)   injection forecasts;

         (c)   fuel and flare gas forecasts;

         (d)   scheduled or planned downtime exceeding three (3) days;

         (e)   data collection programs; and

         (f)   other areas deemed of significance by the Operator.

      6.7.4 Effect of  the Annual  Operating Plan: The  Annual Operating  Plan
      shall be primarily for informational and planning purposes and shall not
      obligate  any Party  to any  expenditures or  constitute an  Election to
      participate  in any specific  operation.  However,  the Annual Operating
      Plan is  recognized as the  Operator's effort  to forecast and  plan for
      activities during  the  year while  providing for  input  from the  Non-
      Operators.  Pursuant to the terms and conditions of this  Agreement, any
      Party may make proposals  for operations which were not  included in the
      Annual Operating Plan.   Approval of any such operation, under the terms
      provided in  Article 8 (Voting, Election  & Notices), shall be  deemed a
      modification to the Annual Operating Plan. 

                                 ARTICLE 7                                
                          CONFIDENTIALITY OF DATA

7.1   Confidentiality Obligation: The Parties agree that all Confidential Data
acquired  or  obtained by  any  Party  with respect  to  the joint  operations
conducted under  this Agreement  (and the  scope and  terms of  this Agreement
itself)  shall be kept confidential during the  term of this Agreement and for
an additional period of two (2) years after the termination of this Agreement.
Each Party  agrees to maintain the  secrecy of the Confidential  Data using at
least the standard of care it normally uses in protecting its own confidential
information and trade secrets.   The Confidential Data shall be made available
to each Participating Party for its exclusive use.  During the confidentiality
period, the  Confidential  Data shall  not  be disclosed  to any  third  party
(unless disclosed under an "exception  to confidentiality" under Article 7.1.1
or as a "permitted disclosure" under Article 7.1.2).

      7.1.1 Exceptions  to  Confidentiality:  The  confidentiality  obligation
      shall  not apply  to the  extent that  particular items  of Confidential
      Data:
            (a)   are  now or later  become part  of the public  domain (other
                  than as  a result of a wrongful act or omission by a Party);
                  or
            (b)   are  now or  later become  available to  a Party  on a  non-
                  confidential basis from a source, other than a Party hereto,
                  that  is   legally  permitted   to  disclose  the   item  of
                  Confidential Data; or
            (c)   were known to a Party  on a non-confidential basis prior  to
                  the  disclosure  of the  Confidential Data  to it  under the
                  terms of this Agreement or to which such Party was otherwise
                  entitled at the time of disclosure; or
            (d)   is independently developed by  employees or contractors of a
                  Party who have not had access to Confidential Data.

      7.1.2 Permitted  Disclosures:  The   Operator  may  disclose  items   of
      Confidential  Data  to  such  third  parties  as  may  be  necessary  in
      connection  with the operation  of a Contract  Area, provided such third
      parties are bound by written  agreement to keep secret the  Confidential
      Data for a period of time not  less than is set forth in this  Agreement
      (or  a lesser  period if  agreed by  all Parties).   The  Operator shall
      promptly inform the  other Parties  hereto of  the names  of such  third
      parties   and   list  the   items   of   Confidential  Data   disclosed.
      Notwithstanding anything  herein  to the  contrary  and subject  to  the
      restrictions that: (i) the Confidential  Data shall not be removed  from
      the custody and premises of the Party  making such disclosure, excepting
      disclosure made  pursuant to items (1) and (5) below; and (ii) that such
      third party be  bound by written  agreement not to  use or disclose  the
      Confidential  Data  except  for  the  express  purpose  for  which  such
      disclosure is to be made, any  Party may disclose, in whole or  in part,
      the Confidential Data:

            (1)   to any Affiliate of such Party provided such Affiliate shall
                  be bound by the confidentiality provision contained  herein;
                  or

            (2)   to  any  bona  fide,  financially  responsible,  prospective
                  assignee  of any  portion of  such Party's  Working Interest
                  (including but not limited to an entity with whom a Party or
                  its Affiliates is conducting bona fide negotiations directed
                  toward  a merger, consolidation or a sale of a Party's or an
                  Affiliate's shares or substantially all of its assets in the
                  OCS  Gulf of  Mexico),  provided that  the disclosing  Party
                  shall give all other Parties to this Agreement not less than
                  fifteen  (15)  days  advance written  notice  specifying the
                  extent  to   which  that  Party  intends   to  disclose  the
                  Confidential Data  to the prospective assignee  and the name
                  of such prospective assignee; or

            (3)   to  any potential  contractors  or professional  consultants
                  engaged by  or on behalf of  -such Party and acting  in that
                  capacity  where  such  disclosure   is  essential  to   such
                  contractor's or consultant's work; or

            (4)   to any bank  or other  financial institution  to the  extent
                  appropriate  to   a  Party   arranging  financing   for  its
                  obligations under this Agreement; or,

            (5)   to the extent required by the terms of any Lease, or by law,
                  order,   decree,  regulation  or   rule  (including  without
                  limitation,  those  of  any  regulatory  agency,  securities
                  commission,  stock  exchange,  judicial  or   administrative
                  proceeding).   If a Party  is legally compelled  to disclose
                  any Confidential Data such  Party shall promptly provide all
                  other  Parties  to this  Agreement  written  notice of  such
                  proceedings so  that the  non-disclosing Parties may  seek a
                  protective order or  other remedy.  A disclosing Party shall
                  furnish only  such Confidential Data as  is legally required
                  and will  use its reasonable efforts  to obtain confidential
                  treatment for any Confidential Data disclosed; or,

            (6)   to  an  entity   desiring  to   transport  and/or   purchase
                  Hydrocarbons produced  hereunder for  the purpose of  making
                  Hydrocarbon   reserve   estimates   and   other    technical
                  evaluations.

      7.1.3 Limited Releases  to Offshore Scout Association:  The Operator may
      disclose  the following well  information at  weekly Offshore  Oil Scout
      meetings:

            7.1.3.1     Well Location:

            (a)   proposed surface location;
            (b)   surveyed surface location with X & Y;
            (c)   proposed bottom hole location;
            (d)   KB and water depth;
            (e)   OCS number and well number; and
            (f)   actual  bottom hole  location (must  be reported  within two
                  weeks of reaching total depth of the well).

            7.1.3.2     Well Operations:

            (a)   rig move in date;
            (b)   spud date;
            (c)   weekly drilling depth, MW;
            (d)   casing depths, cement, EMWs;
            (e)   mud weight, sidewall cores, cores, RFTs (only that they were
                  taken); M logs (only the depths and type run);
            (g)   date Total Depth is reached; and
            (h)   date rig is released.

            7.1.3.3     Well Completion Information:

            (a)   any  Media  Release  or  public filing  of  well  completion
                  information will be furnished at weekly Scout meetings.

      7.1.4 Continuing Confidentiality Obligation: Any Party who ceases to own
      a Working Interest in a Contract Area shall nonetheless  remain bound by 
      the  confidentiality and  use obligations  of this  Agreement as  to any
      Confidential Data obtained through this Agreement.

7.2   Ownership of Confidential Data: Except as otherwise provided for in this
Article, all Confidential Data produced as a result of a joint operation shall
be  the joint property  of all Participating  Parties in that  operation.  Any
Non-Participating Party shall have no rights in or access to Confidential Data
produced  or  derived  from  a  Non-Consent  Operation  unless and  until  the
provisions of Article 16 (Non-Consent Operations) are satisfied.

      7.2.1 Well Log and Data Trades: Any Participating  Party may propose the
      exchange or  trade  of any  jointly owned  Confidential  Data for  other
      similar data  and information owned by  a third party.   The approval of
      such  exchange  or  trade  shall   require  unanimous  approval  of  the
      Participating  Parties which own such data.  Upon approval of such trade
      by  the  Participating  Parties,  the  Operator  shall  consummate  such
      exchange or  trade with the  third party.   The Operator  shall promptly
      provide  all  Participating  Parties  copies of  the  third  party  data
      obtained along with copies of any agreement relating to such exchange.

      7.2.2 Ownership of  Non-Consent Data:  When the Non-Participating  Party
      becomes a Participating Party in the operation, as provided herein, such
      non-consent Confidential  Data and information previously  withheld from
      such Non-Participating  Party shall  thereafter become jointly  owned by
      the Party.

7.3   Access  to the  Lease  and Rig:  Each  Participating Party's  authorized
representatives  shall have access  to any drilling  rig, Production System or
Facility serving a Contract  Area to observe and inspect operations  and wells
in which it participates (and the records and other  data pertaining thereto).
Access by the Participating  Party to any  drilling rig, Production System  or
Facility serving  a  Contract Area  shall  be  arranged through  the  Operator
twenty-four (24)  hours in advance (or,  if conditions do not  permit, as much
advance notice as is reasonably possible).  Each Party's access will be at its
sole risk  and expense and at  reasonable times and provided  such access does
not unreasonably interfere with the operations being conducted.

7.4   Development of Proprietary Information and/or Technology: The ownership,
use, treatment and disclosure of any proprietary information and/or technology
specific to drilling  technology, production technology,  production structure
and Facilities and their transportation and installation, pipelines, flowlines
and offshore oil and gas transportation which are charged to the joint account
shall be handled in accordance  with Exhibit "G" (Integrated Project  Team and
Technology Sharing).

7.5   News Releases: The Parties  shall use reasonable efforts  to unanimously
agree upon  the timing and  content of releases  to the news  media concerning
operations covered  by this  Agreement.   However,  in the  event the  Parties
cannot unanimously  agree upon  either the timing  and/or content of  the news
release within thirty (30) days of receipt of such proposed news release, then
such  timing  and/or  content  shall require  approval  as  a  General Matter.
Failing General  Matter approval of a  news release, such news  release may be
prepared in accordance with Exhibit "F" (News Release Guidelines).

                                   ARTICLE 8
                          VOTING, ELECTIONS & NOTICES

8.1   Overall  Supervision of Business Affairs:  The activities of the Parties
under this Agreement that are not within the scope of the Operator's authority
to unilaterally decide  under Article 5.0 (Rights  and Duties of  Operator) or
Article  6.2  (Authorization  for  Expenditure)  shall  be  divided  into  the
following broad classes: 

      (1)   "General Matters" for which a vote for  approval is required prior
            to action, but no accompanying Election regarding participation is
            required (an  example of such a General Matter is a well log trade
            proposed and approved under Article 7.2.1), or;

      (2)   Proposed operations  for  which both  a  vote  for approval  as  a
            General    Matter   and   an   accompanying   Election   regarding
            participation are required prior  to conducting the operation. (An
            example  of such a  General Matter is  an Appraisal Well proposed,
            approved and elected upon under Article 1 1. 1), or;

      (3)   Proposed  operations for which  a vote  for approval as  a General
            Matter is  not  required  and where  only  an  Election  regarding
            participation is required for such  operation. (An example of such
            an  operation  is  an  Election  for  a Fabrication  AFE  proposed
            pursuant to  a previously approved Development  Plan under Article
            12.8 (Fabrication AFE) without  the requirement for approval as  a
            General Matter).

The  Parties  shall decide  and  take  action  upon all  General  Matters  and
Elections in accordance with the provisions of this Article 8.0.

8.2   Voting Procedures on  General Matters and Elections:  Any General Matter
shall require the  approval of the Parties and  shall be decided by a  vote of
the Parties as follows:

      8.2.1 Voting Interest: Each Party shall have a  voting interest equal to
      its  Working Interest  in a  Contract Area  or, with  respect to  a Non-
      Consent  Operation, its  Participating  Interest in  such operation,  as
      applicable.

      8.2.2 Vote  Required:  The  Parties  shall attempt  to  reach  unanimous
      agreement   regarding  proposals  requiring  approval  of  the  Parties.
      However, in the event that the Parties cannot unanimously agree, (except
      as  otherwise provided  in this  Agreement), a  General Matter  shall be
      decided by an affirmative vote of either:

            (a)   should  there be only  two (2)  Parties to this  Agreement a
                  General Matter approval shall  require mutual consent of the
                  Parties,  except  as  to   any  of  the  following  proposed
                  operations  (as to  which  such operations  will require  an
                  Election  by the  Parties  rather than  requiring the  prior
                  approval by the Parties as a General Matter)

                        Exploratory Operations (Article 10),
                        Appraisal Operations (Article 11), or
                        Development Operations (Article 13).

            (b)   should there be three (3) or more Parties to this Agreement:

                        affirmative  vote of two  (2) or  more of  the Parties
                        having  a combined  voting  interest of  sixty percent
                        (60%) or more.

      Each Party who  voted to  approve the General  Matter shall execute  the
      accompanying AFE evidencing its Election to participate in  the approved
      proposal if an Election is necessary (i.e., proposal included AFE).  For
      General Matters  where an AFE is  not required with a  proposal, a Party
      shall evidence  its vote for  approval in writing.   A Party  failing to
      vote,  or respond timely  to a General  Matter, shall be  deemed to have
      voted against the proposal.

      8.2.3 Second Opportunity  for an  Election: Upon  approval of  a General 
      Matter which requires an  Election (e.g., proposal, including  AFE), any
      Party  who either: (i)  voted against  the proposal;  or (ii)  failed to
      vote; shall have forty eight (48) hours (exclusive of Saturdays, Sundays
      and  federal holidays) from receipt  of notice from  the Operator that a
      General Matter has been approved, to  respond with an Election as to its
      participation in  the proposal.  Failure  to respond in a  timely manner
      shall be deemed an Election not to participate.  When a drilling  rig is
      on location and standby charges are accumulating, the time permitted for
      such  a response shall  not exceed forty-eight  (48) hours (inclusive of
      Saturday, Sunday or legal holidays).

8.3   Response Time for General Matters and Elections: After receipt of notice
pursuant to this Article 8, the Parties shall either: (i) submit their vote in
response to a General Matter  proposal as described under Article 8.  1 (1) or
(2),  or (ii) make  an Election if the  proposal does not require  a vote as a
General  Matter as  described under  Article 8.1(3).  The Operator  shall give
prompt  notice of  the results  of  such voting  or Elections  to each  Party.
Unless specified otherwise herein, the  response times required for each  type
of proposal shall be as follows:

      8.3.1 Well Operation Proposal: When any proposed well operation does not
      require construction of  a Production System,  each Party shall  respond
      with their vote or Election within thirty (30) days after receipt of the
      proposal.   When a drilling rig  is on location and  standby charges are
      accumulating, a vote or an Election in response to the proposal shall be
      made  within forty-eight  (48)  hours  after  receipt  of  the  proposal
      (exclusive of  Saturdays, Sundays  and federal holidays);  provided that
      the  forty-eight (48)  hour provision  of this  Article 8.3.1  shall not
      apply  to  a new  well  (other than  a substitute  well)  proposed under
      Articles 10.2  (Proposal of  Exploratory Operations), 11.1  (Proposal of
      Appraisal Operations) or 13.1 (Proposal of Development Operations).

      8.3.2 Production   System   Construction:   Elections   involving    the
      construction  and installation  of a Production  System shall  require a
      response within  one  hundred twenty  (120) days  after  receipt of  the
      Fabrication AFEs.

      8.3.3 Other AFE Related Operations: Except as otherwise provided  for in
      Articles 8.3.1  (Well Operation  Proposal) and 8.3.2  (Production System
      Construction), the  response time  to a  proposed operation will  depend
      upon  the AFE  gross  expenditure amount.    Response times  will be  as
      follows:

      (a)   AFE of $200,000 or more but less than $20,000,000 response will be
            made within thirty (30) days after receipt of said proposal.

      (b)   AFE of $20,000,000 or more but less than $50,000,000 response will
            be made within ninety (90) days after receipt of said proposal.

      (c)   AFE of  $50,000,000  or more  response  will  be made  within  one
            hundred twenty (120) days after receipt of said proposal.

      8.3.4 Other Proposals:  For all  other proposals requiring  notice, each
      Party shall
      respond  with an Election or vote within  thirty (30) days after receipt
      of the proposal.

      8.3.5 Failure to Respond: Failure of any Party to respond to  a proposal
      within  the required  period shall  be deemed a  vote against  a General
      Matter (if required by the nature  of the proposal) and, if  applicable,
      an Election not to participate.

      8.3.6 Suspensions of Production: Anything  in this Article 8.3 (Response
      Time  for  General Matters  and Elections)  notwithstanding, if  the MMS
      grants  a  Suspension  of  Production  (an  "SOP")  or a  Suspension  of
      Operations (an  "SOO") for  all  or any  part of  the Contract  Area(s),
      shorter time  limits  set forth  as requirements  of  the SOP/SOO  shall
      supersede the longer time periods for a Party's Election as provided for
      under this Agreement.

      8.3.7 Standby Charges:  The Participating  Parties in a  prior operation
      shall  be responsible  for  standby charges  accrued  until all  Parties
      having  a right to do so, have made an election to either participate or
      not participate in a subsequent proposed operation.  All standby charges
      accruing after the final election regarding the subsequent operation has
      been made, shall be the  responsibility of the Participating Parties  in
      the subsequent operation.

8.4   Meetings of the Parties: In addition  to the annual meeting required  by
Article 6.7 (Annual  Operating Plan), meetings of the Parties  shall be called
by the Operator upon its own motion or at the request of any Party.  Except in
the case of emergency, or except when agreed by unanimous  consent, no meeting
shall be  called on less than  ten (10) days (exclusive  of Saturdays, Sundays
and federal  holidays) advance notice, and such notice shall include an agenda
of the meeting.  The representative of the Operator  shall be chairman of each
meeting and shall  take minutes of each meeting.  Only  matters set out in the
agenda for the meeting shall  be considered at the meeting unless  unanimously
agreed to by all the Parties to this Agreement.

8.5   Designation  of   Representatives:  The  names  and   addresses  of  the
representatives who  are  authorized to  represent and  bind  each Party  with
respect to voting on General Matters  or Elections hereunder, are set forth in
Article IV of Exhibit "A-2"  attached hereto.  The designated  representatives
may  be changed  by written  notice to  the other  Parties in  accordance with
Article 8.7 (Giving and Responding to Notices).

8.6   Elections: An Election  to participate in  an Exploratory Operation,  an
Appraisal  Operation or a  Development Operation shall  include an Election to
participate in  all necessary expenditures  for drilling, testing,  logging to
the  Objective Depth (including  plugging/abandonment) as set  out in the Well
Plan.  An Election to participate in a Development Well shall  also require an
Election to participate in all necessary expenditures through the installation
of the wellhead if set forth in the Well Plan.

8.7   Giving and Responding to Notices:  All notices and responses  (including
notices/proposals of General Matters, Elections) shall be  made in writing and
delivered  to   the  designated  representative  in  person  or  by  facsimile
transmission  (followed  by  a  phone call  confirming  receipt),  U.S.  mail,
overnight express or courier.  When a drilling rig is on location  and standby
charges  are  accumulating,  all  notices  and  responses  shall be  given  by
telephone  and immediately confirmed  in writing.   Any notices  and responses
shall be  effective only  when  received by  the Party  to  whom such  notice,
proposal  or response  is directed.   Any  notice or  response transmitted  by
facsimile shall be  deemed given and received  only after the receiving  Party
has  confirmed receipt of such facsimile.   Any notice or response transmitted
by overnight express or courier shall be deemed given and received twenty-four
(24) hours (exclusive of Saturdays,  Sundays and federal holidays) after  such
notice or response  is deposited or  transmitted.  Any  notice or response  by
U.S. mail  (other than overnight express)  shall be deemed given  and received
five  days (exclusive of  Saturdays, Sundays  and federal holidays)  after the
notice or response is deposited in the mail.

8.8   Content of Notice:  Any notice which requires  a response within  a time
period shall  indicate which of  the response  times specified in  Article 8.3
(Response Time  for General Matters and  Elections) is required.   If a notice
proposes a well operation, the notice shall include the following information  

      (a)   the  type of  well  operation being  proposed, i.e.,  Exploratory,
            Appraisal or DevelopmentOperation(s);

      (b)   the Well Plan for the proposed operation; and

      (c)   an AFE showing the estimated Costs of the operation, including all
            necessary expenditures associated  with the drilling, testing  and
            completing or abandoning the well.

                                   ARTICLE 9
                            GEOPHYSICAL OPERATIONS

9.1   Geophysical  Operations: Any  Party may  propose  to acquire  or process
geophysical surveys (other  than shallow hazard  surveys, velocity surveys  or
other  similar  well  bore  geophysical operations)  to  evaluate  all  or any
portion(s) of the Contract Area at any time during the term of this Agreement.
These  geophysical  surveys may  consist  of  either conducting  "proprietary"
surveys,  purchasing 'speculative"  surveys from  vendors or  participating in
"group shoot" surveys.  Geophysical  Operations are independent operations and
are not to be considered Exploratory, Appraisal or Development Operations, and
may  be conducted  simultaneously with  Exploratory, Appraisal  or Development
Operations.

      9.1.1 Conduct of Proprietary Geophysical  Operations: The Operator shall
      conduct  all proprietary  geophysical  surveys (or  processing) for  the
      joint   account  of   the   Participating  Parties   based  upon   their
      Participating  Interest share of the Costs of the surveys.  The Operator
      shall  provide the Participating  Parties with copies  of all field data
      and  support documentation as  appropriate for any  and all seismic data
      collected  from the geophysical  survey.  The  Operator shall obtain all
      licenses  and/or permits  from  all governmental  agencies necessary  to
      support the surveys.  The joint ownership of any proprietary geophysical
      data  derived from  a proprietary survey  shall be limited  to the field
      tapes i.e., raw data and initial processing  (not including re-processed
      or   interpreted  data)  and   owned  on  the   basis  of  the  Parties'
      Participating Interests  in  the survey.   If  the  geophysical data  is
      acquired by  a geophysical contractor  instead of through  the Operator,
      then wherever in this  Article the word "Operator"  appears "Contractor"
      shall be substituted therefor.  If  a Party elects not to participate in
      a proprietary geophysical survey, then a Participating Party shall elect
      to either: (i) proceed with the Geophysical  Operation with the interest
      of the  Non-Participating Party shared  by the Participating  Parties on
      the  basis  of  their  respective Working  Interests,  unless  otherwise
      agreed, or (ii) change its Election to become a Non-Participating Party.
      A Non-Participating Party shall not be entitled  to any geophysical data
      obtained  from  the  proprietary  geophysical  survey  unless  the  Non-
      Participating Party agrees to become an underinvested Party per terms of
      Article  16.5.3 (Geophysical  Operations, Feasibility  Study, Integrated
      Project Team andlor Final Design AFE).

      9.1.2 Group-Shoot And  Speculative  Seismic Surveys:  The Parties  shall
      make a good faith effort to coordinate the acquisition of any new group-
      shoot or speculative seismic surveys covering one or more  of the Leases
      within the Contract  Area.  This shall enable all  Parties who desire to
      acquire such  data  to take  advantage  of  group or  partnership  rates
      available  from most  seismic contractors  and will  allow each  Party a
      license  to use  such  data.   For  such  joint  seismic data  purchases
      covering  the Leases-, the  acquiring Parties shall  mutually agree upon
      the Cost shares of the total licensing fee (rather than on their Working
      Interest shares).

                                  ARTICLE 10
                            EXPLORATORY OPERATIONS 

10.1  Application: The Costs, risks  and obligations of Exploratory Operations
conducted in accordance  with this Agreement shall be borne  by the Parties as
provided in Article 10.2.4 (Exploratory Operations Costs) below.

10.2  Proposal of Exploratory Operations: Any Party may  propose to conduct an
Exploratory  Operation  within  the  Contract Area  by  giving  notice  of the
proposal  (along with the associated AFE and  Well Plan) to all other Parties.
Each Exploratory Operation proposed shall require approval as a General Matter
except as  provided  in Article  8.2.2 (two  party  agreement) and/or  Article
10.3.5 (Subsequent Exploratory Operations If Not Approved as a General Matter)
and Article 16.4 (Non-Consent Operations to Maintain Contract Area).   Once an
Exploratory Operation  is  approved as  a  General  Matter, the  Operator  (or
substitute operator) shall commence the Exploratory Operation at the sole Cost
and risk  of the Participating  Parties.  Except  as provided in  Article 16.2
(Acreage Forfeiture  Provisions) and  Article 16.4 (Non-Consent  Operations to
Maintain  Contract  Area),  Costs  of  a  non-consent  Subsequent  Exploratory
Operation  will  be  recouped  in  accordance  with  Article  16  (Non-Consent
Operations).

      10.2.1      Well  Plan's  Minimum  Specifics:  The  Well  Plan  for  any
      Exploratory Well(s)  and any  proposed Subsequent Exploratory  Operation
      will include at least the following information:

      (a)   the surface and target bottomhole locations;

      (b)   the  expected spud  date  and the  anticipated  time necessary  to
            conclude   drilling,  evaluation  completion   and/or  abandonment
            operations;

      (c)   the  true vertical depth  to be drilled,  along with the specified
            Objective Depth (and other target zones to be penetrated);

      (d)   the proposed drilling plan, including  the casing program and  any
            anticipated Sidetracking operations;

      (e)   details of any  coring, logging or other  evaluation operations to
            be conducted; and

      (f)   information  concerning the drilling rig to be used, including day
            rates, water depth  rating and other  limitations relevant to  the
            drilling operations to be conducted.

      10.2.2      Pre-Spud   Technical  Meeting  &   Revision  of  Well  Plan:
      Subsequent  to the approval  of the  Exploratory Operation as  a General
      Matter, but prior to commencing such Exploratory Operation (other than a
      substitute operation), the Participating Parties shall  meet for a "Pre-
      Spud Technical  Meeting".  The purpose  of the meeting is  to review the
      Well Plan describing the specific operations planned for the Exploratory
      Well.  Any proposed revision to the operations specified in the original
      Well  Plan and AFE  shall require mutual  agreement of the Participating
      Parties.   Any such revision to the Well  Plan shall be evidenced by the
      joint  signature  of  an  amended  AFE  for  the  proposed   Exploratory
      Operation.   In the absence of  agreement upon a revised  Well Plan, the
      original Well  Plan and AFE shall  stand as approved.   Any revisions to
      the original Well  Plan or  AFE by the  Participating Parties shall  not
      give any  Non-Participating Party an  additional opportunity  to make  a
      Participation Election  unless the  Objective Depth is  changed, or  the
      target  bottom hole location is changed by  more than 500 feet, in which
      case  the Exploratory Operation shall  be proposed anew.   The Well Plan
      for an Exploratory Operation shall be deemed  automatically revised with
      each  Sidetracking,  Deepening   or  additional  Exploratory   Operation
      approved by the Participating Parties. 

      10.2.3      Timely Operation: A proposed Exploratory Operation  shall be
      commenced within one hundred eighty (180) days from  the date upon which
      it  is  approved.   Except as  a result  of  Force Majeure,  pursuant to
      Article  25.1 (Force  Majeure), if  operations have  not commenced  in a
      timely  manner,  the  approved  Exploratory Operation  shall  be  deemed
      withdrawn,  with the effect  as if  the Exploratory Operation  had never
      been approved.  If an approved Exploratory Operation is deemed withdrawn
      due  to lack of  timely commencement  of operations, any  Costs incurred
      during said one hundred eighty  (180) day period which are  attributable
      to the proposed operation shall still be chargeable to the Participating
      Parties.  An Exploratory  Operation shall be deemed to have commenced on
      the date  the rig  arrives  on location  or, if  the rig  is already  on
      location,  the date  when actual  drilling operations  for  the proposed
      Exploratory Operation are begun.

      10.2.4      Exploratory   Operations   Costs:  The   Costs,   risks  and
      obligations associated  with drilling, testing,  logging and  abandoning
      (whether  permanent or  temporary) an  Exploratory Well,  any substitute
      well  and any subsequent  Exploratory Operations  shall be borne  by the
      Participating Parties  in proportion to their  Participating Interest in
      such Exploratory Operation.

      10.2.5      AFE Overruns and Substitute  Well: The Operator shall timely
      commence  an Exploratory Operation  and continue the  operation with due
      diligence to the Objective Depth subject to (i) a supplemental AFE being
      required pursuant to Article 6.2 (Authorization for Expenditure) or (ii)
      the Operator encounters mechanical difficulties,  uncontrolled influx of
      subsurface water, abnormal pressures,  pressured or heaving shale, salt,
      granite or  other practicably  impenetrable substances or  other similar
      conditions   prevail  in   the   hole  that   render  further   drilling
      impracticable.    If  the  Exploratory  Well  is  abandoned due  to  the
      conditions  described  under  10.2.5  (ii), then  the  Operator  or  any
      Participating Party may propose a  substitute well (with the  associated
      AFE and  Well  Plan), and  each  Participating  Party in  the  abandoned
      Exploratory  Well shall make  an Election whether  to participate in the
      proposed substitute  well.   The proposal  for a  substitute Exploratory
      Well  shall not require approval as a  General Matter.  The Operator (or
      substitute Operator) shall commence the substitute well at the sole Cost
      and risk  of the Parties making  an Election to participate.   Any Party
      who makes an  Election not to  participate in either  (i) or (ii)  above
      shall be subject to the  provisions of Article 16.2 (Acreage  Forfeiture
      Provisions)  or  Article  16.5.1  (Non-Consent   Subsequent  Exploratory
      Operations)., if  such Election  is  made for  a non-consent  Subsequent
      Exploratory Operation.

10.3  Subsequent  Exploratory Operations  at  Objective Depth:  After (i)  the
Exploratory Well (or its substitute) has been drilled to its  Objective Depth,
(ii) all operations in the  controlling AFE and Well Plan have  been completed
or terminated  (except plug and abandon)  and (iii) all logs  and test results
have  been  distributed to  the  Participating  Parties, the  Operator,  shall
promptly notify the Participating Parties  of the Operator's proposal for  one
of the following operations:

      (a)   conduct Additional  Testing, Coring  or Logging of  the formations
            encountered prior to setting production casing;
      (b)   Sidetrack the well bore to core the formations encountered;
      (c)   Deepen  the well to  a new Objective  Depth (however,  if a casing
            string is  required  to Deepen  the well,  then  option "d"  shall
            precede Deepening the well);
      (d)   Sidetrack the well to another bottomhole location  not deeper than
            the stratigraphic equivalent of the original Objective Depth;
      (e)   conduct production testing;
      (f)   conduct other operations on the well not listed; 
      (g)   complete  the well  at Objective  Depth in  the objective  zone or
            formation;
      (h)   plug back the well and attempt a completion in a shallower zone or
            formation;
      (i)   temporarily abandon the well; or
      (j)   permanently plug and abandon the well.

      10.3.1      Response  to Operator's  Proposals: Within  forty-eight (48)
      hours  (exclusive  of Saturdays,  Sundays  and  federal holidays)  after
      receipt  of  Operator's  proposal  to  conduct  Subsequent   Exploratory
      Operations,  each Participating  Party shall  respond to  the Operator's
      proposal by making its Election to participate in Operator's proposal or
      by making  a  counterproposal.   Failure  of  a Participating  Party  to
      respond to a  proposal (except a proposal to plug  and abandon) shall be
      deemed  an Election not to participate in the Operator's proposal and to
      become a Non- Participating Party from that point.

      10.3.2      Counterproposals:  If   a   Participating  Party   makes   a
      counterproposal  for  Subsequent   Exploratory  Operations,  the   other
      Participating Parties shall have an additional twenty-four (24) hours to
      respond  to   all  counterproposals.    If   conflicting  proposals  for
      Subsequent Exploratory Operations are  made, preference for voting shall
      be given first to operation (a)  above, next to operation (b) above, and
      so forth.  If different depths or bottom hole locations are proposed for
      Subsequent  Exploratory Operations,  preference  shall be  given to  the
      shallowest depth (or the bottom hole location  nearest the existing well
      bore) and then  to other depths or  bottom hole locations  in descending
      (or  more distant)  order.   After a  decision to  conduct a  Subsequent
      Exploratory Operation  is made and the  Subsequent Exploratory Operation
      is  commenced, the  remaining proposals  for  other types  of subsequent
      Exploratory Operations shall be deemed withdrawn.   At the completion of
      the Subsequent  Exploratory Operation,  the Operator shall  again submit
      proposals)  for Subsequent  Exploratory Operations to  the Participating
      Parties, through the procedure provided  herein, until such time as  the
      well is plugged and abandoned.

      10.3.3      Approval  of  Subsequent   Exploratory  Operations  by   All
      Parties: If the proposed Subsequent Exploratory Operation is approved by
      all  then  Participating  Parties,   the  Operator  shall  commence  the
      Subsequent  Exploratory  Operation  at  the  Cost(s)  and  risk  of  the
      Participating Parties.

      10.3.4      Approval  of Subsequent Exploratory  Operations as a General
      Matter  by  Fewer  Than  All  Parties:  If  a  proposal  for  Subsequent
      Exploratory  Operations (except  a  proposal to  plug  and abandon),  is
      approved as  a  General Matter  by  fewer  than all  Parties,  then  the
      Operator (or  substitute Operator) shall  conduct the  operation at  the
      sole Cost and risk of the Participating  Parties.  Any Non-Participating
      Party in a Subsequent Exploratory Operation shall  be subject to Article
      16.5.1   (Non-Consent  Subsequent  Exploratory   Operations).    A  Non-
      Participating  Party  in a  Subsequent  Exploratory  Operation shall  be
      relieved  of  the  Costs,  risks  and  obligations  of  the   Subsequent
      Exploratory Operation, except  as to its share of  the Costs of plugging
      and abandoning the Exploratory Well  in its then current condition.   No
      operation  shall be performed on the well  unless deemed by the Operator
      to be  safe and the well bore is in  a condition to perform the proposed
      operation.

      10.3.5      Subsequent  Exploratory  Operations  If  Not  Approved  as a
      General Matter: If no proposed Exploratory Operation  (except a proposal
      to  plug and  abandon)  receives sufficient  vote to  be  approved as  a
      General  Matter  pursuant  to  Article 10.3.4  (Approval  of  Subsequent
      Exploratory Operations as a General  Matter by Fewer Than All  Parties), 
      then prior to an Exploratory Well being  plugged and abandoned, Operator
      (or substitute Operator) shall conduct at  the sole Cost and risk of the
      Participating Parties,  the  proposed Subsequent  Exploratory  Operation
      receiving the largest  percentage of Working  Interest approval, and  in
      the  event  of  tie vote  between  two  (2)  or  more of  such  proposed
      Subsequent Exploratory Operations, then  preference shall be given first
      to  operation (a)  then (b)  and  so on,  as set  forth in  Article 10.3
      (Subsequent  Exploratory  Operations  at  Objective Depth).    Any  Non-
      Participating Party  in such  Subsequent Exploratory Operation  shall be
      subject to Article 16  (Non-Consent Operations).  Such Non-Participating
      Party  shall  be  relieved of  the  Costs,  risk and  obligation  of the
      Subsequent Exploratory Operation, except as to its share of the Costs of
      plugging  and  abandoning  the  Exploratory  Well  in  its  then-current
      condition.  No operation shall be performed on the well unless deemed by
      the Operator to be safe and  the well bore is in a condition  to perform
      the operation.

10.4  Plugging and Abandoning Costs: Upon the conclusion of all operations set
forth in an Exploratory Operation's  Well Plan and all Subsequent  Exploratory
Operations on such well or if the  Operator encounters mechanical difficulties
or impenetrable  conditions, which  make further drilling  impracticable, then
the Operator may propose to plug  and abandon the well.  Upon approval  of the
well abandonment as  a General Matter by the Participating  Parties or failing
General Matter approval, the Operator deems the well bore not to be safe or in
a  condition to perform  further operations,  the Operator shall  commence the
plugging  and abandonment  of  the well.    The Participating  Parties  in the
original  operation  shall  pay  all  Costs  of  plugging and  abandoning  the
Exploratory  Well   (except  any  increased  plugging   and  abandoning  Costs
associated solely with a Subsequent Exploratory Operation  conducted as a Non-
Consent  Operation).  The  Participating Parties in  any Non-Consent Operation
shall  be  responsible   for  the  increased  plugging  and  abandoning  Costs
attributable to the Non-Consent Operation.

10.5  Conclusion of Exploratory Operations: Exploratory Operations shall cease
in  any Contract Area  after the abandonment of  the Exploratory Well, whether
permanent or temporary, and the  release of the rig from the  Exploratory Well
(including any substitute well).

10.6  Subsurface Team: Within sixty (60) days after rig release of the Initial
Exploratory Well, unless otherwise mutually  agreed, the Parties shall form  a
subsurface  team.    The  subsurface  team  will  include  at  least  one  (1)
representative from  each of the Parties.  Each Party shall be responsible for
designating  its  representative(s)  for  the  subsurface  team.    A  Party's
representatives  for the  subsurface team  may be  changed at  any time.   The
salaries,  burdens,   benefits,  other  compensation  and   expenses  of  each
subsurface team member shall be  the responsibility of the Party employing  or
providing  the  subsurface team  member.   The  Operator  shall  serve as  the
coordinator for the subsurface team.  Members of the subsurface team will work
independently  at  office locations  provided  by the  Party  designating such
member.  The responsibilities of the  subsurface team shall include but not be
limited to the following items:

      making recommendations for Exploratory  Well(s) in other Contract Areas,
      making  recommendations for  Appraisal Operations,  evaluating potential
      Producible  Reservoirs  within a  Contract  Area(s),  and; advising  the
      Integrated Project  Team regarding subsurface matters  so the Integrated
      Project Team can more effectively assist the Operator in the preparation
      of the Development Plan pursuant to Article 12 (Development Plan).

      The  subsurface team will  meet as it  deems necessary to  carry out the
above  activities.   Once the  subsurface team  is formed,  it will  remain in
existence until the expiration or dissolution of the Contract Area. 

                                  ARTICLE 11
                             APPRAISAL OPERATIONS

11.1  Proposal  of  Appraisal  Operations:  After  completion  of  Exploratory
Operations any Party  may propose to conduct an Appraisal Operation within the
Contract Area  by giving notice of the proposal (along with the associated AFE
and Well Plan) to all other Parties.  Each Appraisal  Operation proposed shall
require approval as a General Matter.  Once an Appraisal Operation is approved
as a General Matter, the Operator (or substitute Operator) shall commence  the
Appraisal Operation  at the sole Cost  and risk of  the Participating Parties.
Costs of a Non-Consent Appraisal Operation will be recouped in accordance with
Article 16 (Non-Consent Operations).

      11.1.1      Well  Plan's  Minimum  Specifics:  The  Well  Plan  for  the
      Appraisal  Operation shall include  at least  the information  set forth
      under Article 10.2.1 (Well Plan's Minimum Specifics).

      11.1.2      Pre-Spud Technical Meeting & Revision of Well Plan: The Pre-
      spud  Technical  Meeting  &  Revision  of  the  Well  Plan shall  be  in
      accordance with Article 10.2.2 (Pre-Spud Technical Meeting & Revision of
      Well Plan).

      11.1.3      Timely Operation:  A proposed  Appraisal Operation  shall be
      commenced within one hundred eighty (180) days from  the date upon which
      it is approved.  Except as a result of Force Majeure  (Article 25.1), if
      operations have not commenced in a timely manner, the approved Appraisal
      Operation shall be deemed withdrawn, with the effect as if the Appraisal
      Operation  had never been approved as a  General Matter.  If an approved
      Appraisal   Operation  is  deemed  withdrawn  due   to  lack  of  timely
      commencement of operations,  any Costs incurred during said  one hundred
      eighty (I80) day period which are attributable to the proposed operation
      shall  still be chargeable  to the Participating  Parties.  An Appraisal
      Operation for  the drilling of an Appraisal Well shall be deemed to have
      commenced  on the date  the rig arrives  on location  or, if the  rig is
      already on location, the date when actual drilling operations are begun.

