Exhibit 10.15



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                      AMENDED AND RESTATED CREDIT AGREEMENT


                                      AMONG


                             THE CYMRI CORPORATION,
                           PETROLEUM ENGINEERS, INC.,
                    PETROLEUM ENGINEERS INTERNATIONAL, INC.,
                                       AND
                              TRIUMPH ENERGY, INC.
                   individually and collectively, as Borrower


                                       AND


                                 STERLING BANK,
                                    as Lender

                           Effective December 3, 2004




             REDUCING REVOLVING LINE OF CREDIT OF UP TO $20,000,000

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<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----


ARTICLE I DEFINITIONS AND INTERPRETATION.....................................1
         1.1      Terms Defined Above........................................1
         1.2      Additional Defined Terms...................................1
         1.3      Undefined Financial Accounting Terms......................13
         1.4      References................................................13
         1.5      Articles and Sections.....................................13
         1.6      Number and Gender.........................................13
         1.7      Incorporation of Exhibits.................................13

ARTICLE II TERMS OF FACILITY................................................14
         2.1      Revolving Line of Credit..................................14
         2.2      Use of Loan Proceeds......................................14
         2.3      Interest..................................................14
         2.4      Repayment of Loans and Interest...........................15
         2.5      Outstanding Amounts.......................................15
         2.6      Time, Place, and Method of Payments.......................15
         2.7      Borrowing Base Determinations.............................15
         2.8      Mandatory Prepayments.....................................16
         2.9      Voluntary Prepayments of Loans............................17
         2.10     Commitment Fee............................................17
         2.11     Facility Fee..............................................17
         2.12     Reimbursement for Engineering Expenses....................17
         2.13     Loans to Satisfy Obligations of Borrower..................18
         2.14     Security Interest in Accounts; Right of Offset............18
         2.15     General Provisions Relating to Interest...................18
         2.16     Letters in Lieu of Transfer Orders........................19
         2.17     Power of Attorney.........................................19
         2.18     Letters of Credit.........................................20
         2.19     Letter of Credit Fee......................................20
         2.20     Assignment of Revenues....................................20

ARTICLE III CONDITIONS 21
         3.1      Receipt of Loan Documents and Other Items.................21
         3.2      Each Loan and Letter of Credit............................23

ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................25
         4.1      Due Authorization.........................................25
         4.2      Corporate Existence.......................................25
         4.3      Valid and Binding Obligations.............................25
         4.4      Security Instruments......................................25
         4.5      Title to Assets...........................................25
         4.6      Score and Accuracy of Financial Statements................25
         4.7      No Material Misstatements.................................26
         4.8      Liabilities, Litigation, and Restrictions.................26
         4.9      Authorizations; Consents..................................26
                                        i
<PAGE>

         4.10     Compliance with Laws......................................26
         4.11     ERISA26
         4.12     Environmental Laws........................................26
         4.13     Compliance with Federal Reserve Regulations...............27
         4.14     Investment Company Act Compliance.........................27
         4.15     Public Utility Holding Company Act Compliance.............27
         4.16     Proper Filing of Tax Returns; Payment of Taxes Due........27
         4.17     Refunds...................................................27
         4.18     Gas Contracts.............................................27
         4.19     Intellectual Property.....................................27
         4.20     Casualties or Taking of Property..........................28
         4.21     Locations of Borrower.....................................28
         4.22     Subsidiaries..............................................28
         4.23     Purchasers of Production..................................28

