Exhibit 10.18


                        CREDIT AGREEMENT


                              Among

                     McMoRan OIL & GAS LLC,
                          as Borrower,


                     HIBERNIA NATIONAL BANK,
                            as Agent,

                               and

                  THE LENDERS SIGNATORY HERETO

                    Dated as of July 1, 2002





                    Revolving Credit Facility

                        TABLE OF CONTENTS
                                                            Page


ARTICLE I


Definitions and Accounting Matters
                                                              1

     Section 1.01  Terms Defined Above                        1
     Section 1.02  Certain Defined Terms                      1
     Section 1.03  Accounting Terms and Determinations       15
     Section 1.04  Single Lender                             15

ARTICLE II

     Commitments
                                                             16

     Section 2.01  Loans and Letters of Credit               16
     Section  2.02   Borrowings, Continuations  and  Conversions,
          Letters of Credit                                  17
     Section 2.03  Changes of Commitments                    19
     Section 2.04  Fees                                      19
     Section 2.05  Several Obligations                       20
     Section 2.06  Notes                                     20
     Section 2.07  Prepayments                               21
     Section 2.08  Borrowing Base                            22
     Section 2.09  Assumption of Risks                       25
     Section 2.10  Obligation to Reimburse and to Prepay     26
     Section 2.11  Lending Offices                           27

ARTICLE III

Payments of Principal and Interest
                                                             27
     Section 3.01  Repayment of Loans                        27
     Section 3.02  Interest                                  28

ARTICLE IV

Payments; Pro Rata Treatment; Computations; Etc.
                                                             29
     Section 4.01  Payments                                  29
     Section 4.02  Pro Rata Treatment                        29
     Section 4.03  Computations                              29
     Section 4.04  Non-receipt of Funds by the Agent         30
     Section 4.05  Set-off, Sharing of Payments, Etc.        30
     Section 4.06  Taxes                                     31
     Section 4.07  Disposition of Proceeds                   34
     Section 4.08  Revenue Clearing Account                  34

ARTICLE V

Capital Adequacy
                                                             35
     Section 5.01  Additional Costs                          35
     Section 5.02  Limitation on Eurodollar Loans            36
     Section 5.03  Illegality                                37
     Section  5.04   Base  Rate Loans Pursuant to Sections
          5.01, 5.02 and 5.03                                37
     Section 5.05  Compensation                              37
     Section 5.06  Replacement Lenders.                      38

ARTICLE VI
     Conditions Precedent
                                                             39
     Section 6.01  Initial Funding                           39
     Section  6.02   Initial and Subsequent Loans and Letters  of
          Credit                                             41
     Section 6.03  Conditions Relating to Letters of Credit  41

ARTICLE VII

Representations and Warranties
                                                             42
     Section 7.01  Existence                                 42
     Section 7.02  Financial Condition                       42
     Section 7.03  Litigation                                43
     Section 7.04  No Breach                                 43
     Section 7.05  Authority                                 43
     Section 7.06  Approvals                                 43
     Section 7.07  Use of Loans                              43
     Section 7.08  ERISA                                     44
     Section 7.09  Taxes                                     45
     Section 7.10  Titles, etc.                              45
     Section 7.11  No Material Misstatements                 46
     Section 7.12  Investment Company Act                    46
     Section 7.13  Public Utility Holding Company Act        46
     Section 7.14  Subsidiaries                              46
     Section 7.15  Location of Business and Offices          46
     Section 7.16  Defaults                                  47
     Section 7.17  Environmental Matters                     47
     Section 7.18  Compliance with the Law                   48
     Section 7.19  Insurance                                 48
     Section 7.20  Hedging Agreements                        49
     Section 7.21  Restriction on Liens                      49
     Section 7.22  Reserved                                  49
     Section 7.23  Gas Imbalances                            49

ARTICLE VIII

Affirmative Covenants
                                                             50
     Section 8.01  Financial Statements                      50
     Section 8.02  Litigation                                52
     Section 8.03  Maintenance, Etc.                         52
     Section 8.04  Environmental Matters                     53
     Section 8.05  Further Assurances                        54
     Section 8.06  Performance of Obligations                54
     Section 8.07  Engineering Reports                       55
     Section 8.08  Title Information                         56
     Section 8.09  Collateral                                57
     Section 8.10  ERISA Information and Compliance          57
     Section 8.11  Accounts                                  58


ARTICLE IX

Negative Covenants
                                                             58
     Section 9.01  Debt                                      58
     Section 9.02  Liens                                     59
     Section 9.03  Investments, Loans and Advances           60
     Section 9.04  Dividends, Distributions and Redemptions  61
     Section 9.05  Sales and Leasebacks                      61
     Section 9.06  Nature of Business                        62
     Section 9.07  Mergers, Etc.                             62
     Section 9.08  Proceeds of Notes                         62
     Section 9.09  ERISA Compliance                          63
     Section 9.10  Sale or Discount of Receivables           64
     Section 9.11  Debt Service Coverage Ratio               64
     Section 9.12  Reserved                                  64
     Section 9.13  Sale of Oil and Gas Properties            64
     Section 9.14  Environmental Matters                     64
     Section 9.15  Transactions with Affiliates              65
     Section 9.16  Subsidiaries                              65
     Section 9.17  Negative Pledge Agreements                66
     Section   9.18    Gas  Imbalances,  Take-or-Pay   or   Other
          Prepayments                                        66
     Section 9.19  Margin Calls on Hedging Agreements        66

ARTICLE X

Events of Default; Remedies
                                                             66
     Section 10.01  Events of Default                        66
     Section 10.02  Remedies                                 68

ARTICLE XI

The Agent
                                                             69
     Section 11.01  Appointment, Powers and Immunities       69
     Section 11.02  Reliance by Agent                        69
     Section 11.03  Defaults                                 70
     Section 11.04  Rights as a Lender                       70
     Section 11.05  indemnification                          70
     Section 11.06  Non-Reliance on Agent and other Lenders  70
     Section 11.07  Action by Agent                          71
     Section 11.08  Resignation or Removal of Agent          71

ARTICLE XII

Miscellaneous
                                                             72
     Section 12.01  Waiver                                   72
     Section 12.02  Notices                                  72
     Section 12.03  Payment of Expenses, Indemnities, etc    73
     Section 12.04  Amendments, Etc.                         75
     Section 12.05  Successors and Assigns                   75
     Section 12.06  Assignments and Participations           75
     Section 12.07  Invalidity                               77
     Section 12.08  Counterparts                             77
     Section 12.09  References                               77
     Section 12.10  Survival                                 77
     Section 12.11  Captions                                 78
     Section 12.12  no oral agreements                       78
     Section 12.13  governing law; submission to jurisdiction78
     Section 12.14  Interest                                 79
     Section 12.15  Confidentiality                          80
     Section 12.16  Effectiveness                            81
     Section 12.17  exculpation provisions                   81


           THIS  CREDIT  AGREEMENT dated as of July  1,  2002  is
among:   McMoRan OIL & GAS LLC (successor by merger with  McMoRan
Oil & Gas Co.), a limited liability company formed under the laws
of  the  State  of  Delaware (together with  its  successors  and
assigns, the "Borrower"); each of the lenders that is a signatory
hereto or which becomes a signatory hereto as provided in Section
12.06 (individually, together with its successors and assigns,  a
"Lender" and, collectively, the "Lenders"); and Hibernia National
Bank,   a   national  banking  association   (in  its  individual
capacity,  "Hibernia"),  as  agent  for  the  Lenders  (in   such
capacity,  together  with its successors in  such  capacity,  the
"Agent").

                         R E C I T A L S

      A.    The Borrower and Hibernia desire for Hibernia to make
available to the Borrower a revolving credit facility.  For  ease
of  document preparation and negotiation, the parties have agreed
to  use  this  form of instrument, which permits  (but  does  not
require) multiple lenders to participate in such revolving credit
facility.   As  provided  in  Section 1.04,  notwithstanding  the
references  in  this  Agreement to the "Agent"  and  to  multiple
"Lenders", on the Closing Date Hibernia is the sole Lender  under
this Agreement.

           ARTICLE I Definitions and Accounting Matters
           Section 1.01  Terms Defined Above .  As used  in  this
Agreement,  the terms "Agent," "Borrower," "Hibernia,"  "Lender,"
and "Lenders" shall have the meanings indicated above.

           Section 1.02  Certain Defined Terms .  As used in this
Credit  Agreement, the following terms shall have  the  following
meanings  (all  terms  defined in this  Article  I  or  in  other
provisions  of  this Agreement in the singular to have  the  same
meanings when used in the plural and vice versa):

     "Additional Costs" shall have the meaning assigned such term
in Section 5.01(a).

     "Affected  Loans" shall have the meaning assigned such  term
in Section 5.04.

     "Affiliate" of any Person shall mean (i) any Person directly
or  indirectly controlled by, controlling or under common control
with  such  first  Person, (ii) any director or officer  of  such
first Person or of any Person referred to in clause (i) above and
(iii)  if  any  Person in clause (i) above is an individual,  any
member  of  the immediate family (including parents,  spouse  and
children)  of  such  individual and  any  trust  whose  principal
beneficiary  is  such individual or one or more members  of  such
immediate  family and any Person who is controlled  by  any  such
member  or  trust.  For purposes of this definition,  any  Person
which  owns  directly or indirectly 35% or more of the securities
having  ordinary  voting power for the election of  directors  or
other  governing  body of a corporation or 35%  or  more  of  the
partnership  or  other ownership interests of  any  other  Person
(other  than as a limited partner of such other Person)  will  be
deemed  to  "control" (including, with its correlative  meanings,
"controlled by" and "under common control with") such corporation
or other Person.

      "Agreement" shall mean this Credit Agreement, as  the  same
may from time to time be amended or supplemented.

      "Aggregate Commitments" at any time shall equal the  amount
calculated  in accordance with Section 2.03(a) hereof.   Although
the  face amount of the initial Note under this Agreement  is  in
the    amount   of   the   Aggregate   Maximum   Credit    Amount
($10,000,000.00),  the Borrower acknowledges that  the  Aggregate
Commitment  on the Closing Date is a lesser number equal  to  the
initial  Borrowing Base, subject to one or more future  increases
arising  from any corresponding future increases in the Borrowing
Base  (after further bank management approvals).  So long as  the
Borrowing  Base  is  smaller than the  Aggregate  Maximum  Credit
Amount,  then each reduction of the Borrowing Base, including  by
automatic  reductions by the Monthly Reductions  as  provided  in
Section  2.08(i), causes a reduction of the Aggregate  Commitment
in each instance in a like amount.

      "Aggregate  Maximum Credit Amount" at any time shall  equal
the   sum   of   the  Maximum  Credit  Amounts  of  the   Lenders
($10,000,000.00), as the same may be reduced pursuant to  Section
2.03(b).

      "Applicable Lending Office" shall mean, for each Lender and
for  each Type of Loan, the lending office of such Lender (or  an
Affiliate of such Lender) designated for such Type of Loan on the
signature  pages hereof or such other offices of such Lender  (or
of  an Affiliate of such Lender) as such Lender may from time  to
time specify to the Agent and the Borrower as the office by which
its Loans of such Type are to be made and maintained.

      "Applicable  Margin" shall mean, the applicable  per  annum
percentage set forth at the appropriate intersection in the table
shown  below,  based on the Utilization Percentage as  in  effect
from time to time:

 Utilization  Percentage             Eurodollar        Rate Base Rate

     Less than 50%                      3.25%               0.50%

     50% or more                        3.75%               1.00%

      "Assignment" shall have the meaning assigned such  term  in
Section 12.06(b).

      "Base Rate" shall mean, with respect to any Base Rate Loan,
for  any  day, the Prime Rate for such day.  Each change  in  any
interest  rate  provided  for herein based  upon  the  Base  Rate
resulting from a change in the Base Rate shall take effect at the
time of such change in the Base Rate.

      "Base  Rate  Loans" shall mean Loans that bear interest  at
rates based upon the Base Rate.

      "Borrowing Base" shall mean at any time an amount equal  to
the amount determined in accordance with Section 2.08(f).

      "Borrowing Base Deficiency" shall have the meaning assigned
such term in Section 2.07(c).

      "Business Day" shall mean any day other than a day on which
commercial  banks  are authorized or required  to  close  in  New
Orleans, Louisiana and, where such term is used in the definition
of  "Quarterly  Date" or if such day relates to  a  borrowing  or
continuation  of,  a  payment or prepayment of  principal  of  or
interest  on, or a conversion of or into, or the Interest  Period
for,  a  Eurodollar Loan or a notice by the Borrower with respect
to  any  such  borrowing  or continuation,  payment,  prepayment,
conversion  or Interest Period, any day which is also  a  day  on
which  dealings in Dollar deposits are carried out in the  London
interbank market.

     "Closing Date" shall mean July 10, 2002.

      "Code"  shall mean the Internal Revenue Code  of  1986,  as
amended from time to time and any successor statute.

      "Commitment" shall mean, for any Lender, its obligation  to
(i)  make Loans up to the lesser of such Lender's Maximum  Credit
Amount  or  the  Lender's Percentage Share of the then  effective
Borrowing Base and (ii) participate in the issuance of Letters of
Credit as provided in Section 2.01(b).

      "Consolidated Subsidiaries" shall mean with regard  to  any
entity  each Subsidiary of such entity  (whether now existing  or
hereafter created or acquired) the financial statements of  which
shall  be  (or should have been) consolidated with the  financial
statements of such entity in accordance with GAAP.

      "Debt"  of any Person means, without duplication,  (a)  all
obligations   of  such  Person  for  borrowed  money   (including
principal,  interest, fees and charges), (b) all  obligations  of
such  Person  evidenced by bonds, debentures,  notes  or  similar
instruments  (including principal, interest, fees  and  charges),
(c)  all  obligations of such Person for the unearned balance  of
any payment received under any contract outstanding for 180 days,
(d)  all  obligations  of such Person under conditional  sale  or
other  title retention agreements relating to Property or  assets
purchased  by  such Person, (e) all obligations  of  such  Person
issued  or assumed as the deferred purchase price of Property  or
services   (excluding   trade  accounts   payable   and   accrued
obligations incurred in the ordinary course of business  so  long
as  the  same are not 180 days overdue or, if overdue, are  being
contested in good faith and by appropriate proceedings), (f)  all
Debt  of others secured by (or for which the holder of such  Debt
has an existing right, contingent or otherwise, to be secured by)
any Lien on Property owned or acquired by such Person, whether or
not  the  obligations secured thereby have been assumed, (g)  all
obligations of such Person, contingent or otherwise, guaranteeing
or having the economic effect of guaranteeing Debt of others, (h)
all obligations of such Person to pay rent or other amounts under
a capital lease, (i) all recourse obligations of such Person with
respect  to  sales of accounts receivable which  would  be  shown
under  GAAP  on the balance sheet of such Person as a  liability,
(j) all obligations of such Person as an account party (including
reimbursement obligations to the issuer of a letter of credit) in
respect   of   bankers'  acceptances  and   letters   of   credit
guaranteeing  Debt,  (k) all noncontingent  obligations  of  such
Person  as  an account party (including reimbursement obligations
to  the  issuer of a letter of credit) in respect of  letters  of
credit other than those referred to in clause (j) above, (l)  all
obligations  under  leases  which require  such  Person  to  make
payments  over  the  term of such lease,  including  payments  at
termination,  which are substantially equal to  at  least  eighty
percent  (80%) of the purchase price of the Property  subject  to
such lease plus interest at an imputed rate of interest, (m)  all
obligations or undertakings of such Person to maintain  or  cause
to be maintained the financial position or covenants of others or
to  purchase  the  Debt  or Property of others,  (n)  obligations
outstanding  for  180 days or more to deliver goods  or  services
including Hydrocarbons in consideration of advance payments,  (o)
obligations to pay for goods or services in the event  that  such
goods  or services are not actually received or utilized by  such
Person, (p) any capital stock of such Person in which such Person
has  a  mandatory obligation to redeem such stock within two  (2)
years  after  the  Termination Date (plus any extension  of  such
date), (q) any Debt of a Special Entity for which such Person  is
liable   either  by  agreement  or  because  of  a   Governmental
Requirement,  (r)  the  undischarged balance  of  any  production
payment created by such Person or for the creation of which  such
Person directly received payment; and (s) all obligations of such
Person  under  Hedging Agreements.  The Debt of any person  shall
exclude  obligations  under  leases which  are  characterized  as
operating leases.

      "Default" shall mean an Event of Default or an event  which
with  notice  or lapse of time or both would become an  Event  of
Default.

      "Dollars"  and "$" shall mean lawful money  of  the  United
States of America.

       "EBITDAX"  shall  mean,  for  any  period,  the   sum   of
consolidated  net  income  for such  period  plus  the  following
expenses or charges to the extent deducted from consolidated  net
income in such period:  interest paid or accrued on the Loans  to
the  Borrower  and  on  other Debt of the  Borrower  during  such
period,   taxes,   depreciation,  depletion,   amortization   and
exploration expenses.  As used herein, "consolidated net  income"
shall mean, for any period, the amount which, in conformity  with
GAAP,  would  be  set forth opposite the caption "net  income  or
loss" (or any like caption) on a consolidated income statement of
the  Borrower and its Consolidated Subsidiaries (before deducting
minority  interests  in net income of Consolidated  Subsidiaries,
but  disregarding all extraordinary or unusual noncash  items  in
calculating  such consolidated net income).  The  calculation  of
each of the items specified above will exclude items relating  to
Unrestricted Subsidiaries.

      "Effective Date" shall have the meaning assigned such  term
in Section 12.16.

      "Engineering Reports" shall have the meaning assigned  such
term in Section 2.08.

      "Environmental  Laws"  shall mean any  and  all  applicable
Governmental Requirements pertaining to health or the environment
in   effect  in  jurisdictions  in  which  the  Borrower  or  any
Subsidiary  is conducting or at any time has conducted  business,
or  where  any  Property of the Borrower  or  any  Subsidiary  is
located, including without limitation, the Oil Pollution  Act  of
1990  ("OPA"),  the Clean Air Act, as amended, the  Comprehensive
Environmental, Response, Compensation, and Liability Act of  1980
("CERCLA"), as amended, the Federal Water Pollution Control  Act,
as  amended, the Occupational Safety and Health Act of  1970,  as
amended,  the  Resource Conservation and  Recovery  Act  of  1976
("RCRA"),  as amended, the Safe Drinking Water Act,  as  amended,
the  Toxic  Substances  Control Act, as  amended,  the  Superfund
Amendments  and  Reauthorization Act of  1986,  as  amended,  the
Hazardous  Materials Transportation Act, as  amended,  and  other
environmental  conservation or protection laws.  The  term  "oil"
shall  have  the  meaning specified in OPA, the terms  "hazardous
substance"  and  "release"  (or "threatened  release")  have  the
meanings  specified in CERCLA, and the terms  "solid  waste"  and
"disposal" (or "disposed") have the meanings specified  in  RCRA;
provided,  however, that (i) in the event either OPA,  CERCLA  or
RCRA  is amended so as to broaden the meaning of any term defined
thereby,  such  broader  meaning shall apply  subsequent  to  the
effective date of such amendment and (ii) to the extent the  laws
of  the  state  in  which any Property of  the  Borrower  or  any
Subsidiary  is located establish a meaning for "oil,"  "hazardous
substance,"  "release,"  "solid waste"  or  "disposal"  which  is
broader  than that specified in either OPA, CERCLA or RCRA,  such
broader meaning shall apply.

      "ERISA"  shall mean the Employee Retirement Income Security
Act  of  1974,  as  amended from time to time and  any  successor
statute.

     "ERISA Affiliate" shall mean each trade or business (whether
or  not  incorporated) which together with the  Borrower  or  any
Subsidiary  would be deemed to be a "single employer" within  the
meaning  of section 4001(b)(1) of ERISA or subsections (b),  (c),
(m) or (o) of section 414 of the Code.

     "ERISA Event" shall mean (i) with respect to any plan, as to
which  PBGC  has  not  by regulation waived  the  requirement  of
Section  4043(a) of ERISA that it be notified within 30  days  of
the occurrence of such event (provided that a failure to meet the
minimum   funding  standard  of  Section  412  of  the  Code   or
Section  302 of ERISA, including, without limitation, the failure
to  make  on or before its due date a required installment  under
Section 412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable  event regardless of the issuance of  any  waivers  in
accordance with Section 412(d) of the Code) a "Reportable  Event"
described  in  Section 4043 of ERISA and the  regulations  issued
thereunder,  (ii) the withdrawal of the Borrower, any  Subsidiary
or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2)  of
ERISA, (iii) the filing of a notice of intent to terminate a Plan
or  the  treatment  of  a Plan amendment as a  termination  under
Section  4041  of ERISA, (iv) the institution of  proceedings  to
terminate  a Plan by the PBGC or (v) any other event or condition
which  might constitute grounds under Section 4042 of  ERISA  for
the   termination  of,  or  the  appointment  of  a  trustee   to
administer, any Plan.

      "Eurodollar Loans" shall mean Loans the interest  rates  on
which  are  determined on the basis of rates referred to  in  the
definition of "Eurodollar Rate".

     "Eurodollar Rate" shall mean, with respect to any Eurodollar
Loan,  the rate per annum (rounded upwards, if necessary, to  the
nearest  1/16 of 1%) at approximately 11:00 a.m. London time  (or
as soon thereafter as practicable) two (2) Business Days prior to
the  first  day  of the Interest Period for such  Loan  at  which
leading  banks  in  the  London  interbank  market  offer  Dollar
deposits having a term comparable to such Interest Period and  in
an  amount  comparable to the principal amount of the  Eurodollar
Loan to be made by the Lenders for such Interest Period (as shown
on  the Dow Jones Telerate Matrix for British Bankers Association
Interest Settlement Rates).

     "Event of Default" shall have the meaning assigned such term
in Section 10.01.

       "Excepted  Liens"  shall  mean:   (i)  Liens  for   taxes,
assessments or other governmental charges or levies not  yet  due
or  which are being contested in good faith by appropriate action
and  for which adequate reserves have been maintained; (ii) Liens
in connection with workmen's compensation, unemployment insurance
or  other  social  security, old age pension or public  liability
obligations  not  yet due or which are being  contested  in  good
faith by appropriate action and for which adequate reserves  have
been  maintained  in  accordance  with  GAAP;  (iii)  operators',
vendors',  carriers',  warehousemen's,  repairmen's,  mechanics',
workmen's,  materialmen's,  construction  or  other  like   Liens
arising by operation of law or lien in favor of operators or  co-
interest owners under contract in the ordinary course of business
or  incident  to  the  exploration,  development,  operation  and
maintenance  of  Oil  and Gas Properties or statutory  landlord's
liens,  each of which is in respect of obligations that have  not
been  outstanding more than 90 days or which are being  contested
in  good  faith by appropriate proceedings and for which adequate
reserves  have been maintained in accordance with GAAP; (iv)  any
Liens  reserved  in  leases or farmout  agreements  for  rent  or
royalties  and  for  compliance with the  terms  of  the  farmout
agreements  or  leases in the case of leasehold estates,  to  the
extent  that  any such Lien referred to in this clause  does  not
materially  impair the use of the Property covered by  such  Lien
for  the purposes for which such Property is held by the Borrower
or any Subsidiary or materially impair the value of such Property
subject  thereto;  (v) encumbrances (other  than  to  secure  the
payment  of  borrowed  money or the deferred  purchase  price  of
Property   or  services),  easements,  restrictions,  servitudes,
permits, conditions, covenants, exceptions or reservations in any
rights of way or other Property of the Borrower or any Subsidiary
for  the  purpose of roads, pipelines, transmission lines,  trans
portation lines, distribution lines for the removal of gas,  oil,
coal or other minerals or timber, and other like purposes, or for
the joint or common use of real estate, rights of way, facilities
and  equipment, and defects, irregularities, zoning  restrictions
and  deficiencies in title of any rights of way or other Property
which  in the aggregate do not materially impair the use of  such
rights  of  way or other Property for the purposes of which  such
rights of way and other Property are held by the Borrower or  any
Subsidiary  or  materially  impair the  value  of  such  Property
subject  thereto; (vi) deposits of cash or securities  to  secure
the  performance  of  bids,  trade contracts,  leases,  statutory
obligations  and other obligations of a like nature  incurred  in
the  ordinary  course of business; (vii) Liens permitted  by  the
Security  Instruments  ;  (viii)  required  margin  deposits   on
permitted  Hedging Agreements arising in the ordinary  course  of
business; (ix) Liens on assets or Properties not owned as of  the
Closing  Date  by  the  Borrower  or  any  Restricted  Subsidiary
securing  only  purchase  money Debt  of  the  Borrower  or  such
Restricted  Subsidiary permitted by Section 9.01(e), which  Liens
are  limited  to the specific Property the purchase of  which  is
financed  by  such  Debt;  (x) with the Majority  Lenders'  prior
written  approval, Liens existing at the time of  acquisition  by
the  Borrower or any Restricted Subsidiary of the majority of the
capital  stock or other ownership interests or substantially  all
of  the assets of any other Person or existing at the time of the
merger  of  any  such  other  Person into  the  Borrower  or  any
Restricted  Subsidiary, on such capital stock or other  ownership
interests or assets so acquired or on the assets of the Person so
merged into the Borrower or such Restricted Subsidiary; provided,
however,  that such acquisition or merger (and the  discharge  of
such  Liens  referred  to in the immediately succeeding  proviso)
shall not otherwise result in an Event of Default or Default; and
provided  further that all such Liens shall be discharged  within
180  days after the date of the respective acquisition or merger;
(xi)  Liens of lessors of Property (in such capacity)  leased  by
the  Borrower  or  any  Restricted  Subsidiary  pursuant  to   an
operating  lease or permitted capital lease, which  Lien  in  any
such case is limited to the Property leased thereunder; and (xii)
with  the  Majority  Lenders' prior written  approval,  Liens  on
equity or debt investments in Third Parties owned by the Borrower
or  a Restricted Subsidiary (which Lien in any case is limited to
such  pledged  equity or debt investment) which  secure  Debt  of
Third  Parties  or other Third Party obligations  (or  guaranties
thereof);  provided that such pledged investments were  initially
acquired in accordance with Section 9.03.

      "Federal Funds Rate" shall mean, for any day, the rate  per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal  to the weighted average of the rates on overnight  federal
funds  transactions with a member of the Federal  Reserve  System
arranged  by  federal funds brokers on such day, as published  by
the  Federal  Reserve Bank of New York on the Business  Day  next
succeeding such day, provided that (i) if the date for which such
rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on  the
next   preceding  Business  Day  as  so  published  on  the  next
succeeding  Business  Day,  and (ii)  if  such  rate  is  not  so
published for any day, the Federal Funds Rate for such day  shall
be  the  average  rate charged to Hibernia on such  day  on  such
transactions as determined by Hibernia.

      "Fee  Level"  at any time shall equal the  portion  of  the
Aggregate  Commitments  on  which  the  Borrower  has  paid   the
commitment fee required by Sections 2.04(c) and (d).  The initial
Fee  Level  on  the  Closing Date is the initial  amount  of  the
Borrowing Base on the Closing Date, being $4,500,000.00.  The Fee
Level may hereafter be increased (but not decreased) by increases
to the Borrowing Base (and hence to the Aggregate Commitments) as
provided in Section 2.04(d).

     "Financial Statements" shall mean the financial statement or
statements  of  the  Borrower and its  Consolidated  Subsidiaries
described or referred to in Section 7.02.

      "Form  1001 Certification" shall have the meaning  assigned
such in Section 4.06(d).

      "Form  4224 Certification" shall have the meaning  assigned
such in Section 4.06(d).

      "GAAP"  shall mean generally accepted accounting principles
in the United States of America in effect from time to time.

      "Governmental  Authority" shall include  the  country,  the
state,  county, parish, city and political subdivisions in  which
any  Person  or  such  Person's  Property  is  located  or  which
exercises  valid  jurisdiction  over  any  such  Person  or  such
Person's Property, and any court, agency, department, commission,
board,  bureau  or  instrumentality  of  any  of  them  including
monetary authorities which exercises valid jurisdiction over  any
such   Person  or  such  Person's  Property.   Unless   otherwise
specified, all references to Governmental Authority herein  shall
mean  a  Governmental Authority having jurisdiction  over,  where
applicable,  the  Borrower,  the Subsidiaries  or  any  of  their
Property  or  the  Agent,  any Lender or any  Applicable  Lending
Office.

      "Governmental  Requirement" shall mean  any  law,  statute,
code,   ordinance,   order,  determination,   rule,   regulation,
judgment,  decree,  injunction, franchise,  permit,  certificate,
license, authorization or other directive or requirement (whether
or  not  having the force of law), including, without limitation,
Environmental  Laws, energy regulations and occupational,  safety
and health standards or controls, of any Governmental Authority.

     "Hedging Agreements" shall mean any commodity, interest rate
or  currency swap, cap, floor, collar, forward agreement or other
exchange  or protection agreements or any option with respect  to
any such transaction.

      "Highest  Lawful  Rate" shall mean, with  respect  to  each
Lender,  the maximum nonusurious interest rate, if any,  that  at
any  time  or  from  time to time may be contracted  for,  taken,
reserved,  charged  or  received  on  the  Notes  or   on   other
Indebtedness  under  laws applicable to  such  Lender  which  are
presently in effect or, to the extent allowed by law, under  such
applicable laws which may hereafter be in effect and which  allow
a  higher maximum nonusurious interest rate than applicable  laws
now allow.

      "Hydrocarbon  Interests"  shall mean  all  rights,  titles,
interests and estates now or hereafter acquired in and to oil and
gas  leases,  oil,  gas and mineral leases, or  other  liquid  or
gaseous  hydrocarbon  leases, mineral fee  interests,  overriding
royalty   and   royalty  interests,  net  profit  interests   and
production payment interests, including any reserved or  residual
interests of whatever nature.

      "Hydrocarbons"  shall mean oil, gas, casinghead  gas,  drip
gasoline,   natural  gasoline,  condensate,  distillate,   liquid
hydrocarbons,  gaseous hydrocarbons and all products  refined  or
separated therefrom.

     "Indebtedness" shall mean any and all amounts owing or to be
owing  by the Borrower or any Restricted Subsidiary to the  Agent
and/or  Lenders  in  connection with the Loan Documents  and  the
Letter  of Credit Agreements, and any Hedging Agreements  now  or
hereafter   arising  between  the  Borrower  or  any   Restricted
Subsidiary  and  any Lender or any Affiliate of such  Lender  and
permitted  by  the  terms  of this Agreement  and  all  renewals,
refinancings,  extensions and/or rearrangements  of  any  of  the
above.

      "Indemnified Parties" shall have the meaning assigned  such
term in Section 12.03(b).

      "Indemnity Matters" shall mean any and all actions,  suits,
proceedings   (including   any  investigations,   litigation   or
inquiries),  claims,  demands  and  causes  of  action  made   or
threatened  against  a Person and, in connection  therewith,  all
losses,  liabilities,  damages  (including,  without  limitation,
consequential  damages) or reasonable costs and expenses  of  any
kind  or nature whatsoever incurred by such Person whether caused
by  the  sole  or  concurrent negligence of such  Person  seeking
indemnification.

      "Initial  Funding" shall mean the funding  of  the  initial
Loans  or  issuance  of the initial Letters of Credit,  whichever
occurs first, pursuant to Section 6.01 hereof.

     "Interest Period" shall mean, with respect to any Eurodollar
Loan,  the period commencing on the date such Eurodollar Loan  is
made  and  ending  on the numerically corresponding  day  in  the
first, second or third calendar month thereafter, as the Borrower
may select as provided in Section 2.02 (or such longer period  as
may  be  requested by the Borrower and agreed to by the  Majority
Lenders), except that each Interest Period which commences on the
last  Business Day of a calendar month (or on any day  for  which
there  is  no  numerically corresponding day in  the  appropriate
subsequent calendar month) shall end on the last Business Day  of
the appropriate subsequent calendar month.