      11.1.4      AFE Overruns and Substitute  Well: The Operator shall timely
      commence  an Appraisal  Operation  and continue  the operation  with due
      diligence to the  Objective Depth, subject to (i) a  supplemental AFE is
      required pursuant to Article 6.2 (Authorization for Expenditure) or (ii)
      the Operator encounters mechanical difficulties,  uncontrolled influx of
      subsurface water, abnormal pressures,  pressured or heaving shale, salt,
      granite or  other practicably  impenetrable substances or  other similar
      conditions   prevail  in   the   hole  that   render  further   drilling
      impracticable.  If the Appraisal Well is abandoned due to the conditions
      described  under  11.1.4 (ii),  then the  Operator or  any Participating
      Party may propose  a substitute well  (with the associated AFE  and Well
      Plan), and each Participating Party in the abandoned Appraisal Well will
      make an Election whether to participate in the proposed substitute well.
      The Operator (or substitute Operator) shall commence the substitute well
      at  the  sole  Cost  and  risk of  the  Parties  making  an  Election to
      participate.  Costs of a Non-Consent substitute well will be recouped in
      accordance with Article 16 (Non-Consent Operations).

11.2  Subsequent  Appraisal  Operations  at  Objective Depth:  After  (i)  the
Appraisal  Operation  has  been  drilled  to  its  Objective Depth,  (ii)  all
operations in  the  controlling AFE  and  Well  Plan have  been  completed  or
terminated (except plug and abandon) and (iii) all logs and  test results have
been distributed  to the Participating  Parties, the Operator,  shall promptly
notify the Participating Parties (and Non-Participating Party(ies) in the case
of  a  proposal under  11.2  (c) and  (d),  if applicable)  of  the Operator's
proposal for one of the following operations: 

      (a)   conduct Additional  Testing, Coring  or Logging of  the formations
            encountered prior to setting production casing;
      (b)   Sidetrack the well bore to core the formations encountered;
      (c)   Sidetrack the well  to another bottomhole location not deeper than
            the stratigraphic equivalent of the original Objective Depth;
      (d)   Deepen the well to a new Objective Depth;
      (e)   conduct production testing;
      (f)   complete the well at the Objective Depth in the  objective zone or
            formation;
      (g)   plug back the well and attempt a completion in a shallower zone or
            formation;
      (h)   conduct other operations on the well not listed;
      (i)   temporarily abandoning the well; or
      (j)   permanently plug and abandon the well.

      11.2.1      Response  to Operator's  Proposals: Within  forty-eight (48)
      hours  (exclusive  of Saturdays,  Sundays  and  federal holidays)  after
      receipt  of   Operator's  proposal   to  conduct   subsequent  Appraisal
      Operations, the  Participating Parties  shall respond to  the Operator's
      proposal by  making  its Election  to Operator's  proposal  or making  a
      counterproposal.   Failure  of a  Participating Party  to  respond to  a
      proposal (except  a proposal  to plug  and abandon)  shall be deemed  an
      Election not to  participate in the Operator's proposal and  to become a
      Non-Participating Party from that point.

      11.2.2      Counterproposals:   If  a   Participating   Party  makes   a
      counterproposal  for  a   subsequent  Appraisal  Operation,  the   other
      Participating Parties shall have an additional twenty-four (24) hours to
      respond to all counterproposals.  If convicting proposals for subsequent
      Appraisal  Operations are  made, preference  for  voting shall  be given
      first to operation (a) above, next to operation (b) above, and so forth.
      If different depths  or locations are proposed  for subsequent Appraisal
      Operations,  preference shall be  given to the  shallowest depth (or the
      location nearest  the  existing well  bore)  and  then other  depths  or
      locations  in descending (or  more distant) order.   After a decision to
      conduct  a subsequent  Appraisal Operation  is made  and the  subsequent
      Appraisal  Operation is  commenced,  the remaining  proposals for  other
      types of subsequent Appraisal Operations shall be  deemed withdrawn.  At
      the completion of the subsequent Appraisal Operation, the Operator shall
      again  submit proposal(s)  for  subsequent Appraisal  Operations to  the
      Participating Parties, through the procedure provided herein, until such
      time as the well is plugged and abandoned.

      11.2.3      Approval of Subsequent Appraisal  Operations by All Parties:
      If  the proposed subsequent  Appraisal Operation is  approved by all the
      then Participating  Parties, the Operator shall  commence the subsequent
      Appraisal  Operation  it  the  Cost(s)  and  risk  of the  Participating
      Parties.

      11.2.4      Approval of  Subsequent  Appraisal Operations  as a  General
      Matter by Fewer Than All Parties: If a proposal for subsequent Appraisal
      Operations (except  a proposal to  plug and abandon),  is approved  as a
      General  Matter  by  fewer  than  all  Parties,  then the  Operator  (or
      substitute  Operator) shall conduct  the operation at  the sole Cost and
      risk  of the Participating  Parties.   Any Non-Participating Party  in a
      subsequent  Appraisal Operation  shall  be subject  to Article  16 (Non-
      Consent  Operations).    A   Non-Participating  Party  in  a  subsequent
      Appraisal   Operation  shall  be  relieved   of  the  Costs,  risks  and
      obligations  of the  subsequent Appraisal  Operation, except  as to  its
      share of  the Costs of plugging and abandoning the Appraisal Well in its
      then-current  condition.  No  operation shall  be performed on  the well
      unless deemed by  the Operator  to be  safe and the  well bore  is in  a
      condition to perform the proposed operation. 

      11.2.5      Subsequent Appraisal Operations If Not Approved as a General
      Matter:  If no proposed  Appraisal Operation (except  a proposal to plug
      and abandon) receives sufficient vote to be approved as a General Matter
      pursuant to Article 11.2.4  (Approval of Subsequent Appraisal Operations
      as  a General  Matter  by Fewer  Than  All Parties),  then  prior to  an
      Appraisal  Well being  plugged  and abandoned,  Operator (or  substitute
      Operator) shall conduct at  the sole Cost and risk of  the Participating
      Parties,  the  subsequent  Appraisal  Operation  receiving  the  largest
      percentage of Working Interest  approval, and in  the event of tie  vote
      between  two (2)  or more  of such  proposed Appraisal  Operations, then
      preference shall be given first to operation  (a) then (b) and so on, as
      set forth in Article 11.2  (Subsequent Appraisal Operations at Objective
      Depth).    Any  Non-Participating  Party in  such  subsequent  Appraisal
      Operation shall be subject to Article 16 (Non-Consent Operations).  Such
      Non-Participating  Party  shall  be  relieved  of  the Costs,  risk  and
      obligation of the subsequent Appraisal Operation, except as to its share
      of the Costs of plugging and  abandoning the Appraisal Well in its then-
      current condition.  No  operation shall be performed on the  well unless
      deemed by the Operator to be safe and the well bore is in a condition to
      perform the operation.

11.3  Election  by  Non-Participating  Parties  in  Deepening or  Sidetracking
Appraisal  Operations:   If  an  Appraisal  Well  is  drilled to  its  initial
Objective Depth and does not appear to result in a well that will qualify as a
Producible Well, and if any Participating Party proposes to either  (i) Deepen
said Appraisal Well, or  (ii) Sidetrack said Appraisal Well,  then as provided
in  Article 11.2  (c) or  (d), the  Operator shall  notify each  original Non-
Participating Party of  the proposal.   Each original Non-Participating  Party
may respond with an Election regarding  such a proposal to Deepen or Sidetrack
by notifying  the  Operator of  its  Election  within forty-eight  (48)  hours
(exclusive of  Saturdays, Sundays  and federal  holidays) after receiving  the
Operator's notice.  Any original Non-Participating Party making an Election to
participate in the  Deepening or  Sidetracking of an  Appraisal Well shall  be
deemed to  be  underinvested in  an  amount equal  to its  share  of the  Cost
incurred  in such  Non-Consent Well  (including but  not limited  to drilling,
testing,  logging or  coring) prior to  such Deepening  or Sidetracking.   The
Parties that participated in  drilling to the initial Objective  Depth will be
deemed overinvested in  that amount, and all  Costs for operations  under this
Agreement  that   would  otherwise   be  allocated  proportionately   to  such
overinvested Parties shall be allocated to the underinvested Parties until all
overinvestments are  eliminated.  Any original  Non-Participating Party making
an Election to participate  in the Deepening  or Sidetracking of an  Appraisal
Well  shall remain  a Non- Participating  Party in  the Appraisal  Well to the
initial  Objective Depth until  the Costs  recoverable under Article  16 (Non-
Consent  Operations), less  any payments  through a  Disproportionate Spending
Settlement and/or Article 16.9 (Underinvestment of  Costs), have been recouped
by the original Participating Parties.

11.4  Deeper Drilling: A proposal to drill  an Appraisal Well to an  Objective
Depth below the deepest Producible  Reservoir penetrated by a Producible  Well
shall require approval as a General Matter and shall be further subject to the
following provisions.

      11.4.1      Limited Participation  in Deeper Drilling: If  a proposal is
      approved pursuant to Article 11.4 (Deeper Drilling) above, any Party may
      either:

            make an Election  to participate in  the proposed Deeper  Drilling
            operation; or make an Election not to  participate in the proposed
            Deeper Drilling operation;
            or
            make  an Election to  limit its  participation to drilling  to the
            base of the deepest Producible  Reservoir to be penetrated by  the 
            Deeper Drilling operation.

            A party making an Election to limit its participation in  a deeper
      Appraisal  Well to the  base of  the deepest Producible  Reservoir shall
      bear its Participating interest share of  the Cost and risk of  drilling
      (including abandonment) to the base of the deepest Producible Reservoir.
      If  a Party makes an Election not  to participate in the proposed Deeper
      Drilling, the proposed operations shall be conducted pursuant to Article
      16 (Non-Consent Operations).

      11.4.2      Multiple Completion Alternatives Above and Below the Deepest
      Producible Reservoir:  If a Non-Participating Party in a Deeper Drilling
      operation below the deepest Producible Reservoir:

            considers  the well  to be  capable of producing  at or  above the
            deepest Producible Reservoir, and
            has  indicated a  desire  to complete  the well  at  or above  the
            deepest   Producible  Reservoir,   any  further   Deeper  Drilling
            operations shall be conducted subject to the following provisions:

            (a)   Multiple Completion: If all the Participating Parties in the
                  well agree  that a  multiple well completion(s)  is possible
                  and  practicable  involving a  completion  at  or above  the
                  deepest Producible Reservoir and (ii) a completion below the
                  deepest Producible Reservoir,  the Participating Parties  in
                  the Deeper Drilling operation  shall bear 100% of the  Costs
                  of  drilling  to  an   Objective  Depth  below  the  deepest
                  Producible-e Reservoir  that are  in excess of  the original
                  Costs  to  drill  and  complete  the  well  in  the  deepest
                  Producible Reservoir.

            (b)   Single  Completions: If  the  Participating  Parties do  not
                  agree   that  multiple  well  completions  are  possible  or
                  practicable,  the  Non-Participating  Party  in  the  Deeper
                  Drilling  operation shall  be  deemed  overinvested  in  the
                  original well  in an  amount equal to  the Non-Participating
                  Party's Share of the original Costs of  drilling the well to
                  the deepest Producible Reservoir.  The Participating Parties
                  in  the   Deeper  Drilling  operation  shall   assume  their
                  proportionate share of  the Non-Participating Party's  Share
                  of  the  Costs  of  other operations  conducted  under  this
                  Agreement until all overinvestments are eliminated.

            If,  after having been  drilled to an  Objective Depth deeper than
      the  deepest  Producible  Reservoir,  at the  first  occurrence  of  the
      following events:

            (i)         the well is not a Producible Well in the deeper depths
                        and the well is plugged back  to a shallower zone; or,
            (ii)        the  well is  completed as  a Producible  Well in  the
                        deeper depths,  but  Hydrocarbon production  from  the
                        deeper  zone is  later  depleted prior  to Non-Consent
                        Recoupment (attributable to Deeper Drilling operation)
                        and the well is plugged back  to a shallower zone; or,
            (iii)       the  well  is completed  as a  Producible Well in  the
                        deeper   depth  and  the  Participating  Parties  have
                        recovered  the   applicable   Non-Consent  Recoupment
                        (attributable to the  Deeper  Drilling operation) from 
                        Hydrocarbon production from the deeper zone;

      the Participating Parties as to the depths  below the deepest Producible
      Reservoir shall be  deemed overinvested in an  amount equal to the  Non-
      Participating Party's  Share  of the  well's Cost  down  to the  deepest
      Producible Reservoir.   The overinvestment shall  be depreciated at  the
      rate of  one-half  percent (1/2%)  per month  from the  date the  Deeper
      Drilling operation  commences to the earlier of the date of (i), (ii) or
      (iii)  above, but such depreciation  shall not reduce the overinvestment
      below  forty percent (40.0%)  of the original  overinvestment.  The Non-
      Participating  Parties in  the  Deeper Drilling  operation shall  assume
      their proportionate  share of  the  Participating Party's  Share of  the
      Costs  of other  operations  conducted under  this  Agreement until  all
      overinvestments are eliminated.

      11.4.3      Completion  Attempts  At  or Above  the  Deepest  Producible
      Reservoir:  If a well  drilledbelow the deepest  Producible Reservoir is
      not completed for production in the deeperdepths, then the Participating
      Parties in said well down to the deepest Producible Reservoir shall have
      a  right to utilize the  well for completion  in a Producible Reservoir.
      The  Participating  Parties in  drilling  below  the deepest  Producible
      Reservoir  in said well  shall bear  the Costs (including  plugging back
      Costs) necessary to place the well in proper condition for completion in
      a Producible Reservoir.  If a well drilled below  the deepest Producible
      Reservoir is  damaged to  the extent that  it is  rendered incapable  of
      being  completed  and  produced  at  or  above  the  deepest  Producible
      Reservoir in that well, the Participating Parties in the Deeper Drilling
      operation shall  be obligated, at their  sole Cost and risk,  to restore
      the well to its condition prior to the  Deeper Drilling operations below
      the deepest  Producible Reservoir.    The Participating  Parties in  the
      Deeper  Drilling Operation shall be obligated to pay for the entire Cost
      of  redrilling the  well if  the damage  cannot be  repaired.   Both the
      Participating  Parties  in  the  original  drilling  operation  and  the
      Participating  Parties  in  the   Deeper  Drilling  operation  shall  be
      Participating  Parties  in  the  completion  attempt  in  the  shallower
      formation.

11.5  Plugging and Abandoning Costs: Upon the conclusion of all operations set
forth in  an  Appraisal Operations  Well  Plan  and all  subsequent  Appraisal
Operations on such well, or if the Operator encounters mechanical difficulties
or impenetrable  conditions, which  make further drilling  impracticable, then
the Operator may  propose to plug and abandon the well.   Upon approval of the
well abandonment as a General Matter  by the Participating Parties or  failing
General Matter approval, the Operator deems the well bore not to be safe or in
a  condition to perform  further operations,  the Operator shall  commence the
plugging  and abandonment  of  the well.    The Participating  Parties in  the
original  operation  shall  pay  all  Costs  of  plugging and  abandoning  the
Appraisal Well (except any increased plugging and abandoning Costs  associated
solely  with  a  subsequent Appraisal  Operation  conducted  as  a Non-Consent
Operation).  The Participating Parties  in any Non-Consent Operation shall  be
responsible for the  increased plugging and  abandoning Costs attributable  to
the Non-Consent Operation.

11.6  Feasibility Study:  Any  Party  may propose  a  feasibility  study  (the
conduct of such  proposal shall not require approval as  a General Matter) for
any technical,  engineering  or other  issues  affecting Appraisal  or  future
Development Operations  on a Contract  Area.   The proposal  of a  feasibility
study  shall not  cause  the formation  of  the Integrated  Project  Team.   A
feasibility study  may or may not require  a study team, will  be of a shorter
duration,  and will be more narrow in  scope than the Integrated Project Team.
The  process for  approving a  feasibility study  to be  charged to  the joint
account  is listed below,  however, any Party may  prepare its own feasibility
study at its sole cost.

      11.6.1      Feasibility  Study Proposal  and Meeting:  A proposal  for a
      feasibility study shall be accomplished  by a Party furnishing (1)  memo
      describing the scope of the feasibility study,  and (2) cost estimate of
      the feasibility  study to the  other Parties.   Within thirty  (30) days
      after the feasibility study proposal, the Operator  shall call a meeting
      of the Parties.  At such meeting, the Parties shall discuss and resolve:

            (a)   the  positions of  all Parties  on the  proposed feasibility
                  study,
            (b)   the necessity of the study,
            (c)   composition  and   organization  of   any  study  team,   if
                  applicable, associated with  the proposed feasibility study,
                  and
            (d)   any other related matter.

            The Operator may modify any proposal  for a feasibility study as a
      result  of such meeting.   Operator may,  within thirty  (30) days after
      such  meeting,  submit  to  the other  Parties  such  feasibility  study
      proposal along with an AFE for approval.

      11.6.2      Election on  Proposed Feasibility Study:  All Parties  shall
      notify the Operator  of their Participation Election  in the feasibility
      study within thirty (30) days after receipt of the AFE  for the proposed
      feasibility study.  If any Party makes an Election not to participate in
      the  feasibility study,  then each  Participating  Party shall  elect to
      either: (i) proceed with  the feasibility study with the interest of the
      Non-Participating Party shared by the Participating Parties on the basis
      of their respective Working Interests, unless otherwise  agreed, or (ii)
      change its Election to become  a Non-Participating Party.  The  Operator
      shall commence  the feasibility  study on  behalf  of all  Participating
      Parties.   A Party making an  Election not to participate  in a proposed
      feasibility study shall become a Non-Participating Party as to the costs
      of  the  feasibility study  and shall  be subject  to the  provisions of
      Article  16.5.3 (Non-Consent Geophysical  Operations, Feasibility Study,
      Integrated  Project Team andlor Final  Design AFE).  A Non-Participating
      Party  shall  not  receive  the  data,  information  or results  of  the
      feasibility  study until  satisfaction  of the  requirements of  Article
      16.5.3   (Non-Consent   Geophysical   Operations,   Feasibility   Study,
      Integrated Project Team and/or Final Design AFE).

      11.6.3      Costs  of  Feasibility  Study:   Costs  and  expenses  of  a
      feasibility study charged to the Joint Account shall include, but not be
      limited  to, any study  team formed  in connection with  the feasibility
      study, contract services  and related miscellaneous expenses.  All Costs
      and  expenses of the  feasibility study  shall be handled  in accordance
      with Exhibit "C" (Accounting Procedure).

11.7  Conclusion of Appraisal Operations: Any Party may propose that Appraisal
Operations have  been concluded on  the Contract  Area by notifying  the other
Parties.  Upon  such notification the  Parties shall meet  to determine, as  a
General Matter,  the conclusion of Appraisal Operations.   The formation of an
Integrated  Project  Team  shall  not  require  the  conclusion  of  Appraisal
Operations and may occur concurrently with Appraisal Operations.

                                  ARTICLE 12
                               DEVELOPMENT PLAN

12.1  Phased Development  Plans: The  results of Exploratory  and/or Appraisal
Operations  may justify the  development of one  or more Producible Reservoirs
within the Contract Area.  The Operator shall prepare for  the approval of the
Parties a Development Plan in order to pursue such development of the Contract
Area.   In  order to provide  for the  orderly preparation  of the Development
Plan, unless otherwise mutually  agreed by all the Parties,  the Parties shall
form  an  Integrated  Project  Team,  subject  to  Article 12.2  (Proposal  of
Integrated  Project Team),  whose duties  are more  specifically set  forth in
Exhibit  "G" (Integrated  Project Team  and Technology  Sharing) and  shall be
charged  with assisting the Operator in  the preparation of a Development Plan
and in  design, engineering,  fabrication, transportation and  installation of
the Initial Production System and Facilities.  In view of the Costs and  scope
of Development Operations for a Contract Area, the Parties may agree to divide
Development Operations  into  an initial  Development Phase  and  one or  more
subsequent Development Phases.  Each Development Phase  shall be centered upon
the installation of a new  or expanded Production System for a  Contract Area.
A separate Development Plan shall be prepared  for each Development Phase, and
each Development Plan shall be developed, approved and implemented pursuant to
this Article 12 (Development Plan).

12.2  Proposal  of  Integrated  Project  Team:  The  Operator  shall have  the
exclusive  right to  submit a  proposal for  the formation  of the  Integrated
Project Team during the first  twelve (12) month period following rig  release
for  an  Exploratory Well  on  any of  the  Contract  Areas.   However,  if an
Appraisal Operation  is approved by the  Parties as a General  Matter prior to
the proposal for  the formation of the Integrated Project Team, the Operator's
exclusive proposal period shall be extended until twelve (12) months after rig
release of the last approved Appraisal Operation on any of the Contract Areas.
If Operator  fails to propose  the formation  of the  Integrated Project  Team
during  its  exclusive  proposal  period(s),  then,  after  expiration of  the
Operator's exclusive proposal  period(s), any Party may propose  the formation
of the Integrated Project Team.

12.3  Integrated  Project Team Election:  A proposal for  the formation of the
Integrated Project Team  shall not require  the approval of  the Parties as  a
General Matter.   Each Party shall have an Election as to its participation in
the AFE  for the Integrated Project Team, pursuant to Article 8.3.3 (Other AFE
Related  Operations).   The  formation  and administration  of  the Integrated
Project Team  shall  be handled  in accordance  with  Exhibit "G"  (Integrated
Project Team and Technology Sharing) with the Costs of  the Integrated Project
Team being charged  in accordance with Exhibit "C"  (Accounting Procedure).  A
Party  which makes  an Election not  to participate in  the Integrated Project
Team shall  become a Non-Participating Party as to the costs of the Integrated
Project Team  and shall be subject  to the provisions of  Article 16.5.3 (Non-
Consent  Geophysical Operations,  Feasibility Study,  Integrated  Project Team
andlor Final  Design AFE).  A Non-Participating Party shall not have access to
the data or studies prepared by the Integrated Project Team until satisfaction
of  the requirements  of Article  16.5.3 (Non-Consent  Geophysical Operations,
Feasibility Study, Integrated Project Team andlor Final Design AFE).

12.4  Proposal  of a Development  Plan: The Operator  shall have the exclusive
right  for  a  period  of  eighteen (18)  months  from  the  formation  of the
Integrated Project  Team to  submit  a Development  Plan  for the  review  and
approval of the  Parties, such proposed Development Plan to  be based upon the
work and  recommendations of  the Integrated  Project Team.   If  Operator has
begun preparation of a Development Plan during the first twelve (12) months of
the eighteen (18) month period, but the Development Plan will not be completed
and submitted  by the end of the Operator's exclusive period, the Operator may
request  an extension of the exclusive period  to allow completion of the work
in progress.  Any request for extension shall include a report of the progress
to date and  specify a date  for submission of  the Development Plan not  more
than six  (6) months from  the expiration of the  exclusive submission period.
The  Parties  shall  not  arbitrarily or  unreasonably  refuse  a  request for
extension of  the Operator's submission period.  If the Parties mutually agree
not  to form  an Integrated  Project Team,  then the  Operator shall  have the
exclusive right  to propose  a Development  Plan for a  period of  twelve (12)
months  following  completion  of  the  Exploratory  Operations  or  Appraisal
Operations, whichever is later.

      12.4.1      Alternative Development Plans: If  a Development Plan is not
      timely  submitted by the  Operator or the  Development Plan submitted by
      the Operator is  not approved pursuant  to Article  12.6 (Approval of  a
      Development Plan) or 12.6.1 (Amended Approval Requirementfor Development
      Plans)  below,  then  any  Party  shall have  the  option  to  submit  a
      Development Plan.   Development Plans  proposed after expiration  of the
      Operator's  exclusive period  shall be  considered  for approval  by the
      Parties in the order in which the Development Plans are submitted.

12.5  Content  of the Development  Plan: Any  Development Plan  proposed under
this  Agreement  shall  contain  sufficient detail  to  allow  the  Parties to
adequately  evaluate the  scope, timing,  Costs and  capacity of  the proposed
Development Plan and Production System.  All Development Plans submitted shall
include at least the following information:

      (a)   Initial Production System:  Description of the  Initial Production
            System including:

            (i)         the type of Production System proposed  (i.e., tension
                        leg  well jacket,  floating production  system, etc.),
                        including    the    Production   System's    location,
                        configuration (i.e.,  number of  well slots  or subsea
                        tiebacks) and production capacity;
            (ii)        a  description   of  the  Facilities,   including  the
                        gathering  and pipeline system  necessary to transport
                        the Hydrocarbons from the well heads to shore;
            (iii)       a projected time schedule for  designing, contracting,
                        Fabricating,   constructing,   transporting   and
                        installing;
            (iv)        the estimated date  of initial Hydrocarbon  production
                        and the estimated daily rate of Hydrocarbon production
                        thereafter; and,
            (v)         the estimated  Costs of  the Production System  not in
                        the form of an AFE;

      (b)   Producible Reservoirs:  A description of  the Hydrocarbon  bearing
            geological  formations   expected  to   be  developed   under  the
            Development Plan along with the general area and depth of sands or
            reservoirs to be developed by the Production System;
      (c)   Recoverable Reserves: An estimated  range of recoverable  reserves
            for the proposed Development Plan;
      (d)   Predrilling  Operations: A  reasonable description  of predrilling
            operations,  if  any, planned  in  support  of later  development,
            including  an estimate of  the timing,  Cost and location  of each
            predrilling operation;
      (e)   Development  Wells:  A  reasonable  description  of  drilling  and
            completion plans for all  Development Wells, including an estimate
            of the timing, Cost and location of each well.
      (f)   Other  Data: Provided  such  information is  available, any  other
            information reasonably  necessary to perform an  evaluation of the
            technical  and  economic  feasibility of  the  Initial  Production
            System provided for in the Development Plan.

12.6  Approval of a  Development Plan: The Operator shall have four (4) months
to obtain unanimous approval of the  Parties for any Development Plan proposal
submitted by  the Operator during  its exclusive  period.  If  either (i)  the
Operator  fails to  gain the  unanimous approval  of the  Parties or  (ii) the
Operator fails to  submit a Development Plan, the Parties  shall have a period
of  four (4)  months commencing with  either the expiration  of the Operator's
exclusive  period  or  the failure  to  obtain  approval in  which  either the
Operator's   Development  Plan  or  an  alternate   Development  Plan  may  be
unanimously approved by the Parties.

      12.6.1      Amended  Approval Requirement  for  Development Plans:  If a
      Development Plan  is  not unanimously  approved upon  conclusion of  the
      eight (8) month period provided in Article 12.6 (Approval of Development
      Plan)  above, then  the  unanimous agreement  requirement, provided  for
      under Article 12.6 (Approval of a Development Plan) shall  be amended to
      provide:

      (i)   during  this  amended approval process, consideration for approval
            by  the  Parties  shall  be  given first and simultaneously to any
            previously proposed Development Plan;
      (ii)  for a twelve (12) month  period following expiration of the eight
            (8) month period, approval of a Development Plan shall be by  the
            Parties as a General Matter.  No new alternative Development Plan
            shall be submitted  during the last six (6) months of this twelve
            (12) month period; and
      (iii) if a Development Plan is not approved, as a General Matter, during
            this twelve (12) month period, then the  Development Plan shall be
            approved according to the following

            a)    If  there is only  one Development  Plan submitted  and such
                  Development Plan  receives an  affirmative vote of  at least
                  fifty percent (50%) of the voting interest, such Development
                  Plan shall be deemed approved by the Parties;

            b)    If there are two (2) or more Development Plans submitted and
                  one  Development Plan  receives  an affirmative  vote of  at
                  least fifty  percent (50%)  of the  voting interest and  the
                  other Development  Plan(s) receives  an affirmative  vote of
                  less than fifty percent (50%)  of the voting interest,  then
                  the Development  Plan receiving  the affirmative vote  of at
                  least fifty  percent (50%) of  the voting interest  shall be
                  deemed approved by the Parties;

            c)    If   two  competing  Development   Plans  each   receive  an
                  affirmative vote of fifty percent (50%) voting interest, the
                  Parties will  use reasonable efforts to  diligently pursue a
                  compromise Development Plan.

12.7  Final Design  AFE: Within six (6)  months from the date  the Development
Plan is approved as provided in Article 12.6 (Approval of a Development Plan),
Operator shall  submit to all  Parties the  Final Design AFE  for the  Initial
Production  System for their Election.  Such  Final Design AFE shall include a
cost estimate  for design which  shall include both  the cost of  Operator and
Non-Operator  staff  time (including  Affiliate  employees)  and  the cost  of
contract labor and services for the design and testing necessary to adequately
define the system for  the bidding of Fabrication.   The Final Design AFE  may
also include the cost of long-delivery equipment items which must be purchased
before the  start of Fabrication and construction.  Operator may provide other
additional documents as necessary to allow the  Parties to adequately evaluate
the Final Design AFE.

      12.7.1      Response to Final Design AFE: Each Party shall respond as to
      its Election in the Final  Design AFE proposal within the time  frame as
      described in Article 8.3.3 (Other AFE  Related Operations).  If all  the
      Parties make  an Election to participate  in the Final Design  AFE, then
      the  Operator  shall proceed  with the  Final Design  AFE for  the Joint
      Account of the Parties.  If a Party makes an Election not to participate
      in the Final Design  AFE, then each  of the Participating Parties  shall
      elect to either: (i) proceed with the Final Design AFE with the interest
      of the Non-Participating  Party shared by  the Participating Parties  on
      the  basis  of  their  respective Working  Interests,  unless  otherwise
      agreed, or (ii) change its Election to become a Non-Participating Party.
      All  risk,  Cost  and  expense  shall  be  borne  in  proportion to  the
      respective interest of the Participating Parties.  Any Non-Participating
      Party shall  be subject  to the Non-Consent  provisions as set  forth in
      Article  16.5.3 (Geophysical  Operations, Feasibility  Study, Integrated
      Project Team andlor Final Design AFE). 

12.8  Fabrication AFE:  Within twelve (12)  months from  the date of  the last
Election for  the Final Design AFE  as provided in Article  12.7 (Final Design
AFE),  unless such additional  time is  necessary due to  circumstances beyond
Operator's  control, Operator shall  submit a Fabrication  AFE for the Initial
Production  System to  all Parties  for their  Election.  The  Fabrication AFE
shall consist of  separate AFEs for each major component  in the construction,
fabrication and installation  of the Initial  Production System identified  in
the approved Development Plan  and Final Design AFE.  If the Operator does not
timely submit  the Fabrication AFE, any Party may submit a Fabrication AFE for
the Development Plan.   The Fabrication  AFE shall consist  of a separate  AFE
for: (i) the structural  components of the Initial Production System, (ii) the
equipment and  Facilities to be located on  a Contract Area (or  located off a
Contract  Area but serving a Contract Area),  and (iii) any pipelines or other
Facilities for  handling Hydrocarbon production.   The Election  regarding the
Fabrication  AFE shall  be a  single Election and  not an  Election as  to the
individual AFEs comprising the Fabrication AFE.

      12.8.1      Response to  Fabrication AFE:  The Parties shall  make their
      Election  as to the Fabrication AFE  within the time period as described
      in Article  8.3.2 (Production  System Construction).   Development Wells
      shall be subject to separate  AFEs and shall not be included  within the
      Fabrication AFE.  If all the Parties make an Election  to participate in
      the  Fabrication  AFE,  then  the  Operator  shall  proceed  to  design,
      fabricate,  construct,  transport  and  install  the  Initial Production
      System  for the Joint Account of the Parties.   By making an Election to
      participate in  the Fabrication AFE, each Participating Party commits to
      pay its Participating Interest share of the Costs, risks and liabilities
      of the  Initial Production  System as  set out  in the  Fabrication AFE.
      Each  Non-Operating Participating Party shall have  the option to attend
      regularly scheduled  meetings between  the Operator and  any contractors
      constructing the  Initial Production  System or Facilities  specified in
      the Fabrication  AFE as well as  visits to the construction  sites.  Any
      Non-Participating Party shall be subject to Article  12.9 (Assignment of
      Interest)  and  the Participating  Parties  shall elect  to  either: (i)
      proceed  with  the  Fabrication  AFE  with  the  interest  of  the  Non-
      Participating Party shared by the Participating Parties  on the basis of
      their  respective Working  Interests, unless  otherwise agreed,  or (ii)
      change  its Election to  become a Non-Participating  Party.  The Working
      Interest   of  the  Non-Participating  Party  shall  be  shared  by  the
      Participating   Parties  in  accordance  with  Article  16.2.3  (Initial
      Production System).

12.9  Assignment  of  Interest:  If  any  Party  makes   an  Election  not  to
participate in the Fabrication  AFE for the Initial Production System under an
approved Development Plan,  then the Non-Participating Party  shall be subject
to  Article 16.2 (Acreage  Forfeiture Provisions) and  be deemed a Withdrawing
Party  subject to Article  17 (Withdrawal from  Agreement).  The Participating
Parties  shall  share  the  interest  assigned  in   the  proportion  which  a
Participating  Party's  Working  Interest  bears to  the  sum  of  the Working
Interests of  all of the  Participating Parties (unless  otherwise unanimously
agreed by the Participating Parties).   If the Operator makes an  Election not
to  participate in the  Fabrication AFE, then  the Participating Parties shall
select  a successor Operator  pursuant to Article  4.5 (Selection of Successor
Operator).    If  Development Operations  under the Development  Plan are  not
timely commenced pursuant to  Article 12.14 (Timely Operations  for Production
Systems), the Non-Participating Party shall  be entitled to a reassignment  of
its Working Interest.

12.10 Minor Modifications and Revisions  to Development Plans: In implementing
the Development Plan, the Operator  shall advise the Participating Parties  of
progress.  As additional information becomes available,  the Operator may make
modifications and revisions to the Development Plan subject to the following. 

      12.10.1     Minor Modifications to Development Plans: The  Operator may,
      without  the   approval  of   the  Participating  Parties,   make  minor
      modifications to a Development Plan if such minor modifications are both
      necessary and  reasonable  to  accomplish the  Development  Plan.    For
      purposes  of  this   paragraph,  a  minor  modification   shall  mean  a
      modification which does not cause the estimated Cost of any separate AFE
      submitted  under the Fabrication  AFE to  increase by more  than fifteen
      percent  (15%) or  Fifteen Million  Dollars ($15,000,000),  whichever is
      less, and does not change  the type of Production System, the  number of
      Development Wells, the  capacity of  the Facilities  or the  Hydrocarbon
      transmission  system of the Development Plan.   Such minor modifications
      also shall not  materially change the risk or timing  of the Development
      Plan.

      12.10.2     Revisions to  Development Plans:  A Development Plan  may be
      revised as  needed to  accommodate  new data,  interpretations or  other
      changes  not   covered  by  Article  12.10.1   (Minor  Modifications  to
      Development  Plans)   or  by  Article  12.11   (Major  Modifications  to
      Development Plans).  Any such revision pursuant  to this Article 12.10.2
      (Revisions to  Development Plans) shall  require approval  as a  General
      Matter.   The Operator shall provide  a copy of  the revised Development
      Plan to all  Parties, except in  the case when  the Development Plan  is
      automatically  revised  as  a  result of  a  Development  Operation  not
      included in  the  then current  Development  Plan  being approved  as  a
      General Matter  as provided  in  Article 13.1  (Proposal of  Development
      Operations).

12.11 Major Modifications  to Development  Plans: The Operator  shall promptly
notify   the  Participating  Parties  whenever  a   major  modification  to  a
Development Plan is anticipated and shall furnish to the Participating Parties
the Operator's proposal to modify the Development  Plan (and associated AFE's)
along with the basis for the proposal  and estimated Costs.  Approval of major
modifications shall require the affirmative vote of all Participating Parties.
A major modification shall be deemed to have occurred when:

      (i)         the type of Production System is changed; or
      (ii)        the number of well slots of the Production System is changed
                  by at least twenty-five percent (25%); or
      (iii)       the  type of  Hydrocarbon  transmission system  is changed
                  (e.g., pipeline vs. barge, etc.),

      If the major modification is approved by  all the Participating Parties,
then the Operator shall immediately advise any Party who made  an Election not
to  participate in the  Fabrication AFE for  the original approved Development
Plan  and provide  the  modified Development  Plan  to such  Non-Participating
Party.   Any  Non-Participating Party  shall have  the right  for a  period of
ninety  (90) days,  after receipt of  the modified  Development Plan  from the
Operator,  in  which  to make  an  Election  to  participate in  the  modified
Development Plan.   Any Non-Participating Party's  Election to participate  in
the modified Development Plan shall be subject  to a Disproportionate Spending
Settlement  in an  amount equal  to one  hundred percent  (100%) of  such Non-
Participating Party's share of the  actual Costs incurred for the  Development
Plan.  The Non-Participating Party who makes an Election to participate in the
modified  Development  Plan  shall  be   an  underinvested  Party  until  such
underinvestment is eliminated.  The Participating Parties shall deliver to the
Non-Participating Party who makes an  Election to participate in the  modified
Development  Plan an assignment  of one  hundred percent  (100%) of  such Non-
Participating Party's former Working Interest in the  Contract Area, the wells
therein and production therefrom within thirty (30) days after full payment is
received.  If  the major modification is  approved, the Development  Plan (and
any associated  AFE's) shall be deemed  modified and the Operator  shall carry
out the modified Development  Plan.  In the event a major  modification is not
approved  by  all  Participating  Parties,  the  Operator  shall  continue  to
implement the approved Development Plan.

12.12 Supplemental AFE for Cost Overruns  on Fabrication AFE: As provided  for
in Article 6.2.6 (Supplemental AFE for Cost Overruns on Fabrication AFE).

12.13 Termination  of  a  Development  Plan: Any  proposed  termination  of an
approved Development Plan may only be accomplished by unanimous consent of the
Participating Parties.

12.14 Timely Operations  for Production Systems: The  Operator shall commence,
or cause to  be commenced. the construction of a  Production System within one
(1) year  from  the last  Party's  Election for  the  Fabrication AFE.    Such
construction  shall  be  deemed  timely  commenced  on   the  date  the  major
fabrication  contract  for  the  Production  System  is   awarded.    If  such
construction  is  not  commenced  in  a  timely   manner,  then  the  approved
Fabrication  AFE  shall  be  deemed  withdrawn  with  the  effect  as  if  the
Fabrication AFE had  never been submitted.  The above  notwithstanding, if the
MMS grants a  "Suspension of Production" or  a "Suspension of Operations"  (an
SOP/SOO") for an approved Development Plan, any shorter time  limits set forth
as requirements of the SOP/SOO  shall supersede the corresponding longer  time
limit set forth in this Agreement or the Development Plan.

12.15 Expansion,  Modification or  Repair  of an  Existing Production  System:
Subsequent to the installation of the Production System described and approved
in  the first Development Plan for a Contract  Area, any Party may propose the
expansion, modification or repair of  any existing Production System in  which
it has participated  by written notice to  the other Participating  Parties in
such Production System.   Such proposal shall be presented  in accordance with
Articles 6.7  (Annual  Operating Plan)  and  8.3  (Response Time  for  General
Matters and  Elections) for approval  as a General  Matter.  If approved  as a
General  Matter,  it  will be  binding  on all  Participating  Parties  in the
Production System and Operator shall proceed with such project for the benefit
of the Joint Account and all Cost, risk and expense of such operation shall be
borne in proportion to the respective Participating Parties' Working  Interest
in such Production System unless  otherwise agreed.  This Article 12.15  shall
not  constitute a limit on a Party's right to install its own Facilities under
Article  15 (Disposition of  Hydrocarbon Production).   The provisions of this
Article 12.15 shall not apply to subsequent Development Phase(s).