ARTICLE V AFFIRMATIVE COVENANTS.............................................28
         5.1      Maintenance and Access to Records.........................28
         5.2      Quarterly Financial Statements; Compliance Certificates...28
         5.3      Annual Financial Statements...............................29
         5.4      Oil and Gas Reserve Reports...............................29
         5.5      Title Opinions; Title Defects.............................29
         5.6      Notices of Certain Events.................................30
         5.7      Letters in Lieu of Transfer Orders; Division Orders.......30
         5.8      Additional Information....................................31
         5.9      Compliance with Laws......................................31
         5.10     Payment of Assessments and Charges........................31
         5.11     Maintenance of Corporate Existence and Good Standing......31
         5.12     Payment of Note; Performance of Obligations...............31
         5.13     Further Assurances........................................31
         5.14     Initial Fees and Expenses of Counsel to Lender............32
         5.15     Subsequent Fees and Expenses of Lender....................32
         5.16     Operation of Oil and Gas Properties.......................32
         5.17     Maintenance and Inspection of Properties..................32
         5.18     Maintenance of Insurance..................................32
         5.19     INDEMNIFICATION...........................................33
         5.20     Operating Accounts........................................34
         5.21     Hedging Transaction Reports...............................34
         5.22     Aged Accounts Reports.....................................34
         5.23     Production and Expense Reports............................34
         5.24     Operating Budget Forecasts................................35
         5.25     Assignments of Proceeds and Accounts Receivable Debtors...35
         5.26     Lockbox Agreement.........................................35
         5.27     Stock Certificates........................................35
         5.28     Certificates of Deposit...................................35

ARTICLE VI NEGATIVE COVENANTS...............................................35
         6.1      Indebtedness..............................................35
         6.2      Contingent Obligations....................................36
         6.3      Liens36
                                       ii
<PAGE>

         6.4      Sales of Assets...........................................36
         6.5      Leasebacks................................................36
         6.6      Sale or Discount of Receivables...........................36
         6.7      Loans or Advances.........................................36
         6.8      Investments...............................................36
         6.9      Dividends and Distributions...............................37
         6.10     Issuance of Stock; Changes in Corporate Structure.........37
         6.11     Transactions with Affiliates..............................37
         6.12     Lines of Business.........................................37
         6.13     Plan Obligations..........................................37
         6.14     Current Ratio.............................................37
         6.15     EBITDA to Interest Ratio..................................37
         6.16     Debt to Capitalization Ratio..............................37

ARTICLE VII EVENTS OF DEFAULT...............................................38
         7.1      Enumeration of Events of Default..........................38
         7.2      Remedies..................................................39

ARTICLE VIII MISCELLANEOUS..................................................40
         8.1      Transfers; Participations.................................40
         8.2      Survival of Representations, Warranties, and Covenants....40
         8.3      Notices and Other Communications..........................40
         8.4      Parties in Interest.......................................41
         8.5      Rights of Third Parties...................................41
         8.6      Renewals; Extensions......................................41
         8.7      No Waiver; Rights Cumulative..............................41
         8.8      Survival Upon Unenforceability............................42
         8.9      Amendments; Waivers.......................................42
         8.10     Controlling Agreement.....................................42
         8.11     Disposition of Collateral.................................42
         8.12     GOVERNING LAW.............................................42
         8.13     JURISDICTION AND VENUE....................................42
         8.14     WAIVER OF RIGHTS TO JURY TRIAL............................43
         8.15     ENTIRE AGREEMENT..........................................43
         8.16     CYMRI as Agent............................................43
         8.17     Amended and Restated Agreement............................43
         8.18     Counterparts..............................................43

                                       iii

LIST OF EXHIBITS

Exhibit I         Form of Note
Exhibit II        Form of Borrowing Request
Exhibit III       Form of Compliance Certificate
Exhibit IV        Disclosures
Exhibit V         Borrowing Base Oil and Gas Properties
Exhibit VI        Borrowing Base Certificate
Exhibit VII       Purchasers of Production

                                       iii
<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT
                      -------------------------------------


         THIS AMENDED AND RESTATED CREDIT AGREEMENT is made and entered into
effective the 3rd day of December, 2004, by and among THE CYMRI CORPORATION, a
Texas corporation ("CYMRI"), PETROLEUM ENGINEERS, INC., a Louisiana corporation
("PEI"), PETROLEUM ENGINEERS INTERNATIONAL, INC., a Louisiana corporation
("PEII"), and TRIUMPH ENERGY, INC., a Louisiana corporation ("TEI") (each
individually and collectively, the "Borrower"), and STERLING BANK, a Texas state
chartered bank (the "Lender").