      Notwithstanding the foregoing:  (i) no Interest Period  may
commence  before  and end after the Termination Date;  (ii)  each
Interest Period which would otherwise end on a day which is not a
Business  Day shall end on the next succeeding Business Day  (or,
if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (iii) no
Interest Period shall have a duration of less than one month and,
if  the  Interest Period for any Eurodollar Loans would otherwise
be  for  a  shorter  period, such Loans shall  not  be  available
hereunder.

      "LC  Commitment" at any time shall mean an amount equal  to
the  greater of (i) $2,000,000.00 or (ii) fifty (50%) percent  of
the Aggregate Commitments.

      "LC  Exposure"  at any time shall mean the  aggregate  face
amount  of all undrawn and uncancelled Letters of Credit and  the
aggregate  of all amounts drawn under all Letters of  Credit  and
not yet reimbursed.

      "Lender  Termination Date" shall have the meaning  assigned
such term in Section 5.06(c).

      "Letter  of  Credit  Agreements"  shall  mean  the  written
agreements  with the Agent, as issuing lender for any  Letter  of
Credit,  executed  or hereafter executed in connection  with  the
issuance  by the Agent of the Letters of Credit, such  agreements
to  be  on  the Agent's customary form for letters of  credit  of
comparable amount and purpose as from time to time in  effect  or
as otherwise agreed to by the Borrower and the Agent.

      "Letters of Credit" shall mean the letters of credit issued
pursuant  to  Section  2.01(b) and all reimbursement  obligations
pertaining to any such letters of credit, and "Letter of  Credit"
shall mean any one of the Letters of Credit and the reimbursement
obligations pertaining thereto.

      "Lien"  shall  mean  any interest in Property  securing  an
obligation owed to, or a claim by, a Person other than the  owner
of  the  Property, whether such interest is based on  the  common
law, statute or contract, and whether such obligation or claim is
fixed  or  contingent, and including but not limited to  (i)  the
lien  or  security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt  or
a  lease, consignment or bailment for security purposes  or  (ii)
production  payments and the like payable  out  of  Oil  and  Gas
Properties.    The   term  "Lien"  shall  include   reservations,
exceptions,  encroachments, easements, rights of way,  covenants,
conditions,  restrictions, leases and other title exceptions  and
encumbrances  affecting  Property.   For  the  purposes  of  this
Agreement, the Borrower or any Subsidiary shall be deemed  to  be
the  owner of any Property which it has acquired or holds subject
to  a  conditional  sale agreement, or leases under  a  financing
lease  or  other  arrangement pursuant  to  which  title  to  the
Property has been retained by or vested in some other Person in a
transaction intended to create a financing.

      "Loan  Documents" shall mean this Agreement, the Notes  and
the Security Instruments.

      "Loans"  shall  mean the loans as provided for  by  Section
2.01(a).

      "Majority Lenders" shall mean, at any time while  no  Loans
are  outstanding, Lenders having at least two-thirds (2/3rds)  of
the  Aggregate  Commitments and, at  any  time  while  Loans  are
outstanding, Lenders holding at least two-third (2/3rds)  of  the
outstanding  aggregate  principal amount of  the  Loans  (without
regard  to  any sale by a Lender of a participation in  any  Loan
under Section 12.06(c)).

      "Material  Adverse  Effect" shall  mean  any  material  and
adverse   effect  on  (i)  the  assets,  liabilities,   financial
condition,  business, operations or affairs of the  Borrower  and
the  Restricted Subsidiaries taken as a whole or from  the  facts
represented  or  warranted  in any Loan  Document,  or  (ii)  the
ability of the Borrower and the Restricted Subsidiaries taken  as
a  whole to carry out their business as at the Closing Date or as
proposed  as  of the Closing Date to be conducted or  meet  their
obligations under the Loan Documents on a timely basis.

      "Maximum  Credit Amount" shall mean, as to each Lender  and
subject  to the limitation set forth in Section 2.03 hereof,  the
amount set forth opposite such Lender's name on Annex I under the
caption  "Maximum  Credit Amounts" (as the same  may  be  reduced
pursuant to Section 2.03(b) hereof pro rata to each Lender  based
on its Percentage Share) as modified from time to time to reflect
any assignments permitted by Section 12.06(b).

      "Monthly Reduction" shall mean at any time an amount  equal
to the amount of the automatic monthly reduction to the Borrowing
Base determined in accordance with Section 2.08(i).

      "MMR"  shall  mean  McMoRan  Exploration  Co.,  a  Delaware
corporation and the sole member of the Borrower.

      "Mortgaged Property" shall mean the Property owned  by  the
Borrower or a Restricted Subsidiary and which is subject  to  the
Liens  existing  and  to exist under the terms  of  the  Security
Instruments.

      "Multiemployer Plan" shall mean a Plan defined as  such  in
Section 3(37) or 4001(a)(3) of ERISA.

      "net dividends, distributions and redemptions" (as used  in
Section 9.04 hereof) shall mean the gross aggregate amount of all
dividends, distributions and redemptions under Section 9.04  from
and after the Closing Date.

     "Notes" shall mean the promissory note or notes (whether one
or  more) of the Borrower provided for by Section 2.06 and in the
form  of  Exhibit A hereto, together with any and  all  renewals,
extensions    for    any   period,   increases,   rearrangements,
substitutions or modifications thereof.

     "Notice of Termination" shall have the meaning assigned such
term in Section 5.06(a).

      "Oil  and Gas Properties" shall mean Hydrocarbon Interests;
the   Properties  now  or  hereafter  pooled  or  unitized   with
Hydrocarbon   Interests;  all  presently   existing   or   future
unitization, pooling agreements and declarations of pooled  units
and  the units created thereby (including without limitation  all
units  created  under  orders,  regulations  and  rules  of   any
Governmental  Authority) which may affect all or any  portion  of
the  Hydrocarbon  Interests; all operating agreements,  contracts
and  other  agreements  which relate to any  of  the  Hydrocarbon
Interests   or  the  production,  sale,  purchase,  exchange   or
processing   of  Hydrocarbons  from  or  attributable   to   such
Hydrocarbon  Interests; all Hydrocarbons in and under  and  which
may  be  produced  and saved or attributable to  the  Hydrocarbon
Interests, including all oil in tanks, the lands covered  thereby
and  all rents, issues, profits, proceeds, products, revenues and
other  incomes from or attributable to the Hydrocarbon Interests;
all tenements, hereditaments, appurtenances and Properties in any
manner  appertaining,  belonging, affixed or  incidental  to  the
Hydrocarbon  Interests;  and  all  Properties,  rights,   titles,
interests  and estates described or referred to above,  including
any  and all Property, real or personal, now owned or hereinafter
acquired  and  situated upon, used, held for  use  or  useful  in
connection with the operating, working or development of  any  of
such  Hydrocarbon Interests or Property (excluding drilling rigs,
automotive equipment or other personal property which may  be  on
such  premises for the purpose of drilling a well  or  for  other
similar temporary uses) and including any and all oil wells,  gas
wells,  injection  wells  or other wells, buildings,  structures,
fuel  separators,  liquid extraction plants,  plant  compressors,
pumps,  pumping  units, field gathering systems, tanks  and  tank
batteries,  fixtures,  valves,  fittings,  machinery  and  parts,
engines,   boilers,  meters,  apparatus,  equipment,  appliances,
tools,  implements,  cables, wires, towers,  casing,  tubing  and
rods,  surface  leases, rights-of-way, easements  and  servitudes
together   with   all  additions,  substitutions,   replacements,
accessions and attachments to any and all of the foregoing.

      "Other Taxes" shall have the meaning assigned such term  in
Section 4.06(b).

      "PBGC"  shall mean the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions.

       "Percentage  Share"  shall  mean  the  percentage  of  the
Aggregate  Commitments  to be provided by  a  Lender  under  this
Agreement  as indicated on Annex I hereto, as modified from  time
to time to reflect any Assignments permitted by Section 12.06(b).

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

      "Plan"  shall  mean any employee pension benefit  plan,  as
defined  in  Section  3(2) of ERISA, which (i)  is  currently  or
hereafter  sponsored,  maintained  or  contributed  to   by   the
Borrower, any Subsidiary or an ERISA Affiliate or (ii) was at any
time   during   the  preceding  six  calendar  years   sponsored,
maintained or contributed to, by the Borrower, any Subsidiary  or
an ERISA Affiliate.

      "Post-Default Rate" shall mean, in respect of any principal
of  any  Loan  or any other amount payable by the Borrower  under
this  Agreement or any Note, a rate per annum during  the  period
commencing  on the date of an Event of Default until such  amount
is  paid  in  full or all Events of Default are cured  or  waived
equal to 2% per annum above the Base Rate as in effect from  time
to  time plus the Applicable Margin (if any), but in no event  to
exceed  the  Highest Lawful Rate provided that, for a  Eurodollar
Loan,  the "Post-Default Rate" for such principal shall  be,  for
the  period  commencing on the date of the Event of  Default  and
ending  on  the earlier to occur of the last day of the  Interest
Period  therefor or the date all Events of Default are  cured  or
waived,  2%  per annum above the interest rate for such  Loan  as
provided  in  Section  3.02(ii), but in no event  to  exceed  the
Highest Lawful Rate.

      "Prime Rate" shall mean the prime or base rate of interest,
on  any  particular date, as reflected in The Wall Street Journal
(or if such rate is not published or is no longer available, such
other  index satisfactory to the Agent).  Such rate is a  general
reference rate of interest, it being understood that many of  the
Agent's commercial or other loans are priced in relation to  such
rate, that it is not necessarily the lowest or best rate actually
charged  to  any  customer and that the Agent  may  make  various
commercial  or  other  loans  at  rates  of  interest  having  no
relationship to such rate.

      "Principal Office" shall mean the principal office  of  the
Agent,  presently located at 313 Carondelet Street, New  Orleans,
Louisiana   70130  or such other location as  designated  by  the
Agent from time to time.

      "Property" shall mean any interest in any kind of  property
or  asset,  whether  real,  personal or  mixed,  or  tangible  or
intangible.

      "Quarterly  Dates" shall mean the last day of  each  March,
June,  September and December, in each year, the first  of  which
shall be September 30, 2002; provided, however, that if any  such
day  is not a Business Day, such Quarterly Date shall be the next
succeeding Business Day.

      "Redetermination Date" shall have the meaning assigned such
term in Section 2.08(a).

      "Regulation  D"  shall mean Regulation D of  the  Board  of
Governors  of  the Federal Reserve System (or any successor),  as
the same may be amended or supplemented from time to time.

      "Regulatory Change" shall mean, with respect to any Lender,
any change after the Closing Date in any Governmental Requirement
(including  Regulation D) or the adoption or  making  after  such
date of any interpretations, directives or requests applying to a
class of lenders (including such Lender or its Applicable Lending
Office) of or under any Governmental Requirement (whether or  not
having  the  force of law) by any Governmental Authority  charged
with the interpretation or administration thereof.

      "Replacement Lenders" shall have the meaning assigned  such
term in Section 5.06(b).

     "Required Payment" shall have the meaning assigned such term
in Section 4.04.

      "Reserve Report" shall mean a report, in form and substance
satisfactory to the Agent, to be delivered prior to  March  1  of
each  year, setting forth as of prior year-end: (i) the  oil  and
gas  reserves  attributable to certain of the  Borrower's  and/or
Restricted  Subsidiary's Oil and Gas Properties together  with  a
projection  of  the  rate of production and  future  net  income,
taxes,  operating expenses and capital expenditures with  respect
thereto  as  of  such  date, based upon the  pricing  assumptions
consistent with SEC reporting requirements at the time, and  (ii)
such other information as the Agent may reasonably request.   The
term  "Reserve Report" shall also include the information  to  be
provided  by  the Borrower pursuant to Section 8.07(a)  prior  to
September  1 of each year, setting forth, as of July  1  of  such
year,  the  information required in clauses (i) and (ii)  of  the
preceding sentence.

      "Responsible  Officer" shall mean, as to  any  Person,  the
Chief  Executive Officer, the President or any Vice President  of
such  Person  and,  with respect to financial matters,  the  term
"Responsible  Officer" shall include the Chief Financial  Officer
or the Treasurer of such Person.  Unless otherwise specified, all
references  to  a  Responsible  Officer  herein  shall   mean   a
Responsible Officer of the Borrower.

       "Restricted  Subsidiary"  means  any  direct  or  indirect
Subsidiary   of   the  Borrower  that  is  not  an   Unrestricted
Subsidiary.

     "rolling four quarter basis" shall have the meaning assigned
such term in Section 9.11.

      "Scheduled  Redetermination Date" shall  have  the  meaning
assigned such term in Section 2.08(d).

      "SEC" shall mean the Securities and Exchange Commission  or
any successor Governmental Authority.

     "Security Instruments" shall mean the Letters of Credit, the
Letter  of Credit Agreements, the Guaranty Agreement by MMR,  the
agreements or instruments described or referred to in Exhibit  E,
and  any and all other agreements or instruments now or hereafter
executed and delivered by the Borrower or any other Person (other
than  participation or similar agreements between any Lender  and
any  other  lender  or creditor with respect to any  Indebtedness
pursuant  to  this Agreement) in connection with, or as  security
for the payment or performance of the Notes or this Agreement, or
reimbursement  obligations under the Letters of Credit,  as  such
agreements may be amended, supplemented or restated from time  to
time.

      "Special  Entity"  shall mean any  joint  venture,  limited
liability  company or partnership, general or limited partnership
or  any  other  type  of  partnership or  company  other  than  a
corporation  in which the Borrower or one or more  of  its  other
Subsidiaries  is a member, owner, partner or joint  venturer  and
owns,  directly or indirectly, at least a majority of the  equity
of  such  entity or controls such entity, but excluding  any  tax
partnerships that are not classified as partnerships under  state
law.   For  purposes  of this definition, any Person  which  owns
directly  or  indirectly an equity investment in  another  Person
which  allows  the first Person to manage or elect  managers  who
manage the normal activities of such second Person will be deemed
to  "control"  such  second Person (e.g. a sole  general  partner
controls a limited partnership).

      "Subsidiary"  shall mean (i) any corporation  of  which  at
least a majority of the outstanding shares of stock having by the
terms  thereof ordinary voting power to elect a majority  of  the
board  of directors of such corporation (irrespective of  whether
or  not  at the time stock of any other class or classes of  such
corporation  shall have or might have voting power by  reason  of
the  happening  of  any contingency) is at the time  directly  or
indirectly owned or controlled by the Borrower or one or more  of
its  Subsidiaries  or by the Borrower and  one  or  more  of  its
Subsidiaries  and  (ii)  any Special  Entity.   Unless  otherwise
indicated  herein, each reference to the term "Subsidiary"  shall
mean a Subsidiary of the Borrower.

      "Taxes"  shall  have  the meaning  assigned  such  term  in
Section 4.06(a).

      "Terminated  Lender" shall have the meaning  assigned  such
term in Section 5.06(a).

      "Termination  Date" shall mean, unless the Commitments  are
sooner  terminated pursuant to Sections 2.03(b) or 10.02  hereof,
July 9, 2003.

      "Third Party" shall have the meaning assigned such term  in
Section 9.03.

      "Type"  shall mean, with respect to any Loan, a  Base  Rate
Loan or a Eurodollar Loan.

       "Unrestricted  Subsidiary"  shall  mean  (i)  any  of  the
Subsidiaries  listed on Schedule 7.14 hereto as  an  Unrestricted
Subsidiary,  (ii) any Subsidiary of any Unrestricted  Subsidiary,
(iii)  any  surviving  Person  (other  than  the  Borrower  or  a
Restricted Subsidiary) into which any of such Persons referred to
in  clause  (i) or (ii) is merged or consolidated  and  (iv)  any
Subsidiary  organized  after  the  date  of  this  Agreement  and
designated   as  an  Unrestricted  Subsidiary  by  the   Borrower
(pursuant to Section 9.16(b) hereof).  By written notice  to  the
Agent,  the  Borrower may (x) declare any Unrestricted Subsidiary
to  be  a  Restricted  Subsidiary and  such  former  Unrestricted
Subsidiary   shall  thereafter  be  deemed  to  be  a  Restricted
Subsidiary  for  all purposes of this Agreement (subject  to  the
limitations  of  this  Agreement and  pursuant  to  Section  9.16
hereof) or (y) at any time other than when a Default or Event  of
Default  has  occurred  and is continuing or  would  exist  after
giving  effect  to such declaration, in any fiscal year,  declare
one  or  more  Restricted Subsidiaries,  to  be  an  Unrestricted
Subsidiary, subject to the limitations contained in Section  9.03
hereof,   and   any  such  former  Restricted  Subsidiary   shall
thereafter  be  deemed to be an Unrestricted Subsidiary  for  all
purposes of this Agreement.

      "Utilization  Percentage" shall mean, as of  any  day,  the
fraction expressed as a percentage, the numerator of which is the
sum  of  (i)  the LC Exposure, plus (ii) the aggregate  principal
amount  of all outstanding Loans on such day, and the denominator
of  which  is  the  Borrowing Base in effect  on  such  day.  For
purposes of this calculation, the value of the denominator  shall
be limited to the Aggregate Commitments.

      "Wholly-Owned Subsidiary" shall mean, as to  the  Borrower,
any  Subsidiary of which all of the outstanding shares  of  stock
having  by  the terms thereof ordinary voting power to elect  the
board  of  directors of such corporation, other  than  directors'
qualifying shares, are owned or controlled by the Borrower or one
or  more of the Wholly-Owned Subsidiaries or by the Borrower  and
one or more of the Wholly-Owned Subsidiaries.

           Section  1.03   Accounting Terms and Determinations  .
Unless  otherwise  specified herein, all  accounting  terms  used
herein  shall be interpreted, all determinations with respect  to
accounting  matters hereunder shall be made,  and  all  financial
statements  and certificates and reports as to financial  matters
required  to  be furnished to the Agent or the Lenders  hereunder
shall  be prepared, in accordance with GAAP, applied on  a  basis
consistent with the audited financial statements of MMR  referred
to  in  Section 7.02 (except for changes concurred with by  MMR's
independent public accountants).

           Section  1.04   Single Lender .  On the Closing  Date,
Hibernia is the sole Lender under this Agreement, and the parties
contemplate that Hibernia likely may remain the sole Lender under
this  Agreement  through the Termination  Date.   Notwithstanding
this fact, this Agreement contains references to the Agent and to
multiple Lenders, but it is the intention of the parties to  this
Agreement  that  this  Agreement  be  read  throughout  with  the
understanding  that  Hibernia is the Agent and  the  sole  Lender
(until,  and if, such time as there is an Assignment by  Hibernia
to  a  new  additional Lender).  Accordingly,  the  Borrower  and
Hibernia  acknowledge and agree that until such time as there  is
an   Assignment,  the  terms  "Agent",  "Lenders"  and  "Majority
Lenders" each shall mean Hibernia in its individual capacity, and
this Agreement shall operate and be administered and performed by
the parties on the basis that Hibernia is the sole Lender and  is
not  acting as the Agent.  One example of the foregoing intention
is  that the provisions of this Agreement requiring the votes  of
the  Lenders,  or requiring notices by the Agent to the  Lenders,
shall  be  ignored.   Without  limiting  the  generality  of  the
foregoing,  prior to an Assignment resulting in multiple  Lenders
under  this Agreement: (a) Hibernia's Percentage Share  is  100%,
and  all Loans to the Borrower under this Agreement will be  made
by  Hibernia and all Letters of Credit under this Agreement shall
be issued by Hibernia, and all fees and payments shall be paid to
Hibernia;  (b) the Borrowing Base shall be determined  solely  by
Hibernia in accordance with Section 2.08, and the steps regarding
notice  and agreement or disagreement by other Lenders  shall  be
ignored  as surplusage; (c) the Borrower shall have no  right  to
terminate  the Commitment of Hibernia pursuant to the  provisions
of Section 2.08(b) or Section 5.06; (d) the provisions of Article
XI  shall  not  be  applicable; and (e)  notwithstanding  Section
12.04, any provision of this Agreement or any Security Instrument
may  be  amended,  modified or waived  with  the  Borrower's  and
Hibernia's prior written consent.


                      ARTICLE II  Commitments
          Section 2.01  Loans and Letters of Credit .

          (a)  Loans.  Each Lender severally agrees, on the terms
     of  this Agreement, to make Loans to the Borrower during the
     period from and including (i) the Closing Date or (ii)  such
     later  date  that  such  Lender  becomes  a  party  to  this
     Agreement as provided in Section 12.06(b), to but excluding,
     the Termination Date in an aggregate principal amount at any
     one  time outstanding up to but not exceeding the amount  of
     such  Lender's  Commitment  as  then  in  effect;  provided,
     however, that the aggregate principal amount of all Loans by
     all  Lenders hereunder at any one time outstanding  together
     with   the  LC  Exposure  shall  not  exceed  the  Aggregate
     Commitments.  Subject to the terms of this Agreement, during
     the  period  from  the  Closing Date to  but  excluding  the
     Termination  Date,  the  Borrower  may  borrow,  repay   and
     reborrow  the  amount determined pursuant  to  this  Section
     2.01(a).

           (b)   Letters of Credit.  During the period  from  and
     including  the Closing Date to but excluding the Termination
     Date, the Agent, as issuing bank for the Lenders, agrees, on
     the  terms  of  this  Agreement, to extend  credit  for  the
     account of the Borrower at any time and from time to time by
     issuing,  renewing,   extending  or  reissuing  Letters   of
     Credit;  provided however, the LC Exposure at any  one  time
     outstanding  shall  not exceed the  lesser  of  (i)  the  LC
     Commitment  or (ii) the Aggregate Commitments,  as  then  in
     effect,  minus the aggregate principal amount of  all  Loans
     then  outstanding.   The Lenders shall participate  in  such
     Letters  of  Credit according to their respective Percentage
     Shares.

           (c)   Limitation on Types of Loans.   Subject  to  the
     other  terms and provisions of this Agreement, at the option
     of  the  Borrower,  the  Loans may be  Base  Rate  Loans  or
     Eurodollar  Loans; provided that, without the prior  written
     consent  of  the  Majority Lenders, no  more  than  six  (6)
     Eurodollar  Loans  may be outstanding at  any  time  to  any
     Lender.

             Section   2.02    Borrowings,   Continuations    and
Conversions, Letters of Credit .

           (a)   Borrowings.  The Borrower shall give  the  Agent
     (which shall promptly notify the Lenders) advance notice  as
     hereinafter  provided  of  each borrowing  hereunder,  which
     shall  specify  the aggregate amount of such borrowing,  the
     Type  and  the date (which shall be a Business Day)  of  the
     Loans  to be borrowed and (in the case of Eurodollar  Loans)
     the duration of the Interest Period therefor.

           (b)   Minimum Amounts.  All Base Rate Loan  borrowings
     shall  be  in amounts of at least $100,000 or the  remaining
     balance of the Aggregate Commitments, if less, or any  whole
     multiple  of $100,000 in excess thereof, and all  Eurodollar
     Loans  shall be in amounts of at least $100,000 or any whole
     multiple of $100,000 in excess thereof.

          (c)  Notices.  The initial borrowing and all subsequent
     borrowings,  continuations  and  conversions  shall  require
     advance  written notice to the Agent (which  shall  promptly
     notify  the  Lenders) in the form of Exhibit  B  hereto  (or
     telephonic  notice  promptly confirmed  by  such  a  written
     notice), which in each case may be revocable or irrevocable,
     from the Borrower to be received by the Agent not later than
     11:00  a.m. New Orleans, Louisiana time on the date of  each
     Base  Rate Loan borrowing and three Business Days  prior  to
     the date of each Eurodollar Loan borrowing, continuation  or
     conversion.   Without  in  any way limiting  the  Borrower's
     obligation to confirm in writing any telephonic notice,  the
     Agent may act without liability upon the basis of telephonic
     notice  believed by the Agent in good faith to be  from  the
     Borrower prior to receipt of written confirmation.  In  each
     such  case, the Borrower hereby waives the right to  dispute
     the  Agent's  record of the terms of such telephonic  notice
     except in the case of gross negligence or willful misconduct
     by the Agent.

           (d)   Continuation Options.  Subject to the provisions
     made  in  this  Section 2.02(d), the Borrower may  elect  to
     continue  all or any part of any Eurodollar Loan beyond  the
     expiration  of  the  then current Interest  Period  relating
     thereto  by  giving  advance notice as provided  in  Section
     2.02(c)  to  the  Agent  (which shall  promptly  notify  the
     Lenders)  of  such election, specifying the amount  of  such
     Loan  to  be continued and the Interest Period therefor.  In
     the  absence  of  such  a timely and  proper  election,  the
     Borrower  shall  be deemed to have elected to  convert  such
     Eurodollar  Loan  to  a Base Rate Loan pursuant  to  Section
     2.02(e).   All  or any part of any Eurodollar  Loan  may  be
     continued  as  provided  herein,  provided  that   (i)   any
     continuation of any such Loan shall be (as to each  Loan  as
     continued  for an applicable Interest Period) in amounts  of
     at  least  $100,000  or any whole multiple  of  $100,000  in
     excess  thereof and (ii) no Default shall have occurred  and
     be  continuing.   If a Default shall have  occurred  and  be
     continuing,  each Eurodollar Loan shall be  converted  to  a
     Base  Rate  Loan  on  the last day of  the  Interest  Period
     applicable thereto.

           (e)   Conversion Options.  The Borrower may  elect  to
     convert  all or any part of any Eurodollar Loan on the  last
     day of the then current Interest Period relating thereto  to
     a  Base  Rate  Loan by giving advance notice  to  the  Agent
     (which  shall promptly notify the Lenders) of such election.
     Subject to the provisions made in this Section 2.02(e),  the
     Borrower  may elect to convert all or any part of  any  Base
     Rate  Loan at any time and from time to time to a Eurodollar
     Loan by giving advance notice as provided in Section 2.02(c)
     to  the  Agent (which shall promptly notify the Lenders)  of
     such election.  All or any part of any outstanding Loan  may
     be  converted  as  provided herein, provided  that  (i)  any
     conversion  of  any  Base Rate Loan into a  Eurodollar  Loan
     shall  be  (as  to  each such Loan into  which  there  is  a
     conversion for an applicable Interest Period) in amounts  of
     at  least  $100,000  or any whole multiple  of  $100,000  in
     excess  thereof and (ii) no Default shall have occurred  and
     be  continuing.   If a Default shall have  occurred  and  be
     continuing,  no  Base  Rate Loan may  be  converted  into  a
     Eurodollar Loan.

           (f)   Advances.  Not later than 1:00 p.m. New Orleans,
     Louisiana  time  on  the date specified for  each  borrowing
     hereunder,  each Lender shall make available the  amount  of
     the  Loan to be made by it on such date to the Agent, to  an
     account  which  the  Agent  shall  specify,  in  immediately
     available  funds,  for  the account of  the  Borrower.   The
     amounts so received by the Agent shall, subject to the terms
     and  conditions of this Agreement, be made available to  the
     Borrower  by  depositing the same, in immediately  available
     funds,  in  an  account of the Borrower, designated  by  the
     Borrower and maintained at the Principal Office.

           (g)   Letters of Credit.  The Borrower shall give  the
     Agent  (which  shall  promptly notify the  Lenders  of  such
     request)  advance  revocable or  irrevocable  notice  to  be
     received by the Agent not later than 11:00 a.m. New Orleans,
     Louisiana  time not less than three (3) Business Days  prior
     thereto of each request for the issuance and at least thirty
     (30)  Business  Days prior to the date  of  the  renewal  or
     extension  of  a  Letter of Credit hereunder  which  request
     shall specify the amount of such Letter of Credit, the  date
     (which shall be a Business Day) such Letter of Credit is  to
     be  issued,  renewed or extended, the duration thereof,  the
     name and address of the beneficiary thereof, the form of the
     Letter of Credit and such other information as the Agent may
     reasonably   request  all  of  which  shall  be   reasonably
     satisfactory  to  the  Agent.   Subject  to  the  terms  and
     conditions of this Agreement, on the date specified for  the
     issuance,  renewal or extension of a Letter of  Credit,  the
     Agent  shall  issue such Letter of Credit to the beneficiary
     thereof.   No Letter of Credit shall be issued,  renewed  or
     extended with an expiration date after the date specified in
     the definition of "Termination Date".

           In  conjunction with the issuance of  each  Letter  of
     Credit,  the  Borrower  shall execute  a  Letter  of  Credit
     Agreement.   In  the  event  of  any  conflict  between  any
     provision  of  a  Letter  of  Credit  Agreement   and   this
     Agreement,  the  Borrower, the Agent and the Lenders  hereby
     agree that the provisions of this Agreement shall govern.

           The  Agent will send to the Borrower and each  Lender,
     upon  issuance  of  any Letter of Credit,  or  an  amendment
     thereto, a true and complete copy of such Letter of  Credit,
     or such amendment thereto.

          Section 2.03  Changes of Commitments .

           (a)   The Aggregate Commitments shall at all times  be
     equal  to  the  lesser of (i) the Aggregate  Maximum  Credit
     Amount  after adjustments resulting from reductions pursuant
     to  Section  2.03(b) hereof or (ii) the  Borrowing  Base  as
     determined  from  time to time pursuant to  Section  2.08(f)
     hereof.

           (b)  The Borrower shall have the right to terminate or
     to reduce the amount of the Aggregate Maximum Credit Amounts
     at  any  time or from time to time upon not less than  three
     (3)  Business  Days' prior notice to the Agent (which  shall
     promptly  notify  the Lenders) of each such  termination  or
     reduction,  which  notice shall specify the  effective  date
     thereof  and  the amount of any such reduction (which  shall
     not  be less than $500,000 or any whole multiple of $500,000
     in  excess thereof) and may be revocable or irrevocable  and
     effective  only  upon receipt by the Agent.   The  Aggregate
     Maximum  Credit Amounts once terminated or reduced  pursuant
     to this Section 2.03(b) may not be reinstated.

          Section 2.04  Fees .

           (a)  The Borrower agrees to pay to the Agent, for  the
     account  of each Lender, an unusued fee on the daily average
     of the amount by which the Aggregate Commitments  exceed the
     sum of (A) the LC Exposure, plus (B) the aggregate principal
     amount  of  all  outstanding Loans for the period  from  and
     including  the Closing Date up to but excluding the  earlier
     of  the date the Aggregate Commitments are terminated or the
     Termination  Date at a rate per annum equal to  one-half  of
     one  (0.50%)  percent.   All  such  unused  fees  shall   be
     calculated  on  the basis of a year of 365 (or,  in  a  leap
     year, 366) days for the actual number of days elapsed.   The
     accrued  unused fees shall be due and payable  quarterly  in
     arrears  on  each Quarterly Date and on the earlier  of  the
     date  the  Aggregate  Commitments  are  terminated  or   the
     Termination Date.

           (b)   The  Borrower agrees to pay the Agent,  for  the
     account  of each Lender, commissions for issuing the Letters
     of  Credit  on the daily average outstanding of the  maximum
     liability of the Agent existing from time to time under such
     Letter  of Credit (calculated separately for each Letter  of
     Credit) at the applicable per annum percentage set forth  at
     the  appropriate  intersection in  the  table  shown  below,
     provided  that  each Letter of Credit shall bear  a  minimum
     commission  of  $300.00.  Each Letter  of  Credit  shall  be
     deemed  to be outstanding up to the full face amount of  the
     Letter  of Credit until the Agent has received the  canceled
     Letter of Credit or a written cancellation of the Letter  of
     Credit from the beneficiary of such Letter of Credit in form
     and substance acceptable to the Agent, or for any reductions
     in  the  amount of the Letter of Credit (other than  from  a
     drawing), written notification from the beneficiary of  such
     Letter of Credit.  Such commissions are payable quarterly in
     arrears.