12.16 Subsequent Development  Phases:  At  any time  after  the  last  Party's
Election  under the Fabrication  AFE for  the Initial Development  System, any
Participating  Party may propose  an additional  Development Phase(s)  and the
installation of a subsequent or expanded Production  System(s).  Upon proposal
of a subsequent Development Phase, the Operator shall propose the formation of
an Integrated  Project Team to prepare  a Development Plan for  the subsequent
Development Phase.  The preparation and approval of the Development Plan for a
subsequent Development  Phase shall follow  the same  procedures specified  in
this Article  12 (Development Plan)  for the preparation  and approval of  the
initial Development Plan.

12.17 Access  to Existing  Facilities:  Development  Operations in  subsequent
Development Phases shall have reasonable  access (on a space available  basis)
to gathering, processing and  transportation Facilities installed for previous
Development Phases.

      12.17.1     Non-Consent Operations in  Subsequent Development Phases: If
      fewer than all Parties make  an Election to participate in a  subsequent
      Development Phase,  the Operator (or substitute  Operator) shall conduct
      Development  Operations  in the  subsequent  Development  Phase for  the
      account of the  Participating Parties and at  their sole Cost  and risk.
      The Participating  Parties  shall  conduct  the  subsequent  Development
      Operations with the benefit  of the non-consent provisions specified  in
      Article 16  (Non-Consent Operations).   A  Non-Participating Party  in a
      subsequent Development Phase shall not be entitled to any information or
      data  from any  subsequent  Development Operation  associated with  such
      Development Phase, unless the  Non-Participating Party makes an Election
      to  participate in  such subsequent  Development Operations  pursuant to
      Article  16.7  (Operations  From  a  Subsequent  Non-Consent  Production
      System).  Any Non-Participating Party in a  subsequent Development Phase
      may retain its Working Interest in the  Contract Area corresponding to a
      Development Phase  in  which it  participated.    However, such  a  Non-
      Participating Party  shall not  unreasonably interfere  with Development
      Operations  in the  subsequent Development  Phase (including  making any
      claim  for drainage  upon  the Participating  Parties in  the subsequent
      Development  Phase,  so long  as  the  subsequent  Development Phase  is
      conducted according to prudent operating practices).  In all events, the
      sequence  and   conduct  of  Development  Operations   in  a  subsequent
      Development  Phase shall be  controlled by the  Participating Parties in
      the subsequent  Development Operation.   Hydrocarbon  production volumes
      shall be  measured on  the basis  of well  tests and  operating expenses
      allocated upon the basis of Hydrocarbon production volume throughput.

                                  ARTICLE 13
                            DEVELOPMENT OPERATIONS

13.1  Proposal of Development  Operations: It is the intent of  the Parties to
proceed with development of the Contract Area in  accordance with the approved
Development Plan.  Any Participating Party in the Development Plan may propose
to  conduct  specific  Development  Operations  which  were  included  in  the
Development Plan by giving notice of the proposal and the associated Well Plan
[which shall include at least the information set out in  Article 10.2.1 (Well
Plan's Minimum Specifics)] and  AFE to the other Participating Parties.   Each
Development Operation  included  in an  approved  Development Plan  shall  not
require approval as  a General Matter.  The  Operator (or substitute Operator)
shall commence  the Development  Operation at  the sole Cost  and risk  of the
Parties making an Election to participate.  Costs of a non-consent Development
Operation  will  be  recouped  in  accordance  with  Article  16  (Non-Consent
Operations).  Any Participating Party  in the Development Plan may propose  to
conduct  specific  Development  Operations  which were  not  included  in  the
Development Plan.  However, such a proposal  shall also specify that it is not
for  an  operation  included in  the  Development  Plan.    A proposal  for  a
Development Operation  not  included in  the  Development Plan  shall  require
approval as a General Matter and, if  approved, such Development Operation not
included in  the Development Plan  shall automatically revise  the Development
Plan.   However, the  provisions of  this Article 13  (Development Operations)
shall  not apply  to the  proposal for  the Initial  Production System  in the
Contract Area.  The Initial  Production System shall be proposed as a  part of
the Development Plan in accordance with  Article 12 (Development Plan) of this
Agreement.

      13.1.1      Operator's Counterproposal: If a Non-Operating Party makes a
      proposal that was not included in the approved Development Plan and such
      proposal is  approved as a  General Matter  with the Operator  being the
      non-approving Party, the Operator shall have the option to:

      (a)   make an Election to participate  in the operation proposed by  the
            Non-Operating Party;
      (b)   become  a Non-Participating  Party pursuant  to the  provisions of
            Article 16 (Non-Consent Operations); or,
      (c)   make a  counterproposal within  the applicable response  time that
            attempts  to satisfy the  same or similar  objectives (in terms of
            timing and  development  of a  Contract Area)  as  would the  Non-
            Operating Party's proposal.

      The Operator's counterproposal, if  approved as a General Matter,  shall
      have the effect of voiding the Non-Operating Party's proposal.   A Party
      making an Election not to participate  in the Operator's counterproposal
      shall  become a  Non-Participating  Party in  the  operation subject  to
      Article 16 (Non-Consent Operations).   If the Operator's counterproposal
      is not approved, the  Operator shall make its Election  and commence the
      originally proposed operation in a timely manner.

      13.1.2      AFE Overruns and Substitute Wells: The Operator shall timely
      commence a Development Operation and continue the  drilling of such well
      with due diligence to  its Objective Depth  or until (i) a  supplemental
      AFE is required pursuant to Article  6.2 (Authorization for Expenditure)
      or (ii)  the Operator  encounters mechanical  difficulties, uncontrolled
      influx  of subsurface  water, abnormal  pressures, pressured  or heaving
      shale,  salt, granite  or other  practicably impenetrable  substances or
      other  similar  conditions  prevail  in the  hole  that  render  further
      drilling impracticable.  If the Development Well is abandoned due to the
      conditions  described  under  13.1.2  (ii),  then  the  Operator  or any
      Participating Party may propose  a substitute well (with the  associated
      AFE and  Well  Plan), and  each  Participating  Party in  the  abandoned
      Development  Well shall make  an Election whether  to participate in the
      proposed  substitute well.  The Operator  (or substitute Operator) shall
      commence the  substitute well at the  sole Cost and risk  of the Parties
      making  an Election to  participate.  Costs  of a Non-Consent substitute
      Development  Well will be  recouped in accordance  with Article 16 (Non-
      Consent Operations).

      13.1.3      Timely  Operations: A  proposed  Development Operation  (not
      requiring the  installation of a  Production System) shall  be commenced
      within  one hundred twenty (120) days from  the date upon which the last
      applicable Election to participate was made. If operations have not been
      timely commenced within  one hundred twenty (120)from the  last Election
      date,  the proposal and  Elections shall  be deemed withdrawn,  with the
      effect as  if the  proposal and  Elections had  never been  made.   If a
      proposal is  deemed  withdrawn due  to lack  of  timely commencement  of
      operations, any  Costs incurred  during  said one  hundred twenty  (120)
      period which are attributable to  the proposed operation shall still  be
      chargeable to  the Participating Parties.   A Development  Operation for
      the drilling of a Development Well shall be deemed to  have commenced on
      the date  the rig  arrives  on location  or, if  the rig  is already  on
      location, the date when actual drilling operations are begun.

13.2  Subsequent   Development   Operations  at   Objective  Depth:   After  a
Development Well (or  its substitute) has been drilled  to its Objective Depth
as  set forth  in  the Well  Plan  (and all  logs  and  evaluations have  been
distributed to  the Participating Parties), the Operator shall promptly notify
the Participating Parties of the Operator's  proposal for one of the following
operations:

      (a)   conduct Additional  Testing, Coring  or Logging of  the formations
            encountered prior to setting production casing;
      (b)   complete the well at the Objective  Depth in the objective zone or
            formation;
      (c)   Sidetrack the well to another bottomhole location not deeper  than
            the stratigraphic equivalent of the original Objective Depth;
      (d)   plug back the well and attempt a completion in a shallower zone or
            formation;
      (e)   Deepen  the  well  to  a  new  Objective  Depth; M  conduct  other
            operations on the well not listed;
      (g)   temporarily abandon the well; or
      (h)   permanently plug and abandon the well.

      13.2.1      Response  to  Operator's Proposal:  Within  forty-eight (48)
      hours  (exclusive  of Saturdays,  Sundays  and  federal holidays)  after
      receipt  of   Operator's  proposal  to  conduct  subsequent  Development
      Operations,  each Participating  Party shall  respond to  the Operator's
      proposal by making its Election to participate in Operator's proposal or
      by making  a  counterproposal.   Failure  of  a Participating  Party  to
      respond  to a proposal (except a proposal  to plug and abandon) shall be
      deemed an Election  not to participate in the Operator's proposal and to
      become a Non-Participating Party from that point.

      13.2.2      Counterproposals:   If  a   Participating   Party  makes   a
      counterproposal   for  subsequent  Development   Operations,  the  other
      Participating Parties shall have an additional twenty four (24) hours to
      respond  thereto.   If convicting  proposals for  subsequent Development
      Operations  are made, preference  shall be given  first to operation (a)
      above,  next to operation (b) above, and  so forth.  If different depths
      or  locations   are  proposed  for  subsequent  Development  Operations,
      preference for  voting shall be  given to the  shallowest depth (or  the
      location nearest  the  existing well  bore)  and  then other  depths  or
      locations in  descending (or more distant)  order.  After a  decision to
      conduct a  subsequent Development Operation  is made and  the subsequent
      Development Operation  is commenced,  the remaining proposals  for other
      types of  subsequent Development  Operations shall be  deemed withdrawn.
      At  the completion of the subsequent Development Operation, the Operator
      shall again submit proposal(s)  for subsequent Development Operations to
      the Participating Parties, through  the procedure provided herein, until
      such time as the well is plugged and abandoned.

      13.2.3      Approval  of   Subsequent  Development  Operations   by  All
      Parties: If the proposed subsequent Development Operation is approved by
      all  the  then  Participating   Parties,  the  Operator  (or  substitute
      Operator)  shall commence  the subsequent  Development Operation  at the
      Cost(s) and risk of the Participating Parties.

      13.2.4      Approval of  Subsequent Development Operations as  a General
      Matter  by  Fewer  Than  All  Parties:  If  a  proposal  for  subsequent
      Development  Operations  (except a  proposal  to plug  and  abandon), is
      approved as  a  General Matter  by  fewer  than all  Parties,  then  the
      Operator shall  conduct the operation at  the sole Cost and  risk of the
      Participating  Parties.   Any  Non-Participating Party  in a  subsequent
      Development  Operation   shall  be subject  to  Article 16  (Non-Consent
      Operations).   A  Non-Participating  Party in  a subsequent  Development
      Operation shall be relieved  of the Costs, risks and obligations  of the
      subsequent Development Operation, except as to its share of the Costs of
      plugging  and  abandoning  the  Development  Well  in  its  then-current
      condition.  No operation shall be performed on the well unless deemed by
      the Operator to  be safe and the well bore is  in a condition to perform
      the proposed operation.

13.3  Election by  Non-Participating  Parties  in  Deepening  or  Sidetracking
Operations:  If a Development Well  is drilled to  its initial Objective Depth
and does not  appear to  result in a  well that will  qualify as a  Producible
Well,  and if  any  Participating Party  proposes to  either  (i) Deepen  said
Development Well or (H)  Sidetrack said Development Well, then as  provided in
Article 13.2  (c)  or  (e),  the Operator  shall  notify  each  original  Non-
Participating Party  of the proposal.   Each original  Non-Participating Party
may respond  with an Election regarding such a proposal to Deepen or Sidetrack
by notifying  the  Operator of  its  Election  within forty-eight  (48)  hours
(exclusive of  Saturdays, Sundays and  federal holidays)  after receiving  the
Operator's notice.  Any original Non-Participating Party making an Election to
participate in  such Deepening or Sidetracking of  a Development Well shall be
deemed  to be  underinvested in  an  amount equal  to its  share  of the  Cost
incurred  in such  Non-Consent Well  (including but  not limited  to drilling,
testing,  logging or  coring) prior  to the  Deepening or  Sidetracking.   The
Parties that participated in  drilling to the initial Objective Depth  will be
deemed overinvested  in that amount,  and all Costs for  operations under this
Agreement that would otherwise be allocated to such overinvested Parties shall
be allocated  to  the  underinvested  Parties until  all  overinvestments  are
eliminated.    Any original  Non-Participating  Party  making  an Election  to
participate in  the  Deepening or  Sidetracking of  a  Development Well  shall
remain a  Non-Participating  Party in  the  Development  Well to  the  Initial
Objective Depth  until  the Costs  recoverable under  Article 16  (Non-Consent
Operations), less any payments  through a Disproportionate Spending Settlement
and/or  Article 16.9  (Underinvestment of  Costs), have  been recouped  by the
original Participating Parties.

13.4  Deeper Drilling: A proposal  to drill a Development Well to an Objective
Depth below the deepest Producible  Reservoir penetrated by a Producible  Well
or to  reenter and Deepen an  existing Development Well to  an Objective Depth
below the deepest Producible Reservoir  penetrated by a Producible Well  shall
require  approval as  a General  Matter and  shall be  further subject  to the
following provisions.

      13.4.1      Limited Participation  in Deeper Drilling: If  a proposal is
      approved  pursuant  to Article  13.4  (Deeper Drilling),  any  Party may
      either:

            make an Election  to participate in  the proposed Deeper  Drilling
            operation; or make an Election not to  participate in the proposed
            Deeper Drilling operation; 
            or, 
            make  an Election to  limit its  participation to drilling  to the
            base of the deepest Producible  Reservoir to be penetrated by  the
            Deeper Drilling operation.

      A  Party making  an  Election to  limit  its participation  in a  deeper
Development Well to the  base of the  deepest Producible Reservoir shall  bear
its Participating Interest share of  the Cost and risk of  drilling (including
abandonment) to  the base of  the deepest  Producible Reservoir.   If a  Party
makes an  Election not  to participate  in the  proposed Deeper  Drilling, the
proposed  operations shall  be conducted  pursuant to Article  16 (Non-Consent
Operations).

      13.4.2      Multiple Completion Alternatives Above and Below the Deepest
      Producible Reservoir:  If a Non-Participating Party in a Deeper Drilling
      operation below the deepest Producible Reservoir:

      (i)   considers the  well to  be capable of  producing at  or above  the
            deepest Producible Reservoir, and
      (ii)  has  indicated  a desire  to complete  the  well at  or  above the
            deepest Producible Reservoir,

      any further Deeper Drilling operations shall be conducted subject to the
      following provisions:

      (a)   Multiple Completion: If all the  Participating Parties in the well
            agree  that   a  multiple  well  completion(s)   is  possible  and
            practicable  involving (i)  a completion at  or above  the deepest
            Producible  Reservoir  and (ii)  a  completion  below the  deepest
            Producible  Reservoir,  the Participating  Parties  in the  Deeper
            Drilling operation shall bear  100% of the Costs of drilling to an
            Objective Depth below the deepest Producible Reservoir that are in
            excess of the original Costs to drill and complete the well in the
            deepest Producible Reservoir.
      (b)   Single Completions: If the Participating Parties do not agree that
            multiple well  completions are  possible or practicable,  the Non-
            Participating  Party in  the  Deeper Drilling  operation shall  be
            deemed overinvested in the original well in an amount equal to the
            Non- Participating Party's Share of the original Costs of drilling
            the well to the  deepest Producible Reservoir.   The Participating
            Parties  in  the  Deeper  Drilling operation  shall  assume  their
            proportionate share of the  Non-Participating Party's Share of the
            Costs of other operations conducted under this Agreement until all
            overinvestments are eliminated.

      If, after having  been drilled  to an  Objective depth  deeper than  the
      deepest Producible Reservoir, at  the first occurrence of the  following
      events:

      (i)   the  well is not a Producible Well  in the deeper depths and
            the well is plugged back to a shallower zone; or,
      (ii)  the  well is completed  as a  Producible Well in  the deeper
            depths, but  Hydrocarbon production from the  deeper zone is
            later depleted prior to Non-Consent Recoupment (attributable
            to Deeper  Drilling operation) and the well  is plugged back
            to a shallower zone; or,
      (iii) the well is  completed  as a  Producible  Well in the deeper
            depths  and  the  Participating  Parties have recovered  the
            applicable non-consent Recoupment (attributable to the Deeper
            Drilling operation)  from  Hydrocarbon  production  from the
            deeper zone,

      the Participating Parties as to the depths  below the deepest Producible
      Reservoir  shall be deemed  overinvested in an amount  equal to the Non-
      Participating Party's  Share  of the  well's Cost  down  to the  deepest
      Producible Reservoir.   The overinvestment  shall be depreciated  at the
      rate of  one-half percent  (1/2%) per  month from  the  date the  Deeper
      Drilling operation commences to the earlier of the date of  (i), (ii) or
      (iii)  above, but such depreciation shall  not reduce the overinvestment
      below  forty percent (40.0%)  of the original  overinvestment.  The Non-
      Participating  Parties in  the  Deeper Drilling  operation shall  assume
      their  proportionate share  of the  Participating Party's  Share of  the
      Costs of  other  operations conducted  under  this Agreement  until  all
      overinvestments are eliminated.

      13.4.3      Completion  Attempts  At  or  Above  the Deepest  Producible
      Reservoir: If a well drilled  below the deepest Producible Reservoir  is
      not  completed   for  production  in   the  deeper   depths,  then   the
      Participating  Parties  in said  well  down  to  the deepest  Producible
      Reservoir shall have  a right to  utilize the well  for completion in  a
      Producible Reservoir.   The Participating Parties in  drilling below the
      deepest  Producible  Reservoir  in  said  well  shall   bear  the  Costs
      (including  plugging back Costs)  necessary to place  the well in proper
      condition  for completion in a Producible Reservoir.   If a well drilled
      below the deepest Producible Reservoir is  damaged to the extent that it
      is  rendered incapable of  being completed and produced  at or above the
      deepest Producible Reservoir in that well, the Participating  Parties in
      the Deeper Drilling operation shall be obligated, at their sole Cost and
      risk, to restore the well to its condition prior to  the Deeper Drilling
      operations below  the deepest  Producible Reservoir.   The Participating
      Parties in the Deeper  Drilling Operation shall be obligated to  pay for
      the entire Cost of redrilling the well if the damage cannot be repaired.
      Both the  Participating Parties in  the original drilling  operation and
      the  Participating Parties  in the  Deeper Drilling  operation shall  be
      Participating  Parties  in  the  completion  attempt  in  the  shallower
      formation.

13.5  Plugging and Abandoning Costs: At  the conclusion of all operations  set
forth  in  a  Development  Well's Well  Plan  and  all  subsequent Development
Operations on such well or, if the Operator encounters mechanical difficulties
or impenetrable  conditions, which  make further drilling  impracticable, then
the Operator may propose to  plug and abandon the well.  Upon  approval of the
well  abandonment  as  a  General Matter  by  the  Participating  Parties, the
Operator  shall commence  the  plugging  and abandonment  of  the  well.   The
Participating Parties  in  the original  operations  shall  pay all  Costs  of
plugging  and abandoning the  Development Well (except  any increased plugging
and abandoning Costs associated solely with a subsequent Development Operation
conducted as a  Non-Consent Operation).  The Participating Parties in any Non-
Consent  Operation  shall  be  responsible  for  the  increased  plugging  and
abandoning Costs attributable to the Non-Consent Operation.

                                  ARTICLE 14
                       FACILITIES AND GATHERING SYSTEMS

14.1  Facilities  as a Part  of Development  Plan: The Development  Plan shall
provide  for the installation  of all basic Facilities  necessary to handle or
service  Hydrocarbon  production  for  the Contract  Area.    If  the approved
Development Plan provides that Hydrocarbon  production from the Contract  Area
can most efficiently  be processed and handled  at Facilities located  off the
Contract Area (an "offsite facility"), the Development  Plan shall provide for
a Production System designed to utilize an "offsite facility".

14.2  Use of  Facilities  Off the  Contract  Area: In  the  event that  excess
capacity  exists at an  "offsite facility"  and the approved  Development Plan
calls  for  a  "tie-back" development  of  the  Contract Area  to  an "offsite
facility",  the Operator will  use reasonable efforts  to secure a "Facilities
Use  and  Production  Handling  Agreement" from  the  owners  of  the "offsite
facility" for use in handling  Hydrocarbon production from the Contract  Area.
However, the Operator shall  have no duty (fiduciary or  otherwise) beyond the
obligation  to utilize  reasonable efforts  to secure  access to  the "offsite
facility" on behalf of the Participating Parties.  Any access  secured by such
"Facilities Use  and Production Handling  Agreement" to an  "offsite facility"
shall  be  shared  proportionately  by  the  Parties  on  the basis  of  their
Participating Interests in the Development Plan.  This Article 14.2 shall  not
constitute a  limit on  a Party's  right to install  its own  Facilities under
Article 15 (Disposition of Hydrocarbon Production).

14.3  Use  of  Facilities  Located on  the  Contract  Area:  The Participating
Parties hereto shall have priority access to all jointly owned  Facilities and
gathering  system capacity for  use in  operating and developing  the Contract
Area  pursuant to an approved Development Plan.   Use of the Facilities on the
Contract  Area for handling  production coming from  outside the Contract Area
may be granted only if Facility capacity  is available beyond the requirements
of an  approved Development  Plan for  developing the Contract  Area.   Use of
excess capacity from Facilities shall be subject to the following priority  of
usage:

      a.    First  priority to  Hydrocarbon  production jointly  owned by  the
            Participating Parties from inside the Contract Area.
      b.    Second  priority to  Hydrocarbon production  Jointly owned  by the
            Participating Parties coming from outside the Contract Area.
      c.    Third priority to Hydrocarbon  production owned by a Participating
            Party coming from outside the contract Area.
      d.    Fourth priority  to Hydrocarbon Production owned  by third parties
            coming from outside the Contract Area.

      Priority  "a" shall require  approval by the  Participating Parties as a
General Matter.  Priorities  "b", "c" and "d" shall require unanimous approval
by all the Participating Parties.  In the event that unanimous approval cannot
be reached by the Participating Parties under priorities "b" and "c" above, as
to the  means and methods for utilizing  such excess capacity from Facilities,
such excess capacity shall be allocated  to each Party in accordance with each
Party's Participating Interest in the  Facilities having excess capacity,  and
each  Party shall be entitled to use its  share of excess capacity as it deems
appropriate. 

14.4  Approval of Additional Facilities on a Contract Area: This Article shall
only apply to Facilities located on  the Contract Area which were not included
in the approved Development Plan.   Any Party may propose the  installation of
additional or expanded Facilities for the Contract Area beyond those specified
in the Development  Plan by giving notice  to the other  Participating Parties
together  with information adequate  to describe  the proposed  Facilities and
their estimated Costs.  Except as provided in Article 15.2 (Facilities to Take
In Kind), the installation of  additional Facilities on the Production  System
beyond  the scope of  the Development Plan  shall require the  approval of the
Participating Parties as a General Matter, and  the availability of sufficient
deck  space and buoyancy to support the  proposed additional Facilities.  Upon
approval, the Operator shall proceed to install  the additional Facilities for
the benefit of the Participating Parties provided that, in the judgment of the
Operator,  the   additional  Facilities  do  not   interfere  with  continuing
operations  on  the  Contract  Area.    The  installation  of  any  additional
Facilities shall  be at the sole  Cost and risk of  the Participating Parties.
Any Non-Participating  Party shall be  subject to Article  16.5.6 (Non-Consent
Subsequent Production System and Facilities)

14.5  Contract Area  Production: Notwithstanding  any other provision  of this
Agreement to the contrary, production owned by  the Participating Parties from
the Contract Area  shall at all  times have first  preference to use  capacity
over any production from outside the ContractArea.

                                  ARTICLE 15
                     DISPOSITION OF HYDROCARBON PRODUCTION

15.1  Duty to Take in Kind:  Each Party shall have the right and duty to  take
in kind  or separately dispose of  its share of the  Hydrocarbons produced and
saved  from a  Contract Area,  exclusive of  Hydrocarbon production  which the
Operator uses  in  production  or Development  Operations,  in  preparing  and
treating Hydrocarbons for marketing purposes, and Hydrocarbon production which
is unavoidably lost.

15.2  Facilities  to Take  in  Kind: Any  Participating  Party in  Development
Operations shall  have the right, at  its sole risk and  expense, to construct
Facilities for purposes of taking its share of Hydrocarbon production in kind,
provided  that in  the judgment  of  the Operator,  the  installation of  such
Facilities do not interfere with continuing operations on the Production

System or  a Contract  Area.   During the construction  and operation  of such
facilities, the  Party  responsible for  the construction  or operation  shall
indemnify and defend the other Parties against any claims or liabilities which
may  result  from  such construction  or  operation  and such  Party  shall be
responsible  for any  damage or  losses sustained  by the  other Parties  as a
result of the construction or operation of such facilities.

15.3  Failure  to Take Oil  and/or Condensate in  Kind: If any  Party fails to
take in kind  or dispose of  its share of  the oil and/or  condensate produced
from  a Contract  Area,  the Operator  shall  have the  right,  but never  the
obligation to either  (a) purchase  the non-taking  Party's share  of the  oil
and/or  condensate production  at the  Operator's, or  a third  party's posted
price or,  in the absence of  a posted price  or disagreement as to  the third
party's  posted price,  at the  price prevailing  in the  area for  oil and/or
condensate  of similar kind  subject to adjustments  for gravity, quality, and
less  transportation to  market, or  (b) sell  such oil  and/or condensate  to
others at  the best price obtainable by the Operator, subject to revocation at
will  by the  non-taking  Party.    The non-taking  Parties  agree  to  accept
Operator's purchase or sale of the  non-taking Party's share of the oil and/or
condensate  production under  (a) or  (b) above.   The Operator  shall furnish
notification to  non-taking Party at the  time such option is  exercised.  All
contracts  of  sale  by the  Operator  of  any  Party's  share of  oil  and/or
condensate production shall be only for such reasonable periods of time as are 
consistent with the minimum needs of the industry under the circumstances, but
in no  event shall any  contract be for  a period in  excess of one  (1) year.
Proceeds of  all sales made by the Operator  pursuant to this Article shall be
paid to the Parties entitled thereto once in each calendar month.

      Unless required by governmental authority or judicial  process, no Party
shall be forced to share an available market with any non-taking Party.

15.4  Gas Balancing Provision:   The Parties agree that  in the event separate
disposition of gaseous Hydrocarbons causes split-stream deliveries to separate
pipelines and/or deliveries which on a day to day basis for any reason are not
equal  to a Party's  respective proportionate share  of total gas  sales to be
allocated to it, the gas balancing or accounting between the  Parties shall be
handled  in  accordance  with  Exhibit  "D"  attached  hereto,  entitled  "Gas
Balancing Agreement."

15.5  Expenses  of Delivery  in Kind:  Any Cost  incurred by  the Operator  in
making delivery of any Party's share of Hydrocarbon production or disposing of
same shall  be borne  by such Party.   Any extra  expenditure incurred  in the
taking in kind or separate disposition by any Party of its proportionate share
of Hydrocarbon production shall be borne by such Party.

                                  ARTICLE 16
                            NON-CONSENT OPERATIONS

16.1  Conduct  of Non-Consent Operations:  If any  Party makes an  Election to
become a Non-Participating Party in an operation, the proposed operation shall
be conducted as a Non-Consent Operation.   If the Participating Parties timely
commence the  Non-Consent Operation, then the  Non-Participating Parties shall
be  subject  to  either  the acreage  forfeiture  provisions  of  Article 16.2
(Acreage Forfeiture Provisions), 16.4  (Non-Consent Operations to Maintain the
Contract Area) or the Cost  recoupment provisions of Article 16.5  (Percentage
Recoupment for  Non-Consent Operations),  each reflecting the  increased risks
and Costs  assumed by the Participating  Parties.  Any operation  that invokes
the provisions of this Article 16.0 must be proposed  in good faith using cost
estimates  and Objective  Depths which  are reasonable  for the  Contract Area
considering the geological and  geophysical data available at the  time of the
proposal.  If  any proposed operation requires  approval as a  General Matter,
such approval shall be obtained prior to  the Participating Parties proceeding
with the Non-Consent Operation.   The Operator (or substitute Operator)  shall
conduct any  Non-Consent  Operation  at  the sole  risk  and  expense  of  the
Participating  Parties   in  the  Non-Consent  Operation.     Any  Non-Consent
Operations shall  not unreasonably jeopardize, hinder or  interfere with joint
operations  conducted by  all Parties  (unless the Non-Consent  Operation will
maintain all or a portion of the Contract Area under Article 16.4 (Non-Consent
Operations to Maintain Contract Area).

      16.1.1      Indemnity  for  Non-Consent  Operations:  The  Participating
      Parties shall  (insofar as  it may  be within  their  control) keep  the
      Contract Area free from all liens  and encumbrances which might arise by
      reason of conducting the Non-Consent Operation and indemnify, defend and
      hold  harmless the Non-  Participating Parties  from any such  liens and
      encumbrances.

      16.1.2      Cost  Information:  The Costs  of any  Non-Consent Operation
      shall be borne by the Participating Parties in the proportion that their
      Participating Interests bear  to the sum of all  Participating Interests
      in   the  Non-Consent   Operation  (unless   otherwise  agreed   by  the
      Participating  Parties).   The Costs  of a  Non-Consent Operation  shall
      include the Costs of maintaining  the drilling equipment on site  during
      the notice period for an Election or vote pursuant to Article 8 (Voting,
      Elections  and Notices), including  any response  times, and no  part of
      such Costs shall be borne by the Non-Participating Parties.   Within one
      hundred twenty (120) days  after completion of a  Non-Consent Operations
      the Operator shall furnish all the Parties an  itemized statement of the
      Cost  of the  Non-Consent Operation  and an  inventory of  the equipment
      pertaining thereto.  The Operator shall furnish to the Parties a monthly
      statement showing operating, maintenance and other expenses attributable
      to  the  Non-Consent  Operations,  and the  revenues  from  the  sale of
      Hydrocarbon production  for the preceding month  from operations subject
      to recoupment under this Article 16 (Non-Consent  Operations).  The Non-
      Operating  Parties  shall furnish  the  Operator  any revenue  or  price
      information for  their take in kind  production.  In  accounting for the
      revenues from Non-Consent Operations, Hydrocarbon production need not be
      separately metered, but may be determined upon the basis of monthly well
      tests.

      16.1.3      Non-Consent Operations in Producible Well: Once a Producible
      Well has been completed and placed on production, Non-Consent Operations
      shall  not  be  conducted  in  that well  unless  approved  by  all  the
      Participating Parties in such  well, unless such well is not  capable of
      producing from its current completion(s).

      16.1.4      Non-Consent  Operations  in  Producible  Reservoirs:  Unless
      otherwise  agreed   by  all   Parties,  Non-Consent  Operations   for  a
      Development  Well shall  not be  conducted in  any Producible  Reservoir
      previously  penetrated by a  Producible Well  drilled from  or producing
      through the same Production System serving the  Non-Consent Well and the
      Producible  Well  unless  such  Producible  Reservoir  shall  have  been
      designated  as  an  Objective  Depth  or  completion  zone in  the  well
      proposal.

      16.1.5      Multiple  Completions: Non-Consent  Operations shall  not be
      conducted in any well having multiple completions unless:

      (a)   each of the multiple  completions are owned by the same Parties in
            the same proportion; or,
      (b)   none of  the previous well  completions are capable  of producing;
            or,
      (c)   all  Participating Parties  in  the well  containing the  multiple
            completions consent to such Non-Consent Operation(s).

      For  the  purposes of  this  Article 16  (Non-Consent  Operations), each
      completion shall be considered as a separate well.

16.2  Acreage  Forfeiture Provisions:  In  view of  the significantly  greater
risks associated with  the Exploratory  Well and the  Fabrication AFE for  the
Initial Production System, the Parties agree that  upon timely commencement of
such operations, the Participating Parties shall be  entitled to an assignment
of the  Non-Participating Party's right, title,  interest (including operating
rights) in all of the Leases  comprising a Contract Area.  Within  thirty (30)
days  of  the  timely  commencement of  the  Non-Consent  Operation,  the Non-
Participating Party(s) shall execute and deliver an assignment of its interest
to  the Participating Parties; with no reimbursement by  and at no cost to the
Participating Parties.   If an  assignment is  made pursuant  to this  Article
16.2, then  each Participating Party  shall accept its  Participating Interest
share  of the  Non-Participating Party's  assigned interest,  unless otherwise
agreed.    Except  as  provided  in  Article  16.4.3 (Limitations  on  Acreage
Forfeiture), the non-participating Party's Election not to participate  in the
Initial  Exploratory Well, Exploratory  Well, or  the Fabrication AFE  for the
Initial  Production System shall  be deemed  a withdrawal pursuant  to Article
17.0 (Withdrawal From Agreement).

      16.2.1      Exploratory  Well:  If one  or  more Participating  Party(s)
      proceed with operations for the Initial Exploratory Well on the Contract
      Area as  a Non-Consent  Operation, any Non-Participating  Party(s) shall
      relinquish and assign to the Participating  Party(s) one hundred percent
      (100%) of the Non-Participating Party's right, title and interest in and
      to all of the Leases comprising the Contract Area.

      16.2.2      Initial  Production  System: If  one  or more  Participating
      Party(s)  proceed  with timely  operations  for  the Initial  Production
      System as a Non-Consent  Operation, the Non-Participating Party(s) shall
      relinquish and  assign to the Participating Party(s) one hundred percent
      (100%) of the Non-Participating Party's right, title and interest in and
      to all of the Leases comprising the Contract Area.

      16.2.3      Costs  of  Prior  Operations:  Any  Non-Participating  Party
      subject to a Non-Consent provision shall remain liable  for its share of
      previously incurred  Costs for operations  where it was  a Participating
      Party  and there  shall be  no re-allocation  of Costs  due to  the Non-
      Participating Party's election or assignment.

16.3  Notices  and  Orders: If  the Operator  is required  by notice  or order
(including SOPs and SOOs) from any government  agency having jurisdiction over
the  Contract  Area  to either  drill  or  rework  a  well, or  conduct  other
operations to maintain all or a portion of a Contract Area, the Operator shall
immediately furnish each of the Parties with a copy of such order or notice.

16.4  Non-Consent  Operations  to  Maintain  Contract  Area:    The  following
provisions are applicable if:

      (a)   an operation is required, pursuant to a governmental agency order,
            notice, regulation, SOO or SOP requirement or Lease obligation, to
            maintain all or any portion of a Contract Area; or,
      (b)   a proposal  is made for  an operation  within the  final nine  (9)
            months of the primary term of a Lease which has no Producible Well
            and such Lease is not held by a unit, SOO or SOP,

      then  such operation  must be  timely commenced  and shall  be conducted
pursuant to this Article 16.4. The response time for a proposal made hereunder
shall be the earlier of:

      (a)   the response  time  provided  in  Article 8  (Voting,  Election  &
            Notices), or;
      (b)   sixty  (60)  days before  the  deadline under  the  order, notice,
            regulation, SOO or SOP  requirement or Lease obligation, whichever
            is earlier.

      If the proposal requires  approval as a General Matter and such approval
is not obtained within the applicable response period, then any Party who made
an Election to participate in the Non-Consent Operation  may proceed with such
operation after  giving notice to the  other Parties.  The  other Parties will
have fifteen (15) days after receipt of the notice to make an Election.

      16.4.1      Acreage  Forfeiture in the  Entire Contract Area:   If it is
      necessary  to  drill or  rework a  well or  conduct other  operations to
      maintain an  entire Contract Area, then each  Non-Participating Party in
      the Non-Consent Operation shall relinquish and permanently assign to the
      Participating   Parties  one   hundred  percent   (100%)  of   the  Non-
      Participating  Party's  Working Interest  in  the  entire Contract  Area
      within  thirty  (30)  days  after commencement  of  such  well  or other
      operation.   Failure  to participate  in such  well or  other operations
      shall  be  deemed  a  withdrawal  and  the   provisions  of  Article  17
      (Withdrawal From Agreement) shall apply.

      16.4.2      Acreage  Forfeiture in a  Portion of  a Contract Area:  If a
      well is drilled or  reworked or other operations are conducted  in order
      to  maintain a portion  of a Contract  Area, then each Non-Participating
      Party  in the  Non-Consent  Operation shall  relinquish and  permanently
      assign  to the Participating  Parties one hundred  percent (100%) of the
      Non-Participating  Party's Working Interest in the affected portion of a
      Contract Area within thirty (30) days after commencement of such well or
      other operation.  If a Party  forfeits its Working Interest pursuant  to
      this Article 16.4.2, then such Party  shall have no further rights under
      this  Agreement as  to the portion  of a  Contract Area  forfeited.  The
      remaining Parties shall amend this  Agreement to provide for a  separate
      operational area for  the forfeited portion of a  Contract Area and this
      Agreement shall apply separately to such operational area.

      16.4.3      Limitations  on  Acreage  Forfeiture:  Notwithstanding   the
      foregoing,  if more than one well is  drilled or more than one operation
      is conducted, any  of which would  maintain the entire Contract  Area or
      the  affected portion  of a  Contract Area, an  assignment shall  not be
      required  from  any  Participating  Party  in  any  such well  or  other
      operation.   In addition, no  Party shall  be required to  relinquish or
      assign all  or any portion of its Working Interest in a Contract Area if
      the order,  requiring  the well  or  other  operation, is  appealed  and
      successfully overturned.

16.5  Percentage Recoupment for Non-Consent  Operations: Except as provided in
Articles 16.2 (Acreage Forfeiture Provisions) and 16.4 (Non-Consent Operations
to  Maintain Contract Area),  upon the timely  commencement of any Non-Consent
Operation,  each  Non-Participating  Party's Working  Interest  and  leasehold
operating rights in the  Non-Consent Operation along with title  to any future
Hydrocarbon  production  therefrom  shall  be  owned  by  and vested  in  each
Participating Party in the proportion that  each Participating Party's Working
Interest  bears to  the total  Working Interest  of all  Participating Parties
(unless other proportions are agreed by the Participating Parties) for as long
as  the  Non-Consent Operation  originally  proposed  is  being  conducted  or
Hydrocarbon  production is  obtained  from the  Non-Consent  Operation.   Such
interest,  rights and title  to future Hydrocarbon  production shall revert to
each Non-Participating Party  when the Participating  Party has recouped  from
the  Non-Participating  Party's  Share   of  proceeds  of  future  Hydrocarbon
production from  such Non-Consent Operation an amount  equal to the product of
the  Participating Party's  share of  the Costs  of the  Non-Consent Operation
multiplied by the recoupment percentage for each operation set out below.  The
Non-Participating  Party's Share of the Non-Consent Operation shall be reduced
(to the extent of the Non-Participating Party's prior Working Interest) by any
third-party cash  contribution credited  to the  Non-Consent Operation.   Upon
recoupment by  the  Participating Parties  of the  recoupment percentage,  the
Working Interest and leasehold operating rights in the Non-Consent  Operation,
along  with the title  to any  future Hydrocarbon Production  therefrom, shall
revert to the former Non-Participating  Party and the former Non-Participating
Party shall become a Participating Party in the Non-Consent Operation.

      16.5.1      Non-Consent    Subsequent   Exploratory    Operations:   The
      recoupment  amount for  Non-Consent  Subsequent  Exploratory  Operations
      shall be the Non-Participating Party's share of  the Costs of operations
      conducted  including,   but  not   limited  to,   drilling,  evaluating,
      Deepening,  Deeper  Drilling,  Sidetracking,  completing,  recompleting,
      equipping, plugging  back and plugging and abandonment of the Subsequent
      Exploratory Operation multiplied by seven hundred percent (700%).