                                   WITNESSETH:
                                   -----------

     In consideration of the mutual covenants and agreements  herein  contained,
the Borrower and the Lender hereby agree as follows:

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION
                         ------------------------------

1.1 Terms Defined Above. As used in this Credit Agreement,  the terms "Borrower"
and "Lender" shall have the meaning assigned to them hereinabove.

1.2 Additional  Defined  Terms.  As used in this Credit  Agreement,  each of the
following terms shall have the meaning assigned thereto in this Section,  unless
the context otherwise requires:

          "Accounts   Receivable"  means  all  of  PEI's  and  PEII's  accounts,
     instruments,  deposit accounts,  receivables,  accounts receivable, chattel
     paper,  documents,  general intangibles,  and book debts whether they exist
     now or arise in the future  from PEI's and PEII's sale or lease of goods or
     PEI's and PEII's  rendition of services,  including  all amounts due to PEI
     and PEII from a factor, all returned,  reclaimed,  refused,  or repossessed
     goods,  all books and records  pertaining  to the  foregoing,  the cash and
     non-cash  proceeds  resulting  therefrom  and all security  and  guaranties
     therefor.

          "Affiliate" shall mean any Person directly or indirectly  controlling,
     or under common  control with,  any Borrower and includes any Subsidiary of
     any Borrower and any "affiliate" of any Borrower within the meaning of Reg.
     ss.240.12b-2  of the  Securities  Exchange  Act of 1934,  as amended,  with
     "control,"  as used in this  definition,  meaning  possession,  directly or
     indirectly,  of the power to direct or cause the  direction of  management,
     policies or action through ownership of voting securities, contract, voting
     trust,  or membership in management or in the group  appointing or electing
     management or otherwise through formal or informal arrangements or business
     relationships.

          "Agreement" shall mean this Amended and Restated Credit Agreement,  as
     it may be amended, supplemented, or restated from time to time.

<PAGE>

          "Assignment  of Notes and Liens - Guaranty  Bank"  means that  certain
     Assignment  of Notes,  Liens and Security  Interests  dated of even date of
     this Agreement from Guaranty Bank, FSB to Lender,  in form  satisfactory to
     Lender,  in its sole  discretion,  covering the promissory  note, liens and
     security  interests  from  CYMRI to  Guaranty  Bank,  FSB  pursuant  to the
     Guaranty Bank Credit Agreement.

          "Available Commitment" shall mean, at any time, an amount equal to the
     remainder,  if any, of (a) the Borrowing  Base in effect at such time minus
     (b) the sum of the outstanding balance (principal and interest) on the Note
     at such time, plus the L/C Exposure at such time.

          "Base Rate" shall mean, at any time, the prime rate established in The
     Wall Street  Journal's  "Money Rates" or similar  table.  If multiple prime
     rates are quoted in the table, then the highest prime rate will be the Base
     Rate.  In the event that the prime rate is no longer  published by The Wall
     Street  Journal in the  "Money  Rates" or similar  table,  then  Lender may
     select an alternative published index based upon comparable  information as
     a substitute  Base Rate.  Upon the selection of a substitute Base Rate, the
     applicable   interest  rate  shall  thereafter  vary  in  relation  to  the
     substitute  index.  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  without  notice to the  Borrower at the time of such change in
     the Base Rate.

          "Borrowing  Base" shall mean, at any time with regard to the Borrowing
     Base Assets, the amount determined by the Lender in accordance with Section
     2.7 and then in effect.

          "Borrowing Base Accounts" means,  collectively,  the Eligible Accounts
     Receivable and the Certificates of Deposit.

          "Borrowing  Base Assets" means,  collectively,  the Borrowing Base Oil
     and Gas Properties and the Borrowing Base Accounts.