   Utilization  Percentage                Letter of
                                          Credit Fee

     Less than 50%                           3.25%

     50% or more                             3.75%

           (c)  The Borrower agrees to pay to the Agent, for  the
     account  of  each Lender, an upfront commitment fee  in  the
     amount  equal  to two (2%) percent of the initial  Aggregate
     Commitments  ($90,000.00, being 2% of the initial  Borrowing
     Base of $4,500,000.00) on the Closing Date.

           (d)   In connection with each future increase  in  the
     Borrowing  Base  above the then applicable  Fee  Level,  the
     Borrower agrees to pay to the Agent, for the account of each
     Lender,  a  commitment fee in an amount equal  to  two  (2%)
     percent of the amount by which the increased Borrowing  Base
     exceeds the then existing Fee Level.  The initial Fee  Level
     on  the  Closing Date is the initial amount of the Borrowing
     Base  on  the  Closing  Date, being $4,500,000.00.   If  the
     Borrowing  Base hereafter is increased to an  amount  higher
     than  such  initial Fee Level, then such new  higher  amount
     shall  become  the Fee Level.  Thereafter, if the  Borrowing
     Base  is increased to an amount higher than such Fee  Level,
     the  Fee Level shall be reset to such higher number, one  or
     more  times.  All such additional commitment fees  shall  be
     due  and  payable at the time the increase in the  Borrowing
     Base becomes effective.

           (e)  If the Borrower exercises its option to cause the
     Lenders  to  redetermine  the  Borrowing  Base  pursuant  to
     Section 2.08(d), then for each exercise of such option,  the
     Borrower  shall  pay a fee to the Agent  in  the  amount  of
     $2,000 to be shared by the Lenders pro rata in proportion to
     their  Percentage Share.  Such fee shall be due and  payable
     at  the  time  the Borrower gives notice of its election  to
     exercise such option.

           (f)   If  a  new Lender is added under this  Agreement
     pursuant to an Assignment, the Borrower and the Agent  shall
     enter  into  a letter agreement setting forth a commercially
     reasonable agent fee to be paid by the Borrower to the Agent
     for its own account.

          Section 2.05  Several Obligations .  The failure of any
Lender to make any Loan to be made by it or to provide funds  for
disbursements  or reimbursements under Letters of Credit  on  the
date specified therefor shall not relieve any other Lender of its
obligation to make its Loan or provide funds on such date, but no
Lender  shall be responsible for the failure of any other  Lender
to  make  a  Loan to be made by such other Lender or  to  provide
funds to be provided by such other Lender.

           Section  2.06  Notes .  The Loans made by each  Lender
shall be evidenced by a single promissory note of the Borrower in
substantially the form of Exhibit A hereto, dated (i) the Closing
Date  or  (ii)  the effective date of an Assignment  pursuant  to
Section  12.06(b),  payable to the order  of  such  Lender  in  a
principal amount equal to its Maximum Credit Amount as in  effect
and  otherwise  duly  completed  and  such  substitute  Notes  as
required  by Section 12.06(b).  The date, amount, Type,  interest
rate  and  Interest Period of each Loan made by each Lender,  and
all  payments made on account of the principal thereof, shall  be
recorded by such Lender on its books for its Notes, and, prior to
any  transfer,  may  be  endorsed by such Lender  on  a  schedule
attached  to  such Notes or any continuation thereof  or  on  any
separate  record maintained by such Lender.  Failure to make  any
such  notation  or  to  attach a schedule shall  not  affect  any
Lender's  or the Borrower's rights or obligations in  respect  of
such  Loans or affect the validity of such transfer by any Lender
of its Notes.

          Section 2.07  Prepayments .

           (a)   The Borrower may prepay the Base Rate Loans upon
     notice  to  the  Agent  (which  shall  promptly  notify  the
     Lenders)  not  later than 11:00 a.m. New Orleans,  Louisiana
     time  on  the date of such Base Rate Loan prepayment,  which
     notice shall specify the prepayment date (which shall  be  a
     Business Day) and the amount of the prepayment (which  shall
     be  at  least $100,000 or the remaining aggregate  principal
     balance  outstanding on the Notes) and may be  revocable  or
     irrevocable  and effective only upon receipt by  the  Agent.
     The  Borrower  may prepay all or any portion  of  Eurodollar
     Loans  upon  not  less than three (3) Business  Day's  prior
     notice  to  the  Agent  (which  shall  promptly  notify  the
     Lenders),  which  notice shall specify the  prepayment  date
     (which  shall  be  a  Business Day) and the  amount  of  the
     prepayment  (which  shall  be  at  least  $100,000  or   the
     remaining  aggregate principal balance  outstanding  on  the
     Notes)  and  may be revocable or irrevocable  and  effective
     only  upon  receipt by the Agent, provided that interest  on
     the principal prepaid, accrued to the prepayment date, shall
     be  paid on the prepayment date. In addition, prepayments of
     Eurodollar  Loans shall be subject to the terms  of  Section
     5.05.

           (b)   If,  after  giving effect to any termination  or
     reduction  of the Aggregate Maximum Credit Amounts  pursuant
     to  Section  2.03(b),  the outstanding  aggregate  principal
     amount  of  the  Loans  plus the  LC  Exposure  exceeds  the
     Aggregate  Maximum  Credit Amounts, the Borrower  shall  (i)
     prepay  the  Loans  on  the  date  of  such  termination  or
     reduction  in  an aggregate principal amount  equal  to  the
     excess, together with interest on the principal amount  paid
     accrued  to  the  date of such prepayment and  (ii)  if  any
     excess remains after prepaying all of the Loans, pay to  the
     Agent on behalf of the Lenders an amount equal to the excess
     to be held as cash collateral as provided in Section 2.10(b)
     hereof.

           (c)   Upon  any adjustment or redetermination  of  the
     amount  of  the  Borrowing Base in accordance with  Sections
     2.08, 8.08(c), 9.03(j) or 9.13 or otherwise, if the adjusted
     or  redetermined Borrowing Base is less than the sum of  the
     aggregate outstanding principal amount of the Loans and  the
     LC  Exposure (a "Borrowing Base Deficiency"), then  (i)  the
     Borrower  shall  cure  such  Borrowing  Base  Deficiency  by
     prepaying  the  Loans  or reducing the  LC  Exposure  in  an
     aggregate  principal amount equal to such  excess,  together
     with interest on the principal amount paid which has accrued
     to  the date of such prepayment, within thirty (30) days  of
     receipt  of written notice thereof.  If such Borrowing  Base
     Deficiency  is  not  cured  by  the  30th  day,  after   the
     Borrower's   receipt  of  notice  of  such  Borrowing   Base
     Deficiency,  then  such  Borrowing  Base  Deficiency   shall
     constitute  an  Event  of Default hereunder.   The  Borrower
     specifically  acknowledges that no additional  grace  period
     (beyond  the  period stated in the preceding  sentences)  is
     applicable under this Agreement to any failure to make  such
     mandatory prepayment before such failure becomes an Event of
     Default  hereunder.  Additionally, the Borrower specifically
     acknowledges that the foregoing thirty (30) day grace period
     is  not  applicable  to any failure to make  such  mandatory
     prepayment triggered by a Borrowing Base Deficiency due to a
     Monthly Reduction as provided in Section 2.07(e).

           (d)   Following a casualty loss to all or any part  of
     the  Oil and Gas Properties constituting the Borrowing Base,
     all  insurance  proceeds  payable  to  the  Borrower  or   a
     Restricted  Subsidiary, as applicable, and not used  by  the
     Borrower or such Restricted Subsidiary to repair or  replace
     such  Properties  shall  be used by  the  Borrower  or  such
     Restricted  Subsidiary to prepay the Loans.   The  Borrowing
     Base shall be reduced by an amount reasonably determined  at
     the  time  by the Agent to reflect the contribution  to  the
     Borrowing  Base of such Oil and Gas Properties not  repaired
     or  replaced and such Oil and Gas Properties shall no longer
     be included in the Borrowing Base.

            (e)   Notwithstanding  the  foregoing  provisions  in
     Section  2.07(c), the Borrower shall pay the amount  of  any
     Borrowing  Base Deficiency that results from the application
     of  each  Monthly  Reduction on the day  that  such  Monthly
     Reduction takes effect.

           (f)   Prepayments  permitted or  required  under  this
     Section  2.07 shall be without notice, premium  or  penalty,
     except  as  required under Section 5.05  for  prepayment  of
     Eurodollar  Loans.   Any prepayments on  the  Loans  may  be
     reborrowed   subject   to  the  then   effective   Aggregate
     Commitments.

          Section 2.08  Borrowing Base .

           (a)  During the period from and after the Closing Date
     until  the  first scheduled redetermination of the Borrowing
     Base  (scheduled to be December 15, 2002) in accordance with
     this Section 2.08, the amount of the Borrowing Base shall be
     $4,500,000.00.  The Borrowing Base shall be redetermined  in
     accordance  with  Sections  2.08(b),  2.08(c),  2.08(d)  and
     2.08(i)  by  the Agent with the concurrence of the  Majority
     Lenders.   Upon  any redetermination of the Borrowing  Base,
     such  redetermination shall remain in effect until the  next
     successive  Redetermination  Date.   "Redetermination  Date"
     shall  mean  the  date that the redetermined Borrowing  Base
     becomes   effective  subject  to  the  notice   requirements
     specified    in   Section   2.08(e)   both   for   scheduled
     redeterminations  and  unscheduled redeterminations,  except
     that  a  reduction in the Borrowing Base caused by a Monthly
     Reduction shall become effective on the date thereof without
     need of notice.

           (b)   Upon receipt of the reports required by  Section
     8.07   and   such  other  reports,  data  and   supplemental
     information as may from time to time be reasonably requested
     by  the  Agent (the "Engineering Reports"), the  Agent  will
     redetermine  the Borrowing Base.  Such redetermination  will
     be  in  accordance with its normal and customary  procedures
     for evaluating oil and gas reserves and other related assets
     and  Hedging  Agreements as such exist  at  that  particular
     time.    The  Agent,  in  its  sole  discretion,  may   make
     adjustments  to  the  rates, volumes and  prices  and  other
     assumptions set forth therein in accordance with its  normal
     and customary procedures for evaluating oil and gas reserves
     and  other  related assets as such exist at that  particular
     time.   The  Agent  shall  propose  to  the  Lenders  a  new
     Borrowing Base within 30 days following receipt by the Agent
     and  the Lenders of the applicable Engineering Reports in  a
     timely  and  complete  manner, with respect  each  scheduled
     redetermination  of  the  Borrowing  Base.    After   having
     received  notice of such proposal by the Agent, each  Lender
     shall  have 14 days to agree or disagree with such proposal.
     Each  Lender  shall evaluate the proposal in good  faith  in
     accordance  with  its  normal and customary  procedures  for
     evaluating oil and gas reserves and other related assets  as
     such  exist at that particular time.  If at the end  of  the
     14 days, any Lender shall have not communicated its approval
     or  disapproval,  such silence shall  be  deemed  to  be  an
     approval.  If within such 14 day period the Majority Lenders
     have   approved  or  been  deemed  to  approve  the  Agent's
     proposal,  then  the  Agent's  proposal  shall  be  the  new
     Borrowing  Base;  provided,  however,  an  increase  in  the
     Borrowing Base shall require the approval or deemed approval
     of  100%  of  the Lenders before such increase shall  become
     effective.   If  however,  the  Majority  Lenders  have  not
     approved  or  been  deemed to approve the  Agent's  proposal
     within  14  days,  the  Majority  Lenders  shall,  within  a
     reasonable  period of time, agree on a new  Borrowing  Base.
     Should  any  Lender refuse to approve the Agent's  proposal,
     the  Borrower may terminate, in whole but not in  part,  the
     Commitment of such Lender upon five (5) Business Days' prior
     written  notice to the Terminated Lender and the Agent.  The
     termination  shall be governed by subsections (b),  (c)  and
     (d) of Section 5.06, and for such purposes, the Lender whose
     Commitment  has  been  terminated  shall  be  considered   a
     "Terminated  Lender" and the notice given  pursuant  to  the
     prior   sentence   shall   be  considered   a   "Notice   of
     Termination".   The first scheduled redetermination  of  the
     Borrowing Base is to occur on December 15, 2002.

           (c)  The Agent may exclude any Oil and Gas Property or
     portion of production therefrom or any income from any other
     Property from the Borrowing Base, at any time, because title
     information  on or the status of title to such  Property  is
     not  reasonably satisfactory, such Property is not Mortgaged
     Property,   or  such  Property  is  subject  to  contractual
     agreements or commitments or laws restricting the mortgaging
     or  assigning  thereof  or the grant of  security  interests
     therein.

           (d)   (i)  So  long as any of the Commitments  are  in
     effect and until payment in full of all Loans hereunder,  on
     or  around  the  fifteenth (15th) day of each  December  and
     June,  commencing December 15, 2002 (each being a "Scheduled
     Redetermination  Date"), the Lenders shall  redetermine  the
     amount  of  the  Borrowing Base in accordance with  Sections
     2.08(b)   and  (c).   (ii)  In  addition  to  the  scheduled
     redeterminations   pursuant   to   clause   (i)   of    this
     Section  2.08(d), the Majority Lenders or the  Borrower  may
     each  initiate  a redetermination of the Borrowing  Base  as
     they  so elect; provided, however, only one such unscheduled
     redetermination  may  be  elected  between  each   Scheduled
     Redetermination Date.  If such redetermination is  initiated
     by  the Majority Lenders, the Agent shall specify in writing
     to the Borrower the date on which the Borrower is to furnish
     a  Reserve Report in accordance with Section 8.07(b) and the
     date  on which such redetermination is to occur.  Each  such
     redetermination   shall   be   made   in   accordance   with
     Sections 2.08(b) and (c); provided, however, the Agent shall
     propose  to  the  Lenders  the redetermined  Borrowing  Base
     within  14  days  following receipt by  the  Agent  and  the
     Lenders  of the Engineering Reports in a timely and complete
     manner.   After having received notice of such  proposal  by
     the  Agent, the Majority Lenders shall have 14 days to agree
     or  disagree  with  such proposal.  If at  the  end  of  the
     14  days,  the Majority Lenders have not communicated  their
     approval or disapproval, such silence shall be deemed to  be
     an  approval  and  the Agent's proposal  shall  be  the  new
     Borrowing  Base;  provided,  however,  an  increase  in  the
     Borrowing Base shall require the approval or deemed approval
     of  100%  of  the Lenders before such increase shall  become
     effective.   If however, the Majority Lenders  notify  Agent
     within  14  days of their disapproval, the Majority  Lenders
     shall,  within a reasonable period of time, agree on  a  new
     Borrowing Base.

           (e)   The  Agent shall promptly notify in writing  the
     Borrower  and  the Lenders of the new Borrowing  Base.   Any
     redetermination of the Borrowing Base shall not be in effect
     until written notice is received by the Borrower.   However,
     notwithstanding    the   preceding    two    sentences,    a
     redetermination  of  the  Borrowing  Base  arising  from  an
     automatic  reduction  caused by a Monthly  Production  shall
     become effective on the date thereof without need of notice.

          (f)  Upon the Borrower's receipt of written notice from
     the  Agent  of  the  amount of the Borrowing  Base  then  in
     effect,  the Agent and the Borrower shall mutually agree  on
     the  portion  of such Borrowing Base to be accepted  by  the
     Borrower  as the Borrowing Base. During the period from  and
     after  the Closing Date to and including the effective  date
     of  the next designation of the Borrowing Base in accordance
     with  this Section 2.08(f), the amount of the Borrowing Base
     shall be $4,500,000.00.

           (g)   In  addition  to the scheduled  and  unscheduled
     redeterminations  of  the Borrowing Base  pursuant  to  this
     Section 2.08 (including the Monthly Reductions in accordance
     with  Sections  2.08(i), the Borrowing Base in  effect  from
     time  to time is subject to reductions and adjustments  made
     in accordance with Sections 8.08(c),  9.03(j) or 9.13.

          (h)  So long as any of the Commitments are in effect or
     any  LC  Exposure  or Loans are outstanding  hereunder,  the
     Loans  and Letters of Credit shall be governed by  the  then
     effective Borrowing Base.

           (i)  The Borrowing Base shall be automatically reduced
     by the applicable Monthly Reduction commencing on August 15,
     2002,  and  continuing on the 15th day  of  each  successive
     month;  provided  that whenever the 15th day  of  any  month
     occurs  on  a day other than a Business Day, the  applicable
     Monthly  Production shall take effect on the next succeeding
     Business  Day.  Each reduction of the Borrowing Base  caused
     by  a  Monthly Reduction shall take effect automatically  on
     such  date  without  need of notice to  the  Borrower.   The
     amount of the Monthly Reduction will be redetermined by  the
     Agent as part of and at the time of each redetermination  of
     the  Borrowing Base in accordance with Section 2.08(b), upon
     written notice to the Borrower.  During the period from  and
     after  the  Closing Date until the first redetermination  of
     the  Borrowing  Base,  the amount of the  Monthly  Reduction
     shall  be  $500,000.00.  Upon any increase in the  Borrowing
     Base  for  any  reason, including without any limitation  an
     increase  in the Borrowing Base arising from the  Borrower's
     Hedging  Agreements  then in effect, the  Monthly  Reduction
     amount  may be increased by the Agent in its sole discretion
     in  accordance with Section 2.08(b), upon written notice  to
     the Borrower.  So long as the Borrowing Base is smaller than
     the  Aggregate Maximum Credit Amount, each Monthly Reduction
     shall  cause a reduction of the Aggregate Commitments  in  a
     like  amount.  Each Monthly Reduction to the Borrowing  Base
     (and  in  such  circumstance to the  Aggregate  Commitments)
     shall  be permanent, subject to any future increase  in  the
     Borrowing  Base  pursuant  to  a  redetermination   thereof.
     Notwithstanding the foregoing provisions in Section 2.07(c),
     the  Borrower  shall  pay the amount of any  Borrowing  Base
     Deficiency that results from the application of each Monthly
     Reduction  on  the  day  that such Monthly  Reduction  takes
     effect.

           Section  2.09   Assumption of Risks  .   The  Borrower
assumes all risks of the acts or omissions of any beneficiary  of
any  Letter  of Credit or any transferee thereof with respect  to
its  use of such Letter of Credit.  Neither the Agent (except  in
the  case of willful misconduct or bad faith on the part  of  the
Agent or any of its employees), its correspondents nor any Lender
shall be responsible for the validity, sufficiency or genuineness
of  certificates or other documents or any endorsements  thereon,
even if such certificates or other documents should in fact prove
to  be  invalid, insufficient, fraudulent or forged; for  errors,
omissions,  interruptions or delays in transmissions or  delivery
of any messages by mail, telex, or otherwise, whether or not they
be   in  code;  for  errors  in  translation  or  for  errors  in
interpretation of technical terms; the validity or sufficiency of
any  instrument  transferring  or  assigning  or  purporting   to
transfer or assign any Letter of Credit or the rights or benefits
thereunder  or proceeds thereof, in whole or in part,  which  may
prove to be invalid or ineffective for any reason; the failure of
any  beneficiary  or any transferee of any Letter  of  Credit  to
comply  fully with conditions required in order to draw upon  any
Letter  of  Credit;  or for any other consequences  arising  from
causes  beyond the Agent's control or the control of the  Agent's
correspondents.  In addition, neither the Agent  nor  any  Lender
shall be responsible for any error, neglect, or default of any of
the  Agent's correspondents; and none of the above shall  affect,
impair  or  prevent  the vesting of any of  the  Agent's  or  any
Lender's rights or powers hereunder or under the Letter of Credit
Agreements, all of which rights shall be cumulative.   The  Agent
and its correspondents may accept certificates or other documents
that  appear on their face to be in order, without responsibility
for   further  investigation  of  any  matter  contained  therein
regardless  of  any notice or information to  the  contrary.   In
furtherance  and  not in limitation of the foregoing  provisions,
the  Borrower agrees that any action, inaction or omission  taken
or  not taken by the Agent or by any correspondent for the  Agent
in  good  faith in connection with any Letter of Credit,  or  any
related drafts, certificates, documents or instruments, shall  be
binding  on  the  Borrower and shall not put  the  Agent  or  its
correspondents under any resulting liability to the Borrower.

          Section 2.10  Obligation to Reimburse and to Prepay .

           (a)  If a disbursement by the Agent is made under  any
     Letter of Credit, the Borrower shall pay to the Agent within
     two  (2) Business Days after notice of any such disbursement
     is  received  by  the  Borrower, the  amount  of  each  such
     disbursement  made by the Agent under the Letter  of  Credit
     (if  such  payment is not sooner effected as may be required
     under  this  Section 2.10 or under other provisions  of  the
     Letter  of  Credit), together with interest  on  the  amount
     disbursed from and including the date of disbursement  until
     payment  in full of such disbursed amount at a varying  rate
     per annum equal to (i) the then applicable interest rate for
     Base Rate Loans through the second Business Day after notice
     of  such  disbursement is received by the Borrower and  (ii)
     thereafter, the Post-Default Rate for Base Rate  Loans  (but
     in  no  event  to exceed the Highest Lawful  Rate)  for  the
     period  from and including the third Business Day  following
     the date of notice of such disbursement to and including the
     date  of  repayment in full of such disbursed  amount.   The
     obligations  of  the  Borrower  under  this  Agreement  with
     respect   to  each  Letter  of  Credit  shall  be  absolute,
     unconditional and irrevocable and shall be paid or performed
     strictly  in  accordance with the terms  of  this  Agreement
     under   all  circumstances  whatsoever,  including,  without
     limitation,  but  only to the fullest  extent  permitted  by
     applicable law, the following circumstances: (i) any lack of
     validity or enforceability of this Agreement, any Letter  of
     Credit  or  any  of  the  Security  Instruments;  (ii)   any
     amendment  or  waiver  of (including any  default),  or  any
     consent  to  departure from this Agreement  (except  to  the
     extent permitted by any amendment or waiver), any Letter  of
     Credit  or  any  of  the  Security  Instruments;  (iii)  the
     existence  of  any claim, set-off, defense or  other  rights
     which  the  Borrower  may  have  at  any  time  against  the
     beneficiary of any Letter of Credit or any transferee of any
     Letter  of  Credit  (or  any  Persons  for  whom  any   such
     beneficiary  or  any  such transferee may  be  acting),  the
     Agent, any Lender or any other Person, whether in connection
     with  this  Agreement,  any Letter of Credit,  the  Security
     Instruments,  the  transactions contemplated hereby  or  any
     unrelated  transaction;  (iv)  any  statement,  certificate,
     draft,  notice  or  any other document presented  under  any
     Letter  of  Credit  proves to have been forged,  fraudulent,
     insufficient  or  invalid in any respect  or  any  statement
     therein  proves  to  have been untrue or inaccurate  in  any
     respect  whatsoever;  (v) payment by  the  Agent  under  any
     Letter  of  Credit  against  presentation  of  a  draft   or
     certificate  which appears on its face to comply,  but  does
     not  comply,  with the terms of such Letter of  Credit;  and
     (vi) any other circumstance or happening whatsoever, whether
     or  not  similar to any of the foregoing.  The Borrower  may
     repay  its obligations under this Subsection 2.10(a) with  a
     Loan  subject to the other restrictions on Loans under  this
     Agreement.

     Notwithstanding anything in this Agreement to the  contrary,
     the  Borrower will not be liable for payment or  performance
     that results from the gross negligence or willful misconduct
     of   the  Agent,  except  (i)  where  the  Borrower  or  any
     Subsidiary actually recovers the proceeds for itself or  the
     Agent  of  any payment made by the Agent in connection  with
     such gross negligence or willful misconduct or (ii) in cases
     where the Agent makes payment to the named beneficiary of  a
     Letter of Credit.

           (b)   In  the event of the occurrence of any Event  of
     Default,  a  payment  or  prepayment  pursuant  to  Sections
     2.07(b),  (c),  (d) and (e) hereof or the  maturity  of  the
     Notes, whether by acceleration or otherwise, an amount equal
     to  the  LC  Exposure (or the excess in the case of  Section
     2.07(b),  (c), (d) or (e)) shall be deemed to  be  forthwith
     due  and  owing by the Borrower to the Agent and the Lenders
     as  of  the  date of any such occurrence; and the Borrower's
     obligation  to  pay  such  amount  shall  be  absolute   and
     unconditional, without regard to whether any beneficiary  of
     any such Letter of Credit has attempted to draw down all  or
     a  portion  of such amount under the terms of  a  Letter  of
     Credit,  and, to the fullest extent permitted by  applicable
     law, shall not be subject to any defense or be affected by a
     right  of  set-off,  counterclaim or  recoupment  which  the
     Borrower  may  now  or  hereafter  have  against  any   such
     beneficiary, the Agent, the Lenders or any other Person  for
     any  reason whatsoever.  Such payments shall be held by  the
     Agent  on  behalf of the Lenders as cash collateral securing
     the  LC  Exposure in an interest bearing account or accounts
     at  the Principal Office; and the Borrower hereby grants  to
     and  by  its  deposit with the Agent grants to the  Agent  a
     security  interest  in  such  cash  collateral  and  deposit
     account(s).   In  the  event of  any  such  payment  by  the
     Borrower  of  amounts contingently owing  under  outstanding
     Letters of Credit and in the event that thereafter drafts or
     other  demands for payment complying with the terms of  such
     Letters  of  Credit  are not made prior  to  the  respective
     expiration dates thereof, the Agent agrees, if no  Event  of
     Default  has  occurred  and is continuing  or  if  no  other
     amounts  are outstanding under this Agreement, the Notes  or
     the  Security Instruments, to remit to the Borrower  amounts
     for  which  the  contingent  obligations  evidenced  by  the
     Letters of Credit have ceased.

           (c)   Each Lender severally and unconditionally agrees
     that  it shall promptly reimburse the Agent an amount  equal
     to  such Lender's Percentage Share of any disbursement  made
     by  the  Agent  under  any Letter  of  Credit  that  is  not
     reimbursed according to this Section 2.10.

          Section 2.11  Lending Offices .  The Loans of each Type
made by each Lender shall be made and maintained at such Lender's
Applicable Lending Office for Loans of such Type.


          ARTICLE III  Payments of Principal and Interest
           Section 3.01  Repayment of Loans .  The Borrower  will
pay  to  the Agent, for the account of each Lender, the principal
payments required by this Section 3.01.  On the  Termination Date
the  Borrower shall repay the outstanding aggregate principal and
accrued and unpaid interest under the Notes.

           Section 3.02  Interest .  The Borrower will pay to the
Agent,  for  the account of each Lender, interest on  the  unpaid
principal amount of each Loan made by such Lender for the  period
commencing  on  the date such Loan is made to but  excluding  the
date such Loan shall be paid in full, at the following rates  per
annum:

           (i)  if such a Loan is a Base Rate Loan, the Base
     Rate  (as  in  effect  from  time  to  time)  plus  the
     Applicable  Margin,  but  in no  event  to  exceed  the
     Highest Lawful Rate; and

          (ii) if such a Loan is a Eurodollar Loan, for each
     Interest  Period relating thereto, the Eurodollar  Rate
     for  such  Loan plus the Applicable Margin, but  in  no
     event to exceed the Highest Lawful Rate.

Notwithstanding  the  foregoing, the Borrower  will  pay  to  the
Agent,  for the account of each Lender interest at the applicable
Post-Default  Rate  on any principal of any  Loan  made  by  such
Lender, and (to the fullest extent permitted by law) on any other
amount payable by the Borrower hereunder, under any Loan Document
or  under any Note held by such Lender to or for account of  such
Lender,  for  the period commencing on the date of  an  Event  of
Default  until the same is paid in full or all Events of  Default
are cured or waived.

     Accrued interest on Base Rate Loans shall be payable on each
Quarterly  Date  commencing on September 30,  2002,  and  accrued
interest on each Eurodollar Loan shall be payable on the last day
of  the Interest Period therefor and, if such Interest Period  is
longer  than three months at three-month intervals following  the
first  day of such Interest Period, except that interest  payable
at  the  Post-Default Rate shall be payable from time to time  on
demand and interest on any Eurodollar Loan that is converted into
a  Base Rate Loan (pursuant to Section 5.04) shall be payable  on
the date of conversion (but only to the extent so converted).

      Promptly  after  the  determination of  any  interest  rate
provided for herein or any change therein, the Agent shall notify
the  Lenders  to which such interest is payable and the  Borrower
thereof.  Each determination by the Agent of an interest rate  or
fee hereunder shall, except in cases of manifest error, be final,
conclusive and binding on the parties.


 ARTICLE IV     Payments; Pro Rata Treatment; Computations; Etc.
            Section  4.01   Payments  .   Except  to  the  extent
otherwise  provided  herein, all payments of principal,  interest
and  other  amounts  to be made by the Borrower  under  the  Loan
Documents  shall  be  made in Dollars, in  immediately  available
funds, to the Agent at such account as the Agent shall specify by
notice  to  the Borrower from time to time, not later than  11:00
a.m.  New  Orleans,  Louisiana time on the  date  on  which  such
payments shall become due (each such payment made after such time
on  such  due  date to be deemed to have been made  on  the  next
succeeding  Business Day).  Such payments shall be  made  without
(to the fullest extent permitted by applicable law) defense, set-
off  or  counterclaim.  Each payment received by the Agent  under
this  Agreement or any Note for account of a Lender shall be paid
promptly  to such Lender in immediately available funds.   Except
as  provided  in  clause  (iii) of the  definition  of  "Interest
Period",  if the due date of any payment under this Agreement  or
any  Note  would otherwise fall on a day which is not a  Business
Day  such  date shall be extended to the next succeeding Business
Day  and  interest shall be payable for any principal so extended
for the period of such extension.  At the time of each payment to
the  Agent of any principal of or interest on any borrowing,  the
Borrower  shall  notify  the Agent of the  Loans  to  which  such
payment shall apply.  In the absence of such notice the Agent may
specify the Loans to which such payment shall apply, but  to  the
extent possible such payment or prepayment will be applied  first
to the Loans comprised of Base Rate Loans.

           Section  4.02   Pro Rata Treatment .   Except  to  the
extent  otherwise  provided  herein  each  Lender  agrees   that:
(i)  each borrowing from the Lenders under Section 2.01 and  each
continuation and conversion under Section 2.02 shall be made from
the  Lenders pro rata in accordance with their Percentage  Share,
each   payment   of   commitment  fee   or   other   fees   under
Sections 2.04(a), (b), (c), (d) and (e) shall be made for account
of  the  Lenders  pro  rata in accordance with  their  Percentage
Share,  and  each termination or reduction of the amount  of  the
Aggregate Maximum Credit Amounts under Section 2.03(b)  shall  be
applied  to the Commitment of each Lender, pro rata according  to
the  amounts of its respective Commitment; (ii) each  payment  of
principal  of Loans by the Borrower shall be made for account  of
the  Lenders  pro  rata in accordance with the respective  unpaid
principal amount of the Loans held by the Lenders; and (iii) each
payment  of interest on Loans by the Borrower shall be  made  for
account of the Lenders pro rata in accordance with the amounts of
interest due and payable to the respective Lenders; and (iv) each
reimbursement by the Borrower of disbursements under  Letters  of
Credit  shall be made for account of the Agent or, if  funded  by
the  Lenders,  pro  rata  for  the account  of  the  Lenders,  in
accordance with the amounts of reimbursement obligations due  and
payable to each respective Lender.