      16.5.2      Non-Consent  Appraisal Operations:  The recoupment  for non-
      consent Appraisal  Operations  shall be  the  Non-Participating  Party's
      Share of the  Costs of drilling, evaluating, Deepening, Deeper Drilling,
      Sidetracking,  completing, recompleting,  equipping,  plugging back  and
      plugging and abandonment of the  Appraisal Operation multiplied by  four
      hundred percent (400%).  In addition to the recoupment amounts specified
      in this  Article, a Party  making an Election  not to participate  in an
      Appraisal Operation shall be an  underinvested Party in an amount  equal 
      to  the amount  such Party would  have paid  had it  participated in the
      Appraisal Operation.   As an underinvested  Party, the Non-Participating
      Party will be responsible for all Costs  of subsequent operations and/or
      AFEs  under this Agreement  (in addition  to Costs associated  with such
      Party's Working Interest) in which  the Non-Participating Party makes an
      Election to participate, which would otherwise be  the responsibility of
      the  Parties  making  an  Election  to  participate  in  such  Appraisal
      Operation,  until the  underinvestment  is eliminated.    Upon the  non-
      consenting  Party's  written  commitment  to  participate  in  the  next
      operation and/or AFE, the  Non-Participating Party shall be  entitled to
      receive  access to  the well  information and/or  data derived  from the
      Appraisal Operation in which it made an Election not to participate.

      16.5.3      Geophysical   Operations,   Feasibility  Study,   Integrated
      Project Team and/or Final Design AFE:  A Party making an Election not to
      participate in  a Geophysical Operations, Feasibility  Study, Integrated
      Project Team and/or  Final Design AFE will be an  underinvested Party in
      an amount equal to two  hundred percent (200%) of the amount  such Party
      would have paid had it participated in such AFE pursuant to Article 16.9
      (Under-Investment of  Cost).    As  an underinvested  Party,  the   Non-
      Participating  Party will  be responsible  for  all Costs  of subsequent
      operations  and/or  AFE under  this  Agreement  (in  addition  to  Costs
      associated  with  such  Party's  Working Interest)  in  which  the  Non-
      Participating  Party  makes  an  Election to  participate,  which  would
      otherwise  be the responsibility  of the  Parties making an  Election to
      participate   in  such   Geophysical   Operations,  Feasibility   Study,
      Integrated   Project   Team  and/or   Final   Design   AFE,  until   the
      underinvestment is eliminated.

      16.5.4      Non-Consent Development Operations: The recoupment  for Non-
      Consent Development  Operations (including workovers) shall  be the Non-
      Participating  Party's  Share  of  the Costs  of  drilling,  evaluating,
      Deepening,  Deeper  Drilling,  Sidetracking,  completing,  recompleting,
      equipping,  plugging back  and plugging  and abandoning  the Development
      Operation multiplied by three hundred percent (300%).

      16.5.5      Non-Consent Subsequent Production System and Facilities: The
      recoupment  for   any  non-consent  Subsequent   Production  System   or
      Facilities shall be the Non-Participating  Party's Share of the Cost  of
      designing, fabricating and  installing the Subsequent  Production System
      or  Facilities, including  the Cost  of an  injection or  disposal well,
      multiplied by two hundred percent (200%).

      16.5.6      Additional  Production   Recoupment:  In  addition   to  the
      percentage   recoupment  set   forth   above  for   various  Non-Consent
      Operations, the Participating Parties shall be entitled to recoup:

      (a)   two hundred percent (200%)  of the Non-Participating Party's Share
            of the Cost of Facilities  necessary to carry out the  Non-Consent
            Operation; plus,
      (b)   one hundred percent (100%)  of the Non-Participating Party's Share
            of the Cost of using  any Production System already installed  for
            the Contract  Area for  which the  Non-Participating  Party has  a
            Participating Interest; plus,
      (c)   one hundred percent (I 00%) of the Non-Participating Party's Share
            of the  Cost of operating expenses,  maintenance Costs, royalties,
            and severance, gathering, production taxes and  other governmental
            fees based on production.

      16.5.7      Recoupment From  Hydrocarbon  Production: Recoupment  for  a
      Non-Consent  Operation  which results  in  a discovery  of  a Producible
      Reservoir or extension of an existing Producible Reservoir shall be made
      from the  following portions of  the Non-Participating Party's  Share of
      Hydrocarbon production:

      (a)   Subsequent Exploratory Operations, Appraisal Wells, or Development
            Wells:  Recoupment shall be taken from  one hundred percent (100%)
            of  the  Non-Participating   Party's  Share  of   all  Hydrocarbon
            production  from  the  Non-Consent   Operation  (if  the  well  is
            completed  for  Hydrocarbon  production), and  from  fifty percent
            (50%)  of  the  Non-Participating  Party's  Share  of  Hydrocarbon
            production from  all wells  subsequently drilled and  completed in
            the Producible Reservoir discovered by said Non-Consent Operations
            or  the  extended  portion  of an  existing  Producible  Reservoir
            discovered by  said Non-Consent  Operation and in  which the  Non-
            Participating Party has a Participating Interest.
      (b)   Non-consent   Subsequent   Production   Systems   and  Facilities:
            Recoupment shall be taken from  one hundred percent (100%) of  the
            Non-Participating Party's share of Hydrocarbon production from all
            wells  which   are  drilled  from  and/or   produced  through  the
            Subsequent Production System or  Facilities and/or wells benefited
            from injection or disposal wells.

      The interest shall revert to each Non-Participating Party only after the
      Participating   Parties  have   completely  recouped   from  Hydrocarbon
      production the amounts specified herein.

16.6  Reversion of Interests to  Non-Participating Party:  A Non-Participating
Party's Working Interest and leasehold operating rights subject to  recoupment
from  future  Hydrocarbon   production  and/or  a   Disproportionate  Spending
Settlement, shall revert to the Non-Participating Party upon the occurrence of
the first of the following events:

            the Non-Consent Operation results in a dry hole; or,
            hydrocarbon production ceases prior  to complete recoupment by the
            Participating Parties; or,
            the  Participating Parties  propose to  Deepen below  the original
            Objective Depth if the original operation resulted  in a dry hole;
            or,
            upon complete recoupment.

      16.6.1      Dry Hole Reversion: If a Non-Consent Operation (other than a
      Non-Consent   Operation   under   Articles   16.2   (Acreage  Forfeiture
      Provisions)  and  16.4 (Operations  to  Maintain  Contract Area)  above)
      results in a dry hole and  fails to obtain Hydrocarbon production or, if
      Hydrocarbon  production  ceases  prior  to complete  recoupment  by  the
      Participating   Parties,  then  the  Non-Participating  Party's  Working
      Interest  and leasehold  operating rights  which have  been relinquished
      shall revert to  the Non-Participating Party.   However, all non-consent
      Wells,  Production   Systems  and  Facilities  [and   rights  to  future
      Hydrocarbon production from a  Producible Reservoir under Article 16.5.7
      (Recoupment  From Hydrocarbon  Production)] shall  remain vested  in the
      Participating  Parties.    Any  salvage  value  in  excess  of  complete
      recoupment shall be credited to  all Parties according to their  Working
      Interest and without regard to their participation status.

      16.6.2      Deepening a  Non-Consent Well: If a  Non-Participating Party
      makes  an Election to  participate in the  Deepening operation, then the
      Participating Parties shall be deemed overinvested to  the extent of the
      Non-Participating  Party's Share  of Costs  in the  original Non-Consent
      Operation (less any amount recovered by the Participating Parties out of
      the Non-Participating Party's Share of Hydrocarbon production or through
      a Disproportionate  Spending Settlement).  If  the Participating Parties
      have recouped the Cost of the well at the time they desire to Deepen the
      well then the Non-Participating Party will not be an underinvested Party
      in the Deepening of the well.   However, in such case, the Participating
      Parties  in  the  original  well   shall  still  be  permitted  complete
      recoupment from the other wells in  the Producible Reservoir, discovered
      or extended  by  the original  well as  provided in  Article 16.5.7  (a)
      (Recoupment from  Hydrocarbon Production), until  the total  non-consent
      amount to be recouped has been recovered from the Producible Reservoir.

16.7  Operations From  a Subsequent  Non-Consent Production System:  Any Party
who made an Election not to participate in a Subsequent  Production System may
make an Election to participate in operations  from such Subsequent Production
System.  If a Non-Participating Party makes an Election to participate in such
operations,  then  the  Non-Participating  Party  may  reduce  the  percentage
recoupment amount through a Disproportionate Spending Settlement in subsequent
Development Operations conducted  from the Subsequent Production System.   Any
Disproportionate  Spending Settlement  amounts  shall be  subtracted from  the
recoupment entitled to the Participating  Parties in the Subsequent Production
System pursuant  to Article  16.5.5 (Non-Consent Subsequent  Production System
and Facilities).

16.8  Allocation of Production System Costs  to Non-Consent Operations: In the
event a Non-Consent Well is proposed to  be drilled from or produced through a
Production System  owned  by all  the  Parties,  the rights  of  Participating
Parties to use the Production System for the proposed Non-Consent Well and the
Costs therefore shall be based on the following:

      16.8.1      Investment  Charges:  If  a  Non-Consent  Well  will utilize
      either a Production System and/or Subsea Production  System owned by all
      the Parties, the Non-Participating Parties in such  well shall be deemed
      to be the  overinvested Parties in such Production Systems to the extent
      the Participating Parties in such well would have paid a  charge for the
      right to use the Production  System and/or Subsea Production System  and
      its Facilities as follows:

      (a)   The  Participating Parties  shall pay  a one-time  slot usage  fee
            covering its use of  the Production System in  an amount equal  to
            two percent (2%) of the Cost  of the Production System, the Subsea
            Production  System  and  its  Facilities  to  the  owners  of  the
            Production  System (to  be  shared in  proportion  to the  owner's
            Working Interest in the Production  System).  For purposes of  the
            slot usage fee, the total Cost  of the Production System shall  be
            reduced by  .41667% per  month commencing upon  the first  monthly
            anniversary  date of when the  Production System was installed and
            every monthly anniversary  thereafter until the total  Cost of the
            Production System is reduced to  twenty-five percent (25%) of  the
            original  Cost.  The  Cost of  additions to the  Production System
            shall  be reduced  in the  same manner  commencing upon  the first
            monthly anniversary after the addition is installed.   If the non-
            consent well is abandoned,  the right of Participating  Parties to
            use  that  Production  System  slot shall  terminate  unless  such
            Parties commence  drilling a  substitute well from  the same  slot
            within  ninety (90) days  after abandonment.   The slot  usage fee
            shall not apply to a slot which  is deemed to be "surplus." A slot
            may  be deemed  surplus by  the unanimous  consent of  all Parties
            owning an interest in the Production System.

      (b)   If  Hydrocarbon production  from the  non-consent well  is handled
            through Facilities owned by all Parties, the Participating Parties
            shall pay  to the  owners of  the Facilities a  sum equal  to that
            portion of the total Cost of such Facilities  which one well bears
            to the total number of wells which the Facilities are  designed to
            accommodate.

      16.8.2      Operating   and  Maintenance  Charges:    The  Participating
      Parties in a non-consent  well shall pay all Costs necessary  to connect
      their well  to the Facilities and the Production System.  The expense of 
      operating and maintaining the Facilities and the Production System shall
      be allocated equally per active completion among all  active completions
      served.   Subsea  Production System  operating and  maintenance expenses
      shall be allocated equally per active subsea completion among all active
      subsea well completions served by such Subsea Production System.

      16.8.3      Payments:  The  payment of sums  pursuant to Article  16.8.1
      (Investment Charges) shall not be  a purchase of an additional  interest
      in the Production System or Facilities.  Such payments shall be included
      in  the total  amount which  the Participating  Parties are  entitled to
      recoup out of Hydrocarbon production from the non-consent well, but only
      to the  extent of  actual  Costs.   Such charges  shall be  paid by  the
      Participating  Parties in such  well by  allocating (in addition  to any
      other  Costs  allocated   to  them  under  this   Agreement)  all  Costs
      attributable  to tangible,  intangible  and other  cost categories  that
      would otherwise be allocated to the Non-Participating Parties until  all
      overinvestment is eliminated.

16.9  Underinvestment of Costs: A Non-Participating Party  shall not be liable
for settling  any underinvestment of its  share of the Costs  of a Non-Consent
Operation  unless, having the  right to do  so under this  Agreement, the Non-
Participating  Party  makes a  revised  Participation  Election  to  become  a
Participating  Party.   Unless otherwise  provided in  this Agreement,  a Non-
Participating  Party has  the right  to make  a revised  Election to  become a
Participating Party under the following Articles:

      (a)   Article 9.1.1 (Conduct of Propriety Geophysical Operations);
      (b)   Article 11.3 (Election by  Non-Participating Parties in  Deepening
            or Sidetracking Appraisal Operations);
      (c)   Article 11.4 (Deeper Drilling);
      (d)   Article 11.6.2 (Election on Proposed Feasibility Study);
      (e)   Article 12.3  (Integrated Project  Team Election); M  Article 12.7
            (Final Design AFE);
      (g)   Article 12.11 (Major Modification to Development Plans);
      (h)   Article 13.3 (Election by  Non-Participating Parties in  Deepening
            or Sidetracking Operations); and
      (i)   Article 13.4 (Deeper Drilling).

      16.9.1      Settlement  of  Underinvestments:  Upon  making   a  revised
      Participation Election,  a  Non-Participating  Party  shall  settle  any
      underinvestment for its share of the Costs in a Non-Consent Operation by
      either:

            making a Disproportionate Spending Settlement by bearing all Costs
            of all future operations  until the underinvestment is eliminated,
            (i.e. one hundred percent  (100%) of the Non-Participating Party's
            share of the Costs of the original operation); or,

            making an immediate cash  settlement to the original Participating
            Parties in the full amount of the under-investment.

      The  original   Participating  Parties   shall  select  the   manner  of
      eliminating the  underinvestment at their  sole discretion as  a General
      Matter.

      16.9.2      Cash Settlement of Underinvestment:  If there are no further
      proposed  or planned  operations on  the Contract  Area for  which Costs
      would be allocated  toward the elimination  of an under-investment,  the
      underinvested  Party shall  pay  any over-invested  Party the  remaining
      under-invested amount in  cash.  If operations on the Contract Area, for
      which Costs are  being paid by the underinvested Party  and allocated to
      the underinvestment, do not eliminate the underinvestment within two (2)
      years, or any other shorter period specified in this Agreement, from the
      date  the  underinvestment accrued,  or  upon final  settlement  of this
      Agreement, whichever comes first, the underinvested Party shall  pay the
      overinvested Party  the remaining  underinvestment in cash.   Percentage
      recoupment  for Non-Consent  Operations under  Article 16.5  (Percentage
      Recoupment  for  Non-consent  Operations)  shall not  be  considered  an
      over/underinvestment. 
   
                                  ARTICLE 17
                           WITHDRAWAL FROM AGREEMENT

17.1  Right of  Withdrawal:  Subject  to the  limitations  specified  in  this
Article, any Party (the "Withdrawing Party") may  withdraw from this Agreement
by giving prior written notice to  all other Parties (the "Remaining Parties")
stating its intention to withdraw  from continued joint operations under  this
Agreement.    The  withdrawal notice  shall  constitute  an  unconditional and
irrevocable  offer  by  the  Withdrawing  Party  to  convey to  the  Remaining
Party(ies) the  Withdrawing  Party's entire  Working Interest  in  all of  the
Leases, the  Production  System,  the  Hydrocarbon production  and  all  other
property and  equipment within a Contract  Area owned under the  terms of this
Agreement.    The  withdrawal  notice  shall  specify  an  effective  date  of
withdrawal which date shall be  at least sixty (60) days but not more than one
hundred eighty (180) days after the date of the withdrawal notice.

17.2  Response  to Withdrawal:   Within  thirty (30)  days of  receipt of  the
notice  of withdrawal,  eachof the  Remaining Parties  shall elect  in writing
either to  join in  the withdrawal  or to  remain a  Party to  this Agreement.
Failure  to respond  to a  withdrawal notice  shall be  deemed an  Election to
remain a Party to this Agreement.

      17.2.1      Unanimous Withdrawal:  If all the  Parties agree to  join in
      the withdrawal, no assignment of Working Interests  shall take place and
      the  Parties  shall be  deemed  to have  decided  to  abandon all  joint
      operations within  a Contract Area  pursuant to Article  18 (Abandonment
      and Salvage) of this Agreement.

      17.2.2      Acceptance  of  Withdrawing  Interests:  If  fewer than  all
      Parties agree to join in the withdrawal, then the Remaining Parties must
      accept  an  assignment  of  the Withdrawing  Party's  Working  Interest.
      Unless  otherwise  agreed  by  the Remaining  Parties,  the  Withdrawing
      Party's Working Interest shall be shared by  the Remaining Party(ies) in
      the  proportions which  each of  their Working  Interests (prior  to the
      withdrawal)  bear to the  sum of the Working  Interests of all Remaining
      Parties (prior  to the  withdrawal).   The Withdrawing  Party(ies) shall
      take all necessary steps to  accomplish the withdrawal by the  effective
      date and execute and deliver  to the Remaining Party(ies) all  necessary
      instruments to assign its Working Interests to the Remaining Party(ies).
      All expenses associated with the withdrawal and  the transfer of Working
      Interest shall be borne by the Withdrawing Party(ies).

17.3  Limitation Upon and Conditions of Withdrawal:

      17.3.1      Current Operations and Voting:   Any Party withdrawing prior
      to completion of any operations (pursuant to an AFE) on  a Contract Area
      in which it had previously made an Election to participate  shall remain
      fully liable for its share of the AFE.  After giving its notification of
      withdrawal, the  Withdrawing  Party shall  not be  entitled  to make  an
      Election to  participate  or vote  on  any  General Matter,  other  than
      General Matters  for  which the  Withdrawing Party  retains a  financial
      responsibility.

      17.3.2      Prior Expenses:   The  Withdrawing  Party(ies) shall  remain
      responsible  for  its  Participating  Interest  share of  any  Costs  of
      operations,  rentals, royalties,  taxes, damages  or other  liability or
      expense accruing  or  commencing prior  to  the  effective date  of  the
      withdrawal.  Prior to the effective date of the withdrawal, the Operator
      shall  render a final  statement to  the Withdrawing Party(ies)  for its
      share of  all  identifiable expenses  incurred prior  to  the notice  of
      withdrawal, along with a statement  of any deficiency in salvage  value.
      Prior to any withdrawal, a Withdrawing Party, at its sole expense, shall
      satisfy or provide security satisfactory to the remaining Party(ies) for
      all  obligations  and   liabilities  it  has   incurred  or  which   are
      attributable to  it  prior to  the  effective  date of  the  withdrawal.
      Furthermore,  any  liens,  charges  and  other  encumbrances  which  the
      Withdrawing  Party(ies) placed (or  caused to be  placed) on its Working
      Interest  prior to its  withdrawal shall be  fully satisfied or released
      prior  to its withdrawal  (unless the  Remaining Parties are  willing to
      accept the Working Interest  subject to such liens).  Provided  all such
      expenses (including any deficiency in abandonment Costs) have been paid,
      the notice of withdrawal and the assignments shall be effective upon the
      specified effective date.

      17.3.3      Abandonment Costs: The  Withdrawing Party(ies) shall  pay to
      the Operator for the benefit of the Remaining Party(ies) the Withdrawing
      Party's pro rata Working Interest  share of the estimated current  Costs
      of plugging  and  abandoning all  wells and  removal  of all  Production
      Systems, Facilities and other material and equipment serving a  Contract
      Area, less  its pro  rata share  of the estimated  salvage value  of the
      assets at the time of  abandonment.  Such Costs and salvage  value shall
      be prepared by the Operator according with Article IV of Exhibit "C" and
      approved as a General Matter.

      17.3.4      Confidentiality:  A Withdrawing Party  shall continue  to be
      bound by the confidentiality provisions of Article 7 (Confidentiality of
      Data) after  the  withdrawal, but,  as  of  the effective  date  of  the
      withdrawal,  shall  have  no  further access  to  technical  information
      relating to  joint  operations.   The  Withdrawing  Party shall  not  be
      required to  return to  the Remaining  Party(ies) any  Confidential Data
      acquired prior to  the effective date of the withdrawal.   The Remaining
      Party(ies)  shall   have  no   obligation  of  confidentiality   to  the
      Withdrawing Party.

      17.3.5      Emergencies and Force Majeure: No  Party shall be allowed to
      withdraw during  a  Force Majeure  or other  emergency  as described  in
      Article 25.1 (Force Majeure), but may withdraw from this Agreement after
      termination  of such  emergency.   The  Withdrawing  Party shall  remain
      liable  for its  share of all  Costs and  liabilities arising  from said
      emergency,  including but not  limited to the  drilling of relief wells,
      containment and  cleanup of  oil spills and  pollution and all  Costs of
      debris removal made necessary by the emergency.

                                  ARTICLE 18
                            ABANDONMENT AND SALVAGE

18.1  Abandonment  of   Wells:  Any   Participating  Party  may   propose  the
abandonment of a well which has been drilled as a joint operation by notifying
the other  Participating Parties.  If  approved as a General  Matter, the well
shall  be plugged and  abandoned in accordance  with applicable regulations at
the joint Cost and risk  of the Participating Parties.  If any  Party fails to
respond within the notice period specified  in Article 8.3 (Response Time  for
General Matters and  Elections), that Party shall be deemed  to have consented
to the abandonment of the well.

18.2  Facilities  and Production  System Salvage  and Removal Costs:  When the
Parties  owning a  Production  System, Facility  or  Subsea Production  System
desire to dispose of such equipment, such equipment disposal shall be approved
as  a General Matter.  Upon  approval as a General  Matter, the Operator shall
dispose of such equipment in the manner approved by the Participating Parties.
The Costs, risks  and net proceeds,  if any, resulting  from such  disposition
shall  be  shared  by  the  Participating  Parties   in  proportion  to  their
Participating Interests in the equipment.

18.3  Approval Not Required: The Operator  may, without prior approval of  the
Parties, dispose of any items of surplus or obsolete material and equipment if
the  current price of new materials or  equipment similar thereto is less than
One Hundred Thousand Dollars ($100,000.00).

18.4  Abandonment  Operations Required  by  Governmental  Authority: Any  well
abandonment or  Platform/Production System removal required  by a governmental
authority shall  be accomplished  by Operator  with the  Costs, risks  and net
proceeds, if any,  to be shared by the  Parties owning such well,  Platform or
Production System in proportion to their Participating Interest.

                                  ARTICLE 19
                   RENTALS, ROYALTIES AND MINIMUM ROYALTIES

19.1  Overriding  Royalties  and Burdens  on  Production:  If  any  Party  has
previously  created or  hereafter creates  any overriding  royalty, production
payment,  carried or reversionary  working interest,  net profits  interest or
other type of  burden on Hydrocarbon production  ilk addition to  the lessor's
royalty  stipulated  in  the Lease(s)  (an  "Overriding  Royalty"),  the Party
creating the Overriding Royalty  shall assume and bear all obligations  of the
Overriding   Royalty   regardless  of   that   Party's  participation   status
notwithstanding that an assignment of all or a portion of that Party's Working
Interest is  made to another Party  under this Agreement.   The Party creating
the  Overriding Royalty shall  indemnify and  hold all other  Parties harmless
from any and all claims and demands for payment asserted by the owners  of the
Overriding  Royalty.    Any  such agreements  creating  these  interests shall
contain provisions to effect this.

      19.1.1       Subsequent Creation of Overriding Royalty:  Notwithstanding
      anything herein to the contrary, if  subsequent to the execution of this
      Agreement,  any   Party  should  create  an   Overriding  Royalty,  such
      subsequently  created  Overriding  Royalty shall  be  made  specifically
      subject  to all the terms and provisions  of this Agreement and shall be
      subordinate to the rights of the other Parties to this Agreement.

      19.1.2      Subordination of Overriding  Royalties: If the Party  owning
      the Working Interest from which  the Overriding Royalty is created:  (a)
      fails to pay  when due its  share of Costs,  or (b) withdraws  from this
      Agreement, then the Overriding Royalty shall be  chargeable with its pro
      rata portion  of all  Costs (equal to  its fractional interest  in gross
      production) and  the security  rights created in  Article 6.3  (Security
      Rights) shall  be  applicable  against such  Overriding  Royalty.    The
      Operator shall  have the right  to enforce the security  rights (and all
      other  rights granted under  this Agreement)  against the owners  of the
      Overriding Royalty for the purpose of collecting Costs chargeable to the
      Overriding Royalty.

19.2  Payment  of Rentals and  Royalties: The  Operator shall make  all rental
payments  on behalf of the Parties for  the Contract Area.  The Operator shall
use reasonable  care to make proper and timely payment of all rentals, minimum
royalties or  other similar  payments accruing under  the terms of  the Leases
which are included within the Contract  Area.  Upon receipt of proper evidence
of all such payments and the Operator's invoice for its proportionate share of
all such payments, each Non-Operating  Party shall reimburse the Operator  for
the Non-Operating Party's Working Interest share of all such payments.  In the
event Operator fails to make  proper payment of any rental or  minimum royalty
or  similar payments accruing under the terms  of the Lease(s) through mistake
or oversight where such payment is required to continue a Lease in force, then
Operator shall not be liable to the other Parties for any resulting damages or
any loss which results from such nonpayment.

      19.2.1      Non-Participation in  Payments: If  any Party elects  not to
      pay its  share of any rental,  minimum royalty or similar  payment, such
      Non-Participating Party  shall notify the other Parties of its intention
      not to  pay its share of such payment at  least sixty (60) days prior to
      the date  on which  such  payment is  due.   Upon  this occurrence,  the
      Operator shall  make  such payment  solely for  the benefit  of all  the
      Participating  Parties.  The Non-Participating Party shall assign to the
      Participating Parties all of its  Working Interest in the Contract  Area
      or portion thereof, maintained by such payment.

      19.2.2      Royalty Payments: Each Party shall  pay or cause to be  paid
      all royalty  and other  amounts payable  out  of Hydrocarbon  production
      taken from the Lease(s) for its  account.  During any time in  which the
      Participating  Parties   in  a   Non-Consent  Operation  takes   a  Non-
      Participating Party's share of Hydrocarbon production, the Participating
      Parties shall  bear the  Lease royalty on  such Hydrocarbon  production.
      When necessary for calculating the recoupment of a Non-Consent Well, any
      Non-Operating  Party receiving  its share  of Hydrocarbon  production in
      kind shall advise the Operator (in writing on or before the tenth day of
      the  month following the  month in  which the Hydrocarbon  production is
      sold or  used off the premises)  of the volumes of  Hydrocarbons sold or
      used off  the  premises and  the prices  received  for such  Hydrocarbon
      production.

      19.2.3      Federal Offshore Oil Pollution  Compensation Fund Fee:  Each
      Party  agrees  to  pay  and  bear  the  Federal Offshore  Oil  Pollution
      Compensation Fund Fee payable on its share  of Hydrocarbon production or
      any  fees being required  by section 302 of  the Outer Continental Shelf
      Lands  Act of  1978, the Oil  Pollution Act  of 1990  and any subsequent
      statutes   and  regulations  promulgated  pursuant  to  those  statutes.
      However,  should the oil owned by  a Party be reported to  the MMS (or a
      successor regulatory agency) by another Party in its reporting form, the
      reporting Party shall pay the required fees  on all volumes reported and
      the non-reporting Party shall reimburse the reporting Party for all fees
      paid on its behalf

                                  ARTICLE 20
                                     TAXES

20.1  1nternal  Revenue Provision: Notwithstanding  any provisions herein that
the rights and liabilities  hereunder are several and not  joint or collective
or  that the  Agreement and  the operations  hereunder shall not  constitute a
partnership  under  state  law,  if,  for  federal  income tax  purposes,  the
Agreement  and the operations  hereunder are  regarded as a  partnership, each
Party, hereby elects to be excluded from the application of all or any part of
the provisions of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue
Code of 1986, as amended, or similar provisions of applicable state laws.

20.2  Other Taxes  and  Assessments: The  Operator,  on  behalf of  the  Joint
Account, shall file all tax returns and reports required by law and  shall pay
all applicable taxes  [other than income  or other taxes  provided in  Article
20.2.2 (Production and Severance Taxes)] or assessments levied with respect to
operations conducted under this Agreement.  The Parties shall promptly furnish
the  Operator  with  copies  of any  notices,  assessments  or  tax statements
received  pertaining to taxes to be paid by  the Operator.  The Operator shall
charge each Party its Working Interest share of all taxes and assessments paid
and, upon written request from  a Non-Operating Party(ies), provide copies  of
all  tax returns, reports,  tax statements and  receipts for such  taxes.  The
Operator  shall  not  allow  any  taxes  to  become  delinquent,  unless  such
nonpayment is approved as a General Matter.

      20.2.1      Property Taxes:    The  Operator, on  behalf  of  the  Joint
      Account, shall render for ad valorem property  tax purposes all personal
      property and/or  real  property covered  by  this  Agreement as  may  be
      subject  to such  taxation and  shall pay  such property  taxes for  the
      benefit of each Party.  The Operator shall timely and diligently protest
      to a final determination any  valuation it deems unreasonable.   Pending 
      such determination, the  Operator may elect to pay under  protest.  Upon
      final determination, the Operator shall pay the  taxes and any interest,
      penalty or cost accrued as a result of such protest.  The Operator shall
      charge each  Party  its Working  Interest  share  of such  tax  payments
      including  interest, penalties  and all  reasonable Costs  in accordance
      with Exhibit "C" (Accounting Procedure).

      20.2.2      Production  and Severance  Taxes: Each  Party shall  pay, or
      cause  to be paid,  all production, excise,  severance and other similar
      taxes  due on any  Hydrocarbon production which  it received pursuant to
      the terms of this Agreement.  Any Party responsible for such tax payment
      shall upon written request from the Operator, provide evidence that such
      taxes have been paid.

                                  ARTICLE 21
                              INSURANCE AND BONDS

21.1  Insurance:  The Operator shall  maintain the insurance coverage provided
in Exhibit "B" (Offshore Insurance Provisions) attached hereto and charge each
Party its Working Interest share of the Cost of such coverage.

21.2  Bonds:  Operator shall obtain and maintain any and all bonds required to
be carried by  any applicable law, regulation or rule.   Operator will require
all contractors to obtain and maintain all bonds required to be carried by any
applicable law, regulation or rule.

                                  ARTICLE 22
         LIABILITY, CLAIMS, LAWSUITS AND ALTERNATE DISPUTE RESOLUTION

22.1  Individual Obligations:  The obligations, duties and  liabilities of the
Parties shall be several and not joint or collective; and,  except as provided
in  Article 20  (Taxes), nothing contained  herein shall ever  be construed as
creating a  partnership,  joint venture,  association  or other  character  of
business entity  recognizable in law for  any purpose.  Each  Party shall hold
all the other Parties harmless from liens and encumbrances on the Leases or in
a Contract Area arising as a result of its acts or omissions.

22.2  Notice of Claim or Lawsuit: If a  claim is made against any Party or  if
any Party  is sued on account of any matter arising from operations hereunder,
or on any matter affecting the Leases or Contract Area, or if any hearings are
held pursuant  to  operations under  this  Agreement,  such Party  shall  give
written notice  of the  lawsuit or  hearing to  the other  Parties as soon  as
reasonably practicable.

22.3  Settlements: The Operator may settle any single  damage claim or lawsuit
involving operations hereunder if the expenditure does  not exceed Two Hundred
and  Fifty  Thousand Dollars  ($250,000)  and if  the  payment is  in complete
settlement  of such  claim or  suit.   If the  amount required  for settlement
exceeds such amount, the Parties shall  determine the further handling of  the
claim or suit pursuant to Article 22.4 (Defense of Claims and Lawsuits) below.

22.4  Defense of Claims and Lawsuits:  he Operator shall supervise the conduct
of any litigation.  During  litigation, suits may be settled in  excess of the
amount specified in Article 22.3  (Settlements) above only with the  unanimous
consent  of all Participating Parties in the  operation out of which the claim
arose; however,  any Party shall  have the  right to independently  settle any
claim which is attributable to  its interest alone as long as  such settlement
does  not  directly adversely  affect  the interest  or  rights  of the  other
Parties.    No charge  shall  be  made for  services  performed  by the  staff
attorneys of any Party, but all other expenses incurred by the Operator in the
defense  of suits for the Parties, together  with the amount paid to discharge
any final judgment,  shall be considered Costs of operation  and shall be paid
by the Parties in proportion to their Participating Interest  in the operation 
out of which the claim arose.  Outside counsel shall be employed only with the
approval of the affected Parties as a General Matter under Article 8.2 (Voting
Procedures on  General Matters and Elections).   If it is  agreed that outside
counsel is  to be employed,  the fees  and expenses  shall be  charged to  the
Parties in proportion  to their Participating Interest in the operation out of
which such claim arose in accordance with  Exhibit "C" (Accounting Procedure).
Each Party  shall also  have the right  to hire  its own outside  counsel with
respect to its own defense.

22.5  Liability for  Damages:  To the  extent allowed  by  law, liability  for
losses,  damages, Costs,  expenses, claims,  liabilities and  lawsuits arising
from  operations  under this  Agreement not  covered by  or  in excess  of the
insurance carried  for the  Joint  Account shall  be borne  by  each Party  in
proportion to  its Participating Interest in the  operations out of which such
liability arises, except when such liability results from the gross negligence
or willful misconduct of a Party(ies), in which case such  Party(ies) shall be
solely liable for same.

22.6  Indemnification  for Non-Consent  Operations: To  the extent  allowed by
law, the  Participating Parties agree  to hold  the Non-Participating  Parties
(and their  Affiliates, agents,  insurers, directors, officers  and employees)
harmless and  to  indemnify and  protect  them  against all  claims,  demands,
liabilities,  regulatory decrees  and  liens for  environmental pollution  and
property damage or personal injury, including sickness and death, caused by or
otherwise  arising  out  of  Non-Consent Operations,  and  any  loss  and cost
suffered by any Non-Participating Party  as an incident thereof, except  where
the negligent acts or omissions  of any Non-Participating Party contribute  to
that loss or cost.  Should any indemnity contained herein be determined to  be
in  violation  of  law   or  public  policy,  the  Parties  agree   that  said
indemnity(ies) shall then be enforceable only to the maximum extent allowed by
law.

22.7  Indemnification for  Prior  Operations: To  the extent  allowed by  law,
notwithstanding anything to the contrary in  this Agreement, a Party shall not
be liable to any other Party for any losses, damages, costs, expenses, claims,
liabilities  or lawsuits arising  from operations which  occurred prior to the
execution  of or joinder to this Agreement.   Furthermore, the Parties who are
responsible for  such pre-execution or pre-joinder  liability shall indemnify,
defend and hold harmless the aforesaid non-responsible Parties.

22.8  Damage  to  Reservoir, Loss  of  Reserves  and Profits:  Notwithstanding
anything to the contrary contained herein, no Party to this Agreement shall be
liable to  any  other Party  to this  Agreement for  loss  of or  damage to  a
reservoir(s),  loss  of Hydrocarbons,  or for  loss  of profits  or  for other
consequential or business interruption damages.

22.9  Non-Essential  Personnel:  A Party  hereto  who requests  transportation
and/or  access to a Production  System, vessel or  any other Facility utilized
for  Lease operations for any person who is not directly involved with a joint
or Non-Consent Operation under this Agreement, agrees to protect and indemnify
the  other Parties hereto as to any cost,  liability or judgment incurred as a
result of a  claim, demand, cause  of action  or suit brought  by such  person
arising  out of  said person's  transportation and/or  access to  a Production
System, vessel or any Facility utilized for Lease operations.  Notwithstanding
anything to the  contrary herein, any  such indemnification and/or  protection
provided herein shall be inapplicable where  the claim demand, cause of action
or suit  arises  out of  the  willful  misconduct, intentional  act  or  gross
negligence of the Party so indemnified and/or protected.

22.10 Dispute  Resolution  Procedure:  The   Parties  agree  that  any  claim,
controversy or dispute arising out of, relating to or in  connection with this
Agreement,  including  the  interpretation,  validity, termination  or  breach
thereof,  shall be resolved  solely in accordance  with the Dispute Resolution 
Procedure set forth in Exhibit "H" to this Agreement.

                           ARTICLE 23 CONTRIBUTIONS

23.1  Contributions from Third Parties: The Parties may seek to obtain support
from third partiesfor joint operations through contributions  of cash, acreage
or  data.  Any  Party may proposeto  seek support for  joint operations on the
Contract  Area through  contributions from  third parties.   Each  Party shall
notify all  other  Parties of  any  contribution  offers received  from  third
parties.  Any  proposal or offer  from third parties  shall be subject  to the
General Matter approval of the Parties  prior to either accepting the offer or
making such  a proposal.  Upon  General Matter approval, the  Operator, unless
otherwise agreed, shall negotiate all  contributions on behalf of the  Parties
(with prior  consultation of the Parties  and the prior agreement  of the cash
equivalent  value for any  non-cash consideration offered  or received).  Upon
receiving  a response  from a  third  party to  the  Operator's proposal,  the
Operator  shall notify  all of  the  Parties of  the proposal  and its  terms.
Within thirty (30) days of receipt of the Operator's notice, the Party's shall
vote as a  General Matter on  the proposal.   If a proposal  is approved as  a
General Matter, any  Party shall have the right to  decline participation in a
contribution and  be relieved of any obligations and benefits thereunder.  The
Participating Party(s) shall not be required to obtain the consent of the Non-
Participating Party regarding any contribution or trade.

      23.1.1      Cash  Contributions: In  the  event a  cash contribution  is
      accepted  towards the  drilling  of a  well,  in which  all  Parties are
      Participating Parties,  said cash contribution  shall be turned  over to
      the  Operator, and  the Operator  shall credit  the amount  of the  cash
      contribution against  the  Costs  of  the proposed  joint  operation  in
      proportion  to each Party's  Participating Interest.   In the  event the
      Participating Parties accept  a cash contribution toward the drilling of
      a well  where fewer than all Parties are Participating Parties, the cash
      contribution shall be credited among  the Participating Parties in  such
      well to the extent that each Participating Party shall receive a portion
      of  the contribution equal  to its  Participating Interest in  the well.
      The cash contribution  shall be deducted  from the cost of  drilling and
      completing  the  well  prior to  computation  of  the Recoupment  Amount
      Participating Parties  shall be entitled  to receive out  of Hydrocarbon
      production from the Non-Participating Parties in accordance with Article
      16.0  (Non-Consent Operations).

      23.1.2      Acreage  Contributions: Any  contribution of  acreage toward
      the  drilling of  a joint  well shall  be  offered, without  warranty of
      title, to the Participating Parties in proportion to their Participating
      Interests.   If  all of  the Parties  to this  Agreement participate  in
      accepting  their share  of the  assignment of  the acreage,  the acreage
      shall become  a part of the  Contract Area and  subject to the  terms of
      this Agreement.  Any acreage contribution in which less than all Parties
      are Participating Parties shall, to  the extent possible, be subject  to
      the  terms  of an  Operating  Agreement  substantially similar  to  this
      Agreement,  and shall apply  separately to  the acreage acquired  by the
      Participating Parties.

      23.1.3      Data   Contributions:   Contributions   of   geoscience   or
      engineering data offered by third parties in support of joint operations
      shall be handled pursuant to Article 7.0  (Confidentiality of Data), and
      may   be  accepted  by   the  Participating  Parties   so  long  as  the
      confidentiality of  any data  belonging to Non-Participating  Parties is
      preserved.  No data  owned by a Non-Participating Party  may be included
      in  any data contribution  without the consent  of the Non-Participating
      Party.