          "Borrowing  Base  Oil  and Gas  Properties"  means  those  Oil and Gas
     Properties of Borrower that will, with execution of the Loan Documents,  be
     subject to liens created by certain of the Security  Instruments  to secure
     the  Obligations,  which initial  Borrowing Base Oil and Gas Properties are
     described in Exhibit V attached hereto and made a part hereof together with
     such  additional  Oil and Gas Properties as are  subsequently  added to the
     Borrowing Base Assets pursuant to Section 2.8.

          "Borrowing  Request" shall mean each written request, in substantially
     the form  attached  hereto  as  Exhibit  II, by CYMRI to the  Lender  for a
     borrowing or prepayment pursuant to Sections 2.1, 2.8 or 2.9, each of which
     shall:

               (a) be signed by a Responsible Officer of CYMRI;

               (b) specify the amount  requested  or prepaid and the date of the
          borrowing or prepayment (which shall be a Business Day); and

                                        2
<PAGE>

               (c) be delivered to the Lender no later than 11:00 a.m.,  Central
          Standard or Daylight Savings Time, as the case may be, on the Business
          Day of the requested borrowing or prepayment.

          "Business Day" shall mean a day other than a Saturday,  Sunday,  legal
     holiday for commercial  banks under the laws of the State of Texas,  or any
     other day when banking is suspended in the State of Texas.

          "Certificates  of  Deposit"  means  those  three (3)  certificates  of
     deposit issued by Guaranty Bank, FSB in the name of F. M. Cantrell, Jr., in
     the aggregate amount of not less than $962,000 (including interest thereon)
     and held by Guaranty  Bank,  FSB and any and all  renewals or  replacements
     thereof, including, without limitation, replacement certificates of deposit
     held by Lender.

          "Change of Control"  means,  with respect to CYMRI, an event or series
     of events by which (i) the holders of the capital  ownership of CYMRI as of
     the Closing Date cease to own and  control,  directly  and  indirectly,  at
     least fifty-one  percent (51%) of CYMRI's  capital  ownership or (ii) CYMRI
     ceases to own and control,  directly and indirectly,  100% of PEI's, PEII's
     or TEI's capital ownership.

          "Closing  Date" shall mean the effective  date of this  Agreement when
     all conditions precedent hereunder have been satisfied.

          "Collateral" shall mean the Borrowing Base Oil and Gas Properties, the
     Borrowing  Base Accounts and any other  Property now or at any time used or
     intended as security for the payment or  performance  of all or any portion
     of the Obligations.

          "Commitment"  shall  mean the  obligation  of the  Lender,  subject to
     applicable  provisions  of  this  Agreement,  to make  Loans  to or for the
     benefit of the  Borrower  pursuant to Section  2.1 and to issue  Letters of
     Credit pursuant to Section 2.18.

          "Commitment  Fee"  shall  mean each fee  payable  to the Lender by the
     Borrower pursuant to Section 2.10.

          "Commitment  Period"  shall mean the  period  from and  including  the
     Closing Date to but not including the Commitment Termination Date.

          "Commitment Termination Date" shall mean November 30, 2007.

          "Commodity  Hedge Agreement" shall mean any crude oil, natural gas, or
     other hydrocarbon floor, collar, cap, price protection,  or swap agreement,
     in form and substance  between any Borrower and a Person  acceptable to the
     Lender in its sole discretion.

          "Commonly  Controlled  Entity'  shall mean any  Person  which is under
     common  control  with any  Borrower  within the meaning of Section  4001 of
     ERISA.

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<PAGE>

          "Compliance Certificate" shall mean each certificate, substantially in
     the form attached hereto as Exhibit III, executed by a Responsible  Officer
     of CYMRI and furnished to the Lender from time to time in  accordance  with
     Sections 5.2 and 5.3.