           Section  4.03  Computations .  Interest on  Eurodollar
Loans  shall be computed on the basis of a year of 360  days  and
actual  days  elapsed (including the first day but excluding  the
last  day)  occurring in the period for which  such  interest  is
payable, unless such calculation would exceed the Highest  Lawful
Rate, in which case interest shall be calculated on the per annum
basis of a year of 365 or 366 days, as the case may be.  Interest
on  Base Rate Loans and fees shall be computed on the basis of  a
year  of  365  or 366 days, as the case may be, and  actual  days
elapsed  (including  the first day but excluding  the  last  day)
occurring in the period for which such interest is payable.

           Section  4.04   Non-receipt of Funds by  the  Agent  .
Unless  the  Agent shall have been notified by a  Lender  or  the
Borrower  prior  to  the date on which such  notifying  party  is
scheduled to make payment to the Agent (in the case of a  Lender)
of  the  proceeds of a Loan or a payment under a Letter of Credit
to  be  made  by it hereunder or (in the case of the Borrower)  a
payment  to  the Agent for account of one or more of the  Lenders
hereunder   (such  payment  being  herein  called  the  "Required
Payment"), which notice shall be effective upon receipt, that  it
does  not  intend to make the Required Payment to the Agent,  the
Agent may assume that the Required Payment has been made and may,
in  reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient(s) on
such  date and, if such Lender or the Borrower (as the  case  may
be)  has not in fact made the Required Payment to the Agent,  the
recipient(s) of such payment shall, on demand, repay to the Agent
the  amount  so made available together with interest thereon  in
respect of each day during the period commencing on the date such
amount was so made available by the Agent until but excluding the
date  the  Agent recovers such amount at a rate per annum  which,
for  any Lender as recipient, will be equal to the Federal  Funds
Rate,  and  for the Borrower as recipient, will be equal  to  the
Base Rate plus the Applicable Margin.

          Section 4.05  Set-off, Sharing of Payments, Etc.

           (a)   The  Borrower agrees that, in addition  to  (and
     without  limitation of) any right of set-off, bankers'  lien
     or  counterclaim  a Lender may otherwise have,  each  Lender
     shall  have  the  right and be entitled (after  consultation
     with  the Agent), at its option, to offset balances held  by
     it  or  by any of its Affiliates for account of the Borrower
     or  any  Restricted  Subsidiary at any of  its  offices,  in
     Dollars  or in any other currency, against any principal  of
     or  interest  on any of such Lender's Loans,  or  any  other
     amount  payable to such Lender hereunder, which is not  paid
     when  due (regardless of whether such balances are then  due
     to the Borrower), in which case it shall promptly notify the
     Borrower  and the Agent thereof, provided that such Lender's
     failure  to  give such notice shall not affect the  validity
     thereof.

           (b)   If  any  Lender  shall  obtain  payment  of  any
     principal  of  or interest on any Loan made  by  it  to  the
     Borrower  under this Agreement (or reimbursement as  to  any
     Letter of Credit) through the exercise of any right of  set-
     off,  banker's  lien  or counterclaim or  similar  right  or
     otherwise,  and,  as a result of such payment,  such  Lender
     shall have received a greater percentage of the principal or
     interest  (or  reimbursement)  then  due  hereunder  by  the
     Borrower to such Lender than the percentage received by  any
     other  Lenders, it shall promptly (i) notify the  Agent  and
     each  other Lender thereof and (ii) purchase from such other
     Lenders  participations  in  (or,  if  and  to  the   extent
     specified by such Lender, direct interests in) the Loans (or
     participations  in  Letters of Credit) made  by  such  other
     Lenders (or in interest due thereon, as the case may be)  in
     such  amounts, and make such other adjustments from time  to
     time  as shall be equitable, to the end that all the Lenders
     shall  share the benefit of such excess payment (net of  any
     expenses  which may be incurred by such Lender in  obtaining
     or  preserving  such excess payment) pro rata in  accordance
     with  the unpaid principal and/or interest on the Loans held
     by  each  of  the Lenders (or reimbursements of  Letters  of
     Credit).  To such end all the Lenders shall make appropriate
     adjustments   among   themselves   (by   the    resale    of
     participations  sold  or  otherwise)  if  such  payment   is
     rescinded  or  must  otherwise be  restored.   The  Borrower
     agrees  that  any  Lender so purchasing a participation  (or
     direct  interest) in the Loans made by other Lenders (or  in
     interest  due thereon, as the case may be) may exercise  all
     rights  of  set-off, banker's lien, counterclaim or  similar
     rights  with  respect to such participation as fully  as  if
     such  Lender  were a direct holder of Loans (or  Letters  of
     Credit)  in  the  amount  of  such  participation.   Nothing
     contained  herein shall require any Lender to  exercise  any
     such  right  or  shall affect the right  of  any  Lender  to
     exercise,  and retain the benefits of exercising,  any  such
     right  with  respect to any other indebtedness or obligation
     of  the  Borrower.   If  under  any  applicable  bankruptcy,
     insolvency  or  other  similar law, any  Lender  receives  a
     secured   claim  in  lieu  of  a  set-off  to   which   this
     Section  4.05  applies, such Lender  shall,  to  the  extent
     practicable, exercise its rights in respect of such  secured
     claim  in a manner consistent with the rights of the Lenders
     entitled  under this Section 4.05 to share the  benefits  of
     any recovery on such secured claim.

          Section 4.06  Taxes .

           (a)  Payments Free and Clear.  Any and all payments by
     the  Borrower  hereunder shall be made, in  accordance  with
     Section  4.01,  free and clear of and without deduction  for
     any  and  all  present  or  future taxes,  levies,  imposts,
     deductions,  charges  or withholdings, and  all  liabilities
     with  respect thereto, excluding, in the case of each Lender
     and the Agent, taxes imposed on its income, and franchise or
     similar  taxes  imposed on it, by (i) any  jurisdiction  (or
     political  subdivision thereof) of which the Agent  or  such
     Lender, as the case may be, is a citizen or resident  or  in
     which such Lender has an Applicable Lending Office, (ii) the
     jurisdiction (or any political subdivision thereof) in which
     the  Agent  or  such  Lender  is  organized,  or  (iii)  any
     jurisdiction  (or  political subdivision thereof)  in  which
     such  Lender  or  the Agent is presently doing  business  in
     which taxes are imposed solely as a result of doing business
     in  such  jurisdiction (all such non-excluded taxes, levies,
     imposts,  deductions, charges, withholdings and  liabilities
     being  hereinafter referred to as "Taxes").  If the Borrower
     shall  be  required by law to deduct any Taxes  from  or  in
     respect of any sum payable hereunder to the Lenders  or  the
     Agent  (i) the sum payable shall be increased by the  amount
     necessary  so  that  after  making all  required  deductions
     (including deductions applicable to additional sums  payable
     under  this Section 4.06) such Lender or the Agent  (as  the
     case  may  be) shall receive an amount equal to the  sum  it
     would  have  received  had  no such  deductions  been  made,
     (ii)  the Borrower shall make such deductions and (iii)  the
     Borrower  shall pay the full amount deducted to the relevant
     taxing   authority  or  other  Governmental   Authority   in
     accordance with applicable law.

           (b)   Other Taxes.  In addition, to the fullest extent
     permitted by applicable law, the Borrower agrees to pay  any
     present  or future stamp or documentary taxes or  any  other
     excise  or  property taxes, charges or similar  levies  that
     arise from any payment made hereunder or from the execution,
     delivery  or registration of, or otherwise with respect  to,
     this  Agreement,  any Assignment or any Security  Instrument
     (hereinafter referred to as "Other Taxes").

           (c)  indemnification.  to the fullest extent permitted
     by  applicable law, but subject to Section 4.06(d)(ii),  the
     Borrower  will indemnify each Lender and the Agent  for  the
     full  amount  of Taxes and Other Taxes (including,  but  not
     limited  to,  any  Taxes  or  Other  Taxes  imposed  by  any
     Governmental Authority on amounts payable under this section
     4.06)  paid by such Lender or the Agent (on their behalf  or
     on  behalf  of  any Lender), as the case  may  be,  and  any
     liability   (including  penalties,  interest  and  expenses)
     arising  therefrom or with respect thereto, whether  or  not
     such Taxes or Other Taxes were correctly or legally asserted
     unless  the  payment  of such Taxes  was  not  correctly  or
     legally asserted and such Lender's payment of such Taxes  or
     Other  Taxes  was  the  result of its  gross  negligence  or
     willful   misconduct.    any  payment   pursuant   to   such
     indemnification shall be made within thirty (30) days  after
     the  date any Lender or the Agent, as the case may be, makes
     written  demand  therefor.   if  any  Lender  or  the  Agent
     receives a refund or credit in respect of any Taxes or Other
     Taxes  for  which  such  Lender or the  Agent  has  received
     payment  from  the  Borrower it shall  promptly  notify  the
     Borrower  of such refund or credit and shall, if no  default
     has  occurred  and  is continuing, within thirty  (30)  days
     after receipt of a request by the Borrower (or promptly upon
     receipt, if the Borrower has requested application for  such
     refund  or credit pursuant hereto), pay an amount  equal  to
     such  refund or credit to the Borrower without interest (but
     with  any  interest so refunded or credited), provided  that
     the  Borrower, upon the request of such Lender or the Agent,
     agrees  to  return  such refund or credit  (plus  penalties,
     interest  or other charges) to such Lender or the  Agent  in
     the event such Lender or the Agent is required to repay such
     refund or credit.

          (d)  Lender Representations.

                (i)   Each  Lender represents that it  is  either
          (1)  a  corporation  or  banking association  organized
          under  the laws of the United States of America or  any
          state  thereof  or  (2)  it  is  entitled  to  complete
          exemption from United States withholding tax imposed on
          or  with respect to any payments, including fees, to be
          made  to  it  pursuant to this Agreement (A)  under  an
          applicable provision of a tax convention to  which  the
          United  States of America is a party or (B) because  it
          is  acting  through a branch, agency or office  in  the
          United States of America and any payment to be received
          by  it  hereunder is effectively connected with a trade
          or  business  in  the United States of  America.   Each
          Lender that is not a corporation or banking association
          organized  under  the  laws of  the  United  States  of
          America or any state thereof agrees to provide  to  the
          Borrower and the Agent on the Closing Date, or  on  the
          date  of  its  delivery of the Assignment  pursuant  to
          which  it becomes a Lender, and at such other times  as
          required by United States law or as the Borrower or the
          Agent  shall  reasonably  request,  two  accurate   and
          complete  original signed copies of either (A) Internal
          Revenue   Service   Form  4224  (or   successor   form)
          certifying that all payments to be made to it hereunder
          will  be effectively connected to a United States trade
          or  business  (the  "Form 4224 Certification")  or  (B)
          Internal Revenue Service Form 1001 (or successor  form)
          certifying  that  it is entitled to the  benefit  of  a
          provision  of  a  tax convention to  which  the  United
          States  of America is a party which completely  exempts
          from  United States withholding tax all payments to  be
          made  to  it hereunder (the "Form 1001 Certification").
          In  addition, each Lender agrees that if it  previously
          filed a Form 4224 Certification, it will deliver to the
          Borrower  and  the Agent a new Form 4224  Certification
          prior  to the first payment date occurring in  each  of
          its  subsequent  taxable years; and  if  it  previously
          filed a Form 1001 Certification, it will deliver to the
          Borrower and the Agent a new certification prior to the
          first  payment date falling in the third year following
          the previous filing of such certification.  Each Lender
          also  agrees to deliver to the Borrower and  the  Agent
          such other or supplemental forms as may at any time  be
          required  as a result of changes in applicable  law  or
          regulation  in order to confirm or maintain  in  effect
          its   entitlement  to  exemption  from  United   States
          withholding  tax  on  any payments hereunder,  provided
          that  the  circumstances of such Lender at the relevant
          time  and  applicable laws permit it to do  so.   If  a
          Lender  determines, as a result of any change in either
          (i)    a   Governmental   Requirement   or   (ii)   its
          circumstances, that it is unable to submit any form  or
          certificate that it is obligated to submit pursuant  to
          this  Section 4.06, or that it is required to  withdraw
          or  cancel  any  such  form or  certificate  previously
          submitted,  it shall promptly notify the  Borrower  and
          the Agent of such fact.  If a Lender is organized under
          the laws of a jurisdiction outside the United States of
          America,  unless  the  Borrower  and  the  Agent   have
          received  a  Form  1001  Certification  or  Form   4224
          Certification satisfactory to them indicating that  all
          payments  to be made to such Lender hereunder  are  not
          subject  to United States withholding tax, the Borrower
          shall   withhold  taxes  from  such  payments  at   the
          applicable  statutory  rate.   Each  Lender  agrees  to
          indemnify  and hold harmless the Borrower or Agent,  as
          applicable,  from  any United States taxes,  penalties,
          interest  and other expenses, costs and losses incurred
          or  payable  by  (i)  the Agent as  a  result  of  such
          Lender's failure to submit any form or certificate that
          it is required to provide pursuant to this Section 4.06
          or  (ii) the Borrower or the Agent as a result of their
          reliance  on  any such form or certificate  which  such
          Lender  has  provided to them pursuant to this  Section
          4.06.

                     (ii) For any period with respect to which  a
          Lender has failed to provide the Borrower with the form
          required pursuant to this Section 4.06, if any,  (other
          than  if  such  failure  is  due  to  a  change  in   a
          Governmental  Requirement occurring subsequent  to  the
          date  on  which  a form originally was required  to  be
          provided),  such  Lender  shall  not  be  entitled   to
          indemnification  under Section  4.06  with  respect  to
          taxes  imposed by the United States which  taxes  would
          not  have been imposed but for such failure to  provide
          such  forms; provided, however, that should  a  Lender,
          which  is otherwise exempt from or subject to a reduced
          rate  of  withholding  tax  becomes  subject  to  taxes
          because  of  its  failure to deliver  a  form  required
          hereunder, the Borrower shall take such steps  as  such
          Lender  shall reasonably request to assist such  Lender
          to recover such taxes.

                (iii)      Any  Lender  claiming  any  additional
          amounts payable pursuant to this Section 4.06 shall use
          reasonable   efforts   (consistent   with   legal   and
          regulatory  restrictions) to file  any  certificate  or
          document requested by the Borrower or the Agent  or  to
          change  the  jurisdiction  of  its  Applicable  Lending
          Office  or to contest any tax imposed if the making  of
          such  a  filing or change or contesting such tax  would
          avoid  the  need for or reduce the amount of  any  such
          additional amounts that may thereafter accrue and would
          not,  in  the  sole determination of  such  Lender,  be
          otherwise disadvantageous to such Lender.

           Section  4.07  Disposition of Proceeds .  The Security
Instruments contain an assignment by the Borrower or a Restricted
Subsidiary,  as the case may be, unto and in favor of  the  Agent
for the benefit of the Lenders of all production and all proceeds
attributable  thereto which may be produced from or allocated  to
the  Mortgaged  Property,  and the Security  Instruments  further
provide  in general for the application of such proceeds  to  the
satisfaction of the Indebtedness and other obligations  described
therein  and  secured  thereby.  Notwithstanding  the  assignment
contained  in such Security Instruments, until the occurrence  of
an  Event  of  Default, the Lenders agree that they will  neither
notify  the purchaser or purchasers of such production  nor  take
any  other  action to cause such proceeds to be remitted  to  the
Lenders, but the Lenders will instead permit such proceeds to  be
paid  to the Borrower or such Restricted Subsidiary in accordance
with Section 4.08.

           Section 4.08  Revenue Clearing Account .  The Borrower
shall execute such division orders, transfer orders or letters in
lieu thereof as are necessary to direct that all payments due  to
the  Borrower  attributable  to  Hydrocarbons  produced  from  or
allocated  to  the Mortgaged Property are paid  directly  at  all
times  into a revenue clearing account maintained by the Borrower
at the Agent.  Without limiting the foregoing, the Borrower shall
cause  all purchasers from or agents of the Borrower to make  all
payments  for  oil or natural gas purchases from  its  Properties
(whether or not such property is a Mortgaged Property) to be paid
directly   to  such  revenue  clearing  account  at  the   Agent.
Independent  of (and without limiting) the Borrower's  obligation
to  provide  such  payment instructions, the Borrower  agrees  to
immediately deposit in such revenue clearing account, daily,  all
amounts  received by the Borrower on any accounts receivable  and
sales  of  Hydrocarbons.  Further without limiting the foregoing,
the  Borrower shall use its best efforts to cause all  purchasers
from  or  agents of the Borrower which make payments for  oil  or
natural  gas purchases by electronic transfer payments to  change
such  electronic payments to be made directly to  the  Borrower's
revenue clearing account at the Agent.

                   ARTICLE V   Capital Adequacy
          Section 5.01  Additional Costs .

           (a)   Eurodollar Regulations, etc.  The Borrower shall
     pay  directly to each Lender from time to time such  amounts
     as  such  Lender may determine to be necessary to compensate
     such   Lender   for  any  costs  which  it  determines   are
     attributable to its making or maintaining of any  Eurodollar
     Loans  or  issuing  or participating in  Letters  of  Credit
     hereunder or its obligation to make any Eurodollar Loans  or
     issue or participate in any Letters of Credit hereunder,  or
     any  reduction  in  any  amount receivable  by  such  Lender
     hereunder  in  respect  of  any of  such  Eurodollar  Loans,
     Letters  of  Credit  or such obligation (such  increases  in
     costs  and  reductions  in amounts receivable  being  herein
     called  "Additional Costs"), resulting from  any  Regulatory
     Change  which:  (i)  changes the basis of  taxation  of  any
     amounts payable to such Lender under this Agreement  or  any
     Note  in  respect of any of such Eurodollar Loans or Letters
     of  Credit  (other  than taxes imposed on  the  overall  net
     income  of  such Lender or of its Applicable Lending  Office
     for  any  of  such  Eurodollar Loans by the jurisdiction  in
     which  such  Lender has its principal office  or  Applicable
     Lending  Office); or (ii) imposes or modifies  any  reserve,
     special  deposit, minimum capital, capital ratio or  similar
     requirements relating to any extensions of credit  or  other
     assets of, or any deposits with or other liabilities of such
     Lender,  or  the Commitment or Loans of such Lender  or  the
     Eurodollar  interbank  market; or (iii)  imposes  any  other
     condition  affecting this Agreement or any Note (or  any  of
     such  extensions of credit or liabilities) or such  Lender's
     Commitment or Loans.  Each Lender will notify the Agent  and
     the  Borrower of any event occurring after the Closing  Date
     which  will entitle such Lender to compensation pursuant  to
     this  Section  5.01(a) as promptly as practicable  after  it
     obtains  knowledge thereof and determines  to  request  such
     compensation,  and  will  designate a  different  Applicable
     Lending Office for the Loans of such Lender affected by such
     event if such designation will avoid the need for, or reduce
     the  amount of, such compensation and will not, in the  sole
     opinion  of such Lender, be disadvantageous to such  Lender,
     provided  that  such Lender shall have no obligation  to  so
     designate an Applicable Lending Office located in the United
     States.   If  any  Lender  requests  compensation  from  the
     Borrower  under this Section 5.01(a), the Borrower  may,  by
     notice to such Lender, suspend the obligation of such Lender
     to  make additional Loans of the Type with respect to  which
     such  compensation is requested until the Regulatory  Change
     giving rise to such request ceases to be in effect (in which
     case the provisions of Section 5.04 shall be applicable).

          (b)  Regulatory Change.  Without limiting the effect of
     the  provisions  of Section 5.01(a), in the event  that,  by
     reason  of  any Regulatory Change or any other circumstances
     arising  after the Closing Date affecting such  Lender,  the
     Eurodollar  interbank  market or such Lender's  position  in
     such  market, any Lender either (i) incurs Additional  Costs
     based  on or measured by the excess above a specified  level
     of the amount of a category of deposits or other liabilities
     of such Lender which includes deposits by reference to which
     the  interest  rate  on Eurodollar Loans  is  determined  as
     provided  in  this Agreement or a category of extensions  of
     credit  or  other  assets  of  such  Lender  which  includes
     Eurodollar Loans or (ii) becomes subject to restrictions  on
     the amount of such a category of liabilities or assets which
     it may hold, then, if such Lender so elects by notice to the
     Borrower,  the obligation of such Lender to make  additional
     Eurodollar  Loans shall be suspended until  such  Regulatory
     Change  or  other circumstances ceases to be in  effect  (in
     which   case  the  provisions  of  Section  5.04  shall   be
     applicable).

           (c)  Capital Adequacy.  Without limiting the effect of
     the  foregoing provisions of this Section 5.01 (but  without
     duplication), the Borrower shall pay directly to any  Lender
     from time to time on request such amounts as such Lender may
     reasonably  determine  to be necessary  to  compensate  such
     Lender or its parent or holding company for any costs  which
     it  determines are attributable to the maintenance  by  such
     Lender  or  its parent or holding company (or any Applicable
     Lending  Office),  pursuant to any Governmental  Requirement
     following  any Regulatory Change, of capital in  respect  of
     its Commitment, its Notes, its Loans or any interest held by
     it  in  any Letter of Credit, such compensation to  include,
     without limitation, an amount equal to any reduction of  the
     rate  of  return on assets or equity of such Lender  or  its
     parent or holding company (or any Applicable Lending Office)
     to  a  level below that which such Lender or its  parent  or
     holding  company  (or any Applicable Lending  Office)  could
     have  achieved but for such Governmental Requirement.   Such
     Lender  will  notify the Borrower that  it  is  entitled  to
     compensation pursuant to this Section 5.01(c) as promptly as
     practicable   after   it   determines   to   request    such
     compensation.

           (d)  Compensation Procedure.  Any Lender notifying the
     Borrower  of the incurrence of additional costs  under  this
     Section  5.01 shall deliver such notice to the  Borrower  as
     soon as practicable and in any event within ninety (90) days
     after  the  change  or  other  event  giving  rise  to   the
     incurrence of such additional costs and shall in such notice
     to the Borrower and the Agent set forth in reasonable detail
     the  basis  and  amount  of  its request  for  compensation.
     Determinations and allocations by each Lender  for  purposes
     of  this Section 5.01 of the effect of any Regulatory Change
     pursuant  to  Section 5.01(a) or (b), or of  the  effect  of
     capital maintained pursuant to Section 5.01(c), on its costs
     or  rate of return of maintaining Loans or its obligation to
     make  Loans  or  issue  Letters of  Credit,  or  on  amounts
     receivable  by it in respect of Loans or Letters of  Credit,
     and  of the amounts required to compensate such Lender under
     this  Section 5.01, shall be conclusive and binding for  all
     purposes,  provided that such determinations and allocations
     are  made on a reasonable basis.  Any request for additional
     compensation under this Section 5.01 shall be  paid  by  the
     Borrower  within  thirty (30) days of  the  receipt  by  the
     Borrower of the notice described in this Section 5.01(d).

            Section  5.02   Limitation  on  Eurodollar  Loans   .
Anything herein to the contrary notwithstanding, if, on or  prior
to  the  determination of any Eurodollar Rate  for  any  Interest
Period:

           (i)   the  Agent determines (which  determination
     shall  be  conclusive,  absent  manifest  error)   that
     quotations of interest rates for the relevant  deposits
     referred  to in the definition of "Eurodollar Rate"  in
     Section  1.02  are not being provided in  the  relevant
     amounts or for the relevant maturities for purposes  of
     determining rates of interest for Eurodollar  Loans  as
     provided herein; or

           (ii)  the  Agent determines (which  determination
     shall  be  conclusive, absent manifest error) that  the
     relevant   rates  of  interest  referred  to   in   the
     definition  of "Eurodollar Rate" in Section  1.02  upon
     the  basis of which the rate of interest for Eurodollar
     Loans for such Interest Period is to be determined  are
     not  sufficient  to adequately cover the  cost  to  the
     Lenders of making or maintaining Eurodollar Loans;

then the Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans.

           Section 5.03  Illegality .  Notwithstanding any  other
provision  of  this  Agreement, in  the  event  that  it  becomes
unlawful for any Lender or its Applicable Lending Office to honor
its  obligation  to make or maintain Eurodollar Loans  hereunder,
then  such Lender shall promptly notify the Borrower thereof  and
such  Lender's  obligation  to make  Eurodollar  Loans  shall  be
suspended  until  such time as such Lender  may  again  make  and
maintain  Eurodollar  Loans  (in which  case  the  provisions  of
Section 5.04 shall be applicable).

           Section  5.04   Base Rate Loans Pursuant  to  Sections
5.01,  5.02 and 5.03 .  If the obligation of any Lender  to  make
Eurodollar  Loans shall be suspended pursuant to  Sections  5.01,
5.02  or 5.03 ("Affected Loans"), all Affected Loans which  would
otherwise  be made by such Lender shall be made instead  as  Base
Rate  Loans  (and, if an event referred to in Section 5.01(b)  or
Section  5.03 has occurred and such Lender so requests by  notice
to   the  Borrower,  all  Affected  Loans  of  such  Lender  then
outstanding shall be automatically converted into Base Rate Loans
on  the date specified by such Lender in such notice) and, to the
extent  that  Affected Loans are so made as (or  converted  into)
Base  Rate Loans, all payments of principal which would otherwise
be  applied  to  such Lender's Affected Loans  shall  be  applied
instead to its Base Rate Loans.

          Section 5.05  Compensation .  The Borrower shall pay to
each Lender within thirty (30) days of receipt of written request
of  such  Lender  (which request shall set forth,  in  reasonable
detail, the basis for requesting such amounts and which shall  be
conclusive  and  binding  for  all purposes  provided  that  such
determinations  are made on a reasonable basis), such  amount  or
amounts  as  shall compensate it for any loss, cost,  expense  or
liability which such Lender determines are attributable to:

           (i)   any payment, prepayment or conversion of  a
     Eurodollar  Loan properly made by such  Lender  or  the
     Borrower for any reason (including, without limitation,
     the  acceleration  of  the Loans  pursuant  to  Section
     10.02)  on  a  date  other than the  last  day  of  the
     Interest Period for such Loan;

           (ii)  any failure by the Borrower for any  reason
     (including but not limited to, the failure  of  any  of
     the conditions precedent specified in Article VI to  be
     satisfied)  to borrow, continue or convert a Eurodollar
     Loan  from  such Lender on the date for such borrowing,
     continuation  or conversion specified in  the  relevant
     notice given pursuant to Section 2.02(c); or

           (iii)     the revocation by the Borrower of (a) a
     revocable  notice  of borrowing delivered  pursuant  to
     Section  2.02(c)  or (b) a revocable  request  for  the
     issuance  of  a Letter of Credit delivered pursuant  to
     Section  2.02(g) or (c) a revocable notice of reduction
     or termination delivered pursuant to Section 2.03(b) or
     (d) a revocable notice of prepayment delivered pursuant
     to Section 2.07(a).

Without  limiting  the  effect of the  preceding  sentence,  such
compensation shall include an amount equal to the excess, if any,
of  (i)  the amount of interest which would have accrued  on  the
principal  amount so paid, prepaid or converted or  not  borrowed
for  the  period  from  the date of such payment,  prepayment  or
conversion  or failure to borrow to the last day of the  Interest
Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced  on  the
date  specified  for  such borrowing) at the applicable  rate  of
interest for such Loan provided for herein over (ii) the interest
component of the amount such Lender would have bid in the  London
interbank market for Dollar deposits of leading banks in  amounts
comparable   to   such  principal  amount  and  with   maturities
comparable  to  such  period (as reasonably  determined  by  such
Lender).

          Section 5.06  Replacement Lenders.

           (a)   If any Lender has notified the Borrower and  the
     Agent  of its incurring additional costs under Section  5.01
     hereof  or  has required the Borrower to make  payments  for
     Taxes  under  Section 4.06 hereof, then  the  Borrower  may,
     unless  such Lender has notified the Borrower and the  Agent
     that  the circumstances giving rise to such notice no longer
     apply,  terminate, in whole but not in part, the  Commitment
     of  any  Lender  (other  than the  Agent)  (the  "Terminated
     Lender")  at  any  time upon five (5) Business  Days'  prior
     written notice to the Terminated Lender and the Agent  (such
     notice referred to herein as a "Notice of Termination").

           (b)   In  order  to  effect  the  termination  of  the
     Commitment of the Terminated Lender, the Borrower shall: (i)
     obtain  an  agreement with one or more Lenders  to  increase
     their Commitment or Commitments and/or (ii) request any  one
     or more other banking institutions to become parties to this
     Agreement in place and instead of such Terminated Lender and
     agree  to  accept  a  Commitment or  Commitments;  provided,
     however,  that  such one or more other banking  institutions
     are reasonably acceptable to the Agent and become parties by
     executing  an  Assignment  (the  Lenders  or  other  banking
     institutions that agree to accept in whole or  in  part  the
     Commitment of the Terminated Lender being referred to herein
     as  the  "Replacement  Lenders"), such  that  the  aggregate
     increased  and/or  accepted Commitments of  the  Replacement
     Lenders   under  clauses  (i)  and  (ii)  above  equal   the
     Commitment of the Terminated Lender.

           (c)   The Notice of Termination shall include the name
     of  the  Terminated  Lender, the date the  termination  will
     occur  (the  "Lender Termination Date"), and the Replacement
     Lender or Replacement Lenders to which the Terminated Lender
     will  assign its Commitment and, if there will be more  than
     one  Replacement  Lender,  the  portion  of  the  Terminated
     Lender's  Commitment  to  be assigned  to  each  Replacement
     Lender.

          (d)  On the Lender Termination Date, (i) the Terminated
     Lender  shall  by  execution and delivery of  an  Assignment
     assign   its  Commitment  to  the  Replacement   Lender   or
     Replacement  Lenders (pro rata, if there is  more  than  one
     Replacement  Lender, in proportion to  the  portion  of  the
     Terminated  Lender's  Commitment  to  be  assigned  to  each
     Replacement  Lender) indicated in the Notice of  Termination
     and  shall  assign to the Replacement Lender or  Replacement
     Lenders  each  of  its Loans (if any) then  outstanding  and
     participation interests in Letters of Credit (if  any)  then
     outstanding  (pro  rata as aforesaid), (ii)  the  Terminated
     Lender  shall  endorse its Notes, payable without  recourse,
     representation  or warranty to the order of the  Replacement
     Lender or Replacement Lenders (pro rata as aforesaid), (iii)
     the Replacement Lender or Replacement Lenders shall purchase
     the  Notes  held  by  the Terminated  Lender  (pro  rata  as
     aforesaid)  at a price equal to the unpaid principal  amount
     thereof  plus  interest and facility and other fees  accrued
     and  unpaid  to the Lender Termination Date,  and  (iv)  the
     Replacement  Lender  or Replacement Lenders  will  thereupon
     (pro rata as aforesaid) succeed to and be substituted in all
     respects  for the Terminated Lender with like effect  as  if
     becoming a Lender pursuant to the terms of Section 12.06(b),
     and  the Terminated Lender will have the rights and benefits
     of an assignor under Section 12.06(b).  To the extent not in
     conflict, the terms of Section 12.06(b) shall supplement the
     provisions  of  this Section 5.06(d).  For  each  assignment
     made  under this Section 5.06, the Replacement Lender  shall
     pay  to the Agent the processing fee provided for in Section
     12.06(b).  The Borrower will be responsible for the  payment
     of  any  breakage costs associated with termination  of  the
     Terminated Lender, as set forth in Section 5.05.


               ARTICLE VI     Conditions Precedent
          Section 6.01  Initial Funding .