23.2  Restricted Bidding:  If at any  time during the term  of this Agreement,
more than one of the Parties  are on the list of restricted joint  bidders for
OCS lease  sales as issued by  the Minerals Management Service  pursuant to 30
CFR 256.44, then the Parties agree to comply with all statutes and regulations
regarding restricted joint  bidders on the  OCS in effect  during the term  of
this Agreement.   In the case of multiple restricted  bidders being Parties to
this Agreement,  the provisions of this  Agreement shall be amended  to delete
those provisions  which  would otherwise  require a  transfer  of a  leasehold
interest prohibited by 30 CFR 256.44(c).

                                  ARTICLE 24
                ASSIGNMENTS AND PREFERENTIAL RIGHT TO PURCHASE

24.1  Assignments  and Transfers of  Working Interests: All  of the Parties to
this Agreement  agree to  give prior  written notice to  the Operator  and the
other Parties of any proposed assignment, transfer or other disposition of all
or a portion  of a Party's Working  Interest covered by  this Agreement.   Any
assignment of a Working Interest covered by this Agreement shall  be made to a
financially  responsible  assignee  and  shall  be  further  subject  to  this
Agreement and the following provisions:

      24.1.1      Exceptions  to  Prior  Written  Notice:  Notwithstanding any
      provision  of this Agreement  to the contrary,  an assigning Party shall
      not be required  to provide prior written notice with  respect to any of
      the following:

      (i)   A  Party  seeking  to mortgage,  pledge,  hypothecate  or  grant a
            security interest in all or a  portion of its Working Interest  in
            the Leases, any equipment or  Facilities or each Party's share  of
            Hydrocarbon  production  from  a  Contract  Area.    However,  any
            encumbrance  arising  from  the  financing  transaction  shall  be
            expressly subordinated to the rights of the  other Parties to this
            Agreement, and the assigning Party  shall ensure that any mortgage
            or  encumbrance shall be  without prejudice  to the terms  of this
            Agreement; or,
      (ii)  A Party assigning all or an undivided part of its Working Interest
            to an Affiliate.

      24.1.2      Effective Date of Assignments: Except as otherwise  provided
      in this  Agreement, the effective  date for  any assignment shall  be at
      least sixty  (60) days but not  more than one hundred  eighty (180) days
      after the date  of the written notice.  No  assignment, other than those
      allowed by Article 24.1.1 (Exceptions to Prior Written Notice), shall be
      binding upon the Parties unless  and until (i) the assignor  or assignee
      provide all  remaining  Parties with  a photocopy  of  a fully  executed
      assignment, and an executed MMS Form 1123,  Designation of Operator" and
      (ii)  receipt  of  any  necessary  approval by  the  Mineral  Management
      Service.  The Parties shall promptly join in such reasonable  actions as
      may  be necessary to secure such approvals and shall execute and deliver
      any   and  all  documents  reasonably   necessary  to  effect  any  such
      assignment.  Any  costs attributable to such an assignment  shall be the
      sole obligation of the assignor.

      24.1.3      Minimum  Transfer  of  Interest: Unless  unanimously  agreed
      otherwise, any transfer to a  third party shall be limited to  a minimum
      Working  Interest of twelve  and one-half percent  (12.50%) in an entire
      Contract  Area.   No  assignment or  transfer of  any  interest in  this
      Agreement or  any Lease or lands subject to this Agreement shall be made
      that is  not an undivided Working  Interest in all of  a Party's Working
      Interest  in  a  Contract  Area unless  otherwise  provided  under  this
      Agreement.  This limitation on any sale or farmout shall terminate after
      Election to participate in the Fabrication AFE.  If the Working Interest
      of any Party is subsequently conveyed or  distributed to other entities,
      so that any one of  them owns a Working Interest of less than twelve and 
      one-half percent (12.50%), such  entities collectively shall be entitled
      to  only a single  joint representative at  meetings of  the Parties and
      shall vote or act collectively  on all General Matters or  Participation
      Elections.  Such Parties shall be entitled to only a single set of logs,
      samples,  information and reports  and shall  be considered as  only one
      Party for all purposes under this Agreement.

      24.1.4      Form  of Assignments: Except  in those  certain transactions
      set forth  in  Article 24.2.3,  any  assignment of  any  interest in  or
      subject  to  this  Agreement   shall  incorporate  provisions  that  the
      assignment is inferior to and  made expressly subject to this  Agreement
      and providing for  the assumption by the assignee of  the performance of
      all of assignor's obligations under this Agreement.   Any assignment not
      in compliance with this provision shall be voidable by the non-assigning
      Parties.

      24.1.5      Limited Warranty: Any  assignment, vesting or relinquishment
      of  Working Interest between  the Parties under  this Agreement shall be
      made  without  warranty  of title;  however,  all  encumbrances made  by
      assignor or known by assignor shall be disclosed to assignee.

24.2  Preferential Right  to  Purchase:  Subject to  the  provisions  of  this
Agreement, each Party shall have the right to freely transfer and alienate its
Working Interest.  Any transfer of all or an undivided interest in the Party's
Working  Interest, directly or  indirectly, shall be  subject to the following
provisions:

      24.2.1      Notice  of  Proposed  Transaction:  Should  any  Party  (the
      "Assignor") desire to  dispose of all  or an  undivided interest in  its
      Working  Interest  in  a  Contract Area  (whether  offered  as  a single
      property disposition or as part of a multi-property disposition) through
      one of the following type transactions:

            farmout(s)
            cash sale(s); or,
            non-simultaneous like-kind exchange(s)

      and  has received  a  bona fide  offer  (whether from  a  Party to  this
      Agreement or from a third party) which the Assignor is willing to accept
      for the purchase or  other acquisition of the Working Interest,  each of
      the remaining Parties to this Agreement shall  have a preferential right
      to  purchase  all  or  a Party's  proportionate  share  of  such Working
      Interest.   In such case, the Assignor shall promptly give prior written
      notice of the proposed transaction to  the other Parties.  The notice of
      the proposed  transaction shall provide full  information concerning the
      transaction including at least:

            the  name and address  of the  prospective purchaser (who  must be
            ready, able and willing to acquire the interest),
            the  purchase price  or other  consideration offered  (which shall
            include the  monetary  quivalent in  U.S. Dollars  based upon  the
            reasonable market value of any consideration other than cash), and
            all other material terms of the offer.

      24.2.2      Exercise of Preferential Right to Purchase:  For a period of
      thirty (30) days from receipt of the notice, the remaining Parties shall
      have the optional right to elect to acquire the Working Interest offered
      (on the same terms and conditions, or on equivalent terms for a non-cash
      transaction as stated in the notice) without reservations or conditions.
      The Election  to exercise  the preferential right  shall be made  by the
      exercising Party giving the Assignor  written notice of its Election  to
      purchase prior to the  expiration of the thirty (30) day period.   If an
      Election  to preferentially  purchase  is made,  the  Assignor shall  be 
      required to transfer the Working Interest to the Party at  the price and
      on  the  terms  specified  in the  notice.    The  transaction  shall be
      concluded within a  reasonable time, but  no later than sixty  (60) days
      after  receipt  of the  Election  to  preferentially  purchase  (plus  a
      reasonable time  to secure  all necessary  governmental approvals).   If
      more than one Party elects to acquire the Working Interest offered, then
      each  Party shall acquire  a proportion of  the Working Interest offered
      equal to the ratio its own pre-acquisition Working Interest bears to the
      total pre-acquisition Working Interests of all acquiring Parties (unless
      the acquiring Parties agree upon a different ratio).  If  only one Party
      elects to  acquire  the Working  Interest offered,  it  may require  the
      assignor to  transfer all of the  Working Interest offered, but  may not
      require the transfer of less than all Working Interest offered.

      24.2.3      Transactions  Not  Affected  by  the  Preferential Right  to
      Purchase: This preferential right to  purchase shall not exist or  apply
      when a Party proposes to:

            (a)   mortgage  its interest (including assignments of Hydrocarbon
                  production executed as further security for the debt secured
                  by such mortgage), or
            (b)   exchange  all  or  an  undivided  interest  in  its  Working
                  Interest  in  the  Contract  Area  for  property  identified
                  outside the Contract Area at the time of the exchange, or
            (c)   dispose of its Working Interest by:

                        merger, reorganization or consolidation;
                        a sale or  other transfer  of substantially  all of  a
                        Party's assets in the Gulf of Mexico; or
                        a sale or other transfer to an Affiliate.

      24.2.4      Completion  of the  Transaction:  If none  of the  remaining
      Parties elect to exercise its preferential right to purchase the Working
      Interest  offered, the Assignor  shall be free  to complete the proposed
      transaction on  the  terms disclosed  in the  notice.   However, if  any
      proposed transaction  is not completed  within one hundred  twenty (120)
      days from  the  expiration of  the thirty  (30)  day preferential  right
      Election  period  (plus  a  reasonable  time  to  secure  any  necessary
      governmental approvals) or, if the terms of the proposed transaction are
      amended  in  any way,  the  proposed  transaction  shall  be  considered
      withdrawn and the Working Interest offered shall again be subject to the
      preferential right to purchase as if the originally proposed transaction
      had never been proposed.

                                  ARTICLE 25
                                 FORCE MAJEURE

25.1  Force  Majeure: If as  a result of  Force Majeure any  Party is rendered
unable,  wholly or in part, to carry  out its obligations under this Agreement
(except for  the payment of  money) then the  obligations of the  Party giving
such notice, so far as and to the extent that the obligations are  affected by
such Force Majeure, shall be suspended during the continuance of any inability
so caused, but for no  longer period.  For purposes of  this Agreement, "Force
Majeure" shall be inclusive of but not limited to the following events: flood,
hurricane  or  other  acts  of  God;  a  fire,  blowout,  oil  spill or  other
environmental  catastrophe;  war,  civil disturbance,  labor  dispute, strike,
lockout,  compliance with  any law,  order,  rule or  regulation, governmental
action  or delay  in  granting  permits  or permit  approvals  as  needed;  by
inability to secure  materials or rig; or by any  other cause, whether similar
or  dissimilar, beyond the  reasonable control of  the said Party.   The Party
claiming Force  Majeure shall notify  the other  Parties of the  Force Majeure
situation within a reasonable time (not  to exceed thirty (30) days) after the
occurrence of  the facts relied  on and shall keep  all Parties informed  of A 
significant developments.  The notice of Force Majeure shall give full details
of said  Force Majeure,  and also  (if possible) estimate  the period  of time
which said  Party  will require  to  remedy the  Force  Majeure or  to  resume
performance of its obligations under this Agreement.  The affected Party shall
use  all  reasonable  diligence  to  remove  or  overcome  the  Force  Majeure
situation, but  shall not be obligated  to settle any labor  dispute except on
terms acceptable to it and all such disputes shall be handled within  the sole
discretion of the affected Party.

                                  ARTICLE 26
                           ADMINISTRATIVE PROVISIONS

26.1  Term of Agreement: This Agreement shall become binding upon execution by
all  Parties  with an  effective date  as set  forth in  the preamble  to this
Agreement.   This Agreement shall remain in effect from the effective date and
for so long as any of the Leases in a Contract Area shall remain in effect  or
until all  assets and  operations have  been turned over  to a  single Working
Interest owner.   Termination of this  Agreement shall  not relieve any  Party
from any  Costs or liability accrued  or incurred prior to  the termination of
this Agreement, and  the provisions of this Agreement  shall continue in force
for such additional time as necessary until:

      (a)   all wells have been plugged and abandoned;
      (b)   all  property and equipment  in a  Contract Area belonging  to the
            Parties are disposed of by the Operator and all claims or lawsuits
            have been settled or otherwise disposed of, and,
      (c)   a  final  accounting  and  settlement has  been  made  under  this
            Agreement (including settlement of  any gas imbalances pursuant to
            Exhibit "D").

      The Operator shall have a reasonable period of time after the occurrence
of an  event of termination in  which to conclude the  administration of joint
operations and to make a distribution of assets.  During this period  of time,
the Operator shall continue to have and shall exercise all  powers granted and
meet all  duties  imposed by  this  Agreement  until all  provisions  of  this
Agreement are fully executed.

26.2  Time  Limits: Time  is of  the essence  in this  Agreement and  all time
limits shall be  strictly construed and enforced.  The failure or delay of any
Party in the enforcement of the rights granted under this  Agreement shall not
constitute a waiver of said  rights nor shall it be considered as  a basis for
estoppel.  Such Party may exercise its rights under this Agreement despite any
delay or failure to enforce the rights when the right or obligation arose.

26.3  Waiver of Right  to Partition: Each Party for itself  and its successors
and assigns waives the right to bring an action for partition of  its interest
in the Leases  and lands or personal property held  subject to this Agreement,
and covenants  that during the existence of this Agreement it shall not resort
at any  time to  any action at  law or in  equity to  partition any or  all of
Leases and lands or personal property subject to this Agreement.

26.4  Compliance With Laws and Regulations: This Agreement, and all operations
conducted by the Parties pursuant to this Agreement, are expressly subject  to
and shall  comply with all laws, orders, rules and regulations of any federal,
state  or  local governmental  authority having  jurisdiction over  a Contract
Area.  No Party shall  suffer a forfeiture or be liable in damages for failure
to comply with any of  the provisions of this Agreement if such  compliance is
prevented by or  if such failure  results from compliance with  any applicable
law, order, rule or regulation.

      26.4.1      Applicable  Law: THE  PROVISIONS OF  TH1S AGREEMENT  AND THE
      RELATIONSHIP OF  THE PARTIES SHALL BE GOVERNED AND INTERPRETED ACCORDING
      TO  FEDERAL LAWS  AND  LAWS OF  STATE  OF  LOUISIANA WITHOUT  REGARD  TO 
      PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REFER THE MATTER  TO THE LAWS
      OF ANOTHER  JURISDICTION.   UNDER  NO CIRCUMSTANCES  WILL  ANY PARTY  BE
      LIABLE  TO  THE OTHER  FOR  PUNITIVE  DAMAGES, CONSEQUENTIAL,  INDIRECT,
      UNFORESEEN, LOSS OF PROFIT, OR OTHER INDIRECT  OR PENALTY DAMAGES EITHER
      IN LAW OR EQUITY.

      26.4.2      Severance  of  Invalid Provisions:  In  case  of a  conflict
      between the  provisions  of this  Agreement and  the  provisions of  any
      applicable  laws  or   regulations,  the  provisions  of   the  laws  or
      regulations shall govern over the provisions of this Agreement.  If, for
      any reason and for so long as, any clause or provision of this Agreement
      is held  by  court of  competent jurisdiction  to  be illegal,  invalid,
      unenforceable  or unconscionable  under any  present or  future  law (or
      interpretation thereof),  the remainder of  this Agreement shall  not be
      affected by such illegality or  invalidity.  Any such invalid  provision
      shall be  deemed severed  from this Agreement  as if this  Agreement had
      been executed  with the  invalid provision  eliminated.   The  surviving
      provisions of  this  Agreement shall  remain in  full  force and  effect
      unless  the  removal of  the invalid  provision destroys  the legitimate
      purposes of this Agreement; in which event this Agreement shall be  null
      and void.   The Parties shall  negotiate in good faith  for any required
      modifications to this Agreement.

      26.4.3      Fair and Equal Employment: Each  of the Parties is an  Equal
      Opportunity Employer.  To the extent that this Agreement may  be subject
      to Executive Order 11246,  as amended, the equal opportunity  provisions
      (41  CFR  60-1) are  incorporated  herein  by reference.    If the  Non-
      Discrimination  in the  OCS  provisions  of 30  CFR  270  apply to  this
      Agreement  and the operations  conducted under it,  the provisions of 30
      CFR 270 are also incorporated  by reference.  To the extent  required by
      applicable laws  and regulations,  this Agreement  also includes and  is
      subject to  the affirmative action clauses  concerning disabled veterans
      and veterans  of the  Vietnam era  (41 CFR  60-250) and the  affirmative
      action clauses concerning employment of the handicapped (41 CFR 60-741),
      which clauses are incorporated herein by reference.   In performing work
      under this Agreement, the Parties agree to comply with (and the Operator
      shall  require   each  independent   contractor  to  comply   with)  the
      governmental  requirements set  forth  in Exhibit  "E" attached  hereto,
      pertaining  to nonsegregated facilities.  This Agreement and the Parties
      are also subject to any  other applicable rules and regulation  relating
      to nondiscrimination  that may be  promulgated from time to  time by any
      governmental  body having jurisdiction  over the subject  matter of this
      Agreement-

26.5  Construction and  Interpretation of This  Agreement: The  interpretation
and construction  of the  terms  of this  Agreement will  be  governed by  the
following conventions:

      26.5.1      Headings  for   Convenience:    Except  for  the  definition
      headings  contained  in  Article  2  (Definitions),  all  the  table  of
      contents, captions,  numbering sequences and paragraph  headings used in
      this Agreement  are inserted for  convenience only and  shall in  no way
      define, limit or  describe the scope or intent of  this Agreement or any
      part thereof, nor have any  legal effect other than to aid  a reasonable
      interpretation of this Agreement.

      26.5.2      Gender and Number:  The  use of pronouns in whatever  gender
      or number  shall be deemed  to be a proper  reference to the  Parties to
      this Agreement though the Parties  may be individuals, business entities
      or groups thereof Any necessary grammatical changes required to make the
      provisions of this Agreement refer to the correct gender or number shall
      in all instances be assumed as though each case was fully expressed. 

      26.5.3      Independent Representation:  Each  Party has had the benefit
      of independent representation with respect to the subject matter of this
      Agreement.    This  Agreement,  though  drawn  by  one Party,  shall  be
      construed  fairly and  reasonably and  not more  . strictly  against one
      Party than another.

26.6  Integrated Agreement: This Agreement  and the exhibits attached thereto,
contain the  final and  entire Agreement  of the Parties  with respect  to the
subject matter of this contract.  There are no representations, warranties  or
promises,  oral or  written between the  Parties other than  those included in
this Agreement.

      Upon execution of this Agreement,  by all Parties, this Agreement  shall
supersede and  replace all previous negotiations,  understandings or promises,
whether written or  oral, relative to the subject of this  Agreement.  Each of
the  Parties  acknowledges  that  no   other  Party  has  made  any   promise,
representation or warranty that is not expressly stated in this Agreement This
Agreement  shall  not be  modified or  changed except  by a  written amendment
signed  by  all  the  Parties.    This Agreement  is  entire  as  to  all  the
performances  to  be  rendered under  it  and breach  of  any  provision shall
constitute a breach of the entire Agreement.

26.7  Execution of Documents:

      26.7.1      Binding  Effect: This  Agreement shall  be binding  upon and
      inure  to the benefit of the Parties and their respective successors and
      assigns and shall constitute a covenant running with the land and Leases
      comprising a Contract  Area.  This Agreement does not  benefit or create
      any rights in any person or entity not a Party to this Agreement.
      26.7.2      Corporate  Authority:   If  any  Party  is  a legal  entity,
      including  but  not  limited  to,  an  association,  corporation,  joint
      venture,  limited   partnership,  partnership   or  trust,   such  Party
      represents to the other  Parties that the execution and delivery of this
      Agreement and  the completion  of transactions contemplated  herein have
      been duly  authorized by  all necessary  corporate  proceedings or  have
      received all necessary management approvals.

      26.7.3      Further  Assurances:  Each Party further  agrees to take any
      and all  actions necessary and sign  any and all documents  necessary to
      implement the terms of this Agreement.  Any necessary documents (e.g., a
      Designation  of Operator, etc.)  shall be  prepared and executed  by all
      Parties within thirty (30)  days from the  receipt of a written  request
      for same from any Party.

      26.7.4      Multiple Counterparts:   This  Agreement may be  executed by
      signing  the original or  a counterpart thereof.   If  this Agreement is
      executed  in multiple counterparts, each counterpart  shall be deemed an
      original and all of  which when taken together shall  constitute but one
      and the same Agreement with the same effect as if all Parties had signed
      the same  instrument.  This Agreement  may also be ratified  by separate
      instrument referring to this Agreement and adopting by reference all the
      provisions of this Agreement.  A ratification shall have the same effect
      as an execution of the original Agreement.

      IN  WITNESS WHEREOF, each  Party, through  its duly authorized  agent or
representative,  has executed this  Agreement effective  as of the  date first
above written.

WITNESSES                                 SHELL DEEPWATER DEVELOPMENT INC.

__________________            BY: ______________________________

__________________            ITS:Attorney-in-Fact______________ 

                              Date: ____________________________



                              READING & BATES DEVELOPMENT CO.

__________________            BY: _____________________________

__________________            ITS: ____________________________

                              DATE: ___________________________



                                 EXHIBIT "A-1"

Attached to and  made a part of the Joint  Operating Agreement dated effective
______________, by and between Shell Deepwater Development Inc.
and Reading & Bates Development Co.


Lease    Block    Effective   Expiration        Gross
Number   Number   Date        Date              Acres

Royalty  ORR      Lease Ownership


                                 EXHIBIT "A-2"

         Attached to and made a part of the Joint Operating Agreement
dated effective _______________by and between Shell Deepwater Development Inc.
                      and Reading & Bates Development Co.


WORKING INTEREST OF THE PARTIES, OPERATOR AND REPRESENTATIVES


I.    Prospect Area


II.   Working Interest of the Parties


III.  Operator


IV.   Addresses                           Names of Representatives


                                  EXHIBIT "B"

         Attached to and made a part of the Joint Operating Agreement
  dated effective _______________ by and between Shell Deepwater Development
                                     Inc.
                      and Reading & Bates Development Co.

                         OFFSHORE INSURANCE PROVISIONS

I.    WORKERS COMPENSATION & EMPLOYERS LIABILITY INSURANCE 
Operator  will  carry Workers  Compensation insurance  in compliance  with all
State and Federal Regulations in the  jurisdiction where any of the work under
this  agreement shall be  performed, including the  following special coverage
extensions:

      1. Employers' Liability coverage with limits of not less than $1 Million
         per accident.

      2. U.S. Longshoremen and Harbor Workers' Act and Outer Continental Shelf
         Lands Act coverage.

      3. Employers' Liability  arising out  of  Maritime operations  including
         coverage for benefits and damages under the Jones  Act with limits of
         at least $1,000,000 per occurrence.

      4. "In Rem" endorsement providing that a claim "In Rem" shall be treated
         as a claim against the Operator.

      5. Waiver of Subrogation endorsement which waives the insurers rights of
         subrogation against all of the Parties to this agreement.

Premiums  for the  insurance above  specified shall  be charged  to  the Joint
Account.   Provided,  however, that  if the  Operator  either self-insures  or
effectively self-insures, the Operator shall  charge to the joint account,  in
lieu  of any premiums for such insurance, an  amount not to exceed the workers
compensation  manual rates times  the payroll.   Claims under Operator's self-
insurance program shall not be charged to the joint account.

Except as provided  above, Operator shall not be obligated  to obtain or cause
to be carried insurance for the benefit of the joint  account.  Operator shall
not obtain  or cause  to be  carried for  the  benefit of  the joint  account,
control of well or seepage  and pollution insurance nor insurance  against the
hazards of  fire, windstorm, explosion, blowout,  cratering, reservoir damage,
or insurance other than specified above.

II.   INSURANCE NOT CHARGED TO THE JOINT ACCOUNT

At  all times while the Joint Operating Agreement  is in effect, each party to
the Agreement shall  insure or self-insure for their share  of any liabilities
assumed  under the Joint Operating Agreement.   The cost of these insurance or
self-insurance programs  shall be the  individual responsibilities of  each of
the  parties and  none of  the cost  associated with  these programs  shall be
charged  to the  Joint Account.   Each party  shall insure  or self-insure the
following coverage for the minimum limits stated.

      1. Commercial General  Liability Insurance  covering all of  the Parties
         operations,  including  their   offshore  operations,  and  including
         contractual  liability coverage  with  combined single  limits of  at
         least $10,000,000 per occurrence and in the annual aggregate.

      2. Automobile  Liability  covering  all   owned,  non-owned  and  leased
         vehicles  with  combined single  limits  of at  least  $1,000,000 per
         occurrence and in the annual aggregate.

      3. Pollution Liability insurance  covering offshore  oil pollution  with
         limits of at least $10,000,000 per occurrence.

      4. Physical  Damage  insurance  and   coverage  for  Wreck  Removal  for
         Facilities covered by the Joint  Operating Agreement, with limits not
         less than the Parties share of the replacement cost of the facility.

      5. Control of Well and Seepage and Pollution insurance with limits of at
         least $10,000,000 per occurrence. 

      6. Non-owned aviation  liability insurance  in the amount  of $1,000,000
         per occurrence covering liability arising out of any  leased aircraft
         used in  the connection with the work to be performed under the Joint
         Operating Agreement.

All of the above coverages shall be  endorsed to waive the insurers' rights of
subrogation against Operator  and all  other Parties  to the  Agreement.   Any
Party to the Agreement,  at the request of  any other Party to the  Agreement,
shall advise all of the other  Parties to the Joint Operating Agreement  as to
whether  it will  insure  or  self-insure the  above  mention coverages.    If
Insurance  is purchased, upon request, a Party  will provide all other Parties
to  the Joint Operating  Agreement with a  certificate of insurance evidencing
that all of the above insurance acid special insuring provisions are in place.

In  the  event a  Party  elects  to  self-insure  all  or part  of  the  above
requirements, and if any of the other Parties to the Joint Operating Agreement
believe  or  have  a concern  that  the  Party  does  not have  the  financial
capability to  meet its  obligations under  such self-insurance  programs, any
Party to  the Agreement may  request any other Party  to provide proof  of its
ability to  self-insure  these risks.   Proof  will  consist of  independently
audited financial statements demonstrating Net Worth and  assets in the United
States in an amount at  least equal to six (6)  times the amount of the  above
required insurance that the Party elects to  self-insure. If the self-insuring
Party is unable to meet that test, the other Parties to the Agreement may, but
are not required to do so, purchase any or all of the insurance that the Party
elected  to  self-insure.   The  cost  of  said  insurance  shall be  for  the
individual account of the Party on whose behalf the insurance was purchased.

III.  CONTRACTORS INSURANCE

Operator (including any Party conducting Non-Consent Operations) shall use its
best efforts  to require each  contractor who performs  work on behalf  of the
Joint  Operating  Agreement  to  carry  the  following insurance  and  special
insuring provisions.

1.    Workers'  Compensation and Employers'  Liability insurance in accordance
      with  all State and  Federal Regulations  in the jurisdiction  where the
      work  is to  be performed.   This  coverage shall contain  the following
      special endorsements:

      a. Employers' Liability coverage with limits of not less than $1,000,000
         per accident.
      b. U.S. Longshoremen and Harbor Workers' Act and Outer Continental Shelf
         Lands Act coverage.
      c. Employers'  Liability arising  out  of Maritime  operations including
         coverage for benefits and damages under the Jones  Act with limits of
         at  least $1,000,000 per  person and  $2,000,000 all persons  any one
         occurrence.
      d. "In Rem" endorsement providing that a claim "In Rem" shall be treated
         as a claim against the Contractor.
      e. "Borrowed Servant" endorsement providing that a Workers' Compensation
         claim brought  against Operator or  any Party to the  Agreement, by a
         Contractors  employee   will  be  treated  as  a  claim  against  the
         Contractor.
      f. Waiver of Subrogation endorsement which waives the insurers rights of
         subrogation against all of the Parties to this agreement.

2.    Commercial   General   Liability  insurance   and/or   Excess  Liability
      insurance,  including  contractual   liability  covering  the  indemnity
      obligations assumed in the contract with Operator,  with combined single
      limits of $5,000,000 per occurrence for  injuries to or death of persons
      and damage to property. 

3.    Automobile Liability  insurance covering all owned,  non-owned and hired
      vehicles  with  combined  single  limits  of  at  least  $1,000,000  per
      occurrence for injuries to or death of persons and damage to property.

4.    In  the event  watercraft is  used by  the Contractor,  contractor shall
      carry or  require  owners of  such watercraft  to  carry Protection  and
      Indemnity  Insurance in the amount of not  less than the market value of
      the vessel or $1,000,000, whichever is greater.

5.    If Contractor's operations require it to  use aircraft, Contractor shall
      carry or require the owners of such aircraft to carry aircraft liability
      insurance with a combined single limit of $500,000 per passenger seat or
      $1,000,000, whichever is greater.

6.    Any other insurance that Operator deems necessary.

7.    All of  the  insurance carried  by Contractors  pursuant  to Sections  2
      through 6 above shall contain  endorsements waiving the insured's rights
      of subrogation against Operator and all other Parties to the Agreement.

Operator shall make a  good faith effort to  obtain all of the above  required
insurance and s)special insuring  provisions.  Operator shall also make a good
faith effort  to  obtain endorsements  naming the  Operator  as an  Additional
Insured on the policies of insurance where appropriate and to provide that the
word 'Insured! also includes any Party, Co-Owner or Joint Venturer.   However,
Operator  shall not be liable  to non-operators or  to their parent companies,
subsidiaries or any affiliated companies  for failure to do any of  the above.
It  is recognized  in  the industry  that there  are  certain contractors  and
service  companies whose services are necessary  to operations contemplated by
the Parties, who as a matter of their policy refuse contractually to indemnify
working  interest  owners or  to  carry  any  insurance  indemnifying  Working
Interest owners.  As to those  entities, Operator may waive any requirement of
contractual indemnity  or any  or all  of the  insurance or special  insurance
provisions required above.

IV.   NOTICE

Operator shall promptly  notify Non-operators of any loss, damage or claim not
covered by the insurance obtained hereunder for the joint account.  All losses
which are not covered and all losses in  excess of insurance coverage shall be
borne  by the  Parties in  accordance with  the terms  of the  Joint Operating
Agreement under which said operations are being conducted by the Parties.


                                  EXHIBIT "C"

Attached to and made a part of

                             ACCOUNTING PROCEDURE
                           OFFSHORE JOINT OPERATIONS

I.  GENERAL PROVISIONS

1.    Definitions

      "Joint  Property" shall mean  the real and  personal property subject to
      the Agreement to which this Accounting Procedure is attached.
      "Joint Operations" shall mean all operations necessary to proper for the
      development,  operation,   protection  and  maintenance   of  the  Joint
      Property.
      "Joint  Account" shall  mean the  account showing  the charges  paid and
      credits received in the conduct of the Joint Operations and which are to
      be shared by the Parties. 
      "Operator"  shall  mean  the  party  designated  to  conduct  the  joint
      Operations.
      "Non-Operators" shall mean the Parties  of the Agreement other than  the
      Operator.
      "Parties" shall mean Operator and Non-Operator.
      "First  Level  Supervisors" shall  mean  those  employees whose  primary
      function  in  Joint  Operations  is  the  direct  supervision  of  other
      employees and/or  contract labor directly employed on the Joint Property
      in a field operating capacity.
      "Technical  Employees" shall  mean  those employees  having special  and
      specific engineering, geological or other professional skills, and whose
      primary function  in  Joint  Operations  is  the  handling  of  specific
      operating conditions and professional skills, and whose primary function
      in Joint Operations is the handling of specific operating conditions and
      problems for the benefit of the Joint Property.
      "Personal Expenses" shall mean  travel and other reasonable reimbursable
      expenses of Operator's employees.
      "Material" shall mean personal  property, equipment or supplies acquired
      or held for use on the Joint Property.
      "Controllable  Material" shall  mean Material  which at  the time  is so
      classified  in  the  Material  Classification Manual  as  most  recently
      recommended by the Council of Petroleum Accountants Societies.
      "Shore  Base  Facilities" shall  mean  onshore  support facilities  that
      during  drilling,  development,  maintenance  and  producing  operations
      provide  such  services   to  the  Joint   Property  as  receiving   and
      transshipment point for  supplies, materials and  equipment, debarkation
      point for drilling and production personnel and services; communication,
      scheduling and dispatching center; other associated functions benefiting
      the Joint Property.
      "Offshore Facilities" shall  mean platforms and support systems  such as
      oil  and  gas  handling  facilities, living  quarters,  offices,  shops,
      cranes, electrical supply equipment and  systems, fuel and water storage
      and  piping,  heliport,  marine  docking   installations,  communication
      facilities, navigation  aids, and other similar  facilities necessary in
      the conduct of offshore operations.

2.    Statement and Billings

      Operator shall  bill Non-Operators  on or  before the  last day  of each
      month  for  their  proportionate  share of  the  Joint  Account  for the
      preceding  month.  Such  bills will  be accompanied by  statements which
      identify the  authority  for expenditure,  lease  or facility,  and  all
      charges  and  credits,  summarized  by  appropriate  classifications  of
      investment and  expense except that  items of Controllable  Material and
      unusual charges  and credits  shall be  separately identified  and fully
      described in detail.

3.    Advances and Payments by Non-Operators

      A. Unless  otherwise provided  for in  the Agreement,  the Operator  may
         require  the Non-Operators to  advance their share  of estimated cash
         outlay  for the  succeeding operation within  thirty (30)  days after
         receipt of the billing or by the first day of the month for which the
         advance is required, whichever is later.   Operator shall adjust each
         monthly billing to reflect advances received from the Non-Operators.
      B. Each Non-Operator shall pay its  proportion of all bills with  thirty
         (30) days  after receipt.  If  payment is not made  within such time,
         the unpaid  balance shall bear interest monthly  at the prime rate in
         effect at Chase Manhattan Bank on the first day of the month in which
         delinquency occurs plus 1% or the maximum  contract rate permitted by
         the  applicable usury  laws of  the jurisdiction  in which  the Joint
         Property is located, whichever  is the lesser, plus attorney's  fees,
         court  costs, and other  costs in  connection with the  collection of 
         unpaid amounts.

4.    Adjustments

      Payment of  any such  bills shall  not prejudice the  right of  any Non-
      Operator  to  protest or  question  the  correctness thereof;  provided,
      however, all bills and statements rendered to Non-Operators by  Operator
      during  any calendar year shall conclusively  be presumed to be true and
      correct  after twenty-four  (24) months  following the  end of  any such
      calendar  year, unless within  the said twenty-four  (24) month period a
      Non-Operator takes written exception thereto and makes claim on Operator
      for adjustment.    No adjustment  favorable to  Operator  shall be  made
      unless it is made within the same prescribed period.   The provisions of
      this paragraph shall  not prevent adjustments resulting  from a physical
      inventory of Controllable Material as provided for in Section V.

      COPYRIGHT 1987 by the Council of Petroleum Accountants Societies.

5.    Audits

      A. A Non-Operator, upon notice in writing to Operator and all other Non-
         Operators,  shall have  the right  to audit  Operator's  accounts and
         records  relating to the  Joint Account for  any calendar year within
         the twenty-four (24) month period following the  end of such calendar
         year; provided, however, the making of an audit shall not  extend the
         time  for the taking of  written exception to  and the adjustments of
         accounts  as provided for  in Paragraph 4  of this Section  1.  Where
         there are two  or more  Non-Operators, the  Non-Operators shall  make
         every reasonable effort  to conduct a joint  audit in a manner  which
         will result in a minimum of inconvenience to the  Operator.  Operator
         shall bear no portion of the Non-Operators' audit cost incurred under
         this paragraph  unless agreed to by  the Operator.   The audits shall
         not  be conducted more than once each  year without prior approval of
         Operator, except upon the resignation or removal of the Operator, and
         shall  be made at  the expense of  those Non-Operators approving such
         audit.
      B. The Operator  shall reply in  writing to an  audit report within  180
         days after receipt of such report.

6.    Approval by Non-Operators

      Where an approval or other agreement of the Parties or Non-Operators  is
      expressly required under other sections of this Accounting Procedure and
      if the agreement to which this Accounting Procedure is attached contains
      no contrary provisions in regard thereto, Operator shall notify all Non-
      Operators of the Operator's proposal, and the agreement or approval of a
      majority  in interest of  the Non-Operators shall  be controlling on all
      Non-Operators.

                              II.  DIRECT CHARGES

Operator shall charge the Joint Account with the following items:

1.    Rentals and Royalties

      Lease rentals and royalties paid by Operator for the Joint Operations.

2.    Labor

      A. (1)   Salaries  and  wages  of  Operator's  field  employees directly
               employed  on  the  Joint  Property  in  the  conduct  of  Joint
               Operations.
         (2)   Salaries and wages of Operator's employees directly employed on
               Shore Base Facilities or  other Offshore Facilities serving the 
               Joint Property if such costs are not  charged under Paragraph 7
               of this Section II.
         (3)   Salaries of First Level Supervisors in the field.
         (4)   Salaries and wages of  Technical Employees directly employed on
               the  Joint  Property if  such  charges  are excluded  from  the
               Overhead rates.
         (5)   Salaries and wages of Technical Employees either temporarily or
               permanently assigned to and  directly employed in the operation
               of  the Joint Property  if such  charges are excluded  from the
               overhead rates.
      B. Operator's  cost  of  holiday,   vacation,  sickness  and  disability
         benefits  and  other customary  allowances  paid  to employees  whose
         salaries  and  wages  are  chargeable  to  the  Joint  Account  under
         Paragraph 2A of this Section II.   Such costs under this Paragraph 2B
         may  be  charged on  a "when  and as  paid  basis" or  by "percentage
         assessment"  on the amount  of salaries  and wages chargeable  to the
         Joint Account under  Paragraph 2A of this Section II.   If percentage
         assessment is used,  the rate shall be  based on the Operator's  cost
         experience.
      C. Expenditures or contributions made pursuant to assessments imposed by
         governmental  authority which  are  applicable  to  Operator's  costs
         chargeable to the Joint  Account under Paragraphs 2A  and 2B of  this
         Section II.
      D. Personal  Expenses of those  employees whose  salaries and  wages are
         chargeable  to the Joint  Account under Paragraph  2A of this Section
         II.

3.    Employee Benefits

      Operator's  current costs of established plans for employees' group life
      insurance, hospitalization, pension, retirement, stock purchase, thrift,
      bonus,  and  other  benefit  plans  of  a  like  nature,  applicable  to
      Operator's labor cost chargeable to  the Joint Account under  Paragraphs
      2A  and 2B of  this Section II  shall be  Operator's actual cost  not to
      exceed the percent most recently recommended by the Council of Petroleum
      Accountants Societies.

4.    Material

      Material  purchased  or  furnished  by Operator  for  use  on  the Joint
      Property as  provided under   Section IV.   Only such Material  shall be
      purchased for or transferred  to the Joint  Property as may be  required
      for  immediate use  and  is  reasonably  practical and  consistent  with
      efficient and economical operations.  The accumulation of surplus stocks
      shall be avoided.

5.    Transportation

      Transportation  of  employees  and  Material  necessary  for  the  Joint
      Operations but subject to the following limitations:

      A. If Material  is  moved to  the  Joint  Property from  the  Operator's
         warehouse or other  properties, no charge shall be  made to the Joint
         Account  for a distance  greater than  the distance from  the nearest
         reliable supply store  where like material  is normally available  or
         railway  receiving point nearest the Joint  Property unless agreed to
         by the Parties.
      B. If surplus Material is moved to Operator's warehouse or other storage
         point, no  charge shall be made  to the Joint Account  for a distance
         greater than the distance to the nearest  reliable supply store where
         like  material  is normally  available,  or  railway receiving  point
         nearest  the  Joint Property  unless agreed  to by  the Parties.   No
         charge shall  be made to  the Joint  Account for  moving Material  to 
         other  properties  belonging to  Operator,  unless agreed  to  by the
         Parties.
      C. In the  application of  subparagraph  A and  B above,  the option  to
         equalize or charge actual trucking cost is  available when the actual
         charge is $400  or less excluding accessorial charges.  The $400 will
         be adjusted to the amount most recently recommended by the Council of
         Petroleum Accountants Societies.