          "Contingent  Obligation" shall mean, as to any Person,  any obligation
     of such Person  guaranteeing or in effect  guaranteeing  any  Indebtedness,
     leases,  dividends,  or other obligations of any other Person (for purposes
     of this definition, a "primary obligation") in any manner, whether directly
     or  indirectly,  including,  without  limitation,  any  obligation  of such
     Person,  regardless  of  whether  such  obligation  is  contingent,  (a) to
     purchase  any primary  obligation  or any Property  constituting  direct or
     indirect  security  therefor,  (b) to advance  or supply  funds (i) for the
     purchase or payment of any primary obligation,  or (ii) to maintain working
     or equity capital of any other Person in respect of any primary obligation,
     or otherwise to maintain the net worth or solvency of any other Person, (c)
     to purchase  Property,  securities or services primarily for the purpose of
     assuring the owner of any primary  obligation  of the ability of the Person
     primarily liable for such primary  obligation to make payment  thereof,  or
     (d)  otherwise  to assure or hold  harmless  the owner of any such  primary
     obligation  against  loss  in  respect  thereof,  with  the  amount  of any
     Contingent   Obligation   being  deemed  to  be  equal  to  the  stated  or
     determinable  amount of the  primary  obligation  in  respect of which such
     Contingent  Obligation  is made or,  if not  stated  or  determinable,  the
     maximum reasonably  anticipated  liability in respect thereof as determined
     by such Person in good faith.

          "Current Assets" shall mean all assets which would, in accordance with
     GAAP,  be included  as current  assets,  on a  consolidated  basis,  on the
     balance sheet of the Borrower as of the date of calculation.

          "Current  Liabilities"  shall mean all  liabilities  which  would,  in
     accordance with GAAP, be included as current liabilities, on a consolidated
     basis, on the balance sheet of the Borrower as of the date of calculation.

          "CYMRI"  has the  meaning  given to such term in the  preamble of this
     Agreement.

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

          "Default  Rate" shall mean a per annum interest rate equal to the Base
     Rate plus four percent (4%),  but in no event  exceeding the Highest Lawful
     Rate.

          "Dollars" and "$" shall mean dollars in lawful  currency of the United
     States of America.

          "EBITDA" shall mean,  for any period,  Net Income for such period plus
     Interest Expense, federal and state income taxes, depreciation,  depletion,
     amortization,  and other non-cash  expenses for such period deducted in the
     determination of Net Income for such period.

          "Eligible Accounts Receivable" means all Accounts Receivable for which
     PEI's and PEII's right to receive  payment is absolute  and not  contingent

                                       4
<PAGE>

     upon the fulfillment of any condition  whatsoever and on which Lender has a
     first priority perfected  security  interest,  but does not include (a) any
     account  which is unpaid more than 90 days from its invoice date (except as
     permitted  in writing by Lender,  in its sole  discretion,  in  response to
     PEI's and PEII's written request for a specific exception), (b) any account
     for  which  there  exists  a  right  of  set  off,  counterclaim,  dispute,
     objection, complaint, defense or discount, except regular discounts allowed
     in the ordinary course of business to promote prompt payment (and for which
     no defense or counterclaim has been asserted),  (c) any Government Account,
     (d) any account  which arises from the sale or lease to or  performance  of
     services  for, or  represents  an  obligation  of, an employee,  Affiliate,
     partner,  parent or Subsidiary of any  Borrower,  (e) any accounts  arising
     from sales of goods or services in which the performance of PEI or PEII has
     been bonded, (f) any account which arises out of a contract or order which,
     by its terms,  forbids or makes void or unenforceable any assignment by PEI
     or PEII to Lender of the Account  Receivable  arising with respect  thereto
     and (g) for any account  which  constitutes  more than 15% of the aggregate
     Accounts  Receivable  which would otherwise  constitute  Eligible  Accounts
     Receivable,  that  portion of such  Account  Receivable  which  exceeds 15%
     thereof.

          "Environmental  Complaint"  shall mean any written  complaint,  order,
     directive,   claim,   citation,   notice   of   environmental   report   or
     investigation,  or other notice by any Governmental  Authority or any other
     Person  with  respect  to (a)  air  emissions,  (b)  spills,  releases,  or
     discharges to soils,  any  improvements  located  thereon,  surface  water,
     groundwater,  or the sewer, septic,  waste treatment,  storage, or disposal
     systems  servicing any Property of the Borrower,  (c) solid or liquid waste
     disposal, (d) the use, generation, storage, transportation,  or disposal of
     any Hazardous  Substance,  or (e) other  environmental,  health,  or safety
     matters  affecting  any Property of the Borrower or the business  conducted
     thereon.