           The  obligation  of the Lenders to  make  the  Initial
Funding is subject to the receipt by the Agent and the Lenders of
all  fees  payable  pursuant to Section 2.04  on  or  before  the
Closing  Date  and  the  receipt by the Agent  of  the  following
documents  and satisfaction of the other conditions  provided  in
this  Section  6.01, each of which shall be satisfactory  to  the
Agent in form and substance:

           (a)   A  certificate of the Secretary of MMR   setting
     forth (i) resolutions of the  board of directors of MMR,  as
     the  sole  member  of  the Borrower,  with  respect  to  the
     authorization  of the Borrower to execute  and  deliver  the
     Loan Documents to which it is a party and to enter into  the
     transactions  contemplated  in  those  documents,  (ii)  the
     officers  of MMR and the Borrower (y) who are authorized  to
     sign  the  Loan Documents to which McMoRan and the  Borrower
     each  is a party and (z) who will, until replaced by another
     officer or officers duly authorized for that purpose, act as
     its representative for the purposes of signing documents and
     giving  notices and other communications in connection  with
     this  Agreement  and  the transactions contemplated  hereby,
     (iii)  specimen signatures of the authorized officers,  (iv)
     the limited liability company agreement of the Borrower, (v)
     the  Borrower's  certificate of  formation  filed  with  the
     Delaware  Secretary  of  State, as  amended,  and  (vi)  the
     Articles  of Incorporation and Bylaws of MMR, all  certified
     as  being true and complete.  The Agent and the Lenders  may
     conclusively  rely  on  such  certificate  until  the  Agent
     receives notice in writing from MMR or the Borrower  to  the
     contrary.

           (b)   Certificates of the appropriate  state  agencies
     with  respect  to  the  existence,  qualification  and  good
     standing of the Borrower and MMR.

            (c)    A   compliance  certificate  which  shall   be
     substantially  in the form of Exhibit C, duly  and  properly
     executed  by  a  Responsible Officer and  dated  as  of  the
     Closing Date.

          (d)  The Notes, duly completed and executed.

           (e)  An opinion of Jones, Walker, Waechter, Poitevent,
     Carrere &  Denegre,  L.L.P.   counsel  to  the  Borrower,
     substantially in the form of Exhibit D hereto.

           (f)   A  certificate  of  insurance  coverage  of  the
     Borrower  evidencing that the Borrower is carrying insurance
     in accordance with Section 7.19 hereof.

           (g)  Receipt by the Agent of the Guaranty Agreement by
     MMR  guaranteeing  the Indebtedness in  form  and  substance
     satisfactory to the Agent.

           (h)   Receipt  by  the Agent of each of  the  Security
     Instruments, including those described on Exhibit E, if any,
     duly   completed  and  executed  in  sufficient  number   of
     counterparts  for recording, if necessary, and otherwise  in
     recordable form and substance satisfactory to the Agent.

           (i)  Receipt by the Agent of such title information as
     the  Agent  may require from attorneys satisfactory  to  the
     Agent setting forth the status of title to 100% of the value
     of the Hydrocarbon Interests included in the Borrowing Base.

            (j)    The  Agent  shall  have  been  furnished  with
     appropriate  UCC  search certificates  reflecting  no  prior
     Liens other than those in favor of the Agent, Excepted Liens
     and Liens permitted by Section 9.02.

           (k)   Receipt by the Agent of such other documents  as
     the  Agent or any Lender or special counsel to the Agent may
     reasonably request.

           (l)   The  Borrower  shall be in compliance  with  all
     covenants  and  agreements contained  in  Article  VIII  and
     Article IX (after giving effect to the requested Loan).

           Section 6.02  Initial and Subsequent Loans and Letters
of  Credit .  The obligation of the Lenders to make Loans to  the
Borrower  upon  the occasion of each borrowing hereunder  and  to
issue, renew, extend or reissue Letters of Credit for the account
of the Borrower (including the Initial Funding) is subject to the
further  conditions precedent that, as of the date of such  Loans
or Letters of Credit, as the case may be, and after giving effect
thereto:   (i) no Default shall have occurred and be  continuing;
(ii)  no  Material Adverse Effect shall have occurred; (iii)  the
representations  and warranties made by the Borrower  in  Article
VII  and  by  the  Borrower or any Restricted Subsidiary  in  the
Security Instruments shall be true on and as of the date  of  the
making   of  such  Loans  or  issuance,  renewal,  extension   or
reissuance  of a Letter of Credit, as the case may be,  with  the
same  force  and  effect as if made on and as of  such  date  and
following  such new borrowing or issuance, except to  the  extent
such  representations and warranties are expressly limited to  an
earlier  date  or the Majority Lenders may expressly  consent  in
writing  to  the  contrary;  and (iv) the  aggregate  outstanding
amount   of   investments,  loans  and  advances   permitted   by
Section  9.03(i) and net dividends, distributions and redemptions
permitted by Section 9.04, shall not exceed $1,000,000.00.   Each
request  for  a  borrowing  or issuance,  renewal,  extension  or
reissuance of a Letter of Credit by the Borrower hereunder  shall
constitute  a  certification by the Borrower to  the  effect  set
forth  in  the  preceding sentence (both as of the date  of  such
notice  and,  unless  the Borrower otherwise notifies  the  Agent
prior to the date of and immediately following such borrowing  or
issuance, renewal, extension or reissuance of a Letter of Credit,
as of the date thereof).

           Section 6.03  Conditions Relating to Letters of Credit
..  In  addition  to  the  satisfaction of  all  other  conditions
precedent  set  forth in this Article VI, the issuance,  renewal,
extension or reissuance of the Letters of Credit referred  to  in
Section  2.01(b)  hereof is subject to the  following  conditions
precedent:

          (a)  At least three (3) Business Days prior to the date
     of the issuance and at least thirty (30) Business Days prior
     to  the date of the renewal, extension or reissuance of each
     Letter  of  Credit, the Agent shall have received a  written
     request  for a Letter of Credit, in accordance with  Section
     2.02(g) hereof.

           (b)  Each of the Letters of Credit shall (i) be issued
     by  the Agent, (ii) contain such terms and provisions as are
     reasonably  required by the Agent, (iii) be for the  account
     of  the  Borrower and (iv) expire not later than the earlier
     of  one  (1)  year  from  the  date  of  issuance,  renewal,
     extension   or  reissuance  or  two  (2)  days  before   the
     Termination Date.

           (c)  The Borrower shall have duly and validly executed
     and  delivered  to  the Agent a Letter of  Credit  Agreement
     pertaining to the Letter of Credit.


          ARTICLE VII    Representations and Warranties
      The  Borrower represents and warrants to the Agent and  the
Lenders that (each representation and warranty herein is given as
of  the  Closing Date and shall be deemed repeated and reaffirmed
on  the  dates of each borrowing and issuance, renewal, extension
or reissuance of a Letter of Credit as provided in Section 6.03):

           Section  7.01  Existence .  Each of the  Borrower  and
each  Restricted  Subsidiary:  (i) is a  corporation  or  limited
liability  company duly organized, legally existing and  in  good
standing  under the laws of the jurisdiction of its incorporation
or  formation; (ii) has all requisite power, and has all material
governmental  licenses,  authorizations, consents  and  approvals
necessary  to  own its assets and carry on its  business  as  now
being  or as proposed to be conducted; and (iii) is qualified  to
do  business  in  all jurisdictions in which the  nature  of  the
business  conducted by it makes such qualification necessary  and
where failure so to qualify would have a Material Adverse Effect.

           Section  7.02   Financial  Condition  .   The  audited
consolidated  financial statements of MMR  and  its  Consolidated
Subsidiaries  as at December 31, 2001, and the balance  sheet  of
the Borrower and its Consolidated Subsidiaries as at December 31,
2001  and  the related statement of income, member's capital  and
cash  flow of the Borrower and its Consolidated Subsidiaries  for
the  fiscal year ended on said date, in each case as included  in
the   consolidating  statements  of  MMR  and  its   Consolidated
Subsidiaries as of said date with the opinion thereon  of  Arthur
Andersen LLP heretofore furnished to each of the Lenders and  the
unaudited  consolidated balance sheet of  the  Borrower  and  its
Consolidated  Subsidiaries as at March 31, 2002 and  the  related
consolidated statements of income, members capital and cash  flow
of  the Borrower and its Consolidated Subsidiaries for the three-
month  period  ended  on such date heretofore  furnished  to  the
Agent,   are   complete  and  correct  and  fairly  present   the
consolidated  financial  condition  of  the  Borrower   and   its
Consolidated Subsidiaries as at said dates and the results of its
operations  for the fiscal year and the three-month period  ended
on  said  dates,  all in accordance with GAAP, as  applied  on  a
consistent  basis (subject, in the case of the interim  financial
statements,   to  normal  year-end  adjustments).   Neither   the
Borrower  nor any Subsidiary has on the Closing Date any material
Debt,  contingent  liabilities, liabilities  for  taxes,  unusual
forward  or  long-term commitments or unrealized  or  anticipated
losses from any unfavorable commitments, in each case, that would
be  required  to be reserved for in the Financial  Statements  in
accordance  with  GAAP, except as referred  to  or  reflected  or
provided  for  in the Financial Statements or in  Schedule  7.02.
Except as set forth on Schedule 7.10, since March 31, 2002, there
has  been  no  change or event having a Material Adverse  Effect.
Except  as  set  forth on Schedule 7.10, since the  date  of  the
Financial Statements, neither the business nor the Properties  of
the Borrower or any Subsidiary have been materially and adversely
affected  as a result of any fire, explosion, earthquake,  flood,
drought,  windstorm, accident, strike or other labor disturbance,
embargo,  requisition or taking of Property  or  cancellation  of
contracts,  permits or concessions by any Governmental Authority,
riot,  activities of armed forces or acts of God or of any public
enemy.

           Section 7.03  Litigation .  Except as disclosed to the
Lenders in Schedule 7.03 hereto, at the Closing Date there is  no
litigation,   legal,   administrative  or  arbitral   proceeding,
investigation or other action of any nature pending  or,  to  the
knowledge  of  the Borrower threatened against or  affecting  the
Borrower  or  any Restricted Subsidiary as to which  there  is  a
reasonable possibility of an adverse determination and which,  if
adversely  determined, could, individually or in  the  aggregate,
materially  impair  the ability of the Borrower  to  conduct  its
business  substantially  as  now  conducted,  or  materially  and
adversely affect the businesses, assets, operations, prospects or
condition, financial or otherwise, of the Borrower, or impair the
validity or enforceability of, or the ability of the Borrower  to
perform its obligations under, this Agreement or any of the other
Loan  Documents to which it is a party, in each case, taking into
account any applicable insurance.

           Section  7.04  No Breach .  Neither the execution  and
delivery of the Loan Documents, nor compliance with the terms and
provisions hereof will conflict with or result in a breach of, or
require any consent which has not been obtained as of the Closing
Date under, the respective charter or by-laws of the Borrower  or
any Restricted Subsidiary, or any Governmental Requirement or any
agreement  or instrument to which the Borrower or any  Restricted
Subsidiary is a party or by which it is bound or to which  it  or
its  Properties  are subject, or constitute a default  under  any
such  agreement  or  instrument, or result  in  the  creation  or
imposition of any Lien upon any of the revenues or assets of  the
Borrower  or any Restricted Subsidiary pursuant to the  terms  of
any such agreement or instrument other than the Liens created  by
the Loan Documents and those permitted under Section 9.02.

           Section  7.05   Authority .   The  Borrower  and  each
Restricted  Subsidiary have all necessary power and authority  to
execute,  deliver  and  perform its obligations  under  the  Loan
Documents to which it is a party; and the execution, delivery and
performance by the Borrower and each Restricted Subsidiary of the
Loan  Documents to which it is a party, have been duly authorized
by  all  necessary  corporate action on its part;  and  the  Loan
Documents constitute the legal, valid and binding obligations  of
the  Borrower  and  each  Restricted Subsidiary,  enforceable  in
accordance with their terms.

          Section 7.06  Approvals .  No authorizations, approvals
or  consents  of,  and  no  filings or  registrations  with,  any
Governmental Authority are necessary for the execution,  delivery
or  performance by the Borrower or any Restricted  Subsidiary  of
the Loan Documents or for the validity or enforceability thereof,
except  for  the recording and filing of the Security Instruments
as required by this Agreement.

          Section 7.07  Use of Loans .  The proceeds of the Loans
shall  be used and Letters of Credit shall be issued for  working
capital  and  general corporate purposes.  The  Borrower  is  not
engaged  principally, or as one of its important  activities,  in
the  business  of  extending  credit  for  the  purpose,  whether
immediate,  incidental or ultimate, of buying or carrying  margin
stock (within the meaning of Regulation G, U or X of the Board of
Governors  of  the Federal Reserve System) and  no  part  of  the
proceeds  of any Loan hereunder will be used to buy or carry  any
margin stock.

          Section 7.08  ERISA .

           (a)   The Borrower and each Restricted Subsidiary have
     complied  in  all  material respects with ERISA  and,  where
     applicable, the Code regarding each Plan.

           (b)   Each Plan of the Borrower and of each Restricted
     Subsidiary  is,  and  has  been, maintained  in  substantial
     compliance with ERISA and, where applicable, the Code.

          (c)  To the knowledge of the Borrower, no act, omission
     or transaction has occurred which could result in imposition
     on  the  Borrower or on  any Restricted Subsidiary  (whether
     directly  or  indirectly)  of (i)  either  a  civil  penalty
     assessed pursuant to section 502(c), (i) or (l) of ERISA  or
     a  tax  imposed pursuant to Chapter 43 of Subtitle D of  the
     Code  or  (ii)  breach of fiduciary duty  liability  damages
     under section 409 of ERISA.

           (d)   No Plan (other than a defined contribution plan)
     or any trust created under any such Plan has been terminated
     since  September 2, 1974.  No liability to the  PBGC  (other
     than  for the payment of current premiums which are not past
     due)  by the Borrower, any Subsidiary or any ERISA Affiliate
     has  been or is expected by the Borrower, any Subsidiary  or
     any ERISA Affiliate to be incurred with respect to any Plan.
     No ERISA Event with respect to any Plan has occurred.

          (e)  Full payment when due has been made of all amounts
     which the Borrower, any Subsidiary or any ERISA Affiliate is
     required under the terms of each Plan or applicable  law  to
     have  paid as contributions to such Plan, and no accumulated
     funding  deficiency (as defined in section 302 of ERISA  and
     section 412 of the Code), whether or not waived, exists with
     respect to any Plan.

           (f)   The  actuarial  present  value  of  the  benefit
     liabilities under each Plan which is subject to Title IV  of
     ERISA  does  not,  as  of  the end of  the  Borrower's  most
     recently ended fiscal year, exceed the current value of  the
     assets  (computed on a plan termination basis in  accordance
     with  Title  IV  of  ERISA) of such Plan allocable  to  such
     benefit  liabilities.  The term "actuarial present value  of
     the benefit liabilities" shall have the meaning specified in
     section 4041 of ERISA.

          (g)  Neither the Borrower nor any Restricted Subsidiary
     sponsors,  maintains, or contributes to an employee  welfare
     benefit  plan,  as defined in section 3(1) of ERISA,  includ
     ing, without limitation, any such plan maintained to provide
     benefits to former employees of such entities, that may  not
     be terminated by the Borrower or  a Restricted Subsidiary or
     any  ERISA  Affiliate  in its sole discretion  at  any  time
     without any material liability.

           (h)  None of the Borrower, any Subsidiary or any ERISA
     Affiliate sponsors, maintains or contributes to, or  has  at
     any  time  in  the preceding six calendar years,  sponsored,
     maintained or contributed to, any Multiemployer Plan.

           (i)  None of the Borrower, any Subsidiary or any ERISA
     Affiliate  is  required  to provide security  under  section
     401(a)(29) of the Code due to a Plan amendment that  results
     in an increase in current liability for the Plan.

            Section  7.09   Taxes  .   Except  as  set   out   in
Schedule   7.09,   each  of  the  Borrower  and  the   Restricted
Subsidiaries  has  filed  all United States  Federal  income  tax
returns and all other tax returns which are required to be  filed
by  them  and have paid all material taxes due pursuant  to  such
returns or pursuant to any assessment received by the Borrower or
any  Restricted Subsidiary, other than any taxes the validity  of
which  the  Borrower  or  the relevant Restricted  Subsidiary  is
contesting  in  good faith by appropriate proceedings,  and  with
respect  to  which  the  Borrower or such  Restricted  Subsidiary
shall,  to  the extent required by GAAP, have set  aside  on  its
books  adequate reserves.  The charges, accruals and reserves  on
the  books  of  the Borrower and the Restricted  Subsidiaries  in
respect  of  taxes  and other governmental charges  are,  in  the
opinion  of  the Borrower, adequate.  No tax lien has been  filed
and, to the knowledge of the Borrower, no claim is being asserted
with respect to any such tax, fee or other charge.

          Section 7.10  Titles, etc.

           (a)   Except as set out in the title reports delivered
     to the Agent prior to the Closing Date, each of the Borrower
     and  the  Restricted  Subsidiaries has good  and  defensible
     title  to  its  material (individually or in the  aggregate)
     Properties,  free  and  clear  of  all  Liens  except  Liens
     permitted   by  Section  9.02.  Except  as  set   forth   in
     Schedules  7.10 and 9.02, after giving full  effect  to  the
     Excepted  Liens, the Borrower or each Restricted Subsidiary,
     as   applicable,   owns  the  net  interests  in  production
     attributable to the Hydrocarbon Interests reflected  in  the
     most recently delivered Reserve Report and the ownership  of
     such  Properties shall not in any material respect  obligate
     the  Borrower or any Restricted Subsidiary to bear the costs
     and  expenses  relating to the maintenance, development  and
     operations of each such Property in an amount in  excess  of
     the  working interest of each Property set forth in the most
     recently  delivered Reserve Report.  All factual information
     contained  in the most recently delivered Reserve Report  is
     true  and  correct in all material respects as of  the  date
     thereof.

           (b)   All  leases  and agreements  necessary  for  the
     conduct  of  the business of the Borrower and the Restricted
     Subsidiaries  are valid and subsisting, in  full  force  and
     effect  and there exists no default or event or circumstance
     which  with the giving of notice or the passage of  time  or
     both  would give rise to a default under any such  lease  or
     leases,  which  would  affect in any  material  respect  the
     conduct  of  the business of the Borrower and the Restricted
     Subsidiaries.

           (c)  The rights, Properties and other assets presently
     owned, leased or licensed by the Borrower and the Restricted
     Subsidiaries  including, without limitation,  all  easements
     and  rights of way, include all rights, Properties and other
     assets  necessary to permit the Borrower and the  Restricted
     Subsidiaries  to  conduct  their business  in  all  material
     respects  in  the  same  manner as  its  business  has  been
     conducted prior to the Closing Date.

           (d)  Except as set forth on Schedule 7.10, all of  the
     assets  and  Properties of the Borrower and  the  Restricted
     Subsidiaries   which  are  reasonably  necessary   for   the
     operation of its business are in good working condition  and
     are   maintained   in  accordance  with   prudent   business
     standards.

           Section 7.11  No Material Misstatements .  No  written
information, statement, exhibit, certificate, document or  report
furnished  to the Agent and the Lenders (or any of them)  by  the
Borrower or any Subsidiary in connection with the negotiation  of
this  Agreement contained any material misstatement  of  fact  or
omitted  to state a material fact or any fact necessary  to  make
the  statement contained therein not materially misleading in the
light of the circumstances in which made and with respect to  the
Borrower and the Subsidiaries taken as a whole.  There is no fact
peculiar  to the Borrower or any Subsidiary which has a  Material
Adverse Effect or in the future is reasonably likely to have  (so
far  as  the Borrower can now foresee) a Material Adverse  Effect
and  which has not been set forth in this Agreement or the  other
documents, certificates and statements furnished to the Agent  by
or  on behalf of the Borrower or any Subsidiary prior to, or  on,
the Closing Date in connection with the transactions contemplated
hereby.

           Section  7.12  Investment Company Act .   Neither  the
Borrower  nor  any  Subsidiary is an "investment  company"  or  a
company  "controlled"  by  an "investment  company,"  within  the
meaning of the Investment Company Act of 1940, as amended.

           Section  7.13   Public Utility Holding Company  Act  .
Neither  the Borrower nor any Subsidiary is a "holding  company,"
or   a  "subsidiary  company"  of  a  "holding  company,"  or  an
"affiliate"  of a "holding company" or of a "subsidiary  company"
of  a "holding company," or a "public utility" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
           Section  7.14  Subsidiaries .  Except as set forth  on
Schedule 7.14 which indicates all Restricted Subsidiaries and all
Unrestricted Subsidiaries, the Borrower has no Subsidiaries other
than those formed pursuant to Section 9.16 prior to the quarterly
report required by Section 8.01(i).

           Section 7.15  Location of Business and Offices .   The
Borrower's  principal  place  of  business  and  chief  executive
offices  are located at the address stated on the signature  page
of  this  Agreement.  The principal place of business  and  chief
executive  office of each Subsidiary are located at the addresses
stated  on  Schedule  7.14.  The Borrower's  principal  place  of
business and chief executive office has been located continuously
within  the  State  of  Louisiana from and after  the  Borrower's
formation.

           Section 7.16  Defaults .  Neither the Borrower nor any
Subsidiary  is  in  default  nor has any  event  or  circumstance
occurred  which,  but for the expiration of any applicable  grace
period  or  the  giving of notice, or both,  would  constitute  a
default  under any material agreement or instrument to which  the
Borrower or any Subsidiary is a party or by which the Borrower or
any  Subsidiary  is  bound which default would  have  a  Material
Adverse  Effect.   No  Default  hereunder  has  occurred  and  is
continuing.

           Section 7.17  Environmental Matters .  Except  (i)  as
provided  in Schedule 7.17 or (ii) as would not have  a  Material
Adverse Effect (or with respect to (c), (d) and (e) below,  where
the  failure  to  take  such actions would not  have  a  Material
Adverse Effect):

           (a)   Neither  any  Property of the  Borrower  or  any
     Subsidiary nor the operations conducted thereon violate  any
     order  or requirement of any court or Governmental Authority
     or any applicable Environmental Laws;

           (b)   Without  limitation  of  clause  (a)  above,  no
     Property  of  the  Borrower  or  any  Subsidiary   nor   the
     operations  currently  conducted thereon  or,  to  the  best
     knowledge of the Borrower, by any prior owner or operator of
     such  Property or operation, are in violation of or  subject
     to   any  existing,  pending  or  threatened  action,  suit,
     investigation, inquiry or proceeding by or before any  court
     or  Governmental  Authority or to any  remedial  obligations
     under Environmental Laws;

            (c)    All  notices,  permits,  licenses  or  similar
     authorizations, if any, required to be obtained or filed  in
     connection with the operation or use of any and all Property
     of  the  Borrower  and  each Subsidiary,  including  without
     limitation  past or present treatment, storage, disposal  or
     release  of  a hazardous substance or solid waste  into  the
     environment,  have  been duly obtained  or  filed,  and  the
     Borrower  and  each  Subsidiary are in compliance  with  the
     terms  and conditions of all such notices, permits, licenses
     and similar authorizations;

          (d)  All hazardous substances, solid waste, and oil and
     gas exploration and production wastes, if any, generated  at
     any  and all Property of the Borrower or any Subsidiary have
     in  the  past been transported, treated and disposed  of  in
     accordance  with Environmental Laws in effect at  that  time
     and   so   as  not  to  pose  an  imminent  and  substantial
     endangerment to public health or welfare or the environment,
     and,  to  the  best  knowledge of  the  Borrower,  all  such
     transport  carriers  and treatment and  disposal  facilities
     have been and are operating in compliance with Environmental
     Laws  and  so  as  not to pose an imminent  and  substantial
     endangerment to public health or welfare or the environment,
     and  are  not  the  subject  of  any  existing,  pending  or
     threatened   action,  investigation  or   inquiry   by   any
     Governmental  Authority in connection with any Environmental
     Laws;

           (e)   The  Borrower  has taken  all  steps  reasonably
     necessary  to determine and has determined that no hazardous
     substances,  solid  waste, or oil and  gas  exploration  and
     production  wastes,  have  been  disposed  of  or  otherwise
     released  and  there has been no threatened release  of  any
     hazardous  substances on or to any Property of the  Borrower
     or  any  Subsidiary except in compliance with  Environmental
     Laws  and  so  as  not to pose an imminent  and  substantial
     endangerment to public health or welfare or the environment;

           (f)   To  the extent applicable, all Property  of  the
     Borrower and each Subsidiary currently satisfies all design,
     operation, and equipment requirements imposed by the OPA  or
     scheduled as of the Closing Date to be imposed by OPA during
     the  term of this Agreement, and the Borrower does not  have
     any  reason  to  believe that such Property, to  the  extent
     subject to OPA, will not be able to maintain compliance with
     the OPA requirements during the term of this Agreement; and

     (g)   Neither the Borrower nor any Subsidiary has any  known
     contingent  liability  in connection  with  any  release  or
     threatened release of any oil, hazardous substance or  solid
     waste into the environment.

           Section  7.18  Compliance with the Law .  Neither  the
Borrower   nor  any  Subsidiary  has  violated  any  Governmental
Requirement or failed to obtain any license, permit, franchise or
other  governmental authorization necessary for the ownership  of
any  of  its  Properties or the conduct of  its  business,  which
violation  or failure would have (in the event such violation  or
failure were asserted by any Person through appropriate action) a
Material Adverse Effect.  Except for such acts or failures to act
as  would  not have a Material Adverse Effect, the  Oil  and  Gas
Properties   (and  properties  unitized  therewith)   have   been
maintained,  operated  and developed in a  good  and  workmanlike
manner  and in conformity with all applicable laws and all rules,
regulations and orders of all duly constituted authorities having
jurisdiction and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon
Interests  and other contracts and agreements forming a  part  of
the  Oil and Gas Properties; specifically in this connection, (i)
after  the  Closing Date, no Oil and Gas Property is  subject  to
having  allowable production reduced below the full  and  regular
allowable  (including the maximum permissible tolerance)  because
of any overproduction (whether or not the same was permissible at
the  time)  prior to the Closing Date and (ii) none of the  wells
comprising  a  part of the Oil and Gas Properties (or  properties
unitized therewith) are deviated from the vertical more than  the
maximum  permitted  by  applicable laws, regulations,  rules  and
orders,  and  such  wells are, in fact, bottomed  under  and  are
producing from, and the producing intervals are wholly within the
Oil  and  Gas  Properties (or in the case  of  wells  located  on
properties unitized therewith, such unitized properties).

           Section  7.19   Insurance .   Schedule  7.19  attached
hereto  contains  an  accurate and complete  description  of  all
material policies of fire, liability, workmen's compensation  and
other  forms  of  insurance maintained by or  on  behalf  of  the
Borrower  and each Restricted Subsidiary.  All such policies  are
in  full  force  and  effect, all premium payments  with  respect
thereto covering all periods up to and including the date of  the
closing are current, and no notice of cancellation or termination
has been received with respect to any such policy.  Such policies
are sufficient for compliance with all requirements of law and of
all agreements to which the Borrower or any Restricted Subsidiary
is  a  party;  are  valid, outstanding and enforceable  policies;
provide adequate insurance coverage in at least such amounts  and
against  at  least such risks (but including in any event  public
liability)  as  are usually insured against in the  same  general
area  by companies engaged in the same or a similar business  for
the  assets  and  operations of the Borrower and each  Restricted
Subsidiary;  will  remain in full force and  effect  through  the
respective  dates set forth in Schedule 7.19 without the  payment
of  additional premiums (except for adjustments); and will not in
any  way be affected by, or terminate or lapse by reason of,  the
transactions  contemplated  by  this  Agreement.   Schedule  7.19
identifies all material risks, if any, which the Borrower and the
Restricted  Subsidiaries and their respective board of  directors
or  officers have designated as being self-insured.  Neither  the
Borrower  nor  any  Restricted Subsidiary has  been  refused  any
insurance with respect to its assets or operations, nor  has  its
coverage been limited below usual and customary policy limits, by
an  insurance  carrier  to  which it has  applied  for  any  such
insurance or with which it has carried insurance during the  last
three years.

           Section 7.20  Hedging Agreements .  Schedule 7.20 sets
forth,  as of the Closing Date, a true and complete list  of  all
Hedging  Agreements (including commodity price  swap  agreements,
forward  agreements  or  contracts  of  sale  which  provide  for
prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and each Restricted Subsidiary,  the
material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the  net  mark
to  market value thereof, all credit support agreements  relating
thereto  (including  any margin required or  supplied),  and  the
counterparty to each such agreement.

           Section  7.21  Restriction on Liens .  Except  as  set
forth  on  Schedule 7.21, neither the Borrower  nor  any  of  the
Restricted   Subsidiaries  is  a  party  to  any   agreement   or
arrangement   (other  than  this  Agreement  and   the   Security
Instruments), or subject to any order, judgment, writ or  decree,
which  either  restricts or purports to restrict its  ability  to
grant Liens to other Persons on or in respect of their respective
assets or Properties.

          Section 7.22  Reserved .

          Section 7.23  Gas Imbalances .  As of the Closing Date,
except  as  set  forth on Schedule 7.23 or  on  the  most  recent
certificate delivered pursuant to Section 8.07(c), on a net basis
there  are  no  gas imbalances, take or pay or other  prepayments
with respect to the Borrower's or any Restricted Subsidiary's Oil
and  Gas  Properties  which would require the  Borrower  or  such
Restricted Subsidiary to deliver Hydrocarbons produced  from  the
Oil  and  Gas  Properties at some future  time  without  then  or
thereafter receiving full payment therefor exceeding two  hundred
fifty million cubic feet of gas in the aggregate.


              ARTICLE VIII   Affirmative Covenants
      The  Borrower covenants and agrees that, so long as any  of
the  Commitments are in effect and until payment in full  of  all
Indebtedness  hereunder,  all  interest  thereon  and  all  other
amounts  payable  by the Borrower hereunder,  without  the  prior
written consent of the Majority Lenders:

           Section  8.01   Financial Statements .   The  Borrower
shall deliver, or shall cause to be delivered, to the Agent  with
sufficient copies for each for the Lenders:

           (a)   As soon as available and in any event within  90
     days after the end of each fiscal year of the Borrower,  the
     statements of income, member's capital, and cash flow of the
     Borrower  and its Consolidated Subsidiaries for such  fiscal
     year, and the related balance sheets of the Borrower and its
     Consolidated Subsidiaries as at the end of such fiscal year,
     as   contained   in   the  audited  consolidated   financial
     statements  of  MMR and the related consolidating  financial
     statements of its Consolidated Subsidiaries as at the end of
     such  fiscal  year,  and  setting  forth  in  each  case  in
     comparative form the corresponding figures for the preceding
     fiscal  year,  and  accompanied by the  related  opinion  of
     independent   public  accountants  of  recognized   national
     standing  acceptable to the Agent which opinion shall  state
     that   said   financial  statements   fairly   present   the
     consolidated  financial condition and results of  operations
     of  the Borrower and its Consolidated Subsidiaries as at the
     end  of,  and for, such fiscal year and that such  financial
     statements have been prepared in accordance with GAAP except
     for   such  changes  in  such  principles  with  which   the
     independent public accountants shall have concurred and such
     opinion  shall  not  contain  a  "going  concern"  or   like
     qualification  or  exception,  and  a  certificate  of  such
     accountants   stating  that,  in  making   the   examination
     necessary  for  their opinion, they obtained  no  knowledge,
     except as specifically stated, of any Default.

           (b)   As soon as available and in any event within  60
     days  after  (i)  the  end  of each fiscal  quarter  period,
     unaudited  interim Borrower-prepared consolidated statements
     of  income, member's capital, and cash flow of the  Borrower
     and  its  Consolidated Subsidiaries for such period and  for
     the  period from the beginning of the respective fiscal year
     to  the  end  of  such period, and the related  consolidated
     balance  sheets  as at the end of such period,  and  setting
     forth  in  each  case in comparative form the  corresponding
     figures for the corresponding period in the preceding fiscal
     year,  accompanied  by  the  certificate  of  a  Responsible
     Officer,  which certificate shall state that said  financial
     statements   fairly   present  the  consolidated   financial
     condition and results of operations of the Borrower and  its
     Consolidated Subsidiaries in accordance with GAAP, as at the
     end  of,  and  for, such period (subject to normal  year-end
     audit  adjustments); and  (ii) the end of each  month,  upon
     the  Agent's  request therefor, unaudited interim  Borrower-
     prepared consolidated statements of income and cash flow  of
     the  Borrower  and  its Consolidated Subsidiaries  for  each
     month  and  for  the  period  from  the  beginning  of   the
     respective fiscal year to the end of such month.