6.    Services

      The  cost of  contract  services, equipment  and  utilities provided  by
      outside sources, except services excluded  by Paragraph 9 of Section  II
      and Paragraph  i and  ii  of Section  III.   The  costs of  professional
      consultant  services   and  contract  services  of  technical  personnel
      directly engaged on the Joint Property if such charges are excluded from
      the  overhead rates.   The cost  of professional consultant  services or
      contract  services  of  technical  personnel  directly  engaged  in  the
      operation of the Joint Property shall be charged to the Joint Account if
      such charges are excluded from the overhead rates.

7.    Equipment and Facilities Furnished by Operator

      A. Operator shall  charge the  Joint Account  for use  of Operator-owned
         equipment  and  facilities,  including  Shore  Base  and/or  Offshore
         Facilities,  at  rates  commensurate  with  costs  of  ownership  and
         operation.  Such rates may include labor, maintenance, repairs, other
         operating  expense,  insurance, taxes,  depreciation and  interest on
         gross investment  less accumulated  depreciation not to  exceed eight
         percent 8.0% per  annum.  In addition,  for platforms only, the  rate
         may  include   an  element   of  the  estimated   cost  of   platform
         dismantlement.  Such  rates shall not exceed average commercial rates
         currently prevailing in the immediate area of the Joint Property.
      B. In lieu of charges in  Paragraph 7A above, Operator may elect  to use
         average commercial  rates prevailing  in  the immediate  area of  the
         Joint Property  less twenty percent (20%).  For automotive equipment,
         Operator  may elect  to use  rates published  by the  Petroleum Motor
         Transport Association. *

   *  If the Operator contracts a drilling  rig from an affiliated company for
      exploration, appraisal or  development drilling, the day rates used will
      be  the  average  commercial  rates  for  a  similar  specification  rig
      prevailing in the immediate area of the Joint Property.

8.    Damages and Losses to Joint Property

      All costs or expenses necessary  for the repair or replacement of  Joint
      Property made necessary because of  damages or losses incurred by  fire,
      flood, storm, theft,  accident, or other causes, except  those resulting
      from Operator's gross  negligence or willful misconduct.  Operator shall
      furnish Non-Operator  written notice  of damages  or losses  incurred as
      soon  as  practicable  after  a  report  thereof  has been  received  by
      Operator.

9.    Legal Expense

      Expense of  handling, investigating  and settling litigation  or claims,
      discharging  of  liens, payments  of  judgements  and  amounts paid  for
      settlement of claims incurred in or resulting  from operations under the
      Agreement or necessary to protect or recover  the Joint Property, except
      that no charge for services of Operator's legal staff or fees or expense
      of outside  attorneys shall be made  unless previously agreed to  by the
      Parties.   All other legal  expense is considered  to be covered  by the
      overhead  provisions of Section  III unless  otherwise agreed to  by the 
      Parties, except as provided in Section I, Paragraph 3.

10.   Taxes

      All  taxes of  every  kind and  nature  assessed or  levied  upon or  in
      connection  with  the  Joint  Property, the  operation  thereof,  or the
      production therefrom, and which taxes have been paid by the Operator for
      the benefit of the Parties.  If the ad  valorem taxes are based in whole
      or  in part upon  separate valuations of  each party's working interest,
      then notwithstanding anything  to the  contrary herein,  charges to  the
      Joint Account shall be made and paid by the Parties hereto in accordance
      with the tax value generated by each party's working interest.

11.   Insurance

      Net premiums  paid for  insurance required to  be carried for  the Joint
      Operations  for the  protection  of the  Parties.   In  the event  Joint
      Operations are conducted at offshore locations in which Operator may act
      as  self-insurer  for Workers'  Compensation  and Employers'  Liability,
      Operator may  include  the  risk  under its  self-insurance  program  in
      providing  coverage under State  and Federal  laws and charge  the Joint
      Account at Operator's cost not to exceed manual rates.

12.   Communications

      Costs  of  acquiring,  leasing,  installing,  operating,  repairing  and
      maintaining   communication  systems   including  radio   and  microwave
      facilities between the Joint  Property and the Operator's  nearest Shore
      Base Facility.   In the  event communication facilities  systems serving
      the  Joint Property  are Operator-owned,  charges  to the  Joint Account
      shall be made as provided in Paragraph 7 of this Section II.

13.   Ecological and Environmental

      Costs  incurred  on  the  Joint  Property  as   a  result  of  statutory
      regulations  for  archaeological  and  geophysical  surveys relative  to
      identification  and  protection  of   cultural  resources  and/or  other
      environmental or ecological  surveys as may be required by the Bureau of
      Land Management or other regulatory  authority.  Also, costs to  provide
      or have available pollution containment and removal equipment plus costs
      of  actual control  and cleanup  and resulting  responsibilities of  oil
      spills as required by applicable laws and regulations.

14.   Abandonment and Reclamation

      Costs incurred for  abandonment of the  Joint Property, including  costs
      required by governmental or other regulatory authority.

15.   Other Expenditures

      Any  other  expenditure  not  covered or  dealt  with  in  the foregoing
      provisions of this  Section II, or in Section III and which is of direct
      benefit to  the Joint Property  and is incurred  by the Operator  in the
      necessary and proper conduct of the Joint Operations.

                                III.  OVERHEAD

As  compensation   for  administrative,   supervision,  office   services  and
warehousing costs, Operator  shall charge the Joint Account in accordance with
the Section III.

Unless otherwise agreed  to by the  Parties, such charge  shall be in  lieu of
costs  and expenses  of  all offices  and  salaries or  wages plus  applicable 
burdens and expenses of all personnel, except  those directly chargeable under
Section  II.   The  cost  and  expense of  services  from  outside sources  in
connection with matters of taxation, traffic, accounting  or matters before or
involving  governmental  agencies shall  be  considered  as  included  in  the
overhead rates provided  for in this Section III unless  such cost and expense
are agreed to by the Parties as a direct charge to the Joint Account.

      i     Except as otherwise provided in  Paragraph 2 of this Section  III,
            the salaries,  wages and Personal Expenses  of Technical Employees
            and/or the  cost of professional consultant  services and contract
            services  of technical  personnel directly  employed on  the Joint
            Property:
            (   ) shall be covered by the overhead rates.
            ( X ) shall not be covered by the overhead rates.
      ii Except  as otherwise provided in Paragraph 2 of this Section III, the
         salaries, wages  and Personal Expenses of  Technical Employees and/or
         costs of  professional consultant  services and contract  services of
         technical personnel  either temporarily  or  permanently  assigned to
         and directly employed in the operation of the Joint Property:
            ( X ) shall be covered by the overhead rates.
            (   ) shall not be covered by the overhead rates.

1.    Overhead - Drilling and Producing Operations

      As compensation for  overhead incurred in  connection with drilling  and
      producing operations, Operator shall charge on either:
         (   ) Fixed Rate Basis, Paragraph 1A, or
         ( X ) Percentage Basis, Paragraph 1B

      A. Overhead - Fixed Rate Basis
         (1)   Operator shall charge  the Joint Account at the following rates
               per well per month:
               Drilling  Well Rate $_________________(Prorated for less than a
               full month)
               Producing Well Rate $_________________
         (2)   Application of  Overhead - Fixed  Rate Basis for  Drilling Well
               Rate shall be as follows:
            (a)   Charges  for drilling  wells  shall begin  on the  date when
                  drilling  or completion  equipment arrives  on location  and
                  terminate on  the date the drilling  or completion equipment
                  moves  off location  or  rig is  released, whichever  occurs
                  first, except that no charge shall be made during suspension
                  of drilling operations for  fifteen (15) or more consecutive
                  calendar days.
            (b)   Charges  for  wells  undergoing  any  type  of  workover  or
                  recompletion for a period of five  (5) consecutive work days
                  or more  shall be  made  at the  drilling well  rate.   Such
                  charges shall be  applied for the period from  date workover
                  operations,  with  rig  or  other units  used  in  workover,
                  commence through date  of rig or other  unit release, except
                  that no charge shall be made during suspension of operations
                  for fifteen (15) or more consecutive calendar days.

         (3)   Application of Overhead  - Fixed Rate Basis  for Producing Well
               Rate shall be as follows:
            (a)   An  active well  either  produced or  injected into  for any
                  portion of  the  month shall  be  considered as  a  one-well
                  charge for the entire month.
            (b)   Each active  completion in  a multi-completed well  in which
                  production is  not commingled down hole  shall be considered
                  as a one-well charge providing each completion is considered
                  a separate well by the governing regulatory authority.
            (c)   An inactive  gas well shut  in because of  overproduction or 
                  failure  of  purchaser  to  take  the  production  shall  be
                  considered as  a one-well charge  providing the gas  well is
                  directly connected to a permanent sales outlet.
            (d)   A one-well  charge  shall be  made for  the  month in  which
                  plugging and  abandonment operations  are  completed on  any
                  well.  This one-well charge shall be made whether or not the
                  well has produced except when drilling well rate applies.
            (e)   All  other  inactive wells  (including  but  not limited  to
                  inactive wells  covered by unit allowable,  lease allowable,
                  transferred  allowable,  etc.)  shall  not  qualify  for  an
                  overhead charge.
         (4)   The well rates shall be  adjusted as of the first day  of April
               each  year following  the effective  date of  the  agreement to
               which this  Accounting Procedure  is attached.   The adjustment
               shall be computed by multiplying  the rate currently in use  by
               the  percentage  increase or  decrease  in  the average  weekly
               earnings of  Crude Petroleum and Gas Production Workers for the
               last calendar year  compared to the calendar  year preceding as
               shown  by  the  index  of  average  weekly  earnings  of  Crude
               Petroleum and Gas Fields Production Workers as published by the
               United States Department of  Labor, Bureau of Labor Statistics,
               or  the equivalent  Canadian index  as published  by Statistics
               Canada, as applicable.  The  adjusted rates shall be the  rates
               currently in use, plus or minus the computed adjustment.
      B. Overhead - Percentage Basis
         (1)   Operator shall charge the Joint Account at the following rates:
            (a)   Development
                  Two and One-Half  Percent (2.5%) of  cost of Development  of
                  the  Joint  Property  exclusive  of  costs   provided  under
                  Paragraph 9 of Section II and all salvage credits.
            (b)   Operating
                  Thirteen Percent  (13%) of the  cost of Operating  the Joint
                  Property exclusive of costs  provided under Paragraphs 1 and
                  9 of Section II, all salvage credits,  the value of injected
                  substances purchased  for secondary  recovery and all  taxes
                  and assessments which are levied, assessed and paid upon the
                  mineral interest in and to the Joint Property.
         (2)   Application of Overhead - Percentage Basis shall be as follows:
               For  the purpose of  determining charges on  a percentage basis
               under  Paragraph  1B of  this  Section  III, development  shall
               include all  costs in connection with  drilling, redrilling, or
               deepening of  any  or all  wells, and  shall  also include  any
               remedial operations requiring a  period of five (5) consecutive
               work days  or  more on  any  or  all wells;  also,  preliminary
               expenditures   necessary  in   preparation  for   drilling  and
               expenditures  incurred  in  abandoning  when the  well  is  not
               completed  as a producer, and original  cost of construction or
               installation of fixed assets, the expansion of fixed assets and
               any other project  clearly discernible as a fixed asset, except
               Major Construction  as defined in  Paragraph 2 of  this Section
               III.  All other costs  shall be considered as Operating  except
               that catastrophe  costs shall be assessed  overhead as provided
               in Section III, Paragraph 3.

2.    Overhead - Major Construction

      To compensate Operator  for overhead costs incurred in  the construction
      and installation of fixed assets, the expansion of fixed assets, and any
      other  project clearly  discernible as  a fixed  asset required  for the
      development and operation of the  Joint Property, or in the  dismantling
      for abandonment of platforms and related production facilities, Operator
      shall either negotiate a rate prior to the beginning of construction, or
      shall charge the Joint Account for Overhead based on the following rates 
      for any Major Construction project in excess of $25,000.
      A. N/A
      B. If the  Operator charges  engineering, design and  drafting costs  as
         defined in the attached Statement of Clarification and Intent related
         to the project directly to the Joint Account:
            (1)       2%    of total costs
      C. If Operator forms an Integrated Project Team and charges its costs as
         defined  in  the  attached  Statement  of  Clarification  and  Intent
         directly to the Joint Account: 
            (1)        2%   of total costs

      Total cost  shall mean  the  gross cost  of any  one project.   For  the
      purpose of this paragraph, the component parts of a single project shall
      not be treated  separately and the  cost of drilling and  workover wells
      and artificial lift equipment shall be excluded.
      On each project, Operator shall advise Non-Operation(s) in advance which
      of the above options shall apply.  In the event  of any conflict between
      the provisions of this paragraph and those  provisions under Section II,
      Paragraph 2  or  Paragraph 6,  the provisions  of  this paragraph  shall
      govern.

3.    Overhead - Catastrophe:

      Catastrophe  Overhead shall be  at the same  applicable rates as Section
      III, Paragraphs  1  and 2  (Drilling and  Producing  Overhead and  Major
      Construction Overhead).

4.    Amendment of Rates

      The Overhead  rates provided for in this Section III may be amended from
      time to time only by mutual agreement between the Parties  hereto if, in
      practice, the rates are found to be insufficient or excessive.

              IV.  PRICING OF JOINT ACCOUNT MATERIAL PURCHASES, 
                          TRANSFERS AND DISPOSITIONS 

Operator is responsible for  Joint Account Material and shall  make proper and
timely  charges and  credits for  all Material  movements affecting  the Joint
Property.   Operator shall provide all Material for use on the Joint Property;
however,  at  Operator's option,  such Material  may be  supplied by  the Non-
Operator.   Operator  shall make  timely disposition  of  idle and/or  surplus
Material,  such disposal being  made either through  sale to Operator  or Non-
Operator, division in kind, or sale to outsiders.  Operator  may purchase, but
shall be under no obligation to purchase, interest of Non-Operators in surplus
condition A  or B Material.  The disposal of surplus Controllable Material not
purchased by the Operator shall be agreed to by the Parties.

1.    Purchases
      Material purchased shall  be charged at the price paid by Operator after
      deduction of  all discounts received.   In case of Material  found to be
      defective or returned to  vendor for any other reasons, credit  shall be
      passed to  the Joint Account  when adjustment has  been received  by the
      Operator.

2.    Transfers and Dispositions
      Material  furnished to the Joint Property  and Material transferred from
      the  Joint Property  or disposed  of by  the Operator,  unless otherwise
      agreed  to  by the  Parties,  shall be  priced  on  the following  bases
      exclusive of cash discounts:
      A. New Material (Condition A)
         (1)   Tubular Goods Other than Line Pipe
            (a)   Tubular goods, sized 2 1/2 inches OD and larger, except line
                  pipe, shall be priced at Eastern mill published carload base 
                  prices effective as of  date of movement plus transportation
                  cost  using the  80,000  pound carload  weight basis  to the
                  railway receiving point nearest the Joint Property for which
                  published rail rates for tubular goods exist.  If the 80,000
                  pound rail is not offered, the 70,000  pound or 90,000 pound
                  rail rate may  be used.  Freight charges for  tubing will be
                  calculated  from Lorain,  Ohio and  casing  from Youngstown,
                  Ohio.
            (b)   For grades which are special to one  mill only, prices shall
                  be   computed   at  the   mill  base   of  that   mill  plus
                  transportation cost from that  mill to the railway receiving
                  point  nearest  the  Joint  Property as  provided  above  in
                  Paragraph 2.A.(1)(a).   For transportation cost from  points
                  other than Eastern mills, the 30,000 pound Oil Field Haulers
                  Association interstate truck rate shall be used.
            (c)   Special end  finish tubular  goods  shall be  priced at  the
                  lowest published out-of-stock  price, f.o.b. Houston, Texas,
                  plus   transportation   cost,   using   Oil   Field  Haulers
                  Association interstate  30,000  pound  truck  rate,  to  the
                  railway receiving point nearest the Joint Property.
            (d)   Macaroni  tubing (size  less that  2 1/2  inch OD)  shall be
                  priced  at the lowest  published out-of-stock  prices f.o.b.
                  the supplier plus transportation  costs, using the Oil Field
                  Haulers  Association interstate  truck  rate per  weight  of
                  tubing transferred,  to the railway receiving  point nearest
                  the Joint Property.
         (2)   Line Pipe
            (a)   Line pipe movements (except size 24 inch  OD and larger with
                  walls  1/4 inch  and over)  30,000 pounds  or more  shall be
                  priced  under   provisions  of  tubular  goods   pricing  in
                  Paragraph A.(1)(a) as provided above.  Freight charges shall
                  be calculated from Lorain, Ohio.
            (b)   Line pipe movements (except size 24 inch  OD and larger with
                  walls  1/4 inch and  over) less than  30,000 pounds shall be
                  priced  at   Eastern  mill  published  carload  base  prices
                  effective  as of  date of  shipment, plus  20 percent,  plus
                  transportation  costs based  on freight  rates as  set forth
                  under  provisions  of  tubular  goods  pricing  in Paragraph
                  A.(1)(a)  as  provided  above.   Freight  charges  shall  be
                  calculated from Lorain, Ohio.
            (c)   Line pipe 24  inch OD and over and 1/4  inch wall and larger
                  shall be priced f.o.b. the  point of manufacture at  current
                  new published prices plus transportation cost to the railway
                  receiving point nearest the Joint Property.
            (d)   Line pipe,  including fabricated  line pipe, drive  pipe and
                  conduit not listed on published price  lists shall be priced
                  at quoted prices plus freight to the railway receiving point
                  nearest  the Joint Property  or at  prices agreed to  by the
                  Parties.
         (3)   Other  Material shall be  priced at  the current new  price, in
               effect  at date  of movement,  as listed  by a  reliable supply
               store nearest the Joint Property, or point of manufacture, plus
               transportation costs,  if applicable, to the  railway receiving
               point nearest the Joint Property.
         (4)   Unused new Material, except tubular goods, moved from the Joint
               Property shall be priced at the current new price, in effect on
               date of movement, as listed by a  reliable supply store nearest
               the   Joint   Property,   or   point   of   manufacture,   plus
               transportation costs,  if applicable, to  the railway receiving
               point nearest the Joint Property.  Unused  new tubulars will be
               priced as provided above in Paragraph 2.A.(1) and (2).
      B. Good Used Material (Condition B)
            Material in sound and serviceable condition and suitable for reuse 
            without reconditioning:
            (1)   Material moved to the Joint Property
                  At  seventy-five  percent (75%)  of  current  new price,  as
                  determined by Paragraph A.
            (2)   Material used on and moved from the Joint Property
               (a)   At seventy-five  percent (75%)  of current new  price, as
                     determined  by Paragraph  A, if  Material  was originally
                     charged to the Joint Account as new Material or
               (b)   At  sixty-five percent  (65%)  of current  new price,  as
                     determined  by Paragraph  A,  if Material  was originally
                     charged to the Joint Account as used Material.
            (3)   Material not used on and moved from the Joint Property
                  At  seventy-five  percent  (75%)  of current  new  price  as
                  determined by Paragraph A.
            The cost  of  reconditioning, if  any, shall  be  absorbed by  the
            transferring property
      C. Other Used Material
            (1)   Condition C
                  Material which is not in sound and serviceable condition and
                  not  suitable  for   its  original   function  until   after
                  reconditioning  shall be  priced at  fifty percent  (50%) of
                  current new price as determined by Paragraph A.  The cost of
                  reconditioning shall  be charged to the  receiving property,
                  provided Condition C value  plus cost of reconditioning does
                  not exceed Condition B value.
            (2)   Condition D
                  Material,  excluding  junk,  no  longer   suitable  for  its
                  original purpose, but usable for some other purpose shall be
                  priced on a basis commensurate  with its use.  Operator  may
                  dispose of  Condition D  Material under  procedures normally
                  used by Operator without prior approval of Non-Operators.

                  (a)   Casing, tubing, or drill pipe used as  line pipe shall
                        be priced  as  Grade A  and B  seamless  line pipe  of
                        comparable size  and weight.   Used casing,  tubing or
                        drill pipe  utilized as line  pipe shall be  priced at
                        used line pipe prices.
                  (b)   Casing, tubing, or drill  pipe used as higher pressure
                        service lines than standard  line pipe, e.g. power oil
                        lines, shall be priced under normal pricing procedures
                        for  casing, tubing,  or  drill pipe.   Upset  tubular
                        goods shall be priced on a non-upset basis.
            (3)   Condition E
                  Junk  shall be  priced at  prevailing prices.   Operator may
                  dispose of  Condition E Material  under procedures  normally
                  utilized  by   Operator  without  prior  approval   of  Non-
                  Operators.
      D. Obsolete Material
            Material which is serviceable and usable for its original function
            but condition and/or value of  such Material is not equivalent  to
            that  which  would  justify  a  price  as  provided above  may  be
            specially  priced as agreed to by  the Parties.  Such price should
            result in the Joint  Account being charged  with the value of  the
            service rendered by such Material.
      E. Pricing Conditions
            (1)   Loading  or unloading  costs  may be  charged  to the  Joint
                  Account at the  rate of thirty-five cents (35)  per hundred
                  weight on  all tubular  goods movements,  in lieu of  actual
                  loading or unloading costs  sustained at the stocking point.
                  The  above rate  shall be  adjusted as  of the first  day of
                  April  each year  following  January  1,  1985 by  the  same
                  percentage  increase  or decrease  used  to  adjust overhead
                  rates in Section III, Paragraph 1.A(4).  Each year, the rate 
                  calculated shall be rounded to the nearest cent and shall be
                  the rate in effect until  the first day of April next  year.
                  Such  rate shall be  published each  year by the  Council of
                  Petroleum Accountants Societies.
            (2)   Material  involving  erection  costs  shall  be  charged  at
                  applicable percentage of  the current knocked-down price  of
                  new Material.

3.    Premium Prices
      Whenever  Material  is not  readily  obtainable at  published  or listed
      prices because of national emergencies, strikes or other  unusual causes
      over which  the Operator  has no  control, the  Operator may  charge the
      Joint  Account for the  required Material at  the Operator's actual cost
      incurred in providing such Material, in making it suitable for  use, and
      in  moving it  to  the Joint  Property;  provided notice  in  writing is
      furnished to Non-Operators of the proposed charge  prior to billing Non-
      Operators for such Material.  Each Non-Operator shall have the right, by
      so  electing and  notifying  Operator within  ten  days after  receiving
      notice from  Operator, to furnish  in kind all or  part of his  share of
      such Material suitable for use and acceptable to Operator.

4.    Warranty of Material Furnished By Operator
      Operator does not warrant the Material  furnished.  In case of defective
      Material,  credit  shall  not  be  passed  to  the Joint  Account  until
      adjustment has been received by Operator from the manufacturers or their
      agents.

                                V. INVENTORIES

The Operator shall maintain detailed records of Controllable Material.

1.    Periodic Inventories, Notice and Representation
      At reasonable intervals, inventories shall  be taken by Operator of  the
      Joint  Account Controllable  Material.  Written  notice of  intention to
      take  inventory shall be  given by  Operator at  least thirty  (30) days
      before  any  inventory  is  to  begin  so   that  Non-Operators  may  be
      represented when any inventory is taken.  Failure of Non-Operators to be
      represented  at an  inventory  shall bind  Non-Operators  to accept  the
      inventory taken by Operator.

2.    Reconciliation and Adjustment of Inventories
      Adjustments to the Joint Account resulting from  the reconciliation of a
      physical inventory shall be made within six  months following the taking
      of the inventory.  Inventory adjustment shall be made by Operator to the
      Joint  Account for overages  and shortages, but,  Operator shall be held
      accountable only for shortages due to lack of reasonable diligence.

3.    Special Inventories
      Special Inventories may be taken whenever  there is any sale, change  of
      interest, or change of Operator in the  Joint Property.  It shall be the
      duty of  the party selling  to notify  all other Parties  as quickly  as
      possible after  the transfer of  interest takes place.   In  such cases,
      both the seller  and the purchaser shall be  governed by such inventory.
      In cases involving a change  of Operator, all Parties shall  be governed
      by such inventory.

4.    Expense of Conducting Inventories
      A. The  expense of conducting periodic  inventories shall not be charged
         to the Joint Account unless agreed to by the Parties.
      B. The expense of conducting special inventories shall be charged to the
         Parties  requesting such inventories, except inventories required due
         to change of Operator shall be charged to the Joint Account. 

                            ADDENDUM TO EXHIBIT "C"

                             ACCOUNTING PROCEDURE
                     STATEMENT OF CLARIFICATION AND INTENT


These accounting procedures supplement Exhibit "C," (Accounting Procedure), of
the  __________________________Joint Operating Agreement (Agreement).

To clarify the provisions of  Paragraph 5 of Section I,  General Provisions---
Audits, Paragraph  2  of Section  H, Direct  Charges---Labor,  Paragraph I  of
Section  M,  Overhead---Drilling  and  Producing Operations,  Paragraph  2  of
Section M,  Overhead-Major  Construction  and Section  IV,  Pricing  of  Joint
Account  Material  Purchases,  Transfers   and  Dispositions,  the   following
statement of  principles has been agreed  upon by the Parties  with respect to
the  chargeability  of  certain   expenditures  incurred  in  connection  with
Integrated Project Team, Major Construction and Drilling activities.

Expenditures for the Integrated Project Team activities, as defined in Article
12  and Exhibit "G'  of the Agreement,  Major Construction and  Drilling shall
include all costs  and related expenses for conceptual  studies/design, detail
design,  construction,  commissioning  and  installation  activities.     This
includes,  but is  not limited  to, cost  associated with  drilling/completion
engineering  and design,  well  planning, regulatory  requirements,  prototype
design/development, studies, materials, engineering, site evaluation, surveys,
soil  borings,   preliminary  design,   detailed   design,  construction   and
fabrication, mating and  hook-up, transportation, commissioning, assembly  and
testing, pipelines and related  activities and any other  expenditure incurred
by the Operator for the necessary and proper conduct of the Integrated Project
Team, Major Construction or Drilling activities.

Accounting for any of these activities shall be in accordance with appropriate
sections of this  Exhibit "C"  which specify those  costs that are  chargeable
direct  and those to be recovered via  the overhead rates.   Each construction
AFE  will  specify  which   section  shall  apply,  provided,  however,   that
establishment of an Integrated Project Team chargeable under the provisions of
Section III, Paragraph 2.C shall require approval of the Parties in accordance
with Article 12 and Exhibit "G' of the Agreement.

SECTION I, PARAGRAPH 5.B:

A contract  representative  from each  participant will  be  appointed to  the
contract committee  to identify, recommend and/or  implement changes necessary
to  align contract provisions with current practice  as agreed by all parties.
Changes which require amendment of the Joint Operating Agreement shall require
the unanimous approval of the Parties.

The  roles and  responsibilities of  the contract  committee will  include the
review of COPAS  updates for agreement  applicability, resolution of  Operator
billing practices  and  other matters  which will  improve  the agreement  and
relationships among the parties.   The appointed representatives will meet  on
an annual basis on a cycle coincident with the JOA execution date.

Audit exceptions,  unresolved one year from the date of the audit report, will
be  reviewed  by  the contract  committee  for  resolution.   If  the contract
committee is unable to resolve the issue within one hundred eighty (180) days,
the issue will be handled in accordance with the dispute resolution procedures
described in Exhibit 'I" (Dispute Resolution Procedure).

SECTION II PARAGRAPH 2:

Upon request, the Operator  will submit applicable organizational charts  with
the Annual Operating Plan identifying positions to be directly  charged to the 
Joint Account in accordance ,with Paragraph 2.A of Section H.

SECTION III PARAGRAPH 2.B:

In order to clarify "engineering, design and  drafting costs" chargeable under
Section M, Paragraph 2.B of this Exhibit "C," the following shall apply:

a.    SERVICES RENDERED BY OPERATOR'S EMPLOYEES
      All salaries, wages,  payroll burden and Personal  Expenses of personnel
      performing  technical services for  the benefit of  the Joint Account in
      connection  with the design, construction and  installation of the Major
      Construction  project shall  be charged  direct regardless  of location.
      Such  personnel   shall  be   comprised  of  Operator's   Producing  and
      Exploration Department employees including engineers, environmentalists,
      technologists,    engineering   assistants,    technicians,   draftsmen,
      construction  representatives and  other personnel  performing technical
      services.
      Salaries  will  be charged  to the  Joint Account  based on  actual days
      worked only  when such time  totals at least one  day or more  per month
      that  is devoted to  the Major  Construction project Payroll  burden and
      Personal  Expenses associated  with this  labor will  be charged  to the
      Joint Account consistent with the provisions of  Section H, Paragraph 2,
      Direct Charges-Labor and Paragraph 3, Direct Charges-Employee Benefits.

      Personal  Expenses  include  travel,  accommodation,  per  diem,  meals,
      entertainment  and  other  reasonable  reimbursable  costs  incurred  by
      personnel  in  accordance with  Operator  standards  whose salaries  are
      chargeable  to the Joint  Account.   Relocation costs may  be chargeable
      only if the  transfer is primarily for the benefit  of the Joint Account
      and the employee is assigned to the project for a minimum of twelve (12)
      months.

b.    AFFILIATE AND DRAFTING SERVICES

      All  salaries, wages,  payroll  burden, Personal  Expenses and  indirect
      costs  of Operator's  Affiliates (which,  for SOI,  shall include  their
      Civil Engineering and Drafting  groups) which provide requested services
      for the design, construction and installation of the  Major Construction
      project shall be charged direct.

      The  cost of  drafting  services, including  computer assisted  drafting
      (CAD),  necessary for the  design, construction and  installation of the
      Major Construction project shall be direct charged.
      Operator/Non-Operators' Affiliate  and computer services may  be charged
      on the basis of an all- inclusive  standard hourly/daily rate (including
      overhead)  or cost allocation  basis as is customarily  charged to or by
      its Affiliates for personnel and/or services.

      Affiliates shall maintain  auditable records to support all charges made
      by it to the Joint  Account and as to  such charges shall be subject  to
      the same audit requirements provided  for Operator's charges in  Section
      1, Paragraph  5 of this  Exhibit "C." If an  all-inclusive standard unit
      rate is used, such audit  requirements shall be limited to  verification
      that  such rate  is, in  fact, the  rate(s)  customarily charged  by its
      Affiliates.

c.    THIRD-PARTY COSTS

      All third-party expenditures incurred by the Operator for the direct and
      primary benefit  of  the design,  construction and  installation of  the
      Major Construction project regardless of location will be direct charged
      to the Joint Account.   Third-party expenditures shall include, but  not
      be limited to: 
-     Contractors, consultants and service companies
-     Fabrication,  construction and  installation  activities and  associated
      cost
-     Specialized equipment,  materials, testing or other  services (including
      software and specialized computer applications)
-     Research and development, prototype studies, design and development work
      Conceptual work/studies
-     On-site construction representatives and inspectors and associated cost

d.     OVERHEAD APPLICATION

The Major Construction  rates provided in Exhibit "C," Section  III, 2.B shall
provide for all personnel not  chargeable direct and all other  Administrative
functions and  associated cost indirectly  serving the project  including, but
not   limited  to,   cost  for   Accounting,  services   personnel,  treasury,
Administrative, senior  management and other support services  provided by the
Operator.  Such rates shall be applied to the total cost (gross) of such fixed
asset charged to the  Joint Account.   Total cost shall  include all cost  and
related expenses as defined in this Addendum to Section III.2.B.

SECTION III PARAGRAPH 2.C:

Prior to  activating an  Integrated Project  Team pursuant  to Article  12 and
Exhibit "G'  of the Agreement, the following provisions shall apply in lieu of
Exhibit "C," Sections III.2.B. or III.2.C. In the event an  Integrated Project
Team  includes personnel involved  in drill well  design and development (i.e.
well completions, production/wellhead equipment, etc.) direct chargeable costs
associated with such well design and development  prior to actual commencement
of drilling of Development Wells shall be defined by this Section.

a.    SERVICES RENDERED BY EMPLOYEES OF PARTICIPANTS

All salaries,  wages,  payroll burden  and  Personal Expenses  of  management,
supervisory,  technical and other  personnel who are  directly assigned to the
Integrated   Project  Team   and  engaged   in  project   management,  design,
construction and installation shall be  charged direct regardless of location.
Such  personnel  may  include,  but  are  not  limited to,  project  managers,
superintendents, technical managers, engineers, inspectors, environmentalists,
technologists,  engineering  assistants,  technicians,  draftsmen, engineering
clerks, secretaries, construction representatives, purchasing representatives,
material expediters,  financial support and other  technical, professional and
support personnel performing services for the Integrated Project Team.  A  pro
rata share of salaries, wages,  payroll burden and Personal Expenses  of part-
time technical  personnel  may be  charged  direct  if the  individual's  time
devoted to the project totals at least one full day during a given month.

Costs  incurred  by Non-Operators  for salaries,  payroll burden  and Personal
Expenses  of  personnel  directly  assigned  to  the  Integrated Project  Team
authorized by  the  Project Manager  to  provide  services to  the  Integrated
Project Team will be  billed to the Operator on or before  the 20th day of the
following month.   Operator will remit payment to the  Non-Operators for these
costs and charge the total amount to the Joint Account.

A pro  rata share of salaries  will be charged  to the Joint Account  based on
actual days worked  only when such  time totals at least  one day or  more per
month that  is devoted to the  project.  Payroll burden  and Personal Expenses
associated with  this labor will  be charged  to the Joint  Account consistent
with the  provisions  of Section  II, Paragraph  2,  Direct Charges-Labor  and
Paragraph 3, Direct Charges-Employee Benefits.

Personal   Expenses   include   travel,  accommodation,   per   diem,   meals,
entertainment and other reasonable reimbursable costs incurred by personnel in
accordance with Operator standards whose salaries are  chargeable to the Joint
Account.  Relocation costs may be chargeable only if the transfer is primarily
for the benefit  of the  Joint Account  and the  employee is  assigned to  the
Integrated Project Team for a minimum of twelve (12) months.

Each participant shall maintain auditable records to  support any charges made
by it  to the Joint  Account and  shall be subject  to the  audit requirements
provided in  Section 1, Paragraph  5 of this Exhibit  "C" as to  such charges.
Auditable  records shall include  time sheets and  expense account reports for
personnel charged  to  the Joint  Account, basis  for  calculation of  payroll
burden, third-party  invoices, organization  charts or personnel  listings for
the Integrated Project Team, etc.

b.    AFFILIATE AND DRAFTING SERVICES

All salaries, wages, payroll burden,  Personal Expenses and indirect costs  of
Operator's Affiliates (which, for SOI,  shall include their Civil  Engineering
and Drafting groups) which provide requested  services for the benefit of  the
Project  Team  shall be  direct  charged.    The  cost of  drafting  services,
including computer assisted drafting (CAD), utilized by the Project Team shall
be  direct charged.   Costs  incurred by  Non-Operators for  salaries, payroll
burden  and  Personal  Expenses  of personnel  not  directly  assigned  to the
Integrated Project  Team may be  charged to  the Joint Account  only with  the
approval of the Project Manager.

Affiliate  and  computer services  may  be  charged on  the  basis  of an  all
inclusive standard  hourly/daily rate (including overhead)  or cost allocation
basis  as the Operator  customarily charges its  Affiliates (or the Operator's
Affiliate customarily charges the participant) for personnel and/or services.

Affiliates shall maintain auditable records to support  all charges made by it
to the Joint Account and as to such charges shall be subject to the same audit
requirements provided for Operator's charges in Section I, Paragraph 5 of this
Exhibit  "C.' If  an all  inclusive  standard unit  rate is  used, such  audit
requirements shall  be limited to verification that such rate is, in fact, the
rate(s) customarily charged by its Affiliates.

c.    THIRD PARTY COSTS

All third-party expenditures incurred by  the Operator for the direct  benefit
of the  project regardless of  location will  be direct charged  to the  Joint
Account.  Third-party expenditures shall include, but not be limited to:
-     Contractors, consultants and service companies
-     Fabrication, construction  and  installation activities  and  associated
      cost
-     Specialized equipment,  materials, testing or other  services (including
      software and specialized computer applications)
-     Research and development prototype studies, design and development work
-     Conceptual work/studies
-     On-site construction representatives and inspectors and associated cost
-     Drilling design and development

d.    OVERHEAD APPLICATION

The Major Construction  rates provided in Exhibit "C,"  Section III, 2.C shall
provide for  all personnel  above  the Project  Manager  level and  all  other
Administrative functions  and associated  cost indirectly serving  the project
including, but  not  limited  to,  cost for  Accounting,  services  personnel,
treasury,  Administrative,  senior  management  and  other   support  services
provided by  the Operator.   Such  rates shall  be applied  to the  total cost
(gross) of such  fixed asset charged to the  Joint Account.  Total  cost shall
include all cost and related  expenses as defined in this Addendum  to Section
III.2.C.

If the  Project Manager elects  to house  the Integrated Project  Team at  the 
office  of a Non-Operating  Party, the Project  Manager and Non-Operator shall
agree  upon a  rental rate  to charge for  providing a  work location  for the
Project Team.   The actual rent will  be invoiced by  the Non-Operator to  the
Operator.   The  Operator shall  not be  entitled to  charge overhead  on Non-
Operator's  office rental  charges to  the  Joint Account  as  stated in  this
Statement of Clarification and Intent Section III, Paragraph 2.C(d).

SECTION  IV, PRICING  OF  JOINT  ACCOUNT  MATERIAL  PURCHASES,  TRANSFERS  AND
DISPOSITIONS:

The pricing  of material transfers to  and/or from the joint  property will be
determined by  utitilizing the  Computerized Equipment Pricing  System (CEPS),
historical price multiplier, pricing on application or fair market value.  The
Pricing method selected  by the Operator  will be applied consistently  to all
material transfer transactions.

A Direct Purchase is determined to occur when an agreement  is made between an
Operator  and a third  party for the  acquisition of materials  for a specific
well  site  or location.    Direct Purchases  shall  be charged  to  the Joint
Property at  the price paid by  the Operator after deduction  of all discounts
received.  Material provided by the Operator under "vendor stocking programs,"
where the initial use is for  a joint property and title of the  material does
not pass from  the vendor until  usage, is considered  a direct purchase.   If
material is found to be defective or  is returned to the vendor for any  other
reason, credit shall  be passed to  the Joint Property  when adjustments  have
been received by the Operator from the manufacturer, distributor or agent.

"Tubular substitutions"  is defined  where higher-than-specification grade  or
size  tubulars are charged  to the  Joint Property from  Operator's inventory.
The Operator is entitled to  charge the Joint Property at an  equivalent price
of the well design specification tubulars.

                                  EXHIBIT "D"

         Attached to and made a part of the Joint Operating Agreement
dated effective              , by and between Shell Deepwater Development Inc.
and Reading & Bates Development Co.

                     GAS BALANCING AGREEMENT ("AGREEMENT")

1.    DEFINITIONS.   The following definitions shall apply to this Agreement:

      1.01  "Arms Length Agreement" shall mean any gas sales agreement with an
      unaffiliated  purchaser or  any gas  sales agreement with  an affiliated
      purchaser where the sales price represents market value in the Balancing
      Area.

      1.02  "Balancing Area" shall mean all of the  acreage and depths subject
      to the Operating Agreement.

      1.03  "Full  Share  of Current  Production"  shall  mean the  Percentage
      Interest  of each Party in the  Gas actually produced from the Balancing
      Area during each month.