          "Environmental Laws" shall mean (a) the following federal laws as they
     may be cited, referenced, and amended from time to time: the Clean Air Act,
     the Clean  Water  Act,  the Safe  Drinking  Water  Act,  the  Comprehensive
     Environmental  Response,  Compensation  and Liability  Act, the  Endangered
     Species Act, the Resource  Conservation  and Recovery Act, the Occupational
     Safety and Health Act,  the  Hazardous  Materials  Transportation  Act, the
     Superfund  Amendments  and  Reauthorization  Act, and the Toxic  Substances
     Control Act; (b) any and all equivalent environmental statutes of any state
     in which  Property  of the  Borrower  is  situated,  as they may be  cited,
     referenced  and  amended  from time to time;  (c) any rules or  regulations
     promulgated  under or adopted pursuant to the above federal and state laws;
     and (d) any  other  equivalent  federal,  state,  or local  statute  or any
     requirement,  rule, regulation,  code, ordinance, or order adopted pursuant
     thereto, including,  without limitation,  those relating to the generation,
     transportation,  treatment,  storage,  recycling,  disposal,  handling,  or
     release of Hazardous Substances.

          "ERISA"  shall mean the  Employee  Retirement  Income  Security Act of
     1974,  as amended from time to time,  and the  regulations  thereunder  and
     interpretations thereof.

          "Event of Default"  shall mean any of the events  specified in Section
     7.1.

          "Facility  Fee" has the  meaning  given to such term in  Section  2.11
     hereof.

                                       5
<PAGE>

          "Final Maturity" shall mean November 30, 2007.

          "Financial   Statements"   shall  mean  statements  of  the  financial
     condition of the Borrower on a  consolidated  basis and on a  consolidating
     basis as at the point in time and for the period  indicated and  consisting
     of at least a balance sheet and related  statements of  operations,  common
     stock and other stockholders'  equity; and cash flows for the Borrower and,
     when required by applicable  provisions of this Agreement to be reviewed by
     certified public accountants  acceptable to the Lender and footnotes to any
     of the  foregoing,  all of which shall be prepared in accordance  with GAAP
     for Borrower,  consistently applied and in comparative form with respect to
     the corresponding period of the preceding fiscal period.

          "Floating  Rate"  shall mean an  interest  rate per annum equal to the
     Base  Rate from time to time in effect  plus one  percent  (1%),  but in no
     event exceeding the Highest Lawful Rate.

          "GAAP" shall mean generally accepted accounting principles established
     by the Financial  Accounting  Standards Board or the American  Institute of
     Certified  Public  Accountants and in effect in the United States from time
     to time.

          "Government  Accounts"  means  accounts  receivable  owed by the  U.S.
     government or by the  government  of any state,  county,  municipality,  or
     other  political  subdivision  as to which  Lender's  security  interest or
     ability to obtain direct payment of the proceeds is governed by any federal
     or state statutory  requirements other than those of the Uniform Commercial
     Code, including,  without limitation,  the Federal Assignment of Claims Act
     of 1940, as amended.

          "Governmental Authority" shall mean any nation, country, commonwealth,
     territory,  government,  state,  county,  parish,  municipality,  or  other
     political  subdivision and any entity  exercising  executive,  legislative,
     judicial,  regulatory,  or  administrative  functions of or  pertaining  to
     government.

          "Guaranty Bank Credit  Agreement"  means that certain Credit Agreement
     dated April 30, 2002 between  Guaranty Bank, FSB, as lender,  and CYMRI, as
     borrower.