          (c)  Promptly after the Borrower knows that any Default
     or  any  Material Adverse Effect has occurred, a  notice  of
     such Default or Material Adverse Effect, describing the same
     in reasonable detail and the action the Borrower proposes to
     take with respect thereto.

           (d)   Promptly upon receipt thereof, a  copy  of  each
     other report or letter submitted to MMR, the Borrower or any
     Restricted   Subsidiary   by  independent   accountants   in
     connection with any annual, interim or special audit made by
     them  of  the books of MMR, the Borrower and the  Restricted
     Subsidiaries,  and  a  copy  of any  response  by  MMR,  the
     Borrower  or  any  Restricted Subsidiary, or  the  board  of
     directors of MMR, the Borrower or any Restricted Subsidiary,
     to such letter or report.

            (e)   Promptly  upon  its  becoming  available,  each
     financial statement, report, notice or proxy statement  sent
     by  MMR  to  stockholders  generally  and  each  regular  or
     periodic  report and any registration statement,  prospectus
     or written communication (other than transmittal letters) in
     respect  thereof  filed by MMR with or received  by  MMR  in
     connection therewith from any securities exchange or the SEC
     or any successor agency.

           (f)  Promptly after the furnishing thereof, copies  of
     any  material statement, report or notice furnished  by  the
     Borrower to any Person pursuant to the terms of any material
     (i.e.,  over  $500,000,  if permitted)  indenture,  loan  or
     credit or other similar agreement, other than this Agreement
     and  not  otherwise required to be furnished to the  Lenders
     pursuant to any other provision of this Section 8.01.

          (g)  From time to time such other information regarding
     the business, affairs or financial condition of the Borrower
     or any Restricted Subsidiary (including, without limitation,
     any  Plan  or  Multiemployer Plan and any reports  or  other
     information required to be filed under ERISA) as any  Lender
     or the Agent may reasonably request.

           (h)  Simultaneously with the delivery of the financial
     statements  referred  to in clauses (a)  and  (b)  above,  a
     report,  in  form and substance satisfactory to  the  Agent,
     setting  forth as of the last Business Day of such  calendar
     quarter  a  true and complete list of all Hedging Agreements
     (including   commodity   price  swap   agreements,   forward
     agreements or contracts of sale which provide for prepayment
     for  deferred  shipment or delivery of  oil,  gas  or  other
     commodities) of the Borrower and each Restricted Subsidiary,
     the  material  terms  thereof  (including  the  type,  term,
     effective  date,  termination date and notional  amounts  or
     volumes),  the  net mark to market value therefor,  any  new
     credit  support agreements relating thereto  not  listed  on
     Schedule  7.20,  any margin required or supplied  under  any
     credit  support document, and the counterparty to each  such
     agreement.

           (i)  Simultaneously with the delivery of the financial
     statements  referred to in clause (b) above,  an  update  to
     Schedule 7.14 setting forth all Subsidiaries of the Borrower
     as of the last Business Day of such calendar quarter.
           (j)   From  time  to time, division  orders,  transfer
     orders  or  letters in lieu thereof as required  by  Section
     4.08.

The  Borrower will furnish to the Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b)
above,  a  certificate substantially in the  form  of  Exhibit  C
hereto executed by a Responsible Officer (i) certifying as to the
matters  set  forth  therein  and stating  that  no  Default  has
occurred  and is continuing (or, if any Default has occurred  and
is  continuing,  describing the same in reasonable  detail),  and
(ii)   setting   forth  in  reasonable  detail  the  computations
necessary to determine whether the Borrower is in compliance with
Section  9.11 as of the end of the respective fiscal  quarter  or
fiscal year.

          Section 8.02  Litigation .  The Borrower shall promptly
give  to  the  Agent notice of all legal or arbitral proceedings,
and   of   all  proceedings  before  any  Governmental  Authority
affecting  the  Borrower  or  any Restricted  Subsidiary,  except
proceedings  which, if adversely determined,  would  not  have  a
Material Adverse Effect.  The Borrower will, and will cause  each
of  the Restricted Subsidiaries to, promptly notify the Agent and
each  of  the  Lenders  of  any claim, judgment,  Lien  or  other
encumbrance  affecting  any  Property  of  the  Borrower  or  any
Restricted Subsidiary if the value of the claim, judgment,  Lien,
or   other  encumbrance  affecting  such  Property  shall  exceed
$500,000.

          Section 8.03  Maintenance, Etc.

          (a)  The Borrower shall and shall cause each Restricted
     Subsidiary to: preserve and maintain its existence  and  all
     of  its  material  rights, privileges and  franchises;  keep
     books  of record and account in which full, true and correct
     entries  will  be  made of all dealings or  transactions  in
     relation  to  its business and activities; comply  with  all
     Governmental  Requirements if failure to  comply  with  such
     requirements  will have a Material Adverse Effect;  pay  and
     discharge all taxes, assessments and governmental charges or
     levies  imposed on it or on its income or profits or on  any
     of  its Property prior to the date on which penalties attach
     thereto, except for any such tax, assessment, charge or levy
     the payment of which is being contested in good faith and by
     proper  proceedings and against which adequate reserves  are
     being    maintained;   upon   reasonable   notice,    permit
     representatives  of the Agent or any Lender,  during  normal
     business hours, to examine, copy and make extracts from  its
     books and records, to inspect its Properties, and to discuss
     its  business  and  affairs with its officers,  all  to  the
     extent reasonably requested by such Lender or the Agent  (as
     the case may be); and keep, or cause to be kept, insured  by
     financially sound and reputable insurers all Property  of  a
     character usually insured by Persons engaged in the same  or
     similar  business similarly situated against loss or  damage
     of  the kinds and in the amounts customarily insured against
     by such Persons and carry such other insurance as is usually
     carried  by  such  Persons  including,  without  limitation,
     pollution insurance to the extent reasonably available.

            (b)   Contemporaneously  with  the  delivery  of  the
     financial  statements  required by  Section  8.01(a)  to  be
     delivered for each year, the Borrower will furnish or  cause
     to  be  furnished to the Agent and the Lenders a certificate
     of insurance coverage from the insurer in form and substance
     satisfactory  to the Agent and, if requested,  will  furnish
     the Agent and the Lenders copies of the applicable policies.

           (c)   The Borrower will and will cause each Restricted
     Subsidiary   to  operate  its   Properties  or  cause   such
     Properties  to be operated in a good and workmanlike  manner
     in  accordance with the standard practices of  the  industry
     and   in  compliance  with  all  applicable  contracts   and
     agreements  and in compliance in all material respects  with
     all Governmental Requirements.

           (d)   The Borrower will and will cause each Restricted
     Subsidiary  to, at its own expense, do or cause to  be  done
     all things reasonably necessary to preserve and keep in good
     repair, working order and efficiency all of its Oil and  Gas
     Properties subject to a Lien in favor of the Agent and other
     material  Properties  including,  without  limitation,   all
     equipment, machinery and facilities, and from time  to  time
     will make all the reasonably necessary repairs, renewals and
     replacements so that at all times the state and condition of
     its Oil and Gas Properties subject to a Lien in favor of the
     Agent  and other material Properties will be fully preserved
     and  maintained, except (1) for ordinary wear and tear,  (2)
     for  equipment, machinery and facilities no longer  used  or
     useful  in  the  Borrower's or such Restricted  Subsidiary's
     business,   (3)  for  casualty  losses  being   handled   in
     accordance  with Section 2.07(d), and (4) to  the  extent  a
     portion of such Properties is no longer capable of producing
     Hydrocarbons   in  economically  reasonable  amounts.    The
     Borrower  will and will cause each Restricted Subsidiary  to
     promptly:  (i)  pay  and discharge, or make  reasonable  and
     customary  efforts to cause to be paid and  discharged,  all
     delay rentals, royalties, expenses and indebtedness accruing
     under the leases or other agreements affecting or pertaining
     to  its Oil and Gas Properties subject to a Lien in favor of
     the  Agent,  to the extent that any failure  to  so  pay  or
     discharge would have a Material Adverse Effect, (ii) perform
     or  make  reasonable and customary efforts to  cause  to  be
     performed,  in  accordance  with  industry  standards,   the
     material  obligations  required  by  each  and  all  of  the
     assignments,   deeds,  leases,  subleases,   contracts   and
     agreements  affecting  its interests  in  its  Oil  and  Gas
     Properties subject to a Lien in favor of the Agent and other
     material Properties, and (iii) do all other things necessary
     to  keep  unimpaired, except for Liens described in  Section
     9.02,  its rights with respect to its Oil and Gas Properties
     subject  to a Lien in favor of the Agent and other  material
     Properties and prevent any forfeiture thereof or  a  default
     thereunder,  except  to  the  extent  a  portion   of   such
     Properties is no longer capable of producing Hydrocarbons in
     economically reasonable amounts.  The Borrower will and will
     cause each Restricted Subsidiary to operate its Oil and  Gas
     Properties subject to a Lien in favor of the Agent and other
     material   Properties  or  cause  or  make  reasonable   and
     customary  efforts to cause such Oil and Gas Properties  and
     other  material  Properties to be operated  in  a  good  and
     workmanlike manner in accordance with the standard practices
     of  the  industry  and  in compliance  with  all  applicable
     contracts  and agreements and in compliance in all  material
     respects with all Governmental Requirements.



          Section 8.04  Environmental Matters .

           (a)  The Borrower will and will cause each Subsidiary,
     to  the  extent  not  already in  place,  to  establish  and
     implement such procedures as may be reasonably necessary  to
     continuously  determine and assure that any failure  of  the
     following does not have a Material Adverse Effect:  (i)  all
     Property  of  the  Borrower  and the  Subsidiaries  and  the
     operations  conducted thereon and other  activities  of  the
     Borrower and the Subsidiaries are in compliance with and  do
     not  violate  the  requirements of any  Environmental  Laws,
     (ii)  no  oil,  hazardous substances  or  solid  wastes  are
     disposed  of  or  otherwise released on or to  any  Property
     owned   by   any  such  party  except  in  compliance   with
     Environmental  Laws, (iii) no hazardous  substance  will  be
     released  on or to any such Property in a quantity equal  to
     or exceeding that quantity which requires reporting pursuant
     to  Section  103  of CERCLA, and (iv) no oil,  oil  and  gas
     exploration and production wastes or hazardous substance  is
     released  on  or  to any such Property  so  as  to  pose  an
     imminent  and substantial endangerment to public  health  or
     welfare or the environment.

           (b)   The Borrower will promptly notify the Agent  and
     the  Lenders  in writing of any material threatened  action,
     investigation  or inquiry by any Governmental  Authority  of
     which  the  Borrower  has knowledge in connection  with  any
     Environmental Laws, excluding routine testing and corrective
     action.

           (c)   The Borrower will and will cause each Subsidiary
     to provide environmental audits and tests in accordance with
     American  Society  for  Testing and Materials  standards  as
     reasonably  requested by the Agent and the  Lenders  (or  as
     otherwise  required  to be obtained  by  the  Agent  or  the
     Lenders  by  any Governmental Authority) in connection  with
     any  future acquisitions of Oil and Gas Properties or  other
     material Properties.

           Section 8.05  Further Assurances .  The Borrower  will
and  will  cause each Restricted Subsidiary to cure promptly  any
defects  in  the  creation and issuance  of  the  Notes  and  the
execution  and  delivery  of the Security  Instruments  and  this
Agreement.  The Borrower at its expense will and will cause  each
Restricted  Subsidiary to promptly execute  and  deliver  to  the
Agent  upon  request  all  such other documents,  agreements  and
instruments  to  comply  with  or accomplish  the  covenants  and
agreements of the Borrower or any Restricted Subsidiary,  as  the
case  may be, in the Security Instruments and this Agreement,  or
to  further  evidence  and  more fully  describe  the  collateral
intended  as security for the Notes, or to correct any  omissions
in  the Security Instruments, or to state more fully the security
obligations set out herein or in any of the Security Instruments,
or  to perfect, protect or preserve any Liens created pursuant to
any  of  the Security Instruments, or to make any recordings,  to
file  any notices or obtain any consents, all as may be necessary
or appropriate in connection therewith.

            Section  8.06   Performance  of  Obligations  .   The
Borrower  will pay the Notes according to the reading, tenor  and
effect  thereof;  and  the  Borrower will  and  will  cause  each
Restricted  Subsidiary to do and perform every act and  discharge
all  of  the obligations to be performed and discharged  by  them
under the Security Instruments and this Agreement, at the time or
times and in the manner specified.

          Section 8.07  Engineering Reports .

           (a)   Not  less  than 45 days prior to each  Scheduled
     Redetermination  Date, the Borrower  shall  furnish  to  the
     Agent  and the Lenders a Reserve Report.  The Reserve Report
     to  be delivered by May 1 of each year shall be prepared  by
     certified   independent   petroleum   engineers   or   other
     independent petroleum consultant(s) acceptable to the  Agent
     and the Reserve Report to be delivered by November 1 of each
     year  shall be prepared by or under the supervision  of  the
     chief  engineer  of  the  Borrower who  shall  certify  such
     Reserve  Report  to be true and accurate and  to  have  been
     prepared  in  accordance  with the procedures  used  in  the
     immediately preceding May 1 Reserve Report.

           (b)   In  the event of an unscheduled redetermination,
     the  Borrower shall furnish to the Agent and the  Lenders  a
     Reserve Report prepared by or under the supervision  of  the
     chief  engineer  of  the  Borrower who  shall  certify  such
     Reserve  Report  to be true and accurate and  to  have  been
     prepared  in  accordance  with the procedures  used  in  the
     immediately  preceding Reserve Report.  For any  unscheduled
     redetermination  requested by the Majority  Lenders  or  the
     Borrower   pursuant to Section 2.08(d), the  Borrower  shall
     provide such Reserve Report with an "as of" date as required
     by  the  Majority Lenders as soon as possible,  but  in  any
     event  no  later than 30 days following the receipt  of  the
     request by the Agent on behalf of the Majority Lenders.

           (c)   With  the delivery of each Reserve  Report,  the
     Borrower  shall  provide to the Agent  and  the  Lenders,  a
     certificate from a Responsible Officer certifying  that,  to
     the  best of his knowledge and in all material respects: (i)
     the  information  contained in the Reserve  Report  and  any
     other information delivered in connection therewith is  true
     and   correct,   (ii)  the  Borrower  or   each   Restricted
     Subsidiary, as applicable, owns good and defensible title to
     the  Oil and Gas Properties evaluated in such Reserve Report
     and  such Properties are free of all Liens except for  Liens
     permitted by Section 9.02, (iii) except as set forth  on  an
     exhibit to the certificate, on a net basis there are no  gas
     imbalances, take or pay or other prepayments with respect to
     the  Borrower's or any Restricted Subsidiary's Oil  and  Gas
     Properties  evaluated  in such Reserve  Report  which  would
     require  the  Borrower  or  such  Restricted  Subsidiary  to
     deliver   Hydrocarbons  produced  from  such  Oil  and   Gas
     Properties  at  some future time without then or  thereafter
     receiving full payment therefor, (iv) none of the Borrower's
     or  any Restricted Subsidiary's Oil and Gas Properties  have
     been  sold  since  the  date  of  the  last  Borrowing  Base
     determination  except  as set forth on  an  exhibit  to  the
     certificate, which certificate shall list all  of  such  Oil
     and  Gas  Properties sold and in such detail  as  reasonably
     required by the Agent, (v) attached to the certificate is  a
     list  of  the Borrower's or any Restricted Subsidiary's  Oil
     and Gas Properties added to and deleted from the immediately
     prior  Reserve  Report  and a list  showing  any  change  in
     working  interest or net revenue interest in the  Borrower's
     or  any  Restricted  Subsidiary's  Oil  and  Gas  Properties
     occurring  and the reason for such change, (vi) attached  to
     the certificate is a list of all Persons disbursing proceeds
     to  the Borrower or a Restricted Subsidiary from its Oil and
     Gas Properties and (vii) Schedule B attached to such Reserve
     Report  is  a  listing of the Oil and Gas Properties  to  be
     considered in the determination of the Borrowing Base.

           (d)   As soon as available and in any event within  60
     days  after  the end of each calendar quarter, the  Borrower
     shall   provide  production  reports  and  lease   operating
     summaries  by  lease for the Borrower's and each  Restricted
     Subsidiary's  Oil and Gas Properties subject to  a  Lien  in
     favor  of  the Agent, which reports shall include quantities
     or  volume of production, revenue, realized product  prices,
     operating  expenses, taxes, capital expenditures  and  lease
     operating costs which have accrued to the Borrower's or such
     Restricted  Subsidiary's accounts in such period,  and  such
     other  information with respect thereto  as  the  Agent  may
     reasonably require.

          Section 8.08  Title Information .

           (a)   On  or before the delivery to the Agent and  the
     Lenders  of each Reserve Report required by Section 8.07(a),
     the  Borrower will deliver, or cause to be delivered,  title
     information  in form and substance acceptable to  the  Agent
     covering enough of the Hydrocarbon Interests included in the
     Borrowing  Base  that were not included in  the  immediately
     preceding  Reserve  Report, so that  the  Agent  shall  have
     received   together   with   title  information   previously
     delivered  to  the Agent, satisfactory title information  on
     100%  of the value of the Hydrocarbon Interests included  in
     the Borrowing Base.

          (b)  The Borrower shall cure, or cause to be cured, any
     title  defects  or exceptions which are not  Excepted  Liens
     raised  by such information, or substitute, or cause  to  be
     substituted, acceptable Mortgaged Properties with  no  title
     defects  or  exceptions except for Excepted Liens  or  Liens
     permitted  by Section 9.02 covering Mortgaged Properties  of
     an  equivalent value, within 30 days after a request by  the
     Agent or the Lenders to cure such defects or exceptions.

           (c)  If the Borrower is unable to cure, or cause to be
     cured,  any  title  defect requested by  the  Agent  or  the
     Lenders to be cured within the 30-day period or the Borrower
     does  not comply with the requirements to provide acceptable
     title information covering 100% of the value of the Oil  and
     Gas  Properties included in the Borrowing Base evaluated  in
     the most recent Reserve Report, such default shall not be  a
     Default  or an Event of Default, but instead the  Agent  and
     the  Lenders shall have the right to exercise the  following
     remedy  in their sole discretion from time to time, and  any
     failure to so exercise this remedy at any time shall not  be
     a waiver as to future exercise of the remedy by the Agent or
     the  Lenders.  To the extent that the Agent or  the  Lenders
     are not satisfied with title to any Mortgaged Property after
     the  time  period  in  Section  8.08(b)  has  elapsed,  such
     unacceptable Mortgaged Property shall not count towards  the
     100%  requirement, and the Agent may send a  notice  to  the
     Borrower and the Lenders that the then outstanding Borrowing
     Base  shall  be  reduced by an amount as determined  by  the
     Majority  Lenders to cause the Borrower to be in  compliance
     with  the  requirement to provide, or cause to be  provided,
     acceptable  title information on 100% of the  value  of  the
     Hydrocarbon Interests included in the Borrowing Base.   This
     new  Borrowing Base shall become effective immediately after
     receipt of such notice.

           (d)   On  or  before July 31, 2002, the Borrower  will
     deliver, or cause to be delivered, to the Agent supplemental
     title  opinions  from attorneys satisfactory  to  the  Agent
     updating  the  status of title to 100% of the value  of  the
     Hydrocarbon Interests included in the Borrowing Base through
     the  date  and time of recording of the applicable  Security
     Instruments in favor of the Agent and confirming  there  are
     no prior Liens of record thereon.

          Section 8.09  Collateral .

            (a)   Acquisitions.   Should  the  Borrower  or   any
     Restricted  Subsidiary acquire any additional  Oil  and  Gas
     Properties  which will be part of the Oil and Gas Properties
     included  in  the  Borrowing  Base,  the  Borrower  or  such
     Restricted  Subsidiary will grant to the Agent  as  security
     for the Indebtedness a first-priority Lien interest (subject
     only   to  Liens  permitted  under  Section  9.02)  on   the
     Borrower's or such Restricted Subsidiary's interest  in  any
     such  Oil and Gas Properties included in the Borrowing  Base
     not  already  subject to a Lien of the Security Instruments,
     which  Lien  will be created and perfected by and  in  accor
     dance  with  the  provisions of mortgages, deeds  of  trust,
     security  agreements  and  financing  statements,  or  other
     Security Instruments, all in form and substance satisfactory
     to  the  Agent  in  its sole discretion  and  in  sufficient
     executed  (and acknowledged where necessary or  appropriate)
     counterparts for recording purposes.

           (b)   Concurrently with the granting of  the  Lien  or
     other  action  referred  to in Section  8.09(a)  above,  the
     Borrower will provide, or cause to be provided, to the Agent
     title information in form and substance satisfactory to  the
     Agent  in  its  reasonable discretion with  respect  to  the
     Borrower's or such Restricted Subsidiary's interests in such
     Oil and Gas Properties.

           (c)   Also, promptly after the filing in any state  of
     each  new Security Instrument delivered pursuant to  Section
     8.09(a),  upon  the  reasonable request of  the  Agent,  the
     Borrower will provide, or cause to be provided, to the Agent
     an  opinion  addressed to the Agent for the benefit  of  the
     Lenders  in form and substance satisfactory to the Agent  in
     its  sole  discretion from counsel acceptable to the  Agent,
     stating that such Security Instrument is valid, binding  and
     enforceable  in  accordance with its terms  and  in  legally
     sufficient form for recordation in such jurisdiction.

           Section 8.10  ERISA Information and Compliance .  When
requested  by the Agent, the Borrower will promptly  furnish  and
will  cause the Subsidiaries and any ERISA Affiliate to  promptly
furnish to the Agent with sufficient copies to the Lenders copies
of  each annual and other report with respect to each Plan or any
trust  created thereunder filed with the United States  Secretary
of Labor, the Internal Revenue Service or the PBGC.  The Borrower
will promptly notify the Agent immediately upon becoming aware of
the  occurrence  of  any  ERISA Event or,  with  respect  to  any
Restricted   Subsidiary  or  Plan  thereof,  of  any  "prohibited
transaction," as described in section 406 of ERISA or in  section
4975  of  the  Code,  in connection with any Plan  or  any  trust
created  thereunder,  to  the extent that  such  ERISA  Event  or
"prohibited transaction" results in a Material Adverse Effect, in
a  written notice signed by a Responsible Officer specifying  the
nature  thereof, what action the Borrower, the Subsidiary or  the
ERISA  Affiliate  is  taking or proposes  to  take  with  respect
thereto,  and,  when known, any action taken or proposed  by  the
Internal  Revenue Service, the Department of Labor  or  the  PBGC
with  respect  thereto.  Immediately upon  receipt  thereof,  the
Borrower will promptly send to the Agent, with sufficient  copies
to  the Lenders, copies of any notice of the PBGC's intention  to
terminate or to have a trustee appointed to administer any  Plan.
With respect to each Plan (other than a Multiemployer Plan),  the
Borrower will, and will cause each Subsidiary and ERISA Affiliate
to, (i) satisfy in full, without giving rise to any lien, all  of
the  contribution and funding requirements of section 412 of  the
Code (determined without regard to subsections (d), (e), (f)  and
(k)  thereof)  and  of  section 302 of ERISA (determined  without
regard  to sections 303, 304 and 306 of ERISA), and (ii) pay,  or
cause  to be paid, to the PBGC all premiums required pursuant  to
sections 4006 and 4007 of ERISA.

           Section  8.11  Accounts .  The Borrower shall maintain
its  primary collection accounts at the Agent, including  without
limitation  as  provided in Section 4.08.   The  Borrower  hereby
grants  to  the Agent a continuing security interest  in  all  of
Borrower's  deposit accounts now existing or hereafter maintained
at  the  Agent as security for the Indebtedness and in all funds,
investment  property and proceeds pertaining  thereto.   However,
the  Borrower  may continue to maintain and utilize  disbursement
and other accounts at JP Morgan Chase Bank.

                ARTICLE IX     Negative Covenants
      The  Borrower covenants and agrees that, so long as any  of
the  Commitments are in effect and until payment in full of Loans
hereunder, all interest thereon and all other amounts payable  by
the  Borrower hereunder, without the prior written consent of the
Majority Lenders:

           Section  9.01   Debt .  Neither the Borrower  nor  any
Restricted  Subsidiary will incur, create, assume  or  suffer  to
exist any Debt, except:

           (a)  the Notes or other Indebtedness arising under the
     Loan  Documents or any guaranty of or suretyship arrangement
     for  the Notes or other Indebtedness arising under the  Loan
     Documents;

           (b)   Debt  existing  on  the Closing  Date  which  is
     disclosed in Schedule 9.01, and any renewals, extensions  or
     refinancings (but not increases) thereof;

           (c)  Debt (unrelated to Unrestricted Subsidiaries  and
     other  than  for  borrowed money) incurred in  the  ordinary
     course   of   business   in  connection   with   Hydrocarbon
     transportation,  Hydrocarbon  purchasing  or  other  similar
     arrangements, provided that such arrangements are  disclosed
     to  the Agent and the costs of the financing related to such
     arrangements  are incorporated into the Engineering  Reports
     provided to the Agent;

           (d)   Debt  under Hedging Agreements with a Lender  or
     another counterparty rated BBB+ by Standard & Poor's Ratings
     Services, a division of The McGraw-Hill Companies, Inc.,  or
     better  (or  the  equivalent rating  by  another  nationally
     recognized rating service), the notional amounts  of  which,
     with  respect to commodity Hedging Agreements, do not exceed
     80%  of   Borrower's anticipated oil and/or  gas  production
     from  producing wells to be produced during the term of such
     Hedging  Agreements, entered into as a part  of  its  normal
     business  operations  as a risk management  strategy  and/or
     hedge  against  changes  resulting  from  market  conditions
     related to the Borrower's and its Subsidiaries' operations;

           (e)   So  long  as  no Borrowing Base  Deficiency  has
     occurred  which  is continuing, additional Debt  (including,
     without  limitation,  guarantees  of  Debt  of  Unrestricted
     Subsidiaries) with an outstanding aggregate principal amount
     not at any time in excess of $250,000;

           (f)   Debt approved in advance by the Majority Lenders
     secured  by  the  Liens  permitted  by  clause  (x)  of  the
     definition of "Excepted Liens"; provided that such  Debt  is
     discharged  within 180 days of the relevant  acquisition  or
     merger;

           (g)   Debt approved in advance by the Majority Lenders
     secured   by   a   pledge  of  investments  in  Unrestricted
     Subsidiaries permitted by clause (xii) of the definition  of
     "Excepted Liens"; provided that such Debt is recourse solely
     to the investment so pledged;

            (h)    loans  and  advances  between  the  Restricted
     Subsidiaries, to any Restricted Subsidiary from the Borrower
     and to the Borrower from any Restricted Subsidiary; and

           (i)   Debt approved in advance by the Majority Lenders
     which  is subordinated on terms satisfactory to the Majority
     Lenders  to  the  payment  of  the  Indebtedness  (with  the
     Borrowing Base in effect from time to time being reduced  by
     an  amount  equal  to  any effect upon  the  Borrowing  Base
     occasioned by such subordinated Debt in the judgment of  the
     Majority Lenders).

           Section  9.02  Liens .  Neither the Borrower  nor  any
Restricted  Subsidiary will create, incur, assume  or  permit  to
exist any Lien on any of its Properties included in the Borrowing
Base (now owned or hereafter acquired), except:

          (a)  Liens securing the payment of any Indebtedness;

          (b)  Excepted Liens;

           (c)   Liens  securing  capital  leases  allowed  under
     Section 9.01(e) but only on the Property under lease;

          (d)  Liens disclosed on Schedule 9.02; and

           (e)   Liens  on  cash or securities  of  the  Borrower
     securing the Debt described in Sections 9.01(c) and (d);

provided,  however, the exceptions permitted under  this  Section
9.02 shall not permit any contractual Liens upon the Oil and  Gas
Properties  which are included in the Borrowing Base superior  to
any Liens in favor of the Agent as security for the Indebtedness.

            Section  9.03   Investments,  Loans  and  Advances  .
Neither  the Borrower nor any Restricted Subsidiary will make  or
permit  to  remain  outstanding  any  loans  or  advances  to  or
investments  in  any  Person which  is  not  the  Borrower  or  a
Restricted   Subsidiary,  but  which  does  include  Unrestricted
Subsidiaries  (each  such Person being a  "Third  Party")  (which
shall   include  any  payments  on  behalf  of  any  Unrestricted
Subsidiary  and shall include the Borrower's investments  in  and
any loans and advances to any Restricted Subsidiaries that become
Unrestricted Subsidiaries in accordance with Section 9.16 and the
definition  of  "Unrestricted  Subsidiary"),  except   that   the
foregoing restriction shall not apply to:

          (a)  investments, loans or advances which are disclosed
     to the Lenders in Schedule 9.03;

          (b)  [reserved];

               (c)   accounts receivable arising in the  ordinary
               course of business;

           (d)   direct obligations of the United States  or  any
     agency  thereof,  or obligations guaranteed  by  the  United
     States  or any agency thereof, in each case maturing  within
     one year from the date of creation thereof;

          (e)  commercial paper maturing within one year from the
     date  of  creation  thereof rated in the  highest  grade  by
     Standard & Poor's Ratings Services, a division of The McGraw-
     Hill Companies, Inc., or Moody's Investors Service, Inc.;

          (f)  deposits maturing within one year from the date of
     creation  thereof  with, including certificates  of  deposit
     issued  by,  any Lender or any office located in the  United
     States of any other bank or trust company which is organized
     under  the  laws of the United States or any state  thereof,
     has  capital,  surplus and undivided profits aggregating  at
     least  $100,000,000.00 (as of the date of such  Lender's  or
     bank  or trust company's most recent financial reports)  and
     has  a short term deposit rating of no lower than A2 or  P2,
     as such rating is set forth from time to time, by Standard &
     Poor's  Ratings  Services,  a division  of  The  McGraw-Hill
     Companies,   Inc.,  or  Moody's  Investors  Service,   Inc.,
     respectively;

            (g)    deposits  in  money  market  funds   investing
     exclusively  in  investments described in  Section  9.03(c),
     9.03(d) or 9.03(e);

           (h)   investments  in  direct ownership  interests  in
     additional Oil and Gas Properties and gas gathering  systems
     related thereto;

           (i)   investments in Unrestricted Subsidiaries in  the
     form  of  Oil and Gas Properties which are included  in  the
     Borrowing  Base with adjustments to be made to the Borrowing
     Base with respect to the elimination of such properties from
     the  Borrowing  Base; provided, however, the  prior  written
     approval of the Majority Lenders shall be required for  such
     removal of a property from the Borrowing Base; and

           (j)   investments, loans and advances of cash and  any
     other  Property  not included in the Borrowing  Base  in  an
     aggregate  outstanding amount not at any time in  excess  of
     (when  aggregated  with  net  dividends,  distributions  and
     redemptions   permitted  under  Section  9.04)   $1,000,000;
     provided,  however,  that  with respect  to  investments  of
     Property, only the amount of the excess (if any) of the book
     value  of  such Property over the consideration received  by
     the  transferor  in connection with the investment  of  such
     Property  shall  count  against such $1,000,000  limit;  and
     provided  further,  however, that if the Borrowing  Base  is
     more  than  50%  utilized, or if  the  making  of  any  such
     investment,  loan or advance using the proceeds  of  a  Loan
     would  result  in  the Borrowing Base being  more  than  50%
     utilized, then no such investment, loan or advance otherwise
     permitted  by  this  Section 9.03  may  be  made  using  the
     proceeds of a Loan hereunder.