      1.04  "Gas" shall mean all hydrocarbons produced  or producible from the
      Balancing Area,  whether from a  well classified as  an oil well  or gas
      well by the regulatory agency having jurisdiction in such matters, which
      are or may  be made available  for sale or  separate disposition by  the
      Parties, excluding oil, condensate and  other liquids recovered by field
      equipment operated for  the joint account.   "Gas" does not  include gas
      used in joint operations, such as for fuel, recycling or reinjection, or
      which is vented or lost prior to its sale or delivery from the Balancing
      Area. 

      1.05  "Makeup  Gas" shall mean  any Gas taken  by an Underproduced Party
      from  the  Balancing  Area  in  excess  of  its Full  Share  of  Current
      Production, whether pursuant to Section 3.3 or Section 4.1 hereof.

      1.06  "Mcf" shall  mean one thousand  cubic feet.   A cubic foot  of Gas
      shall mean  the volume of  gas contained in one  cubic foot of  space at
      sixty degrees  Fahrenheit, 14.73 pounds per square  inch absolute (PSIA)
      and having a specific gravity of 1.00.

      1.07  "MMBtu" shall mean one million  British Thermal Units.  A  British
      Thermal Unit shall mean the quantity of heat required to raise one pound
      avoirdupois of pure water from  58.5 degrees Fahrenheit to 59.5  degrees
      Fahrenheit at  a  constant pressure  of  14.73  pounds per  square  inch
      absolute.

      1.08  "Operator" shall  mean the  individual or entity  designated under
      the terms of the Operating Agreement  or, in the event this Agreement is
      not employed in  connection with an operating  agreement, the individual
      or  entity designated  as  the operator  of the  well(s) located  in the
      Balancing Area.

      1.09  "Overproduced  Party" shall mean any  Party having taken a greater
      quantity of Gas from the Balancing  Area than the Percentage Interest of
      such Party  in  the cumulative  quantity of  all Gas  produced from  the
      Balancing Area.

      1.10  "Overproduction" shall  mean the cumulative quantity  of Gas taken
      by  a Party  in  excess of  its Percentage  Interest  in the  cumulative
      quantity of Gas produced from the Balancing Area.

      1.11  "Party"  shall mean those individuals  or entities subject to this
      Agreement,  and  their  respective heirs,  successors,  transferees  and
      assigns.

      1.12  "Percentage  Interest"   shall  mean  the  percentage  or  decimal
      interest of  each Party  in  the Gas  produced from  the Balancing  Area
      pursuant to the Operating Agreement covering the Balancing Area.

      1.13  "Royalty"  shall  mean payments  on  production  of  Gas from  the
      balancing  Area  to  all  owners  of  royalties,  overriding  royalties,
      production payments or similar interests.

      1.14  "Underproduced Party"  shall mean any Party having  taken a lesser
      quantity of Gas from  the Balancing Area than the Percentage Interest of
      such  Party in  the cumulative  quantity of  all Gas  produced from  the
      Balancing Area.

      1.15  "Underproduction" shall mean the deficiency between the cumulative
      quantity  of Gas  taken by a  Party and  its Percentage  Interest in the
      cumulative quantity of all Gas produced from the Balancing Area.

      1.16  "Winter  Period"  shall  mean  the months  October,  November  and
      December  in one calendar  year and the  month of January,  February and
      March in the succeeding calendar year.

2.    BALANCING AREA

      2.1   If this Agreement covers more than one Balancing Area, it shall be
      applied as if each Balancing Area were covered by separate but identical
      agreements.   All balancing hereunder shall be on the basis of Gas taken
      from the Balancing Area measured in MMBtus.

      2.2   In  the  event that  all or  part of  the  Gas deliverable  from a
      Balancing  Area is  or becomes  subject to  one or  more maximum  lawful
      prices,  any Gas not  subject to price  controls shall  be considered as
      produced from a  single Balancing Area  and Gas subject to  each maximum
      lawful  price  category shall  be  considered produced  from  a separate
      Balancing Area.

3.    RIGHT OF PARTIES TO TAKE GAS

      3.1   Each Party desiring to  take Gas will  notify the Operator of  the
      volumes  nominated,  the  name  of  the transporting  pipeline  and  the
      pipeline contract  number (if available)  and meter station  relating to
      such delivery,  sufficiently in  advance for the  Operator, acting  with
      reasonable  diligence, to  meet all  nomination and  other requirements.
      Operator is authorized to deliver the volumes so nominated and confirmed
      (if confirmation is required) to the transporting pipeline in accordance
      with the terms of this Agreement.

      3.2   Each Party shall make a reasonable, good  faith effort to take its
      Full Share  of Current Production  each month  to the  extent that  such
      production  is required  to maintain  leases in  effect, to  protect the
      producing capacity  of  a well  or  reservoir, to  preserve  correlative
      rights, or to maintain oil production.

      3.3   When  a  Party fails  for any  reason to  take  its Full  Share of
      Current Production (as  such Share may  be reduced by  the right of  the
      other  Parties to make  up for Underproduction  as provided herein), the
      other Parties shall be entitled  to take any Gas which such  Party fails
      to take.   To the extent  practicable, such Gas shall  be made available
      initially  to  each  Underproduced  Party  in  the  proportion that  its
      Percentage Interest in the Balancing Area bears  to the total Percentage
      Interest of all Underproduced Parties desiring to take such Gas.  If all
      such Gas  is not  taken by  the Underproduced Parties,  the portion  not
      taken  shall  then  be made  available  to  the  other  Parties  in  the
      proportion that  their respective  Percentage Interest in  the Balancing
      Area bears to the total Percentage Interest of such Parties.

      3.4   All Gas taken by a Party in accordance with the provisions of this
      Agreement,  regardless  of  whether   such  Party  is  underproduced  or
      overproduced, shall  be regarded as Gas  taken for its own  account with
      title thereto being in such taking Party.

      3.5   Notwithstanding  the   provisions  of   Section  3.3  hereof,   no
      Overproduced Party shall  be entitled in  any month to  take any Gas  in
      excess of three hundred percent (300%) of its Percentage Interest of the
      Balancing Area's  then current Maximum  Monthly Availability;  provided,
      however,  that this limitation  shall not  apply to  the extent  that it
      would preclude production that is required to maintain leases in effect,
      to  protect the producing capacity  of a well  or reservoir, to preserve
      correlative  rights, or  to  maintain oil  production. "Maximum  Monthly
      Availability" shall mean the maximum  average monthly rate of production
      at which  Gas can be delivered from the Balancing Area, as determined by
      the Operator, considering the maximum efficient well  rate for each well
      within  the   Balancing  Area,  the  maximum  allowable(s)  set  by  the
      appropriate  regulatory agency,  mode of operation,  production facility
      capabilities and pipeline pressures.

      3.6   In the event that a  Party fails to make arrangements to  take its
      Full  Share of Current  Production required  to be produced  to maintain
      leases in  effect,  to  protect the  producing  capacity of  a  well  or
      reservoir,  to   preserve  correlative   rights,  or  to   maintain  oil
      production, the Operator may sell any part of such Party's full share of
      Current Production that such Party fails to take for the account of such
      Party and render to such Party, on a current basis, the full proceeds of
      the sale less any reasonable marketing, compression, treating, gathering
      or transportation costs incurred directly in connection with the sale of
      such Full Share of Current Production.  In making the  sale contemplated
      herein,  the Operator shall be  obligated only to  obtain such price and
      conditions  for the sale  as are reasonable  under the circumstances and
      shall  not be obligated to share  any of its markets.   Any such sale by
      Operator under  the  terms hereof  shall  be  only for  such  reasonable
      periods of time as are consistent with the minimum needs of the industry
      under the  particular circumstances,  but in no  event for  a period  in
      excess of  one  year.   Notwithstanding the  provisions  of Article  3.4
      hereof, Gas sold  by Operator  for a Party  under the provisions  hereof
      shall be deemed to be Gas taken for the account of such Party.

4.    IN-KIND BALANCING

      4.1   Effective the first day of  any calendar month following at  least
      thirty   (30)  days'   prior  written   notice  to  the   Operator,  any
      Underproduced Party may begin  taking, in addition to its Full  Share of
      Current  Production and any Makeup Gas  taken pursuant to Section 3.3 of
      this Agreement, a share of current production determined  by multiplying
      fifty percent  (50%) of  the Full  Shares of Current  Production of  all
      Overproduced Parties  by  a fraction,  the  numerator  of which  is  the
      Percentage Interest of  such Underproduced Party and  the denominator of
      which  is the  total of  the Percentage  Interests of  all Underproduced
      Parties  desiring to take Makeup Gas.   In no event will an Overproduced
      Party be required  to provide more than fifty percent  (50%) of its Full
      Share of Current  Production for Makeup Gas.  The Operator will promptly
      notify  all  Overproduced Parties  of the  election of  an Underproduced
      Party to begin taking Makeup Gas.

      4.2   Notwithstanding  the provisions  of  Section 4.1,  no Overproduced
      Party will be required to provide more than twenty-five percent (25%) of
      its Full Share of  Current Production for Makeup  Gas during the  Winter
      Period.

      4.3   Notwithstanding  any other  provision of  this Agreement,  at such
      time and for so long as Operator, or (insofar as  concerns production by
      the Operator) any Underproduced Party, determines in  good faith that an
      Overproduced Party  has  produced all  of its  share  of the  ultimately
      recoverable reserves in  the Balancing Area, such Overproduced Party may
      be required  to make available  for Makeup Gas,  upon the demand  of the
      Operator or any Underproduced Party, up to one hundred percent (100%) of
      such Overproduced Party's Full Share of Current Production.

5.    STATEMENT OF GAS BALANCES

      5.1   The Operator will maintain appropriate accounting on a monthly and
      cumulative basis  of the volumes of  Gas that each Party  is entitled to
      receive and the  volumes of Gas actually taken or  sold for each Party's
      account.  Within forty-five (45) days after the month of production, the
      Operator will  furnish  a statement  for  such  month showing  (1)  each
      Party's Full Share of  Current Production, (2)  the total volume of  Gas
      actually  taken or  sold for  each Party's  account, (3)  the difference
      between the volume taken by each and that Party's Full  Share of Current
      Production, (4) the Overproduction or Underproduction of each Party, and
      (5) other  data  as recommended  by  the provisions  of the  Council  of
      Petroleum  Accountants   Societies  Bulletin  No.  24,   as  amended  or
      supplemented hereafter.  Each Party taking Gas  will promptly provide to
      the Operator any  data required by the  Operator for preparation  of the
      statements required hereunder.

      5.2   If any  Party fails to  provide the data required  herein for four
      (4) consecutive production months,  the Operator, or where  the Operator
      has failed to provide data, another Party, may  audit the production and
      Gas sales  and  transportation volumes  of  the non-reporting  Party  to
      provide the  required data.   Such audit shall  be conducted only  after
      reasonable notice and  during normal business hours in the office of the
      Party whose records  are being audited.  All costs  associated with such
      audit will be charged to the account of the Party failing to provide the
      required data.

6.    PAYMENTS ON PRODUCTION

      6.1   Each Party taking Gas shall pay or cause to be paid all production
      and severance taxes  due on all  volumes of Gas  actually taken by  such
      Party.

      6.2   Each Party shall pay or cause to be paid Royalty  due with respect
      to Royalty owners to whom it is  accountable based on the volume of  Gas
      actually taken for its account.

      6.3   In the event that any governmental authority requires that Royalty
      payments  be made  on any  other basis  than that  provided for  in this
      Section 6, each Party agrees to make  such Royalty payments accordingly,
      commencing  on   the  effective  date  required   by  such  governmental
      authority,  and  the  method  provided  for  herein   shall  be  thereby
      superseded.

7.    CASH SETTLEMENTS

      7.1   Upon the  earlier  of the  plugging and  abandonment  of the  last
      producing interval  in  the  Balancing  Area,  the  termination  of  the
      Operating Agreement  or  any  pooling or  unit  agreement  covering  the
      Balancing Area, or at  any time no Gas is taken  from the Balancing Area
      for  a period  of twelve  (12) consecutive  months, any  Party  may give
      written  notice  calling  for  cash  settlement  of  the  Gas production
      imbalances among the Parties.  Such notice shall be given to all Parties
      in the Balancing Area.

      7.2   Within  sixty  (60)  days  after  the  notice  calling   for  cash
      settlement under Section 7.1, the Operator will distribute to each Party
      a   Final   Gas  Settlement   Statement   detailing   the  quantity   of
      Overproduction  owed by  each Overproduced  Party to  each Underproduced
      Party  and  identifying  the  month  to  which  such  Overproduction  is
      attributed, pursuant to the methodology set out in Section 7.4.

      7.3   Within sixty (60) days after  receipt of the Final Gas  Settlement
      Statement, each Overproduced Party will pay  to each Underproduced Party
      entitled to  settlement the appropriate cash  settlement, accompanied by
      appropriate accounting detail.  At the time of payment, the Overproduced
      Party will  notify the  Operator of  the Gas  imbalance  settled by  the
      Overproduced Party's payment.

      7.4   The amount  of the cash  settlement will be based  on the proceeds
      received by the Overproduced Party  under an Arm's Length Agreement  for
      the Gas taken  from time to time by the Overproduced  Party in excess of
      the  Overproduced Party's Share  of Current Production.   Any Makeup Gas
      taken by the Underproduced Party prior to monetary  settlement hereunder
      will be applied to offset Overproduction chronologically in the order of
      accrual.

      7.5   The values used for calculating the cash  settlement under Section
      7.1 will  be based on the proceeds  received for the sale  of the Gas by
      the Overproduced Party calculated at the Balancing  Area, under an Arm's
      Length Agreement, after deducting any production or severance taxes paid 
      and  any  Royalty  actually  paid  by  the   Overproduced  Party  to  an
      Underproduced  Party's  Royalty owner(s),  to  the  extent said  payment
      amounted  to   a  discharge   of  said  Underproduced   Party's  Royalty
      obligation, as well as  any reasonable marketing, compression, treating,
      gathering or  transportation costs incurred directly  in connection with
      the sale of the Overproduction.

      7.6   To the extent the  Overproduced Party did not sell  Overproduction
      under an Arm's Length  Agreement, the cash  settlement will be based  on
      the  weighted average price  received by the  Overproduced Party for any
      gas  sold from the  Balancing Area under  Arm's Length Agreements during
      the months  to which such  Overproduction is  attributed.  In  the event
      that  no sales under  Arm's Length Agreements were  made during any such
      month, the  cash settlement  for such  month will be  based on  the spot
      sales  price published for  the applicable  geographic area  during such
      month in a mutually acceptable pricing bulletin.

      7.7   Interest  compounded at the  rate specified in  Exhibit "C" of the
      Operating Agreement to which this Gas Balancing Agreement is attached or
      the  maximum lawful rate  of interest applicable  to the Balancing Area,
      whichever is  less, will accrue for  all amounts due  under Section 7.1,
      beginning the  rst day  following the  date payment  is due pursuant  to
      Section  7.3. Such  interest  shall  be borne  by  the  Operator or  any
      Overproduced Party in the proportion that their respective delays beyond
      the deadlines set out in Sections 7.2 and 7.3 contributed to the accrual
      of the interest.

      7.8   In  lieu  of  the  cash settlement  required  by  Section  7.3, an
      Overproduced  Party may deliver  to the Underproduced  Party an offer to
      settle  its Overproduction in-kind  and at such  rates, quantities, time
      and sources  as may be agreed  upon by the Underproduced Party.   If the
      Parties are  unable to  agree  upon the  manner  in which  such  in-kind
      settlement gas  will  be furnished  within  sixty  (60) days  after  the
      Overproduced  Party's offer  to  settle  in-kind,  which period  may  be
      extended by agreement of said Parties, the Overproduced Party shall make
      a cash settlement as provided  in Section 7.3. The making of  an in-kind
      settlement offer  under  this Section  will  not  delay the  accrual  of
      interest  on  the  cash  settlement should  the  Parties  fail  to reach
      agreement on an in-kind settlement.

      7.9   At  any time during  the term of  this Agreement, any Overproduced
      Party  may, in  its sole  discretion, make  cash settlement(s)  with the
      Underproduced  Parties covering  all  or  part  of its  outstanding  Gas
      imbalance,  provided  that  such  settlements  must  be  made  with  all
      Underproduced Parties  proportionately based on  the relative imbalances
      of the Underproduced Parties, and provided further that such settlements
      may  not be  made more often  than once  every twenty-four  (24) months.
      Such  settlements will be  calculated in the  same manner provided above
      for  final  cash settlements.    The  Overproduced  Party  will  provide
      Operator a detailed accounting of any such cash settlement within thirty
      (30) days after the settlement is made.

8.    TESTING

      8.1   NOT APPLICABLE

9.    OPERATING COSTS

      Nothing in this Agreement shall change or  affect any Party's obligation
      to pay its  proportionate share of all costs and liabilities incurred in
      operations on  or in connection  with the  Balancing Area, as  its share
      thereof is set forth in the Operating Agreement, irrespective of whether
      any Party is at any  time selling and using Gas or whether such sales or
      use are in proportion to its Percentage Interest in the Balancing Area.

10.   LIQUIDS

      The  Parties  shall   share  proportionately  in  and   own  all  liquid
      hydrocarbons recovered  with  Gas by  field equipment  operated for  the
      joint  account  in accordance  with  their Percentage  Interests  in the
      Balancing Area.

11.   AUDIT RIGHTS

      Notwithstanding any provision  in this Agreement or any  other agreement
      between the Parties hereto,  and further notwithstanding any termination
      or cancellation  of this Agreement, for  a period of two  (2) years from
      the end  of the calendar year  in which any information  to be furnished
      under Section 5 or 7  hereof is supplied, any Party shall have the right
      to  audit the records  of any other  Party regarding quantity, including
      but not limited to information regarding Btu-content.  Any Underproduced
      Party shall have the right for a period of two (2) years from the end of
      the calendar year  in which any cash settlement  is received pursuant to
      Section  7 to  audit the  records of  any Overproduced  Party as  to all
      matters  concerning values,  including  but not  limited to  information
      regarding prices  and disposition of Gas  from the Balancing Area.   Any
      such  audit shall be  conducted at the  expense of the  Party or Parties
      desiring such audit,  and shall be  conducted, after reasonable  notice,
      during  normal business hours in  the office of  the Party whose records
      are being audited.  Each  Party hereto agrees to maintain records  as to
      the volumes  and prices of  Gas sold each  month and the  volumes of Gas
      used in its own operations,  along with the Royalty paid on any such Gas
      used by a Party in its own operations.  The audit rights provided for in
      this Section  11 shall be in  addition to those provided  for in Section
      5.2 of this Agreement.

12.   MISCELLANEOUS

      12.1  As between  the Parties, in the event  of any conflict between the
      provisions  of  this  Agreement  and the  provisions  of  any  gas sales
      contract, or in the event of any conflict between the provisions of this
      Agreement  and the provisions of the Operating Agreement, the provisions
      of this Agreement shall govern.

      12.2  Each Party agrees to defend, indemnify and hold harmless all other
      Parties from and against any and all liability for any claims, which may
      be  asserted by  any third  party  which now  or hereafter  stands in  a
      contractual relationship  with such  indemnifying Party and  which arise
      out of  the  operation of  this  Agreement  or any  activities  of  such
      indemnifying  Party under  the  provisions of  this Agreement,  and does
      further agree to save  the other Parties harmless from  all judgments or
      damages sustained and costs incurred in connection therewith.

      12.3  Except  as  otherwise  provided  in this  Agreement,  Operator  is
      authorized  to administer  the provisions of  this Agreement,  but shall
      have no liability to the other Parties for losses sustained or liability
      incurred  which arise  out of or  in connection with  the performance of
      Operator's duties hereunder, except  such as may result  from Operator's
      gross negligence or willful misconduct.  Operator shall not be liable to
      any Underproduced Party for the failure of any Overproduced Party (other
      than Operator) to pay any amounts owed pursuant to the terms hereof.

      12.4  This Agreement shall remain in full  force and effect for as  long
      as the  Operating Agreement shall remain  in force and effect  as to the
      Balancing  Area,  and  thereafter until  the  Gas  accounts  between the
      Parties are settled  in full, and shall  inure to the benefit  of and be
      binding upon the Parties hereto, and their respective heirs, successors,
      legal representatives and assigns, if any.  The  Parties hereto agree to
      give notice  of the  existence  of this  Agreement to  any successor  in
      interest of any such Party and to provide that any  such successor shall
      be bound by  this Agreement, and shall further make  any transfer of any
      interest subject to the Operating  Agreement, or any part thereof,  also
      subject to the terms of this Agreement.

      12.5  Unless the context clearly indicates  otherwise, words used in the
      singular include the plural, the  plural includes the singular, and  the
      neuter gender includes the masculine and the feminine.

      12.6  This  Agreement  shall bind  the  Parties in  accordance  with the
      provisions hereof, and nothing herein  shall be construed or interpreted
      as creating any rights in  any person or entity not a  signatory hereto,
      or as being a stipulation in favor of any such person or entity.

      12.7  If contemporaneously  with this  Agreement becoming  effective, or
      thereafter,  any  Party  requests  that  any   other  Party  execute  an
      appropriate  memorandum or  notice of  this Agreement  in order  to give
      third parties notice of record of same and submits same for execution in
      recordable form, such memorandum or notice shall be duly executed by the
      Party to which such request is made and delivered promptly thereafter to
      the Party  making  the request.    Upon receipt,  the Party  making  the
      request shall cause the memorandum or notice to be duly  recorded in the
      appropriate real property or other records affecting the Balancing Area.

      12.8  In  the  event  Internal  Revenue Service  regulations  require  a
      uniform  method of computing  taxable income by  all Parties, each Party
      agrees  to compute  and report  income to  the Internal  Revenue Service
      based on  the quantity of Gas  taken for its account  in accordance with
      such  regulations,   insofar  as  same   relate  to  sales   method  tax
      computations. 

13.   ASSIGNMENT AND RIGHTS UPON ASSIGNMENT

      13.1  Subject to the provisions of  Sections 13.2 (if elected) and  13.3
      hereof,  and  notwithstanding  anything  in this  Agreement  or  in  the
      Operating Agreement to the contrary, if any Party assigns (including any
      sale, exchange or  other transfer) any  of its  working interest in  the
      Balancing  Area when  such  Party is  an  Underproduced or  Overproduced
      Party,  the assignment or  other act of  transfer shall, insofar  as the
      Parties hereto are concerned, include  all interest of the assigning  or
      transferring  Party in the Gas, all rights  to receive or obligations to
      provide or take Makeup Gas  and all rights to receive or  obligations to
      make  any monetary  payment which  may ultimately  be due  hereunder, as
      applicable.    Operator  and  each of  the  other  parties  hereto shall
      thereafter  treat  the  assignment  accordingly, and  the  assigning  or
      transferring Party shall look solely to its assignee or other transferee
      for any interest in the Gas or monetary payment that such Party may have
      or to  which it may be  entitled, and shall cause its  assignee or other
      transferee to assume its obligations hereunder.

      13.2  Notwithstanding  anything  in  this Agreement  (including  but not
      limited to the provisions  of Section 13.1 hereof)  or in the  Operating
      Agreement to the contrary, and subject to the provisions of Section 13.3
      hereof,  in the  event an  Overproduced Party  intends to  sell, assign,
      exchange or otherwise transfer any of its interest in a  Balancing Area,
      such  Overproduced  Party  shall notify  in  writing  the  other working
      interest owners who  are Parties hereto in  such Balancing Area  of such
      fact  at  least  sixty  (60)  days  prior  to closing  the  transaction.
      Thereafter, any  Underproduced Party  may demand from  such Overproduced
      Party  in  writing,  within  thirty  (30)  days  after  receipt  of  the
      Overproduced Party's  notice, a  cash settlement of  its Underproduction
      from the  Balancing Area.   The Operator shall  be notified of  any such
      demand and of any cash  settlement pursuant to this Section 13,  and the
      Overproduction  and  Underproduction of  each  Party  shall be  adjusted
      accordingly.  Any cash settlement  pursuant to this Section 13 shall  be
      paid  by the Overproduced Party on or before the earlier to occur (i) of
      sixty  (60) days after  receipt of  the Underproduced Party's  demand or
      (ii) at the closing of the  transaction in which the Overproduced  Party
      sells, assigns,  exchanges  or otherwise  transfers  its interest  in  a
      Balancing Area on the same basis as otherwise set forth  in Sections 7.3
      through 7.6  hereof, and shall  bear interest at  the rate set  forth in
      Section  7.7 hereof, beginning  sixty (60)  days after  the Overproduced
      Party's  sale, assignment, exchange  or transfer of  its interest in the
      Balancing Area  for any  amounts not  paid.   Provided, however, if  any
      Underproduced Party  does  not so  demand such  cash  settlement of  its
      Underproduction from the Balancing  Area, such Underproduced Party shall
      look exclusively  to the assignee or other  successor in interest of the
      Overproduced  Party giving notice hereunder for the satisfaction of such
      Underproduced Party's Underproduction in  accordance with the  provision
      of Section 13.1 hereof.

      13.3  The  provisions of this Section 13  shall not be applicable in the
      event any Party mortgages  its interest or  disposes of its interest  by
      merger, reorganization,  consolidation or  sale of substantially  all of
      its assets to a subsidiary or parent company, or to any company in which
      any parent or subsidiary of such Party  owns a majority of the stock  of
      such company.

                                  EXHIBIT "E"

         Attached to and made a part of the Joint Operating Agreement
     dated effective                     , by and between Shell Deepwater

                               Development Inc. 

                      and Reading & Bates Development Co.

                   CERTIFICATION OF NONSEGREGATED FACILITIES

Contractor certifies that  it does not maintain  or provide for  its employees
any segregated  facilities at any of  its establishments and that  it does not
permit  its  employees to  perform their  services at  any location  under its
control,  where segregated  facilities are  maintained.   Contractor certifies
further that  it will not maintain or provide for its employees any segregated
facilities at  any of  its  establishments and  that it  will  not permit  its
employees to perform their  services at any location, under its control, where
segregated facilities are maintained.  Contractor agrees that a breach of this
certification is a violation of the Equal Opportunity Clause in any Government
contract between Contractor and Operator.  As used in this  certification, the
term "segregated facilities" means any  waiting rooms, work areas, rest  rooms
and  other  storage  or  dressing  areas,  parking  lots,  drinking fountains,
recreation  or entertainment  areas,  transportation, and  housing  facilities
provided for employees  which are segregated by  explicit directive or are  in
fact segregated  on the basis  of race,  color, religion,  or national  origin
because of habit,  local custom or otherwise.   Contractor further agrees that
(except  where   it  has  obtained  identical   certifications  from  proposed
subcontractors) prior to the award of subcontracts exceeding $10,000 which are
not exempt from  the provisions of the Equal Opportunity  Clause; that it will
retain  such  certifications  in  its files;  and  that  it  will  forward the
following notice to  such proposed subcontractors  (except where the  proposed
subcontractors have  submitted  identical  certifications  for  specific  time
periods):

NOTICE  TO PROSPECTIVE  SUBCONTRACTORS  OF REQUIREMENT  FOR CERTIFICATIONS  OF
NONSEGREGATED  FACILITIES.   A Certification  of Nonsegregated  Facilities, as
required by the May 9, 1967 order on Elimination of  Segregated Facilities, by
the Secretary of Labor  (32 Fed.  Reg. 7439, May 19,  1967), must be submitted
prior to the award of a subcontract exceeding $10,000 which is not exempt from
the provisions  of the  Equal Opportunity  Clause.   The certification  may be
submitted either for each subcontract or for all  subcontracts during a period
(i. e., quarterly, semi-annually or annually). (1968  MAR.) (Note: The penalty
for  making false  statements in offers  is prescribed  in 18.   U.S.C. 1001.)
Whenever used in the foregoing Section,  the term "contractor" refers to  each
party to this agreement.

                                  EXHIBIT "F"

         Attached to and made a part of the Joint Operating Agreement
dated effective                   , by and between Shell Deepwater Development
                   Inc. and Reading & Bates Development Co.
                            NEWS RELEASE GUIDELINES


1.    General: The Parties hereby establish the following guidelines regarding
the issuing of a  release to the news media concerning  operations on any area
affected  by the  Agreement to  which this  Exhibit is  attached.   Subject to
Article 7.5 (News  Releases) of the  Agreement, no release  to the news  media
shall  be  made until  all  testing  (excluding flow  testing)  in  a well  is
completed  and  all  such  final  test  results  have  been  received  by  all
Participating Parties.

2)    Basic News  Release: If a  proposed news  release is not  approved as  a
      General  Matter per Article  7.5 (News  Releases) of the  Agreement, the
      Operator  may, at its discretion, prepare a basic news release using the
      following content guidelines:

            1 .   Name of Well and Rig Name
            2.    Location of  Well by Area,  Block, Water Depth  and Adjacent 
                  State
            3.    Bonus Price and Sale Date
            4.    Tested Interval(s), if appropriate
            5.    Participants and Percentages
            6.    Acreage Controlled

      Proposed basic news releases shall be transmitted for review and comment
      to the  Non-Operating  Parties not  less  than  72 hours  (exclusive  of
      Saturdays, Sundays, and holidays) before being issued to the news media.
      Any Non-Operating Party may have  its name excluded from the  release by
      so informing the Operator during the 72-hour news release review period.
      This exclusion however,  does not apply to the list  of participants and
      percentage participation.

3)    Supplemental News  Release:  Following receipt  of  Operator's  proposed
      release,  any Participating  Party  may  prepare  its own  news  release
      ("Preparing Party") using the  content guidelines above.  The  Preparing
      Party shall send the  other Parties a copy of the  proposed supplemental
      news release by  facsimile transmission.   A Non-Operating Party's  news
      release shall not be issued in advance of the Operator's release.

4)    No  News Release  by Operator: The  Operator may  choose not  to issue a
      basic news release per Paragraph 2) above.  In this event, within thirty
      (30) days of  the failed vote as  a General Matter in  Article 7.5 (News
      Releases), a Non-Operating Party may make a limited news release.   This
      release shall  be submitted to  the Operator for  review of content  and
      issuance  of the news  release.   After Operator's review,  the proposed
      release shall be submitted to other Non-Operating Parties for review and
      comment.  After  review and  comment by  all Parties,  the limited  news
      release may be given to the news media. 

                                  EXHIBIT "G"

Attached to and made a part of the Joint Operating Agreement dated effective   
               , by and between Shell Deepwater Development Inc. and Reading &
                             Bates Development Co.

                INTEGRATED PROJECT TEAM and TECHNOLOGY SHARING

      WHEREAS,  the Parties, desire  to further provide  for the formation and
operation  of an  Integrated Project  Team for  the  purpose of  assisting the
Operator with  preparing a Development Plan  for the Contract Area  and in the
planning, design  and  engineering of  an Initial  Production  System and  any
Subsequent Production System for the Contract Area; and,

      WHEREAS, Each of the Parties  has considerable experience in  developing
offshore oil and gas properties and the design and installation  of an Initial
Production System will require significant engineering effort; and,

      WHEREAS, The Parties desire  to establish an understanding,  relating to
i)  the costs and expenses of the Integrated Project Team to be charged to the
Joint  Account and the  method in which  such costs  shall be shared,  ii) the
overall  operation, administration  and management  of the  Integrated Project
Team, and  iii) the exchange, development  and use of technology  collected or
developed by or through this Integrated Project Team.

      NOW, THEREFORE,  in  consideration of  the premises  and  of the  mutual
promises exchanged and contained within  this Integrated Project Team Exhibit,
the Parties have reached the following agreement  concerning the formation and
operation of the Integrated Project Team.

                            SECTION 1.0 DEFINITIONS

      As used in this  Exhibit, the initially capitalized terms shall have the
      meanings assigned  in  Article 2.0  of  the  Operating Agreement  or  as
      specified below:

      1.1   Confidential Work Product: shall mean all proprietary geophysical,
      geochemical,  drilling, engineering  or  other similar  technical  data,
      along with  information, reports,  studies, analysis, models  or similar
      data  and documents that  are developed  by the Integrated  Project Team
      within the  scope of  its work  or  received from  or on  behalf of  the
      Parties for use in the  Integrated Project Team's work.  The  term shall
      include all proprietary information  developed by the Integrated Project
      Team, the cost of which is charged to the Joint Account.  The provisions
      of this Exhibit shall not be  applicable to "Confidential Data", as that
      term is defined in the Operating Agreement.

      1.2   Project Manager:  shall mean the designated  representative of the
      Operator  who  will  direct,  supervise  and  oversee  the work  of  the
      Integrated Project Team.

      1.3   Integrated  Project   Team  ("IPT"):  shall  mean   the  group  of
      management,  supervisory,  technical  and  support  personnel  from  the
      Parties  assigned to  assist the  Operator with preparing  a Development
      Plan for  a Prospect Area, and for the planning, design, engineering and
      installation of  a  Production System  for a  Prospect  Area as  further
      provided for in this Exhibit "G".   The IPT shall be formed pursuant  to
      Article 12.0 (Development Plans).

      1.4   Operating  Agreement:  shall  mean  that  certain  Joint Operating
      Agreement effective to which this Exhibit "G" is attached.

      1.5   Background  Technology: shall  mean  any proprietary  geophysical,
      geochemical  drilling, engineering  or  other  similar  technical  data, 
      information,  reports, studies,  analysis,  models or  similar data  and
      documents developed or  obtained by a Party outside of  the scope of the
      Operating Agreement  (and this Exhibit) that is  disclosed by a Party or
      exchanged by the Parties for use by the Integrated Project Team.

      1.6   Employees:  Employees  shall   mean  any   individual  under   the
      employment  of any  Party  to  this  Operating Agreement  including  any
      Affiliate or contractor which may represent any Party hereunder.

                 SECTION 2.0 INTEGRATED PROJECT TEAM FORMATION

      2.1   Formation and Staffing of the  Integrated Project Team: An IPT  of
      project, technical and  support personnel may be established pursuant to
      the terms  of Article 12.2 (Proposal of  Integrated Project Team) of the
      Operating   Agreement.      Each   Participating   Party  may   nominate
      representatives  possessing specific  backgrounds as  identified by  the
      Project Manager  to progress the  Development Plan.   Each Participating
      Party may nominate  a number of IPT  members equal to its  Participating
      Interest in the IPT.  Each Party shall have the right to have percentage
      representation on the IPT up to its respective working interest share of
      the total number of technical personnel to be assigned to the Integrated
      Project Team.  However, a Party shall not be precluded  from having more
      or less than its respective Participating Interest representation on the
      IPT, if approved by the Project Manager and consistent with the needs of
      the IPT.   The Project Manager must  approve actual participation of any
      individual nominated by a  Party for participation on the  IPT, and such
      approval shall not be unreasonably withheld.

            2.1.1 Employee Staff Contribution: Each Participating Party in the
            IPT AFE shall have the right (but not the  obligation) to nominate
            its  Employees as  members of  the IPT.   Nominated  Employees may
            include project, technical or support personnel.

            2.1.2 Affiliate  and  Contract Staff:    The IPT  may  utilize the
            resources of Affiliates, consultants  and contractors to carry out
            the  work of  the IPT.   Consultants  or contractors  nominated by
            Participating  Parties to  serve  on the  IPT  in the  place  of a
            Participating Party's  employees are  included under the  terms of
            this Section 2.1.2. The individuals nominated for participation by
            the Participating Parties  must have experience  commensurate with
            the position  to  which they  are being  nominated,  who could  be
            expected to meaningfully participate and contribute to the work of
            the IPT.

      2.2   Status  of Team  Members: Each  Employee member  of the  IPT shall
      remain  an employee  of its  respective company  and each  company shall
      remain responsible for their employees' salaries and benefits as well as
      maintaining   worker's  compensation   insurance  on   their  employees.
      Accordingly, each  Party will  continue to administer  the compensation,
      benefits,  allowances and staff  planning of  its employees on  the IPT.
      Each Party retains the right to ultimately  direct the details and means
      by  which  their  representatives  participate  on  the  IPT.   However,
      Employees who participate on the  IPT will receive team assignments  and
      general supervision  from the Project  Manager in connection  with their
      day  to day work.   An individual selected to  the IPT shall, insofar as
      possible, and consistent with the needs  of the IPT and the individual's
      employer, serve on the IPT for the duration of the IPT.  Notwithstanding
      the above, some IPT members may be selected for specific tasks or phases
      of IPT work, and upon the conclusion of such tasks or phases  these team
      members may be dismissed by the Project Manager.

      2.3   Project Manager: The IPT shall operate under  the direction of the
      Project Manager, who shall be selected by  the Operator of the IPT.  The 
      Project Manager shall  be responsible  for making  team assignments  and
      shall  be responsible  for  the overall  management  and supervision  of
      specific work tasks for the IPT.  The Project Manager shall determine at
      whose offices the  IPT work is  to be undertaken.   The Project  Manager
      shall be  responsible for  selecting team  members from  the nominations
      provided by Parties.  The Project  Manager shall also be responsible for
      selecting  contractors to  perform  certain  IPT  activities,  acquiring
      supplies and  services needed by  the IPT and for  instituting rules and
      procedures  for  maintaining  confidential  information.    The  Project
      Manager  shall  also  be responsible  for  making  presentations on  any
      Initial or Subsequent Production  System and associated documentation at
      meetings which are conducted under the Operating Agreement.

      2.4   Work Scope of  the Integrated Project Team:  The primary objective
      for forming any  IPT is to pool the talents of  the Parties in preparing
      feasibility  studies prior  to Development  Operations and  in planning,
      design, engineering, fabricating, transportation and installation of any
      Production System.  The proposal of the  Development Plan (including the
      Initial  Production  System) and  commitment of  funds thereto  shall be
      handled  in accordance  with  Article 12.0  (Development  Plans) of  the
      Operating  Agreement.    For  any project  undertaken  by  the  IPT, the
      Operator shall provide: (1) a  memo describing the anticipated scope  of
      the team's work to be undertaken in reasonable detail such that the Non-
      Operator may make an informed  decision concerning its participation  in
      the Integrated  Project Team; (2) a memo  describing the type and number
      of staff required to  complete the assignment; and (3)  an AFE itemizing
      the  Operator's estimate  of the  Cost of  the Integrated  Project Team.
      Approval of the IPT AFE (and scoping memo) shall be  handled pursuant to
      Article 12.1.1 (Integrated Project Team) of the Operating Agreement.

      2.5   Reports by the Integrated Project  Team: The IPT shall review  the
      progress of its work with all Participating  Parties at least quarterly,
      and  present  the  results  of  any  studies   or  planning  upon  their
      conclusion.  The time  and place of the meetings of the IPT and location
      for  conducting IPT  activities  shall  be  determined  by  the  Project
      Manager.

      2.6   Integrated Project Team Costs: The costs and  expenses for the IPT
      shall  be  charged  to  the  Joint  Account  pursuant  to  Exhibit  "C",
      (Accounting Procedure)  of the Operating Agreement.   Each Participating
      Party  in the IPT  shall be  responsible for its  Participating Interest
      share  of  the  IPT  expenses,  regardless  of  its  level  of  Employee
      participation on the IPT.

            2.6.1 Employee Charges:  Each Participating Party in  an IPT shall
            recover the costs of Employees assigned to  or associated with the
            IPT  through  charges  to  the  joint  account  under Exhibit  "C"
            (Accounting Procedure) of the Operating Agreement.

            2.6.2 Contractors and Consultants: The Project Manager  may retain
            the  services  of consultants  and  contractors  as is  reasonably
            necessary to carry out the studies and tasks assigned  to the IPT.
            Costs of  such consultants  and contractors  assigned  to the  IPT
            shall  be  recovered by  Operator  through  charges to  the  joint
            account under Exhibit "C"  (Accounting Procedure) of the Operating
            Agreement.  So  long as the Costs of the  consultant or contractor
            are  within the scope  and amount of an  approved AFE, the Project
            Manager's retention  of consultants  shall not  require additional
            approval by the Participating Parties.

      2.7   Liability of  Integrated Project Team Members.   Each Party agrees
      to defend,  hold  harmless and  indemnify  the  other Parties  from  and
      against any  loss, damage, claim  suit, liability, judgment  and expense
      (including attorney fees and other costs of litigation) for any personal
      injury  (including death) of  its Employees  on the IPT  irrespective of
      whether any  other party or its employees may have been or maybe alleged
      to have been negligent or otherwise legally responsible.

                        SECTION 3.0 Security Provisions

3.1   Security   Policies:  All  Operator   and  Non-Operator   Employees  and
associates with the IPT shall honor Operator's security system and shall treat
all information  directly or indirectly learned  or received by  virtue of its
participation on the IPT  as confidential in accordance with the provisions of
Operator's security manual, and all revisions  thereto which are made prior to
termination of this  Exhibit.  A copy of the security manual and any revisions
thereto shall  be  made available  to Non-Operator  Employees  by the  Project
Manager  for their use during the project.  This obligation of confidentiality
shall also apply to any  other proprietary and confidential information  which
may  relate to matters other than  the Contract Area to  which IPT members are
exposed  by  virtue of  working  in  Operator's offices.    Operator  will use
reasonable efforts to minimize the  exposure of Non-Operator personnel to  the
Operator's proprietary and confidential information.   In no event shall  such
confidential information  be  disclosed to  a third  party  without the  prior
written  consent  of  Operator  and Non-Operator  except  as  provided  in the
Operating Agreement.

                                  SECTION 4.0
                                Confidentiality

4.1   Confidentiality   Obligation:   Each   Party  agrees   to   maintain  as
confidential and  not to use or  disclose to any third  party the Confidential
Work  Product, except as  expressly provided hereunder,  for a confidentiality
period commencing  on the  date of execution  of the  Operating Agreement  and
extending through the later of (i)  two (2) years following the termination of
the IPT work pursuant to Section 8 of this Exhibit "G" or (ii) seven (7) years
following the date of execution of  the Operating Agreement.  After expiration
of   the  confidentiality   period  the   receiving  Party's   obligations  of
confidentiality and restrictions  on use shall  cease.  Each  Party agrees  to
treat the disclosure of the Confidential Work Product in the same manner as it
treats its own confidential information.

      4.1.1 Background  Technology:  The Parties  shall  use  best efforts  to
      declare and  list Background  Technology and  information which  will be
      utilized  by  the IPT  prior to  establishment of  the  IPT.   However a
      Participating   Party  may  declare   and  list   additional  Background
      Technology  after establishment of  the IPT if  it deems such technology
      will  be beneficial  to the  IPT.   Prior to  disclosing any  Background
      Technology to the IPT, the  Participating Parties shall agree to  exempt
      the  Background  Technology  from  the terms  of  this  Exhibit  and the
      Operating Agreement.  If such agreement is not obtained, such Background
      Technology need not be disclosed to the IPT.  The  receiving Party shall
      maintain any Background Technology received as Confidential Work Product
      under this Exhibit.  In no event will Background Technology be disclosed
      to a  third  party  without  the prior  written  consent  of  the  Party
      providing  the  Background  Technology  to  the  IPT.    Any  Background
      Technology  presently  owned  and  developed by  a  Party  prior  to the
      effective date of the Operating Agreement shall remain the sole property
      of that Party.

      4.1.2 Consultant  Agreements:   The  Project  Manager  and   each  Party
      soliciting work  from third party  contractors and consultants  (or from
      Affiliates) in  connection with  the IPT shall  use its best  efforts to
      secure  contract terms  with such third  party which  contain applicable
      confidentiality terms and which support rights to the Parties consistent
      with this Agreement. 

4.2   Exceptions  and  Permitted  Disclosures:  Any  Participating  Party  may
disclose  Confidential Work  Product to  third parties  if such  disclosure is
either  an exception to  the confidentiality  obligation as listed  in Article
7.1.1  (Exceptions  to Confidentiality)  or  is a  permitted  disclosure under
Article 7.1.2 (Permitted Disclosures) of the Operating Agreement.

      4.2.1 Patent  Application  Disclosures:  Notwithstanding  the foregoing,
      each Party may use such  Confidential Work Product under Subarticle  5.2
      as  reasonable  necessary or  appropriate  to  file patent  applications
      pursuant  to Article  6. Prompt  notice will  be  provided to  the other
      Parties of any such filing.

      4.2.2 Subsequent Disclosures: Following the  expiration of the period of
      confidentiality  set forth in  Section 4.1 above,  each Party may freely
      use and disclose the Confidential Work Product without accounting to any
      other  Party,   subject  only  to  whatever   patent  rights,  copyright
      restrictions or  confidentiality obligations are owed  to third parties.
      Subject to  the obligations  of confidentiality  set forth  herein, each
      Party  has the right  to copy, display,  publish, distribute and prepare
      derivative  works  of  all  documents,  drawings  or  other writings  or
      materials created or  conveyed under this Exhibit, including  the rights
      to license, sell or otherwise transfer such rights.

4.3   Supporting Agreements: Each Party shall be responsible for insuring that
its respective representatives fully abide by all obligations associated  with
the  confidentiality  of  all  information  learned  as   a  result  of  their
participation  on the IPT  and agree to  convey such information  to others in
their company on a "need-to-know" basis only.  In this regard, there shall  be
limited reproduction  of  IPT generated  data.    Upon the  Project  Manager's
request,  each Party shall  require its respective  employees participating on
the  IPT  to   execute  a  confidentiality   agreement  consistent  with   the
confidentiality  obligations specified  in  the Operating  Agreement and  this
Exhibit and shall furnish the other Parties with a copy of same  upon request.
Operator  shall be  responsible for  securing confidentiality  agreements from
outside contract services.

                 SECTION 5.0 USE OF CONFIDENTIAL WORK PRODUCT

5.1   Receipt  of Confidential Work  Product: Each  Party will be  entitled to
receive  the full reports  of all  technical studies, detail  reports, general
conclusions,  numerical  results, and  design  drawings  from all  engineering
services that are charged to  the Joint Account pursuant to an AFE in which it
is a Participating Party, whether those engineering  services are performed by
a Party participating in the IPT, an Affiliate or by a third party.

5.2   Right to use Confidential Work Product: Each Participating Party may use
for its own account (and free  of cost) all Confidential Work Product received
or developed by the IPT which is (1) Background Technology or (2) developed by
the EPT under  this Agreement  or the cost  of which is  charged to the  Joint
Account.  Each Participating Party  may disclose Confidential Work Product  to
other  members of joint  ventures or production  sharing arrangements in which
the Party  or Affiliate has  an ownership interest provided  the other members
agree to hold the Confidential  Work Product in confidence and to  use it only
for the benefit of that joint venture or production sharing arrangement.

5.3   Third Party Limitations: The Parties acknowledge that various Background
Technology may  have  been  received  from  third  parties  under  preexisting
restrictions  (e.g.,  that  the  Party may  disclose  the  third  party source
information  to  a  partner in  a  joint  venture  only under  obligations  of
confidentiality  and  under  restriction  to  use  the   information  only  in
connection with the joint venture).  Each delivering Party agrees to identify,
in writing, any Background Technology subject to  third party restrictions and
disclose  the nature  of  the restriction  to  the  receiving Party  prior  to
disclosure  of the Background  Technology.  The  delivering Party shall secure
the receiving Party's acknowledgment of such restrictions prior to transmittal
of  such   third  party   Background  Technology.     The  receiving   Party's
acknowledgment constitutes its acceptance of such obligations and restrictions
imposed upon disclosure and use of the Background Technology.

5.4   Proprietary  Software:  During the  term  of  the IPT,  a  Party  may be
authorized to use various computer software and  programs which are identified
as being proprietary to one  of the other Parties.  Such  proprietary computer
software and programs shall not be considered joint property and such computer
software and programs are not a deliverable under this Agreement.  Use of such
proprietary software  and programs is  not a  grant of license  of any  rights
outside of this Agreement and the Parties retain all rights  to such property.
Computer  software  and programs  which  are not  proprietary  to  one of  the
Parties,  but which  were developed  jointly by the  IPT, shall  be considered
Confidential Work Product and joint property.

                SECTION 6.0 INVENTIONS, PATENTS AND COPYRIGHTS

6.1   Patent  Assignment with  Right  to License  and  Sublicense: Patents  on
inventions  which  are   (1)  conceived  solely  by  outside   contractors  or
consultants  employed for the  joint account,  or conceived jointly  among the
Parties  (each including its  respective Affiliates) while  working on the IPT
and (2) from  work which has been funded by the Joint Account will be assigned
to the Operator.   The Operator  agrees to grant  each Participating Party  an
irrevocable,  non-exclusive, worldwide, royalty-free license to practice under
all such patents,  including the right to grant sublicenses under such patents
to any third  party or Affiliate on such other terms  and conditions that such
Party deems appropriate, without accounting to any other Party.

6.2   Patent Assignment and  License With Limited Right to Sublicense: Patents
on inventions not covered in Section 6.1, which are conceived or first reduced
to practice  (actual or  constructive), by  a Party  or its Affiliate,  either
alone or jointly with any outside contractors or consultants, and  as a direct
result  of work which has  been funded by the Joint  Account, will be owned by
that Party.  The Party owning any such patent agrees to grant each other Party
an irrevocable, non-exclusive, worldwide,  royalty-free license under all such
patents to  make, have made, use and  have used such invention  for such other
Party's  own  business, including  any  joint  venture  or production  sharing
arrangement in which  such other Party  has an  ownership interest.   Further,
each such other Party has the right to extend these rights to its Affiliates.

6.3   No Commitment  to Disclose  Technology:  Except as  expressly set  forth
above, nothing  in this Exhibit  "H" will  be deemed to  require any  Party or
Affiliate to grant  any licenses under any  patents to anyone.   The scope and
content  of any Background  Technology disclosed under  this Agreement will be
determined in the sole discretion of the disclosing Party.

                    SECTION 7.0 WARRANTIES AND INDEMNITIES

7.1   Disclaimer of Warranties: ALL INFORMATION  DISCLOSED OR RECEIVED BY  THE
PARTIES  HEREUNDER  SHALL  BE  PROVIDED  ON  AN  "AS  IS"  BASIS  WITHOUT  ANY
WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO THE ACCURACY, VALIDITY OR UTILITY
OF SUCH INFORMATION OR THAT IT CAN BE USED WITHOUT INFRINGING ANY THIRD  PARTY
PATENT,  COPYRIGHT,  OR  OTHER  PROPRIETARY  RIGHT.     WITHOUT  LIMITING  THE
PRECEDING,  ANY EXPRESS, IMPLIED OR STATUTORY  WARRANTY OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE  ARE EXPRESSLY EXCLUDED FROM THIS  AGREEMENT.
IN NO  EVENT SHALL A PARTY  CONVEYING OR DISCLOSING INFORMATION  BE LIABLE FOR
ANY  INCIDENTAL, CONSEQUENTIAL OR  OTHER DAMAGES  ARISING OUT OF  OR RESULTING
FROM THE USE OF INFORMATION CONVEYED OR DISCLOSED UNDER THIS EXHIBIT.

7.2   Indemnities: Each  Party agrees to  defend, hold harmless  and indemnify
the  other Parties from and against  any loss, damage, claim, suit, liability,
judgment and expense (including attorney  fees and other costs of  litigation)
related to  or in connection  with its use  (including use by  others which it
authorizes), outside of the Contract  Area, of any Confidential Work  Product,
Background  Technology or  other  information or  other technology  disclosed,
exchanged under or developed pursuant to this Exhibit.

                     SECTION 8.0 MISCELLANEOUS PROVISIONS

8.1   Export  Controls:  Each  Party  agrees to  abide  by  the  United States
Department  of  Commerce regulations  concerning  the export  or  re-export of
United  States  source  technical  data, or  the  direct  product  thereof, to
unauthorized destinations  and regulations in respect  of information supplied
by or on behalf of any other Party hereunder.

8.2   Independent Research.    Nothing herein  shall in  any  way restrict  or
impair  the  right of  any  Party  to conduct  its  own independent  research,
development, or  design activities  relating to  the  evaluation of  alternate
deepwater  development systems  even though  such activities  may parallel  or
overlap the activities of the IPT.  Any such Party conducting such independent
research  activities shall be  under no  obligation pursuant to  the Operating
Agreement or this Exhibit to  disclose any results of independent  research to
the other Party(ies) or with respect to the use  or disposition of the results
of independent research, including but not limited to all information and data
resulting therefrom.

8.3   Duration of the Integrated Project Team:  The IPT shall remain in  place
until (1) the team has completed the work described in the IPT AFE and scoping
memo, or  (2) the planning,  design, construction,  installation and  start-up
phase  of any Production System has  been completed, or (3)  IPT work has been
terminated by  approval  of the  Participating Parties  as  a General  Matter,
whichever is  the earlier event.   Upon dissolution  of the IPT,  the Operator
shall conduct any further work required for the installation of the Production
System.   Any AFE  in progress  at the  time of  the  IPT's dissolution  shall
continue to be accounted for under Exhibit "C" (Accounting Procedure).

8.4   Assignability:    Except  in those  certain  transactions  set forth  in
Article  24.2.3 of  the Operating  Agreement, a  third party (not  currently a
Party to  this Agreement) who acquires a Working Interest in the Contract Area
may join the IPT upon  the approval of the Participating Parties  as a General
Matter.   A new Party joining the IPT must agree, in writing, to undertake all
obligations set forth  for a Party under  this Exhibit.   Such new Party  will
have all rights, duties and  obligations under this Exhibit regarding  the use
of all Confidential  Work Product exchanged or developed prior  to the date it
joins the IPT and during its participation thereunder.  However, patent rights
received  by such new Party hereunder pursuant  to Section 7.0 of this Exhibit
shall be  limited to patents based  on developments after the  date such Party
joins the IPT.  In the  event that a Party assigns its entire interest  in the
Leases,  the assigning  Party shall  have  all the  rights  specified in  this
Exhibit,  including patent  rights  and license  rights  thereunder, based  on
developments and exchanges prior to the effective  date of such assignment and
shall continue to have all obligations and duties with respect  thereto as set
forth  in this Exhibit  "H" relating  to the confidentiality,  restrictions on
use, patents,  indemnity,  and as  applicable,  duties  to license  the  other
Parties.

8.5   Re-instatement of Integrated Project Team: The IPT  may be reinstated by
the Operator to  assist in further  work on the  Initial Production System  or
planning and designing any Subsequent  Production System.  Any reinstated  IPT
shall utilize the procedures of this Exhibit, with any applicable time periods
in  Article  12   of  the  Operating  Agreement  running  from   the  date  of
reinstatement of the IPT. 

                                  EXHIBIT "H"

         Attached to and made a part of the Joint Operating Agreement
dated effective          , by and between Shell Deepwater Development Inc. and
                        Reading & Bates Development Co.

                         DISPUTE RESOLUTION PROCEDURE

1.    OVERVIEW

      A.    Description and Goals.  Arbitration as used in this statement is a
      procedure  whereby an Arbitrator resolves any claim(s), controversy(ies)
      or dispute(s)  (the "Dispute") between Shell  Deepwater Development Inc.
      and              (hereinafter  referred to  singularly  as  "Party"  and
      collectively as "Parties") arising out of, relating  to or in connection
      with the             Joint Operating Agreement (hereinafter "Agreement")
      including the interpretation, validity, termination or breach thereof.

            (i)   Binding:  The arbitration process is  binding on the Parties
            and this arbitration  is intended to be a  final resolution of any
            Dispute between the Parties as described above, to the same extent
            as a final judgment  of a court of  competent jurisdiction.   Each
            Party hereby expressly covenants that it shall not resort to court
            remedies except as provided for herein, and for preliminary relief
            in aid of arbitration

            (ii)  Violation:  A  non-prevailing Party shall pay  all legal and
            court  costs incurred by  the other  Party in connection  with the
            enforcement  of the  final  resolution of  any Dispute  under this
            Dispute Resolution  Procedure.   Suits, actions or  proceedings in
            connection with such enforcement shall be instituted in the United
            States District Court  for the Eastern District  of Louisiana, and
            pursuant to Title IX of the United States Code.  Each Party waives
            any option or objection which it may now or thereafter have to the
            laying  of the venue  in any such  suit, action  or proceeding and
            irrevocably submits to the jurisdiction of such  court in any such
            suit, action or proceeding.

      B.    Duty to Negotiate:  The Parties shall  inform one another promptly
      following the occurrence or  discovery of any item or event  which might
      reasonably be  expected to result  in a Dispute  in connection  with the
      Agreement.  The Parties will attempt to  resolve satisfactorily any such
      matters.

      C.    Notice  of Unresolved Dispute:   Should a  Dispute arise which the
      Parties cannot resolve satisfactorily,  either Party may deliver  to the
      other  Party   a  written  notice   of  the   Dispute  with   supporting
      documentation  as  to the  circumstances  leading  to  the Dispute  (the
      "Notice of Dispute").  The Parties,  within ten (10) Business Days  from
      delivery  of  such   notice,  shall  then  each   appoint  a  management
      representative  ("Management Representative")  who has  no prior  direct
      involvement with the subject matter of the Notice of Dispute  and who is
      duly authorized to investigate, negotiate, and settle  the Dispute.  The
      Management Representative for each Party shall meet  and confer as often
      as they deem reasonably necessary for a period not exceeding thirty (30)
      days  following the  delivery of  the Notice  of Dispute  in good  faith
      negotiations to resolve the Dispute amicably.  The parties in their sole
      discretion may also agree to utilize the service of a  mediator pursuant
      to a  joint  engagement.   Unless otherwise  provided  herein, all  such
      notices  shall  be  served  in accordance  with  the  provisions  of the
      Agreement.

II.   ARBITRATION PROCESS 

      A.    Arbitration:   If the  Parties are  unable to resolve  the Dispute
      within forty (40) days following  the receipt of the Notice of  Dispute,
      or such additional time as  may be mutually agreed, the matter  shall be
      submitted to  arbitration in  accordance with  the procedures set  forth
      below.

      B.    Initiation of Arbitration:  The arbitration shall be initiated  by
      either party delivering to the other a Notice of Intention to Arbitrate.

      C.    Governing Procedures:   Except  as expressly provided  herein, the
      arbitration shall  be conducted in  accordance with procedures  that are
      mutually acceptable  to the  Parties,  including limited  depositionless
      discovery.

            (i)   Governing  Law:   The Arbitrator  shall apply  the governing
            substantive  law  of  the  state  chosen  by  the Parties  to  the
            Agreement.

      D.    Arbitrator:    There  shall  be  one   Arbitrator,  who  shall  be
      independent,  impartial  and  experienced  in  arbitration  proceedings.
      Arbitrator  shall  be  experienced  in  the  oil  and gas  industry  and
      knowledgeable or specializing as to  the subject matter involved in  the
      Dispute.  The  Arbitrator shall be chosen as follows:  the Parties shall
      have thirty  (30) days from  the delivery  of a Notice  of Intention  to
      Arbitrate to mutually  agree on an  Arbitrator.  If  the Parties  cannot
      mutually  agree within  said thirty  (30) day  period, then  the Parties
      shall, within  three (3)  days after expiration  of the thirty  (30) day
      period, apply to the American Arbitration  Association as the Appointing
      Authority, for the appointment of an  Arbitrator for or on behalf of the
      Parties,  and in such  case the  Arbitrator appointed by  the Appointing
      Authority  shall meet the  criteria set forth  in this Section  II.D and
      shall act as if mutually agreed to by the Parties.

            (i)   Conflicts: Any Arbitrator, prior  to his or her appointment,
            shall disclose to the Parties all actual or perceived conflicts of
            interest and  business relationships involving the  Dispute or the
            Parties, including but not limited to,  any professional or social
            relationships,   present  or   past,  with   any  Party   (or  its
            affiliates), including any Party's  (or its affiliates) directors,
            officers and  supervisory personnel  and counsel.   Any Party  may
            challenge in writing  the appointment or continued  service of any
            Arbitrator for lack of independence, partiality or any other cause
            likely   to  impair  such   Arbitrator's  ability  to  effectively
            participate in  the proceedings  or render  a  fair and  equitable
            decision.  Where such challenge  is made, the Appointing Authority
            shall uphold or dismiss the  challenge.  In the event a  challenge
            is upheld, the Arbitrator shall  be replaced.  A replacement  will
            be  selected in  the same  manner as  the original  Arbitrator was
            selected.  If an Arbitrator resigns or becomes unable or unwilling
            to  continue to serve  as the  Arbitrator, a replacement  shall be
            selected in the same manner as that Arbitrator was chosen.

            (ii) Multi-Party  Arbitrations:  Where  more than two  Parties are
            involved in the  Dispute ("Multi-Party Arbitration"),  all Parties
            shall jointly name and agree as the  appointment of the Arbitrator
            meeting the  criteria set forth  in Section  II.D. above.   If the
            Parties cannot agree as to the choice of the Arbitrator within the
            said thirty  (30) days,  any  of the  Parties hereto  may in  like
            manner,  within three (3)  days after written  notice to the other
            Parties, apply to the Appointing Authority for  the appointment of
            an Arbitrator  meeting the  criteria  set forth  in Section  II.D.
            above. 

            (iii)  Management  of  the  Arbitration:    The  Arbitrator  shall
            actively manage the  proceedings as he or she deems  best so as to
            make  the same  expeditious,  economical and  less burdensome  and
            adversarial than litigation.

      E.    Confidentiality:   All documents,  briefs, testimony, transcripts,
      as well as, all Arbitrator  decisions shall be confidential.   Likewise,
      the views,  suggestions,  admissions, proposals  and  other  information
      exchanged in  the arbitration are  confidential and are  inadmissible in
      any other proceeding.

      F.    Costs and Expenses:  The Parties  involved in the dispute shall be
      equally  responsible for all  costs, fees  and expenses incurred  by the
      Arbitrator and  any other incidental  costs incurred in  connection with
      the arbitration proceeding shall also  be borne equally by the  Parties.
      Each  Party  is  solely  responsible for  its  own  attorneys'  fees and
      expenses incurred  in the Arbitration.   In  the event of  a Multi-Party
      Arbitration, all  costs  and expenses  shall  be  borne equally  by  all
      Parties.

      G.    Submissions:  Within thirty (30)  days after the selection of  the
      Arbitrator,  each Party shall  provide the  Arbitrator with a  short and
      plain submission defining the issues to be decided and the nature of the
      relief  that  the  Arbitrator  may  award  (the   "Submission").    This
      Submission  shall explicitly  authorize the  Arbitrator to  decide these
      issues.   This authorization shall  stay in force  for period no  longer
      than nine (9) months from this Submission.  If the Parties are unable to
      reach consensus as to the issues involved, the Arbitrator in  his or her
      sole  discretion shall frame the issues  through a reasonable procedure.
      The  Arbitrator will render decisions on the specific issues established
      and  shall fashion any  remedy that the  Arbitrator deems appropriate so
      long  as  that  remedy  is  consistent  with  the  Parties'  Submissions
      hereunder.   Any  money judgment  entered  by  the Arbitrator  shall  be
      payable in U.S. dollars.

H.    Transcriptions: The  presentations and argument will  be transcribed for
the benefit of the Arbitrator and the Parties.

I.    Discovery:    Commencing  thirty  (30) days  after  the  receipt  of the
opposing Party's Submission, each Party  may serve upon the other Party  up to
ten (10) requests  for the production of  documents, including subparts.   The
requests  shall be made  in good faith  and not be  served for the  purpose of
delay or  harassment.   Each request shall  describe the  type of  document(s)
sought and each request shall be limited  to documents that are relevant to  a
claim  or defense in  the Arbitration proceeding,  or reasonably calculated to
lead to the discovery of admissible evidence.  The requests need not be served
all at once but may be served in stages.

            (i)   The Party served  with a request under this  provision shall
            provide the adverse  Party with copies of the requested documents,
            and identify  the request  to which  each document  is responsive,
            within  twenty (20) days  of the receipt  of the request.   If the
            Party served  with a request  objects to the production  of any of
            the requested documents, it  shall nevertheless produce within the
            permitted time all documents responsive to any request that is not
            objected to by that Party.

            (ii)  A  Party that  is served  with a  request may  challenge the
            propriety of the request within the time permitted for response by
            a short written objection which shall be  forwarded to the adverse
            Party and to the Arbitrator.   The adverse Party shall submit  its
            response, if any, to the objecting Party and the Arbitrator within
            five (5) days of  receipt of the objection.  The  Arbitrator shall
            consider the request, the objection and the  response, if any, and 
            decide  whether  the  production shall  be  allowed  or denied  or
            whether the request should be modified within  ten (10) days after
            the submission of the adverse Party's response.

J.    Presentations:  No  later than twenty-five (25)  days prior to  the date
that presentations to the Arbitrator  are to begin, each Party will  submit to
the Arbitrator and serve on the other Party a written position statement.  The
original statement of each Party shall not exceed thirty-five (35) typewritten
letter-size pages.  Each Party shall have the right to submit reply statements
no later than fifteen (15) days prior  to the date of the presentation.   Such
reply statements shall not exceed fifteen (15) typewritten letter-size pages.

            (i)   All documents  and affidavits  that a  Party intends to  use
            during its presentation  shall be submitted to  the Arbitrator and
            served on the other Party with the  position and reply statements.
            All  demonstrative exhibits  shall be exchanged  five (5)  days in
            advance of the presentations.

            (ii)  The presentations  to the  Arbitrator shall extend  for such
            time as the  Arbitrator agrees to be appropriate.   In the absence
            of  any agreement, the presentations for both Parties shall extend
            for no longer than two (2) days and shall be  concluded within six
            (6) months  after selection of  the Arbitrator.   Presentations of
            each Party shall occur successively with no intervening delay.

            (iii) Each   Party   shall  make   an   oral  and/or   documentary
            presentation of its position in such order  and in accordance with
            the time schedule established  by the Arbitrator.   The Arbitrator
            may  question each of  the presenters during  or following any and
            all presentations.

      The  Arbitrator shall determine  a reasonable time  and location for the
      presentations.

K.    Decision  and Award:   The Arbitrator shall  promptly (within sixty (60)
days of conclusion of the  presentations or such longer period as  the Parties
may mutually agree)  determine the claims  of the Parties  and render a  final
decision in writing.  The decision  shall state with specificity the  findings
of fact and  conclusions of law on  which it rests.  The  decision rendered by
the Arbitrator may be enforced in accordance with Section I.A.(ii), above, and
may  only be  appealed pursuant  to Section L  below.   The decision  shall be
served upon each of the  Parties by facsimile transmission and by  first class
mail.

            (i)   If applicable law allows pre-award interest, the  Arbitrator
            may,  in his or  her discretion, grant  pre-award interest and, if
            so, such  interest may be at commercial  rates in the state chosen
            by  the Parties pursuant  to Section II.C.(i)  during the relevant
            period.   Further, the  arbitrator may, in  his or her discretion,
            award to the prevailing party(ies)  its (their) attorneys fees and
            costs   of  arbitration.      The  Arbitrator   shall  not   award
            consequential,  punitive,   indirect   or  other   noncompensatory
            damages.

            (ii)  Within ten (10) days of receipt of the award either side may
            submit a  Motion to  Modify the  award.  A  response shall  be due
            within  fifteen (15) days thereafter and the Arbitrator shall rule
            thereon within fifteen (15) days after receipt of the response.

            (iii) Judgment  on the  award may  be entered  in a  United States
            District Court for the Eastern  District of Louisiana at any  time
            within one year after the decision is made. 

L. Vacation of Award and Appeal:  An appeal from an order or judgment pursuant
to this Section II.L. shall be  instituted in the United States District Court
for the Eastern District of Louisiana.  The court may vacate the award only if
the award was procured by or through fraud or corruption  or bias or prejudice
of the Arbitrator.  Each Party waives any option or objection which it may now
or  thereafter have to  the laying of  the venue of  any such suit,  action or
proceeding and irrevocably  submits to the  jurisdiction of  the court in  any
such suit, action or proceeding.  Each Party agrees that a remedy at law for a
violation of  this Section II.L. may not be adequate and therefore agrees that
the remedies of specific performance and injunctive  relief shall be available
in the event of any  violation in addition to any other right or remedy at law
or in equity to which any Party may be entitled.

M.    Res  Judicata:  To the  extent  permitted by  law,  any decision  of the
Arbitrator shall not  be res judicata or have any binding  effect in any other
litigation  or arbitration  where any Party  to this  Agreement may  also be a
party.

                                  EXHIBIT "I"

         Attached to and made a part of the Joint Operating Agreement
  dated effective ______________, by and between Shell Deepwater Development
                                     Inc.
                      and Reading & Bates Development Co.

                       MEMORANDUM OF OPERATING AGREEMENT
                            AND FINANCING STATEMENT

1.0   This   Memorandum  of  Operating   Agreement  and   Financing  Statement
      (hereinafter  called "Memorandum") is  effective as of  the ______day of
      ____________________.

2.0   The  parties hereto have  entered into an  Operating Agreement effective
      _______________ (hereinafter referred  to as the "Operating  Agreement")
      providing for the development and  production of crude oil, natural  gas
      and  associated  substances  from  the  lands  and  oil and  gas  leases
      described in Exhibit "A-1" of the Operating Agreement attached hereto as
      Attachment "1" (hereinafter called the "Contract Area"), and designating
      as  Operator to conduct  such operations for  itself and the undersigned
      Non-Operators.

3.0   The Operating  Agreement provides for certain  liens, mortgages, pledges
      and/or  security interests  to secure  payment by  the parties  of their
      respective share of costs under the Operating  Agreement.  The Operating
      Agreement contains an Accounting Procedure, along with other provisions,
      which  supplement the  lien, mortgage,  pledge and/or  security interest
      provisions, including non-consent clauses which provide that parties who
      elect not to participate  in certain operations shall be  deemed to have
      relinquished their interest in  production until the carrying consenting
      parties  are able  to  recover their  costs of  such  operations plus  a
      specified  amount.    Should  any  person  or   firm  desire  additional
      information regarding the Operating Agreement or wish  to inspect a copy
      of the  Operating  Agreement, said  person or  firm  should contact  the
      Operator at P.O. Box 4587, Houston, Texas.

4.0   The purpose of  this Memorandum is to more fully  describe and implement
      the  liens, mortgages, pledges and/or security interests provided for in
      the Operating Agreement, and to  place third parties on notice  thereof.
      The purpose of this Memorandum is  also to place third parties on notice
      that  the  Operating  Agreement  does contain  a  Preferential  Right to
      Purchase provision.

5.0   In  consideration of the  mutual rights  and obligations of  the parties 
      hereunder, the parties hereto agree as follows:

      5.1   The Operator shall conduct and direct and have full control of all
            Operations on the Contract Area as permitted  and required by, and
            within the limits of the Operating Agreement.

      5.2   The liability  of  the Parties  shall  be  several, not  joint  or
            collective.    Each  party  shall  be  responsible  only  for  its
            obligations and shall  be liable only for  its proportionate share
            of costs.
      5.3   Each Non-Operator grants to Operator a lien  and mortgage upon all
            its rights, title and interests in the oil, gas and mineral leases
            and  other real property,  in the Contract Area,  and a pledge and
            security interest  in its share of oil  and gas when extracted and
            its interest  in  all equipment  and property  whether movable  or
            immovable,  corporeal or  incorporeal attached  thereon, all  such
            property being  more fully described  in Paragraph 6.0,  to secure
            payment  of its  share of  expense, arising  out of  the Operating
            Agreement together with interest  thereon at the rate  provided in
            the Accounting Procedure referred to  in Paragraph 3.0 above.   To
            the extent that Operator has a security interest under the Uniform
            Commercial Code  of  the  state, Operator  shall  be  entitled  to
            exercise  the rights  and remedies  of a  secured party  under the
            Code.   The bringing of a  suit and the obtaining  of judgement by
            Operator  for  the secured  indebtedness  shall not  be  deemed an
            election of  remedies or otherwise  affect the rights  or security
            interest for the payment thereof.

      5.4   If any Non-Operator  fails to  pay its  share of  costs when  due,
            Operator   may   require   other  Non-Operators   to   pay   their
            proportionate  part of the unpaid  share, whereupon the other Non-
            Operators  shall be  subrogated  to Operator's  lien and  security
            interest.

      5.5   The Operator  grants to Non-Operators a lien, mortgage, pledge and
            security  interest  equivalent  to  that granted  to  Operator  as
            described in Paragraph 5.3 above, to secure payment by Operator of
            its own share of costs when due.

6.0   For  purposes of protecting said  liens, mortgages, pledges and security
      interests,  the parties  hereto agree  that the  mutual lien,  mortgage,
      pledge,  security interest, and  this Memorandum shall  cover all right,
      title and interest of the debtor(s) in:

      6.1   Property Subject to Liens, Pledges, and Security Interests

      (A)   All personal property located upon or used  in connection with the
            Contract Area.
      (B)   All  equipment,  fixtures,  and  appurtenances  upon  or  used  in
            connection with  the Contract Area, whether  movable or immovable,
            corporeal or incorporeal.
      (C)   All oil,  gas and associated  substances of value in,  on or under
            the Contract Area which may be extracted therefrom.
      (D)   All  accounts and revenues  resulting from  the sale of  the items
            described  in  subparagraph  (C) at  the  wellhead  of every  well
            located on  the  Contract Area  or  on  lands pooled  or  unitized
            therewith.
      (E)   All  items   used,  useful,  or  purchased   for  the  production,
            treatment, storage,  transportation, manufacture, or  sale of  the
            items described in subparagraph (C).
      (F)   All  accounts, contract  rights,  rights under  any gas  balancing
            agreement,  general  intangibles,  equipment,  inventory,  farmout
            rights, option farmout rights,  acreage and or cash contributions, 
            and conversion rights, whether now owned  or existing or hereafter
            acquired or arising, including but not limited  to all interest in
            any    partnership,   tax   partnership,    limited   partnership,
            association,  joint venture,  or other  entity or  enterprise that
            holds, owns, or controls any interest  in the Contract Area or  in
            any property encumbered by this Memorandum.
      (G)   All severed and extracted oil, gas, and associated substances  now
            or hereafter produced from  or attributable to the Contract  Area,
            including without limitation oil, gas and associated substances in
            tanks   or   pipelines   or   otherwise   held   for    treatment,
            transportation, manufacture, processing or sale.
      (H)   All the  proceeds  and products  of  the  items described  in  the
            foregoing paragraphs  now existing  or hereafter arising,  and all
            substitutions   therefor,  replacements  thereof,   or  accessions
            thereto.
      (I)   All personal  property and fixtures now and  hereafter acquired in
            furtherance of the purposes  of the Operating Agreement.   Certain
            of the above-described items are or are  to become fixtures on the
            Contract Area.
      (J)   The proceeds and products of collateral are also covered.

      6.2   Property Subject to Liens and Mortgages

      (A)   All real property and oil and gas leases within the Contract Area,
            including all oil, gas and  associated substances of value in,  on
            or under the Contract Area which may be extracted therefrom.
      (B)   All  equipment,  fixtures,  and  appurtenances  upon  or  used  in
            connection with  the Contract Area, whether  movable or immovable,
            corporeal or incorporeal.
      (C)   All real  property  and fixtures  now  and hereafter  acquired  in
            furtherance of the purposes  of the Operating Agreement, including
            any easement, right-of-way, surface leases, and fee acreage.

7.0   The property described in Paragraphs 6.1 and 6.2 will be financed at the
      wellhead of the well or wells  located on the Contract Area or  on lands
      pooled or unitized  therewith, and this  Memorandum is to  be filed  for
      record in the real  estate records of the county or  parish in which the
      Contract Area  is located, or,  in the case  of offshore leases,  in the
      county or  parish  adjacent  thereto  and  in  the  appropriate  Uniform
      Commercial  Code records.   All parties who  have executed the Operating
      Agreement are  identified on Attachment  " 1 ".  All farmors  and option
      farmors, if any,  who have granted support within  the Contract Area are
      identified on Attachment "2".

8.0   Upon default of any covenant or condition of the Operating Agreement, in
      addition  to  any  other  remedy afforded  by  law,  each  party  to the
      Operating  Agreement and  any  successor to  such  party by  assignment,
      operation  of law,  or otherwise,  shall have, and  is hereby  given and
      vested with, the power and authority to take possession of  and sell any
      interest  which the defaulting  party has  in the property  described in
      Paragraphs 6.1 and 6.2 and to foreclose this lien, mortgage, pledge, and
      security interest in the manner provided by law.

9.0   Upon expiration of the subject  Operating Agreement and the satisfaction
      of  all  debts,  the  Operator  shall  file  of  record  a  release  and
      termination on behalf of all parties concerned.  Upon the filing of such
      release  and  termination,  all  benefits  and  obligations  under  this
      Memorandum shall  terminate  as to  all  parties  who have  executed  or
      ratified  this Memorandum.   In  addition, the  Operator shall  have the
      right to file a continuation statement on behalf of all parties who have
      executed or ratified this Memorandum.

10.0  It is  understood and agreed  by the  parties hereto that  if any  part, 
      term, or  provision of  this  Memorandum is  by the  courts  held to  be
      illegal  or in  conflict  with any  law  of the  state  where made,  the
      validity of the remaining portions or provisions  shall not be affected,
      and the  rights and obligations  of the parties  shall be construed  and
      enforced as if  the Memorandum did not contain the particular part, term
      or provision held to be invalid.

11.0  This Memorandum shall be binding upon  and shall inure to the benefit of
      the  parties  hereto and  to  their  respective heirs,  devisees,  legal
      representatives,  successors and assigns.   The  failure of one  or more
      persons  owning  an  interest  in  the  Contract  Area to  execute  this
      Memorandum shall not in any manner affect the validity of the Memorandum
      as to those persons who have executed this Memorandum.

12.0  A  party  having  an interest  in  the  Contract  Area can  ratify  this
      Memorandum by  execution and delivery of an  instrument of ratification,
      adopting and  entering into this Memorandum, and such ratification shall
      have  the  same effect  as  if  the ratifying  party  had  executed this
      Memorandum  or a counterpart  thereof.  By  execution or ratification of
      this  Memorandum, such  party  hereby consents  to its  ratification and
      adoption by any party  who may have or  may acquire any interest in  the
      Contract Area.

13.0  This Memorandum may be executed or ratified in  one or more counterparts
      and  all  of  the  executed  or  ratified  counterparts  shall  together
      constitute  one instrument.  For purposes of recording, only one copy of
      this Memorandum  with individual signature pages  attached thereto needs
      to be filed of record.

                                          Non-Operators:
WITNESSES:                                ______________________(Company)

                                          Attorney -in-Fact
                                          Date: ________________


                                ACKNOWLEDGMENTS


STATE OF __________________

_______OF __________________


      On   this   ______day  of   ____________19____,   before   me,  appeared
_____________________to me personally known, who, being by  me duly sworn, did
say that  he/she is the  ___________________of________________________and that
the foregoing instrument was signed in behalf of that corporation by authority
of its Board of Directors and  acknowledged the instrument to be the free  act
and deed of that corporation.

                                                      NOTARY PUBLIC in and for


                                                      ________________________

My Commission expires: _______________ 


                         ATTACHMENT "1" TO EXHIBIT "I"

         Attached to and made a part of the Joint Operating Agreement
    dated effective ________________________ by and between Shell Deepwater
Development Inc.
                     and Reading and Bates Development Co.

                       MEMORANDUM OF OPERATING AGREEMENT
                            AND FINANCING STATEMENT


I.    DESCRIPTION OF LEASES


II.   OPERATOR


III.  REPRESENTATIVES AND ADDRESSES