           Section 9.04  Dividends, Distributions and Redemptions
..   The  Borrower will not declare or pay any dividend, purchase,
redeem  or  otherwise  acquire for value any  of  its  membership
interests now or hereafter outstanding, return any capital to its
members  or  make any distribution of its assets to its  members,
except  that  the Borrower may make dividends, distributions  and
redemptions  to  MMR  so  long as the  aggregate  amount  of  net
dividends,  distributions and redemptions, when  aggregated  with
investments, loans and advances permitted under Section  9.03(j),
do  not  exceed  $1,000,000 in the aggregate from and  after  the
Closing   Date;   provided,   however,   that   such   dividends,
distributions and redemptions shall not be permitted hereunder if
an  Event  of  Default  has occurred and is continuing  or  would
result  therefrom;  and provided further, however,  that  if  the
Borrowing Base is more than 50% utilized, or if the making of any
such dividend, distribution or redemption using the proceeds of a
Loan  would  result  in the Borrowing Base being  more  than  50%
utilized,  then  no  such  dividend, distribution  or  redemption
otherwise  permitted by this Section 9.04 may be made  using  the
proceeds of a Loan hereunder.

           Section  9.05   Sales and Leasebacks  .   Neither  the
Borrower  nor  any  Restricted Subsidiary  will  enter  into  any
arrangement, directly or indirectly, with any Person whereby  the
Borrower or any Restricted Subsidiary shall sell or transfer  any
of its Property included in the Borrowing Base, whether now owned
or hereafter acquired, and whereby the Borrower or any Restricted
Subsidiary shall then or thereafter rent or lease as lessee  such
Property or any part thereof or other Property which the Borrower
or any Restricted Subsidiary intends to use for substantially the
same purpose or purposes as the Property sold or transferred.

           Section  9.06   Nature  of  Business  .   Neither  the
Borrower  nor  any Restricted Subsidiary will allow any  material
change  to  be  made  in  the character of  its  business  as  an
independent oil and gas exploration and production company.

           Section 9.07  Mergers, Etc.   Neither the Borrower nor
any  Restricted Subsidiary will merge into or with or consolidate
with  any  other Person, or sell, lease or otherwise  dispose  of
(whether  in one transaction or in a series of transactions)  all
or  substantially  all of its Property or  assets  to  any  other
Person, except that:

           (a)   the  Borrower or any Restricted  Subsidiary  may
     merge or liquidate any other Person into itself, so long  as
     the  surviving entity will be in compliance with all of  the
     terms of this Agreement immediately following the merger  or
     liquidation;


           (b)   any Restricted Subsidiary may merge or liquidate
     into the Borrower or another Restricted Subsidiary; and

           (c)  any Restricted Subsidiary may be merged into  any
     other  Person; provided that such other Person,  immediately
     following   such  merger,  shall  be  deemed  a   Restricted
     Subsidiary  and shall comply with the provisions of  Section
     9.16 hereof;

     provided, however, that in the case of a merger permitted by
     clauses (a) and (b) above, immediately thereafter and giving
     effect  thereto,  the Borrower or, as the  case  may  be,  a
     Restricted Subsidiary would be the surviving Person and,  in
     the  case  of a merger permitted by clause (a), (b)  or  (c)
     above,  no  Default  or Event of Default would,  immediately
     thereafter and giving effect thereto, have occurred  and  be
     continuing.  In all such instances permitted by this Section
     9.07,  the surviving entity shall be an entity formed  under
     the  laws  of  one  of the states of the  United  States  of
     America.

           Section  9.08  Proceeds of Notes .  The Borrower  will
not  permit the proceeds of the Notes to be used for any  purpose
other  than  those  permitted by  Section  7.07.     Neither  the
Borrower  nor  any  Person acting on behalf of the  Borrower  has
taken  or will take any action which might cause any of the  Loan
Documents to violate Regulation G, U or X or any other regulation
of  the  Board of Governors of the Federal Reserve System  or  to
violate Section 7 of the Securities Exchange Act of 1934  or  any
rule  or regulation thereunder, in each case as now in effect  or
as the same may hereinafter be in effect.

          Section 9.09  ERISA Compliance .  The Borrower will not
at  any  time  engage  in or permit any of  the  following  if  a
Material Adverse Effect would result:

           (a)  Engage in, or permit any Restricted Subsidiary or
     ERISA  Affiliate to engage in, any transaction in connection
     with  which the Borrower, any Restricted Subsidiary  or  any
     ERISA Affiliate could be subjected to either a civil penalty
     assessed pursuant to section 502(c), (i) or (l) of ERISA  or
     a tax imposed by Chapter 43 of Subtitle D of the Code;

           (b)   Terminate,  or  permit any Subsidiary  or  ERISA
     Affiliate  to terminate, any Plan in a manner, or  take  any
     other action with respect to any Plan, which could result in
     any  liability of the Borrower, any Subsidiary or any  ERISA
     Affiliate to the PBGC;

           (c)  Fail to make, or permit any Restricted Subsidiary
     to  fail  to make, full payment of all amounts which,  under
     the  provisions of any Plan, agreement relating  thereto  or
     applicable  law, the Borrower or a Restricted Subsidiary  is
     required to pay as contributions thereto;

           (d)  Permit to exist, or allow any Subsidiary or ERISA
     Affiliate  to  permit  to  exist,  any  accumulated  funding
     deficiency  within the meaning of Section 302  of  ERISA  or
     Section 412 of the Code, whether or not waived, with respect
     to any Plan;

          (e)  Permit, or allow any Subsidiary or ERISA Affiliate
     to permit, the actuarial present value of the benefit liabil
     ities  under  any  Plan  maintained  by  the  Borrower,  any
     Subsidiary  or any ERISA Affiliate which is regulated  under
     Title  IV of ERISA to exceed the current value of the assets
     (computed  on  a  plan termination basis in accordance  with
     Title  IV  of ERISA) of such Plan allocable to such  benefit
     liabilities  to the extent that such liability  can  not  be
     paid  in  the ordinary course.  The term "actuarial  present
     value  of  the benefit liabilities" shall have  the  meaning
     specified in section 4041 of ERISA;

            (f)   Contribute  to  or  assume  an  obligation   to
     contribute  to, or permit any Subsidiary or ERISA  Affiliate
     to  contribute to or assume an obligation to contribute  to,
     any Multiemployer Plan;

           (g)   Acquire,  or  permit  any  Subsidiary  or  ERISA
     Affiliate to acquire, an interest in any Person that  causes
     such Person to become an ERISA Affiliate with respect to the
     Borrower,  any  Subsidiary or any ERISA  Affiliate  if  such
     Person sponsors, maintains or contributes to, or at any time
     in  the six-year period preceding such acquisition has  spon
     sored,  maintained, or contributed to, (1) any Multiemployer
     Plan,  or (2) any other Plan that is subject to Title IV  of
     ERISA under which the actuarial present value of the benefit
     liabilities under such Plan exceeds the current value of the
     assets  (computed on a plan termination basis in  accordance
     with  Title  IV  of  ERISA) of such Plan allocable  to  such
     benefit liabilities;

          (h)  Incur, or permit any Subsidiary or ERISA Affiliate
     to  incur,  a  liability to or on account of  a  Plan  under
     sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA;

            (i)   Contribute  to  or  assume  an  obligation   to
     contribute  to,  or  permit  any Restricted   Subsidiary  to
     contribute to or assume an obligation to contribute to,  any
     employee welfare benefit plan, as defined in section 3(1) of
     ERISA,   including,  without  limitation,  any   such   plan
     maintained to provide benefits to former employees  of  such
     entities,  that  may not be terminated by such  entities  in
     their  sole  discretion  at any time  without  any  material
     liability; or

           (j)  Amend or permit any Subsidiary or ERISA Affiliate
     to  amend,  a  Plan  resulting in  an  increase  in  current
     liability  such  that the Borrower, any  Subsidiary  or  any
     ERISA Affiliate is required to provide security to such Plan
     under section 401(a)(29) of the Code.

           Section  9.10   Sale  or  Discount  of  Receivables  .
Neither  the Borrower nor any Restricted Subsidiary will discount
or sell (with or without recourse) any of its notes receivable or
accounts  receivable other than in settlement  of  any  past  due
accounts  in  the ordinary course of business and  in  accordance
with prudent commercial practices.

           Section  9.11   Debt  Service Coverage  Ratio  .   The
Borrower will not permit the ratio, as of the last date  of  each
fiscal  quarter,  of  (i) EBITDAX as of the  end  of  any  fiscal
quarter  of  the Borrower (calculated on a rolling  four  quarter
basis)  to  (ii)  interest  expense  of  the  Borrower  and   its
Restricted Subsidiaries, plus the portion of rent paid or payable
(without  duplication)  for  that  period  under  capital   lease
obligations that should be treated as interest in accordance with
Financial  Accounting Standards Board Statement No. 13,  in  each
case  on  a rolling four quarter basis, to be less than  2.00  to
1.00.   As  used in this Agreement, "rolling four quarter  basis"
shall  mean, as to any fiscal quarter, such quarter and the three
preceding fiscal quarters.

          Section 9.12  Reserved .

           Section 9.13   Sale of Oil and Gas Properties  .   The
Borrower  will not, and will not permit any Restricted Subsidiary
to,  sell, assign, farm-out, convey or otherwise transfer any Oil
and  Gas Property subject to a Lien in favor of the Agent or  any
interest  in any Oil and Gas Property subject to a Lien in  favor
of  the  Agent  except  for (i) the sale of Hydrocarbons  in  the
ordinary  course of business, and (ii) the sale  or  transfer  of
equipment  that  is no longer necessary for the business  of  the
Borrower  or  is  contemporaneously replaced by equipment  of  at
least comparable value and use.

           Section  9.14   Environmental Matters .   Neither  the
Borrower  nor  any  Subsidiary will cause or permit  any  of  its
Property to be in violation of, or do anything or permit anything
to  be  done which will subject any such Property to any remedial
obligations under any Environmental Laws, assuming disclosure  to
the  applicable  Governmental Authority of  all  relevant  facts,
conditions and circumstances, if any, pertaining to such Property
where  such  violations  or  remedial obligations  would  have  a
Material Adverse Effect.

           Section 9.15  Transactions with Affiliates .   Neither
the  Borrower nor any  Restricted Subsidiary will enter into  any
transaction,  including, without limitation, any purchase,  sale,
lease  or  exchange of Property or the rendering of any  service,
with   any  Affiliate  unless  such  transactions  are  otherwise
permitted under this Agreement, are in the ordinary course of its
business and are upon fair and reasonable terms no less favorable
to  it  than  it  would  obtain  in  a  comparable  arm's  length
transaction with a Person not an Affiliate.

           Section  9.16  Subsidiaries .  The Borrower shall  not
and  shall  not permit any Restricted Subsidiary to  sell  or  to
issue  any stock or ownership interest of a Restricted Subsidiary
except to the Borrower  or a Restricted Subsidiary and except  in
compliance with Section 9.03.  The Borrower shall not create  any
additional Subsidiaries or permit any Restricted Subsidiary to do
so, except:

           (a)   the  Borrower or any Restricted  Subsidiary  may
     create   (by  formation  or  by  an  acquisition   otherwise
     permitted   by  this  Agreement)  a  Restricted   Subsidiary
     provided, that:

                 (i)    each  new  Restricted  Subsidiary   shall
          forthwith  execute  and deliver to the  Agent  for  the
          benefit   of  the  Lenders  a  written  instrument   of
          guaranty, unconditionally guaranteeing payment  of  all
          Indebtedness of the Borrower; and

                (ii)  simultaneously with  the  delivery  of  the
          aforementioned written instrument of guaranty, each new
          Restricted  Subsidiary shall deliver  to  the  Agent  a
          certificate of the Secretary or Assistant Secretary  of
          such   Restricted   Subsidiary   setting   forth    (A)
          resolutions of its board of directors with  respect  to
          the  authorization  of  such Restricted  Subsidiary  to
          execute and deliver such written instrument of guaranty
          and   to   enter  into  the  transactions  contemplated
          thereby, (B) the officers of such Restricted Subsidiary
          (y)  who are authorized to sign such written instrument
          of  guaranty,  and  (z)  who will,  until  replaced  by
          another  officer or officers duly authorized  for  that
          purpose, act as its representative for the purposes  of
          signing   documents  and  giving  notices   and   other
          communications   in   connection  with   such   written
          instrument    of   guaranty   and   the    transactions
          contemplated thereby, (C) specimen signatures for  such
          officers,  and  (D)  the  articles  or  certificate  of
          incorporation and bylaws of such Restricted Subsidiary,
          certified  as being true and complete.  The  Agent  and
          the  Lenders  may conclusively rely on such certificate
          until  the  Agent receives notice in writing  from  the
          Borrower or such Restricted Subsidiary to the contrary;

          (b)  the Borrower or a Restricted Subsidiary may create
     (by  formation or by an acquisition otherwise  permitted  by
     this Agreement) additional Subsidiaries provided, that, such
     Subsidiary is designated as an Unrestricted Subsidiary by  a
     certificate  of  the Borrower signed by both  of  the  chief
     financial officer (or treasurer) and the general counsel  of
     the  Borrower, which certificate shall be delivered  to  the
     Agent.

           Section  9.17   Negative Pledge Agreements .   Neither
the  Borrower nor any Restricted  Subsidiary will create,  incur,
assume   or   suffer   to  exist  any  contract,   agreement   or
understanding  (other  than  this  Agreement  and  the   Security
Instruments)  which  in  any  way  prohibits  or  restricts   the
granting, conveying, creation or imposition of any Lien on any of
its  Property  included in the Borrowing Base  or  restricts  any
Restricted  Subsidiary from paying dividends to the Borrower,  or
which  requires  the  consent of or notice to  other  Persons  in
connection therewith.

           Section  9.18   Gas Imbalances, Take-or-Pay  or  Other
Prepayments .  The Borrower will not allow gas imbalances,  take-
or-pay  or  other  prepayments with respect to the  Oil  and  Gas
Properties  of  the Borrower or any Restricted  Subsidiary  which
would  require  the  Borrower or such  Restricted  Subsidiary  to
deliver  Hydrocarbons produced on Oil and Gas Properties at  some
future  time  without then or thereafter receiving  full  payment
therefor to exceed one billion cubic feet of gas in the aggregate
on a net basis for the Borrower and Restricted Subsidiaries.

           Section  9.19   "Margin Calls" on Hedging  Agreements.
With respect to Hedging Agreements, neither the Borrower nor  any
Subsidiary  shall post cash or any other consideration whatsoever
in  response to a call on Borrower or any Subsidiary  for  credit
support or eligible material in an aggregate amount greater  than
25% of the then current Borrowing Base.


              ARTICLE XEvents of Default; Remedies
           Section 10.01  Events of Default .  One or more of the
following events shall constitute an "Event of Default":

           (a)   the  Borrower shall default in  the  payment  or
     prepayment   (including,  without  limitation,   prepayments
     resulting  from a Borrowing Base Deficiency,  but  excluding
     prepayments  to  be  made  pursuant  to  revocable   notices
     delivered  pursuant to Section 2.07(a) hereof) when  due  of
     any   principal  of  or  interest  on  any  Loan,   or   any
     reimbursement obligation for a disbursement made  under  any
     Letter of Credit, or any fees or other amount payable by  it
     hereunder  or  under  any  Security  Instrument,  and   such
     default, other than a default of a payment or prepayment  of
     principal (which shall have no cure period), shall  continue
     unremedied for a period of 3 Business Days; or

           (b)   the Borrower or any Restricted Subsidiary  shall
     default  in  the  payment when due of any  principal  of  or
     interest  on  any of its other Debt aggregating $250,000  or
     more,  or  any  event  specified  in  any  note,  agreement,
     indenture  or other document evidencing or relating  to  any
     such  Debt  shall occur if the effect of such  event  is  to
     cause,  or  (with the giving of any notice or the  lapse  of
     time  or both) to permit the holder or holders of such  Debt
     (or  a trustee or agent on behalf of such holder or holders)
     to  cause,  such  Debt  to become due prior  to  its  stated
     maturity; or

          (c)  any representation, warranty or certification made
     or  deemed made herein or in any Security Instrument by  the
     Borrower  or  any Restricted Subsidiary, or any  certificate
     furnished  to  any  Lender  or the  Agent  pursuant  to  the
     provisions hereof or any Security Instrument, shall prove to
     have  been  false  or  misleading as of  the  time  made  or
     furnished in any material respect; or

           (d)  the Borrower shall default in the performance  of
     any of its obligations under Article IX or any other Article
     of  this  Agreement other than under Article  VIII;  or  the
     Borrower  shall default in the performance  of  any  of  its
     obligations  under  Article VIII  or  the  Borrower  or  any
     Restricted  Subsidiary shall default in the  performance  of
     any  of its obligations under any Security Instrument (other
     than  the payment of amounts due which shall be governed  by
     Sections  10.01(a)  and  10.01(m)) and  such  default  shall
     continue  unremedied for a period of thirty (30) days  after
     the  earlier to occur of (i) notice thereof to the  Borrower
     by  the Agent or any Lender (through the Agent), or (ii) the
     Borrower otherwise becoming aware of such default; or

           (e)  the Borrower shall admit in writing its inability
     to,  or be generally unable to, pay its debts as such  debts
     become due; or

          (f)  the Borrower shall (i) apply for or consent to the
     appointment of, or the taking of possession by, a  receiver,
     custodian, trustee or liquidator of itself or of  all  or  a
     substantial  part  of  its property,  (ii)  make  a  general
     assignment for the benefit of its creditors, (iii)  commence
     a  voluntary case under the Federal Bankruptcy Code (as  now
     or  hereafter  in effect), (iv) file a petition  seeking  to
     take  advantage  of  any other law relating  to  bankruptcy,
     insolvency,   reorganization,  winding-up,  liquidation   or
     composition or readjustment of debts, (v) fail to controvert
     in  a timely and appropriate manner, or acquiesce in writing
     to,  any  petition  filed against it in an involuntary  case
     under  the  Federal  Bankruptcy  Code,  or  (vi)  take   any
     corporate  action for the purpose of effecting  any  of  the
     foregoing; or

           (g)   a proceeding or case shall be commenced, without
     the application or consent of the Borrower, in any court  of
     competent   jurisdiction,  seeking  (i)   its   liquidation,
     reorganization,   dissolution   or   winding-up,   or    the
     composition   or  readjustment  of  its  debts,   (ii)   the
     appointment of a trustee, receiver, custodian, liquidator or
     the  like of the Borrower of all or any substantial part  of
     its  assets,  or  (iii) similar relief  in  respect  of  the
     Borrower  under any law relating to bankruptcy,  insolvency,
     reorganization, winding-up, or composition or adjustment  of
     debts,   and   such  proceeding  or  case   shall   continue
     undismissed,  or an order, judgment or decree  approving  or
     ordering  any of the foregoing shall be entered and continue
     unstayed and in effect, for a period of 60 days; or (iv)  an
     order for relief against the Borrower shall be entered in an
     involuntary case under the Federal Bankruptcy Code; or

           (h)   a judgment or judgments for the payment of money
     in  excess of $500,000 in the aggregate shall be rendered by
     a  court  against the Borrower or any Restricted  Subsidiary
     and  the  same  shall  not  be discharged  (or  arrangements
     satisfactory  to  the  Agent shall  not  be  made  for  such
     discharge),  or  a stay of execution thereof  shall  not  be
     procured,  within thirty (30) days from the  date  of  entry
     thereof and the Borrower or such Restricted Subsidiary shall
     not,  within  said period of 30 days, or such longer  period
     during  which execution of the same shall have been  stayed,
     appeal  therefrom  and  cause the execution  thereof  to  be
     stayed during such appeal; or

           (i)   the Security Instruments after delivery  thereof
     shall for any reason, except to the extent permitted by  the
     terms  thereof,  cease to be in full force  and  effect  and
     valid,  binding  and  enforceable in accordance  with  their
     terms, or cease to create a valid and perfected Lien of  the
     priority required thereby on any of the collateral purported
     to be covered thereby, except to the extent permitted by the
     terms  of this Agreement, or the Borrower shall so state  in
     writing; or

          (j)  any Letter of Credit becomes the subject matter of
     any   order,   judgment,  injunction  or  any   other   such
     determination, or if the Borrower or any other Person  shall
     petition  or  apply  for  or obtain  any  order  restricting
     payment by the Agent under any Letter of Credit or extending
     the Lenders' liability under any Letter of Credit beyond the
     expiration date stated therein or otherwise agreed to by the
     Agent; or

           (k)   the Borrower discontinues its usual business  or
     suffers  to  exist  any material change  in  its  ownership,
     control or management; or

           (l)   any  Restricted  Subsidiary  takes,  suffers  or
     permits to exist any of the events or conditions referred to
     in paragraphs (e), (f), (g) or (h) hereof; or

          (m)  a Borrowing Base Deficiency shall remain after the
     applicable  time period provided for in Section 2.07(c),  or
     shall  remain  after the Business Day on which  the  Monthly
     Reduction giving rise to such Borrowing Base Deficiency took
     effect.

          Section 10.02  Remedies .

           (a)  In the case of an Event of Default other than one
     referred  to in clauses (e), (f) or (g) of Section 10.01  or
     in  clause (l) to the extent it relates to clauses (e),  (f)
     or  (g),  the  Agent, upon request of the Majority  Lenders,
     shall,  by  notice to the Borrower, cancel  the  Commitments
     and/or declare the principal amount then outstanding of, and
     the  accrued  interest on, the Loans and all  other  amounts
     payable  by  the  Borrower hereunder  and  under  the  Notes
     (including without limitation the payment of cash collateral
     to  secure  the  LC Exposure as provided in Section  2.10(b)
     hereof)  to  be  forthwith due and payable,  whereupon  such
     amounts   shall  be  immediately  due  and  payable  without
     presentment,   demand,  protest,   notice   of   intent   to
     accelerate,  notice of acceleration or other formalities  of
     any  kind, all of which are hereby expressly waived  by  the
     Borrower.

           (b)   In  the  case of the occurrence of an  Event  of
     Default  referred to in clauses (e), (f) or (g)  of  Section
     10.01  or in clause (l) to the extent it relates to  clauses
     (e),  (f)  or  (g),  the Commitments shall be  automatically
     canceled and the principal amount then outstanding  of,  and
     the  accrued  interest on, the Loans and all  other  amounts
     payable  by  the  Borrower hereunder  and  under  the  Notes
     (including without limitation the payment of cash collateral
     to  secure  the  LC Exposure as provided in Section  2.10(b)
     hereof)  shall  become  automatically  immediately  due  and
     payable  without  presentment, demand,  protest,  notice  of
     intent  to  accelerate,  notice  of  acceleration  or  other
     formalities  of any kind, all of which are hereby  expressly
     waived by the Borrower.

          (c)  All proceeds received after maturity of the Notes,
     whether by acceleration or otherwise shall be applied  first
     to reimbursement of expenses and indemnities provided for in
     this  Agreement  and  the  Security Instruments;  second  to
     accrued  interest  on the Notes; third to fees;  fourth  pro
     rata  to  principal  outstanding  on  the  Notes  and  other
     Indebtedness; fifth to serve as cash collateral to  be  held
     by the Agent to secure the LC Exposure; and any excess shall
     be  paid to the Borrower or the Restricted Subsidiaries,  as
     applicable,  or  as otherwise required by  any  Governmental
     Requirement.


                       ARTICLE XI  The Agent
           Section  11.01  Appointment, Powers and  Immunities  .
Each  Lender hereby irrevocably appoints and authorizes the Agent
to act as its agent hereunder and  under the Security Instruments
with  such powers as are specifically delegated to the  Agent  by
the  terms  of  this  Agreement  and  the  Security  Instruments,
together  with  such  other powers as are  reasonably  incidental
thereto.  The Agent (which term as used in this sentence  and  in
Section  11.05  and  the first sentence of  Section  11.06  shall
include  reference to its Affiliates and its and its  Affiliates'
officers,  directors, employees, attorneys, accountants,  experts
and agents):  (i) shall have no duties or responsibilities except
those expressly set forth in the Loan Documents, and shall not by
reason  of the Loan Documents be a trustee or fiduciary  for  any
Lender;  (ii) makes no representation or warranty to  any  Lender
and  shall  not  be responsible to the Lenders for any  recitals,
statements,  representations  or  warranties  contained  in  this
Agreement, or in any certificate or other document referred to or
provided  for  in,  or  received  by  any  of  them  under,  this
Agreement,   or   for   the   value,   validity,   effectiveness,
genuineness,  execution, legality, enforceability or  sufficiency
of  this Agreement, any Note or any other document referred to or
provided  for  herein or for any failure by the Borrower  or  any
other  Person  (other  than the Agent)  to  perform  any  of  its
obligations hereunder or thereunder or for the existence,  value,
perfection  or  priority  of  any  collateral  security  or   the
financial or other condition of the Borrower, the Subsidiaries or
any  other obligor or guarantor; (iii) except pursuant to Section
11.07 shall not be required to initiate or conduct any litigation
or  collection  proceedings hereunder;  and  (iv)  shall  not  be
responsible  for any action taken or omitted to be  taken  by  it
hereunder  or under any other document or instrument referred  to
or  provided  for herein or in connection herewith including  its
own  ordinary negligence, except for its own gross negligence  or
willful  misconduct.   The Agent may employ agents,  accountants,
attorneys  and  experts  and shall not  be  responsible  for  the
negligence   or  misconduct  of  any  such  agents,  accountants,
attorneys  or experts selected by it in good faith or any  action
taken  or  omitted to be taken in good faith by it in  accordance
with  the  advice  of  such  agents,  accountants,  attorneys  or
experts.  The Agent may deem and treat the payee of any  Note  as
the  holder  thereof for all purposes hereof unless and  until  a
written  notice  of the assignment or transfer thereof  permitted
hereunder  shall have been filed with the Agent.   The  Agent  is
authorized to release any collateral that is permitted to be sold
or released pursuant to the terms of the Loan Documents.

           Section 11.02  Reliance by Agent .  The Agent shall be
entitled  to  rely  upon  any  certification,  notice  or   other
communication   (including  any  thereof  by  telephone,   telex,
telecopier,  telegram or cable) believed by it to be genuine  and
correct  and to have been signed or sent by or on behalf  of  the
proper Person or Persons, and upon advice and statements of legal
counsel,  independent accountants and other experts  selected  by
the Agent.

           Section  11.03   Defaults .  The Agent  shall  not  be
deemed  to  have knowledge of the occurrence of a Default  (other
than  the non-payment of principal of or interest on Loans or  of
fees  or  failure  to  reimburse for Letter of  Credit  drawings)
unless  the  Agent  has  received notice from  a  Lender  or  the
Borrower specifying such Default and stating that such notice  is
a "Notice of Default."  In the event that the Agent receives such
a  notice  of the occurrence of a Default, the Agent  shall  give
prompt  notice thereof to the Lenders.  In the event of a payment
Default, the Agent shall give each Lender prompt notice  of  each
such payment Default.

           Section 11.04  Rights as a Lender .   With respect  to
its Commitments and the Loans made by it and its participation in
the  issuance  of Letters of Credit, Hibernia (and any  successor
acting as Agent) in its capacity as a Lender hereunder shall have
the  same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as the Agent,  and
the   term  "Lender"  or  "Lenders"  shall,  unless  the  context
otherwise   indicates,  include  the  Agent  in  its   individual
capacity.  Hibernia (and any successor acting as Agent)  and  its
Affiliates may (without having to account therefor to any Lender)
accept  deposits from, lend money to and generally engage in  any
kind  of banking, trust or other business with the Borrower  (and
any of its Affiliates) as if it were not acting as the Agent, and
Hibernia   and   its  Affiliates  may  accept  fees   and   other
consideration  from the Borrower for services in connection  with
this  Agreement  or otherwise without having to account  for  the
same to the Lenders.

           Section 11.05  indemnification .  the Lenders agree to
indemnify  the Agent ratably in accordance with their  Percentage
Shares for the Indemnity Matters as described in section 12.03 to
the  extent  not indemnified or reimbursed by the Borrower  under
section  12.03,  but  without limiting  the  obligations  of  the
Borrower  under  said section 12.03 and for  any  and  all  other
liabilities,  obligations, losses, damages,  penalties,  actions,
judgments,  suits, costs, expenses or disbursements of  any  kind
and  nature  whatsoever which may be imposed on, incurred  by  or
asserted against the Agent in any way relating to or arising  out
of:  (i)  this Agreement, the Security Instruments or  any  other
documents   contemplated  by  or  referred  to  herein   or   the
transactions contemplated hereby, but excluding, unless a Default
has  occurred and is continuing, normal administrative costs  and
expenses  incident  to  the  performance  of  its  agency  duties
hereunder  or  (ii) the enforcement of any of the terms  of  this
Agreement,   any  Security  Instrument  or  of  any  such   other
documents; whether or not any of the foregoing specified in  this
section  11.05  arises from the sole or concurrent negligence  of
the Agent, provided that no Lender shall be liable for any of the
foregoing  to the extent they arise from the gross negligence  or
willful misconduct of the Agent.

           Section 11.06  Non-Reliance on Agent and other Lenders
..  Each Lender acknowledges and agrees that it has, independently
and  without reliance on the Agent or any other Lender, and based
on  such  documents and information as it has deemed appropriate,
made its own credit analysis of the Borrower and its decision  to
enter  into  this Agreement, and that it will, independently  and
without reliance upon the Agent or any other Lender, and based on
such  documents  and information as it shall deem appropriate  at
the  time,  continue to make its own analysis  and  decisions  in
taking  or  not  taking action under this Agreement.   The  Agent
shall  not  be  required  to  keep  itself  informed  as  to  the
performance or observance by the Borrower of this Agreement,  the
Notes, the Security Instruments or any other document referred to
or  provided for herein or to inspect the properties or books  of
the  Borrower.   Except for notices, reports and other  documents
and information expressly required to be furnished to the Lenders
by  the  Agent hereunder, the Agent shall not have  any  duty  or
responsibility  to provide any Lender with any  credit  or  other
information  concerning  the  affairs,  financial  condition   or
business  of  the Borrower (or any of its Affiliates)  which  may
come  into  the possession of the Agent or any of its Affiliates.
In  this  regard,  each Lender acknowledges  that  Phelps  Dunbar
L.L.P.  is acting in this transaction as special counsel  to  the
Agent  only, except to the extent otherwise expressly  stated  in
any legal opinion or any Loan Document.  Each Lender will consult
with  its own legal counsel to the extent that it deems necessary
in   connection   with  the  Loan  Documents  and   the   matters
contemplated therein.

           Section 11.07  Action by Agent .  Except for action or
other  matters  expressly required of the  Agent  hereunder,  the
Agent  shall  in  all  cases be fully  justified  in  failing  or
refusing  to  act  hereunder unless it shall (i) receive  written
instructions from the Majority Lenders (or all of the Lenders  as
expressly required by Section 12.04) specifying the action to  be
taken, and (ii) be indemnified to its satisfaction by the Lenders
against  any and all liability and expenses which may be incurred
by  it by reason of taking or continuing to take any such action.
The  instructions of the Majority Lenders (or all of the  Lenders
as  expressly required by Section 12.04) and any action taken  or
failure to act pursuant thereto by the Agent shall be binding  on
all of the Lenders.  If a Default has occurred and is continuing,
the Agent shall take such action with respect to such Default  as
shall  be directed by the Majority Lenders (or all of the Lenders
as  required by Section 12.04) in the written instructions  (with
indemnities)  described  in this Section  11.07,  provided  that,
unless  and  until the Agent shall have received such directions,
the  Agent may (but shall not be obligated to) take such  action,
or  refrain from taking such action, with respect to such Default
as  it shall deem advisable in the best interests of the Lenders.
In  no  event, however, shall the Agent be required to  take  any
action which exposes the Agent to personal liability or which  is
contrary  to  this  Agreement  and the  Security  Instruments  or
applicable law.

           Section  11.08   Resignation or  Removal  of  Agent  .
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving notice
thereof  to  the Lenders and the Borrower, and the Agent  may  be
removed  at  any  time  with or without  cause  by  the  Majority
Lenders.   Upon  any  such resignation or removal,  the  Majority
Lenders shall have the right to appoint a successor Agent.  If no
successor  Agent  shall have been so appointed  by  the  Majority
Lenders  and  shall have accepted such appointment within  thirty
(30)  days  after  the  retiring  Agent's  giving  of  notice  of
resignation  or  the Majority Lenders' removal  of  the  retiring
Agent,  then  the retiring Agent may, on behalf of  the  Lenders,
appoint   a  successor  Agent.   Upon  the  acceptance  of   such
appointment hereunder by a successor Agent, such successor  Agent
shall thereupon succeed to and become vested with all the rights,
powers,  privileges  and duties of the retiring  Agent,  and  the
retiring   Agent  shall  be  discharged  from  its   duties   and
obligations hereunder.  After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article XI and
Section 12.03 shall continue in effect for its benefit in respect
of  any  actions taken or omitted to be taken by it while it  was
acting as the Agent.


                    ARTICLE XII  Miscellaneous
           Section 12.01  Waiver .  No failure on the part of the
Agent  or any Lender to exercise and no delay in exercising,  and
no  course  of  dealing  with respect to,  any  right,  power  or
privilege  under  any of the Loan Documents shall  operate  as  a
waiver  thereof, nor shall any single or partial exercise of  any
right,  power  or  privilege  under any  of  the  Loan  Documents
preclude any other or further exercise thereof or the exercise of
any  other  right,  power or privilege.   The  remedies  provided
herein  are cumulative and not exclusive of any remedies provided
by law.

           Section  12.02   Notices  .   All  notices  and  other
communications  provided  for  herein  and  in  the  other   Loan
Documents  (including, without limitation, any modifications  of,
or  waivers  or consents under, this Agreement or the other  Loan
Documents)  shall  be  given  or  made  by   telecopy,   personal
delivery, nationally recognized overnight courier or U.S. Mail in
writing  and  telecopied,  mailed or delivered  to  the  intended
recipient at the "Address for Notices" specified below  its  name
on  the signature pages hereof or in the Loan Documents or, as to
any  party, at such other address as shall be designated by  such
party  in  a  notice  to each other party.  Except  as  otherwise
provided  in  this Agreement or in the other Loan Documents,  all
such  communications shall be deemed to have been duly given when
transmitted,  if  transmitted before 1:00 p.m. local  time  on  a
Business Day (otherwise on the next succeeding Business  Day)  by
telecopier  to  the  extent  that  confirmation  of  receipt   is
obtained,  or personally delivered or, in the case  of  a  mailed
notice, three (3) Business Days after the date deposited  in  the
mails,   postage  prepaid,  or,  in  the  case  of  a  nationally
recognized  overnight  courier,  one  (1)  day  after  the   date
delivered  to such courier with guaranteed next day delivery,  in
each case given or addressed as aforesaid.

           Section 12.03  Payment of Expenses, Indemnities, etc .
The Borrower agrees:

            (a)    whether   or   not  the  transactions   hereby
     contemplated are consummated, to pay all reasonable expenses
     of  the  Agent in the administration (both before and  after
     the  execution hereof and including advice of counsel as  to
     the  rights  and  duties of the Agent and the  Lenders  with
     respect thereto) of, and in connection with the negotiation,
     syndication,   investigation,  preparation,  execution   and
     delivery of, recording or filing of, preservation of  rights
     under,  enforcement  of, and refinancing,  renegotiation  or
     restructuring  of,  the Loan Documents  and  any  amendment,
     waiver  or  consent  relating  thereto  (including,  without
     limitation,  travel, photocopy, mailing, courier,  telephone
     and  other  similar  expenses of  the  Agent,  the  cost  of
     environmental  audits, surveys and appraisals at  reasonable
     intervals, the reasonable fees and disbursements of  counsel
     and other outside consultants for the Agent and, in the case
     of  enforcement,  the reasonable fees and  disbursements  of
     counsel  for the Agent and any of the Lenders); and promptly
     reimburse  the Agent for all amounts expended,  advanced  or
     incurred  by  the  Agent  or  the  Lenders  to  satisfy  any
     obligation  of  the  Borrower under this  Agreement  or  any
     Security Instrument, including without limitation, all costs
     and expenses of foreclosure;

          (b)  to indemnify the Agent and each Lender and each of
     their  Affiliates  and  each of their  officers,  directors,
     employees,  representatives, agents, attorneys,  accountants
     and  experts ("Indemnified Parties") from, hold each of them
     harmless  against and promptly upon demand pay or  reimburse
     each  of  them  for,  the Indemnity  Matters  which  may  be
     incurred  by  or  asserted against or involve  any  of  them
     (whether  or not any of them is designated a party  thereto)
     as  a result of, arising out of or in any way related to (i)
     any  actual or proposed use by the Borrower of the  proceeds
     of  any  of  the  Loans  or  Letters  of  Credit,  (ii)  the
     execution,  delivery and performance of the Loan  Documents,
     (iii) the operations of the business of the Borrower and the
     Subsidiaries,  (iv)  the  failure of  the  Borrower  or  any
     Subsidiary  to  comply  with  the  terms  of  any   Security
     Instrument  or  this  Agreement, or  with  any  Governmental
     Requirement, (v) any inaccuracy of any representation or any
     breach  of any warranty of the Borrower set forth in any  of
     the   Loan  Documents,  (vi)  the  issuance,  execution  and
     delivery  or transfer of or payment or failure to pay  under
     any  Letter  of Credit, or (vii) the payment  of  a  drawing
     under   any  Letter  of  Credit  notwithstanding  the   non-
     compliance,  non-delivery or other improper presentation  of
     the  manually executed draft(s) and certification(s), (viii)
     any  assertion that the Lenders were not entitled to receive
     the  proceeds received pursuant to the Security  Instruments
     or  (ix)  any other aspect of the Loan Documents, including,
     without limitation, the reasonable fees and disbursements of
     counsel  and all other expenses incurred in connection  with
     investigating,  defending or preparing to  defend  any  such
     action,  suit,  proceeding  (including  any  investigations,
     litigation   or  inquiries)  or  claim  and  including   all
     Indemnity   Matters  arising  by  reason  of  the   ordinary
     negligence  of  any  Indemnified Party,  but  excluding  all
     Indemnity Matters arising solely by reason of claims between
     the  Lenders  or  any  Lender and the Agent  or  a  Lender's
     shareholders against the Agent or Lender or by reason of the
     gross  negligence or willful misconduct on the part  of  the
     Indemnified Party or its Affiliate; and

           (c)   to indemnify and hold harmless from time to time
     the Indemnified Parties from and against any and all losses,
     claims,  cost  recovery  actions, administrative  orders  or
     proceedings,  damages  and liabilities  to  which  any  such
     Person  may  become subject (i) under any Environmental  Law
     applicable to the Borrower or any Subsidiary or any of their
     Properties,  including without limitation, the treatment  or
     disposal of hazardous substances on any of their Properties,
     (ii)  as  a  result of the breach or non-compliance  by  the
     Borrower  or  any  Subsidiary  with  any  Environmental  Law
     applicable to the Borrower or any Subsidiary, (iii)  due  to
     past  ownership by the Borrower or any Subsidiary of any  of
     their Properties or past activity on any of their Properties
     which,  though  lawful and fully permissible  at  the  time,
     could  result in present liability, (iv) the presence,  use,
     release,   storage,  treatment  or  disposal  of   hazardous
     substances on or at any of the Properties owned or  operated
     by  the  Borrower  or  any  Subsidiary,  or  (v)  any  other
     environmental, health or safety condition in connection with
     the Loan Documents, provided, however, no indemnity shall be
     afforded  under  this section 12.03(c)  in  respect  of  any
     Property  for  any  occurrence  arising  from  the  acts  or
     omissions of the Agent or any Lender during the period after
     which  such  Person,  its successors or assigns  shall  have
     obtained possession of such Property (whether by foreclosure
     or  deed  in lieu of foreclosure, as mortgagee-in-possession
     or otherwise).

           (d)   No Indemnified Party may settle any claim to  be
     indemnified  without  the consent of  the  indemnitor,  such
     consent not to be unreasonably withheld; provided, that  the
     indemnitor  may  not  reasonably  withhold  consent  to  any
     settlement  that  an  Indemnified  Party  proposes,  if  the
     indemnitor  does not have the financial ability to  pay  all
     its   obligations  outstanding  and  asserted  against   the
     indemnitor  at  that time, including the  maximum  potential
     claims  against  the  Indemnified Party  to  be  indemnified
     pursuant to this Section 12.03.

           (e)  In the case of any indemnification hereunder, the
     Agent  or  Lender, as appropriate shall give notice  to  the
     Borrower of any such claim or demand being made against  the
     Indemnified   Party  and  the  Borrower   shall   have   the
     non-exclusive right to join in the defense against any  such
     claim  or  demand provided that if the Borrower  provides  a
     defense,  the Indemnified Party shall bear its own  cost  of
     defense unless there is a conflict between the Borrower  and
     such Indemnified Party.

           (f)   the  foregoing indemnities shall extend  to  the
     Indemnified  Parties notwithstanding the sole or  concurrent
     negligence of every kind or character whatsoever (other than
     gross  negligence),  whether active or passive,  whether  an
     affirmative   act   or   an  omission,   including   without
     limitation, all types of negligent conduct identified in the
     restatement  (second)  of  torts  of  one  or  more  of  the
     Indemnified Parties or by reason of strict liability imposed
     without fault on any one or more of the Indemnified Parties.
     to  the  extent that an Indemnified Party is found  to  have
     committed  an act of gross negligence or willful misconduct,
     this   contractual   obligation  of  indemnification   shall
     continue  but shall only extend to the portion of the  claim
     that  is  deemed to have occurred by reason of events  other
     than  the  gross  negligence or willful  misconduct  of  the
     Indemnified Party.

             (g)    The   Borrower's   obligations   under   this
     Section   12.03  shall  survive  any  termination  of   this
     Agreement  and  the payment of the Notes and shall  continue
     thereafter in full force and effect.

           (h)  The Borrower shall pay any amounts due under this
     Section 12.03 within thirty (30) days of the receipt by  the
     Borrower of notice of the amount due.

          Section 12.04  Amendments, Etc.   Any provision of this
Agreement or any Security Instrument may be amended, modified  or
waived  with  the  Borrower's  and the  Majority  Lenders'  prior
written consent; provided that (i) no amendment, modification  or
waiver  which extends the final maturity of the Loans,  increases
the  Aggregate  Maximum  Credit Amounts, forgives  the  principal
amount  of  any  Indebtedness outstanding under  this  Agreement,
releases any guarantor of the Indebtedness or releases any of the
collateral, reduces the interest rate applicable to the Loans  or
the  fees  payable  to  the Lenders generally,  affects  Sections
2.03(a)  or  (b),  this  Section 12.04  or  Section  12.06(a)  or
modifies  the definition of "Majority Lenders" shall be effective
without  consent of all Lenders; (ii) no amendment,  modification
or waiver which increases the Maximum Credit Amount of any Lender
shall  be effective without the consent of such Lender; and (iii)
no  amendment, modification or waiver which modifies the  rights,
duties or obligations of the Agent shall be effective without the
consent of the Agent.

          Section 12.05  Successors and Assigns .  This Agreement
shall  be  binding upon and inure to the benefit of  the  parties
hereto and their respective successors and permitted assigns.

          Section 12.06  Assignments and Participations .

           (a)   The  Borrower  may  not  assign  its  rights  or
     obligations hereunder or under the Notes or any  Letters  of
     Credit  without the prior consent of all of the Lenders  and
     the Agent.

           (b)   Any  Lender may assign to one  or  more  of  its
     Affiliates or, upon the written consent of the Agent and the
     Borrower  (which consent will not be unreasonably withheld),
     assign  to  one or more assignees who are not Affiliates  of
     such  Lender, all or a portion of its rights and obligations
     under  this  Agreement  pursuant to an Assignment  Agreement
     substantially  in  the form of Exhibit F  (an  "Assignment")
     provided, however, that (i) any such assignment shall be  in
     the  amount of at least $1,000,000 or such lesser amount  to
     which  the  Borrower has consented and (ii) the assignee  or
     assignor shall pay to the Agent a processing and recordation
     fee of $2,500 for each assignment.  Any such assignment will
     become  effective  upon the execution and  delivery  to  the
     Agent  of  the  Assignment and the  consent  of  the  Agent.
     Promptly after receipt of an executed Assignment, the  Agent
     shall   send  to  the  Borrower  a  copy  of  such  executed
     Assignment.   Upon receipt of such executed Assignment,  the
     Borrower, will, at its own expense, execute and deliver  new
     Notes  to  the assignor and/or assignee, as appropriate,  in
     accordance  with their respective interests as they  appear.
     Upon  the effectiveness of any assignment pursuant  to  this
     Section  12.06(b), the assignee will become a  "Lender,"  if
     not  already a "Lender," for all purposes of this  Agreement
     and  the  Security  Instruments.   The  assignor  shall   be
     relieved of its obligations hereunder to the extent of  such
     assignment (and if the assigning Lender no longer holds  any
     rights  or  obligations under this Agreement, such assigning
     Lender  shall cease to be a "Lender" hereunder  except  that
     its  rights under Sections 4.06, 5.01, 5.05 and 12.03  shall
     not  be  affected).   The Agent will  prepare  on  the  last
     Business  Day  of each month during which an assignment  has
     become  effective pursuant to this Section 12.06(b),  a  new
     Annex  I  giving  effect  to all such  assignments  effected
     during such month, and will promptly provide the same to the
     Borrower and each of the Lenders.

            (c)   Each  Lender  may  transfer,  grant  or  assign
     participations in all or any part of such Lender's interests
     hereunder  pursuant to this Section 12.06(c) to any  Person,
     provided  that: (i) such Lender shall remain a "Lender"  for
     all  purposes of this Agreement and the transferee  of  such
     participation shall not constitute a "Lender" hereunder; and
     (ii)  no participant under any such participation shall have
     rights  to approve any amendment to or waiver of any of  the
     Loan Documents except to the extent such amendment or waiver
     would (x) forgive any principal owing on any Indebtedness or
     extend  the  final  maturity of the Loans,  (y)  reduce  the
     interest  rate  (other  than as  a  result  of  waiving  the
     applicability  of  any  post-default increases  in  interest
     rates) or fees applicable to any of the Commitments or Loans
     or   Letters   of  Credit  in  which  such  participant   is
     participating,  or postpone the payment of any  thereof,  or
     (z) release any guarantor of the Indebtedness or release all
     or  substantially all of the collateral (except as  provided
     in  the Loan Documents) supporting any of the Commitments or
     Loans  or  Letters  of Credit in which such  participant  is
     participating.   In the case of any such participation,  the
     participant  shall not have any rights under this  Agreement
     or any of the Security Instruments (the participant's rights
     against the granting Lender in respect of such participation
     to  be  those  set forth in the agreement with  such  Lender
     creating such participation), and all amounts payable by the
     Borrower hereunder shall be determined as if such Lender had
     not  sold such participation, provided that such participant
     shall  be  entitled  to  receive  additional  amounts  under
     Article  V on the same basis as if it were a Lender  and  be
     indemnified under Section 12.03 as if it were a Lender.   In
     addition,  each  agreement creating any  participation  must
     include an agreement by the participant to be bound  by  the
     provisions of Section 12.15.

          (d)  The Lenders may furnish any information concerning
     the  Borrower in the possession of the Lenders from time  to
     time  to  assignees and participants (including  prospective
     assignees  and  participants); provided that,  such  Persons
     agree to be bound by the provisions of Section 12.15 hereof.

           (e)  Notwithstanding anything in this Section 12.06 to
     the contrary, any Lender may assign and pledge all or any of
     its  Notes to any Federal Reserve Bank or the United  States
     Treasury as collateral security pursuant to Regulation A  of
     the Board of Governors of the Federal Reserve System and any
     operating  circular  issued by such Federal  Reserve  System
     and/or such Federal Reserve Bank.  No such assignment and/or
     pledge  shall  release the assigning and/or pledging  Lender
     from its obligations hereunder.

           (f)   Notwithstanding  any other  provisions  of  this
     Section 12.06, no transfer or assignment of the interests or
     obligations  of  any Lender or any grant  of  participations
     therein  shall be permitted if such transfer, assignment  or
     grant  would  require  the Borrower to file  a  registration
     statement  with  the SEC or to qualify the Loans  under  the
     "Blue Sky" laws of any state.

           Section 12.07  Invalidity .  In the event that any one
or  more of the provisions contained in any of the Loan Documents
or  the Letters of Credit, the Letter of Credit Agreements shall,
for  any reason, be held invalid, illegal or unenforceable in any
respect,  such  invalidity, illegality or unenforceability  shall
not  affect  any other provision of the Notes, this Agreement  or
any Security Instrument.

           Section 12.08  Counterparts .  This Agreement  may  be
executed  in  any  number of counterparts,  all  of  which  taken
together shall constitute one and the same instrument and any  of
the parties hereto may execute this Agreement by signing any such
counterpart.

           Section  12.09   References  .   The  words  "herein,"
"hereof," "hereunder" and other words of similar import when used
in  this Agreement refer to this Agreement as a whole, and not to
any  particular  article, section or subsection.   Any  reference
herein  to  a Section shall be deemed to refer to the  applicable
Section  of  this Agreement unless otherwise stated herein.   Any
reference  herein to an exhibit or schedule shall  be  deemed  to
refer  to  the  applicable  exhibit or schedule  attached  hereto
unless otherwise stated herein.

           Section  12.10   Survival .  The  obligations  of  the
parties  under  Section 4.06, Article V, and Sections  11.05  and
12.03   shall  survive  the  repayment  of  the  Loans  and   the
termination of the Commitments.  To the extent that any  payments
on   the   Indebtedness  or  proceeds  of  any   collateral   are
subsequently   invalidated,  declared   to   be   fraudulent   or
preferential,  set aside or required to be repaid to  a  trustee,
debtor  in  possession,  receiver  or  other  Person  under   any
bankruptcy  law,  common law or equitable  cause,  then  to  such
extent,  the  Indebtedness  so satisfied  shall  be  revived  and
continue as if such payment or proceeds had not been received and
the  Agent's and the Lenders' Liens, security interests,  rights,
powers  and  remedies  under  this Agreement  and  each  Security
Instrument  shall  continue in full force and  effect.   In  such
event, each Security Instrument shall be automatically reinstated
and  the  Borrower  shall take such action as may  be  reasonably
requested   by  the  Agent  and  the  Lenders  to   effect   such
reinstatement.

            Section  12.11   Captions  .   Captions  and  section
headings appearing herein are included solely for convenience  of
reference  and  are not intended to affect the interpretation  of
any provision of this Agreement.

          Section 12.12  no oral agreements .  the Loan Documents
embody the entire agreement and understanding between the parties
and  supersede  all  other agreements and understandings  between
such  parties relating to the subject matter hereof and  thereof.
the  Loan  Documents  represent the final agreement  between  the
parties  and  may  not  be contradicted  by  evidence  of  prior,
contemporaneous  or subsequent oral agreements  of  the  parties.
there are no unwritten oral agreements between the parties.

            Section   12.13    governing   law;   submission   to
jurisdiction .

          (a)  this Agreement and the Notes shall be governed by,
     and  construed in accordance with, the laws of the state  of
     louisiana  except to the extent that united  states  federal
     law  permits  any  Lender to charge  interest  at  the  rate
     allowed  by  the  laws  of the state where  such  Lender  is
     located.

          (b)  any legal action or proceeding with respect to the
     Loan  Documents shall be brought in the courts of the  state
     of  louisiana  or  of the united states of America  for  the
     eastern  district  of  louisiana,  and,  by  execution   and
     delivery of this Agreement, the Borrower hereby accepts  for
     itself  and  (to the extent permitted by law) in respect  of
     its    Property,   generally   and   unconditionally,    the
     jurisdiction  of the aforesaid courts.  the Borrower  hereby
     irrevocably   waives   any  objection,  including,   without
     limitation, any objection to the laying of venue or based on
     the  grounds of forum non conveniens, which it  may  now  or
     hereafter  have  to  the  bringing of  any  such  action  or
     proceeding   in   such   respective   jurisdictions.    this
     submission  to jurisdiction is non-exclusive  and  does  not
     preclude the Agent or any Lender from obtaining jurisdiction
     over   the   Borrower   in   any  court   otherwise   having
     jurisdiction.

           (c)   the Borrower hereby irrevocably designates  c.t.
     corporation  located  in  baton  rouge,  louisiana,  as  the
     designee,  appointee and agent of the Borrower  to  receive,
     for  and  on  behalf of the Borrower, service of process  in
     such  respective  jurisdictions  in  any  legal  action   or
     proceeding with respect to the Loan Documents.  it is  under
     stood that a copy of such process served on such agent  will
     be  promptly forwarded by overnight courier to the  Borrower
     at  its address set forth under its signature below, but the
     failure  of  the  Borrower to receive such  copy  shall  not
     affect in any way the service of such process.  the Borrower
     further  irrevocably consents to the service of  process  of
     any  of  the  aforementioned courts in any  such  action  or
     proceeding by the mailing of copies thereof by registered or
     certified mail, postage prepaid, to the Borrower at its said
     address,  such service to become effective thirty (30)  days
     after such mailing.

          (d)  nothing herein shall affect the right of the Agent
     or  any  Lender or any holder of a Note to serve process  in
     any  other  manner  permitted by law or  to  commence  legal
     proceedings or otherwise proceed against the Borrower in any
     other jurisdiction.

           (e)   each of the Borrower and each lender hereby  (i)
     irrevocably and unconditionally waive, to the fullest extent
     permitted  by  law,  trial by jury in any  legal  action  or
     proceeding  relating  to  this  Agreement  or  any  Security
     Instrument   and   for   any  counterclaim   therein;   (ii)
     irrevocably  waive, to the maximum extent not prohibited  by
     law,  any right it may have to claim or recover in any  such
     litigation any special, exemplary, punitive or consequential
     damages,  or damages other than, or in addition  to,  actual
     damages;  (iii)  certify  that  no  party  hereto  nor   any
     representative or agent of counsel for any party hereto  has
     represented,  expressly or otherwise, or implied  that  such
     party would not, in the event of litigation, seek to enforce
     the foregoing waivers, and (iv) acknowledge that it has been
     induced   to   enter  into  this  Agreement,  the   Security
     Instruments  and  the transactions contemplated  hereby  and
     thereby  by,  among  other things, the  mutual  waivers  and
     certifications contained in this section 12.13.

           Section 12.14  Interest .  It is the intention of  the
parties  hereto that each Lender shall conform strictly to  usury
laws   applicable  to  it.   Accordingly,  if  the   transactions
contemplated hereby would be usurious as to any Lender under laws
applicable  to  it  (including the laws of the United  States  of
America  and  the  State of Louisiana or any  other  jurisdiction
whose   laws  may  be  mandatorily  applicable  to  such   Lender
notwithstanding the other provisions of this Agreement), then, in
that  event, notwithstanding anything to the contrary in  any  of
the  Loan  Documents or any agreement entered into in  connection
with  or  as  security for the Notes, it is  agreed  as  follows:
(i) the aggregate of all consideration which constitutes interest
under law applicable to any Lender that is contracted for, taken,
reserved,  charged or received by such Lender under  any  of  the
Loan Documents or agreements or otherwise in connection with  the
Notes  shall  under  no circumstances exceed the  maximum  amount
allowed  by such applicable law, and any excess shall be canceled
automatically and if theretofore paid shall be credited  by  such
Lender  on the principal amount of the Indebtedness (or,  to  the
extent  that the principal amount of the Indebtedness shall  have
been or would thereby be paid in full, refunded by such Lender to
the  Borrower);  and (ii) in the event that the maturity  of  the
Notes  is  accelerated  by reason of an election  of  the  holder
thereof  resulting from any Event of Default under this Agreement
or  otherwise,  or  in  the event of any  required  or  permitted
prepayment,  then  such consideration that  constitutes  interest
under  law  applicable to any Lender may never include more  than
the  maximum  amount allowed by such applicable law,  and  excess
interest,  if  any, provided for in this Agreement  or  otherwise
shall be canceled automatically by such Lender as of the date  of
such  acceleration or prepayment and, if theretofore paid,  shall
be  credited  by  such  Lender on the  principal  amount  of  the
Indebtedness (or, to the extent that the principal amount of  the
Indebtedness  shall have been or would thereby be paid  in  full,
refunded  by  such  Lender to the Borrower).  All  sums  paid  or
agreed  to  be  paid  to any Lender for the use,  forbearance  or
detention of sums due hereunder shall, to the extent permitted by
law  applicable to such Lender, be amortized, prorated, allocated
and spread throughout the full term of the Loans evidenced by the
Notes  until  payment  in full so that  the  rate  or  amount  of
interest  on account of any Loans hereunder does not  exceed  the
maximum  amount allowed by such applicable law.  If at  any  time
and  from time to time (i) the amount of interest payable to  any
Lender  on any date shall be computed at the Highest Lawful  Rate
applicable  to  such Lender pursuant to this  Section  12.14  and
(ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Lender would be less
than  the  amount of interest payable to such Lender computed  at
the  Highest  Lawful  Rate applicable to such  Lender,  then  the
amount  of  interest payable to such Lender in  respect  of  such
subsequent  interest  computation period  shall  continue  to  be
computed  at  the Highest Lawful Rate applicable to  such  Lender
until  the total amount of interest payable to such Lender  shall
equal  the total amount of interest which would have been payable
to  such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14.

           Section  12.15  Confidentiality .   In the event  that
the  Borrower  provides  to  the Agent  or  the  Lenders  written
confidential  information  belonging  to  the  Borrower,  if  the
Borrower   shall  denominate  such  information  in  writing   as
"confidential",  the  Agent  and  the  Lenders  shall  thereafter
maintain  such information in confidence in accordance  with  the
standards of care and diligence that each utilizes in maintaining
its  own confidential information.  This obligation of confidence
shall not apply to such portions of the information which (i) are
in  the  public domain, (ii) hereafter become part of the  public
domain   without  the  Agent  or  the  Lenders  breaching   their
obligation  of  confidence to the Borrower, (iii) are  previously
known by the Agent or the Lenders from some source other than the
Borrower,  (iv)  are  hereafter developed by  the  Agent  or  the
Lenders  without  using  the  Borrower's  information,  (v)   are
hereafter  obtained by or available to the Agent or  the  Lenders
from  a  third party who owes no obligation of confidence to  the
Borrower  with respect to such information or through  any  other
means  other  than through disclosure by the Borrower,  (vi)  are
disclosed  with the Borrower's consent, (vii) must  be  disclosed
either  pursuant to any Governmental Requirement  or  to  Persons
regulating the activities of the Agent or the Lenders, (viii)  as
may be required by law or regulation or order of any Governmental
Authority in any judicial, arbitration or governmental proceeding
or  (ix) as may be appropriate in the enforcement or exercise  of
all  rights  and  remedies under this Agreement or  any  Security
Instrument.  Further, the Agent or a Lender may disclose any such
information to any other Lender, any Affiliate of any Lender, any
independent  petroleum engineers or consultants, any  independent
certified public accountants, any legal counsel employed by  such
Person   in  connection  with  this  Agreement  or  any  Security
Instrument,  including  without limitation,  the  enforcement  or
exercise  of all rights and remedies thereunder, or any  assignee
or participant (including prospective assignees and participants)
in  the  Loans; provided, however, that the Agent or the  Lenders
shall  receive  (except from its legal counsel) a confidentiality
agreement  from the Person to whom such information is  disclosed
such  that said Person shall have the same obligation to maintain
the  confidentiality of such information as is imposed  upon  the
Agent or the Lenders hereunder.  Notwithstanding anything to  the
contrary  provided  herein, this obligation of  confidence  shall
cease  three  (3)  years  from  the  date  the  information   was
furnished,  unless  the Borrower requests  in  writing  at  least
thirty  (30)  days  prior to the expiration of  such  three  year
period,  to maintain the confidentiality of such information  for
an additional three year period.  The Borrower waives any and all
other  rights it may have to confidentiality as against the Agent
and  the Lenders arising by contract, agreement, statute  or  law
except as expressly stated in this Section 12.15.

          Section 12.16  Effectiveness .  This Agreement shall be
effective on the Closing Date (the "Effective Date").

           Section 12.17  exculpation provisions .  each  of  the
parties  hereto specifically agrees that it has a  duty  to  read
this Agreement and the Security Instruments and agrees that it is
charged  with notice and knowledge of the terms of this Agreement
and  the  Security  Instruments; that it has in  fact  read  this
Agreement and is fully informed and has full notice and knowledge
of  the terms, conditions and effects of this Agreement; that  it
has  been represented by independent legal counsel of its  choice
throughout  the  negotiations preceding  its  execution  of  this
Agreement  and  the Security Instruments; and  has  received  the
advice  of its attorney in entering into this Agreement  and  the
Security Instruments; and that it recognizes that certain of  the
terms  of  this Agreement and the Security Instruments result  in
one  party assuming the liability inherent in some aspects of the
transaction  and relieving the other party of its  responsibility
for  such liability.  each party hereto agrees and covenants that
it  will  not  contest  the  validity or  enforceability  of  any
exculpatory   provision  of  this  Agreement  and  the   Security
Instruments  on  the  basis  that the  party  had  no  notice  or
knowledge  of  such  provision  or  that  the  provision  is  not
"conspicuous."

           The  parties hereto have caused this Agreement  to  be
duly executed as of the day and year first above written.

BORROWER:                     McMoRan OIL & GAS LLC



                                   By:   /s/ Kathleen L. Quirk
                                        ----------------------
                                   Name:     Kathleen L. Quirk
                                   Title:    Vice President

Address for Notices:

                                   1615 Poydras Street
                                   New Orleans, Louisiana 70112
                                   Telecopier:     (504) 582-4511
                                   Telephone:      (504) 582-4144
                                   Attention: Treasurer

                              with copy to:

                                   Jones, Walker,Waechter,Poitevent,
                                     Carrere & Denegre,  L.L.P.
                                   201 St. Charles Avenue
                                   50th Floor
                                   New Orleans, Louisiana  70170
                                   Telephone:   (504) 582-8000
                                   Facsimile:   (504) 582-8583
                                   Attention:   Relationship Partner

LENDER AND AGENT:                  HIBERNIA NATIONAL BANK,
                                   Individually and as Agent


                                    By:   /s/ Spencer Gagnet
                                         ------------------------
                                    Name:    Spencer Gagnet
                                    Title:   Senior Vice President



                                    Lending Office for Base  Rate Loans and
                                    Eurodollar Loans and  Address for Notice:


                                    Hibernia National Bank
                                    313  Carondelet Street, Suite 1300
                                    New Orleans, LA 70130
                                    Telecopier No.: (504) 533-5434
                                    Telephone No.: (504) 533-5717

                                   Attention:  Energy/Maritime

                                   with copy to:

                                   Phelps Dunbar, L.L.P.
                                   365 Canal Street
                                   Suite 2000
                                   New Orleans, Louisiana  70130
                                   Telephone:     (504) 566-1311
                                   Facsimile:     (504) 568-9007
                                   Attention: James A. Stuckey