          "Hazardous Substances" shall mean flammables,  explosives, radioactive
     materials, hazardous wastes, asbestos, or any material containing asbestos,
     polychlorinated  biphenyls (PCBs),  toxic substances or related  materials,
     petroleum,  petroleum products,  associated oil or natural gas exploration,
     production, and development wastes, or any substances defined as "hazardous
     substances,"   "hazardous   materials,"   "hazardous   wastes,"  or  "toxic
     substances" under the Comprehensive  Environmental  Response,  Compensation
     and Liability Act, as amended, the Superfund Amendments and Reauthorization
     Act, as amended,  the Hazardous  Materials  Transportation Act, as amended,
     the  Resource   Conservation  and  Recovery  Act,  as  amended,  the  Toxic
     Substances  Control Act, as amended,  or any other law or regulation now or
     hereafter enacted or promulgated by any Governmental Authority.

                                       6
<PAGE>

          "Hibernia Bank Credit  Facility"  means that certain  credit  facility
     evidenced  by (i) the  Credit  Agreement  between  TEI,  as  Borrower,  and
     Hibernia  National Bank, as Lender,  the promissory  note and the Mortgage,
     Assignment, Security Agreement and Financing Statement each dated September
     26,  2004  executed in  connection  therewith  and (ii) the two  promissory
     notes,  each  dated  February  20,  2004  and each in the  face  amount  of
     $1,500,000,  one executed by PEI and the other executed by PEII in favor of
     Hibernia National Bank, as Lender,  secured by the two Commercial  Security
     Agreements executed in connection therewith.

          "Highest  Lawful  Rate" shall mean the maximum  non-usurious  interest
     rate, if any (or, if the context so requires,  an amount calculated at such
     rate),  that at anytime or from time to time may be contracted  for, taken,
     reserved,  charged, or received under applicable laws of the State of Texas
     or the United States of America,  whichever authorizes the greater rate, as
     such laws are  presently in effect or, to the extent  allowed by applicable
     law,  as such  laws may  hereafter  be in effect  and which  allow a higher
     maximum non-usurious interest rate than such laws now allow.

          "Indebtedness" shall mean, as to any Person, without duplication,  (a)
     all liabilities  (excluding  reserves for deferred  income taxes,  deferred
     compensation liabilities, and other deferred liabilities and credits) which
     in accordance with GAAP would be included in determining  total liabilities
     as shown on the liability side of a balance sheet,  (b) all  obligations of
     such Person evidenced by bonds,  debentures,  promissory  notes, or similar
     evidences of  indebtedness,  (c) all other  indebtedness of such Person for
     borrowed money,  and (d) all obligations of others,  to the extent any such
     obligation  is secured by a Lien on the assets of such  Person  (whether or
     not such Person has assumed or become liable for the obligation  secured by
     such Lien).

          "Insolvency  Proceeding" shall mean application  (whether voluntary or
     instituted by another  Person) for or the consent to the  appointment  of a
     receiver, trustee,  conservator,  custodian, or liquidator of any Person or
     of all or a substantial  pan of the Property of such Person,  or the filing
     of  a  petition  (whether   voluntary  or  instituted  by  another  Person)
     commencing  a case  under  Title  11 of the  United  States  Code,  seeking
     liquidation,  reorganization,  or  rearrangement or taking advantage of any
     bankruptcy, insolvency, debtor's relief, or other similar law of the United
     States, the State of Texas, or any other jurisdiction.

          "Intellectual  Property"  shall  mean  patents,  patent  applications,
     trademarks, tradenames, copyrights, technology, know-how, and processes.

          "Interest  Expense"  shall mean,  for any period,  the total  interest
     expense (including,  without limitation,  interest expense  attributable to
     capitalized  leases)  of  the  Borrower  for  such  period,  determined  in
     accordance with GAAP.

          "Investment" in any Person shall mean any stock,  bond, note, or other
     evidence of  Indebtedness,  or any other security (other than current trade
     and customer  accounts) of,  investment or partnership  interest in or loan
     to, such Person.

                                       7
<PAGE>

          "L/C Exposure"  shall mean, at any time, the aggregate  maximum amount
     available to be drawn under outstanding Letters of Credit at such time.

          "Letter of Credit"  shall mean any standby  letter of credit issued by
     the Lender for the account of the Borrower pursuant to Section 2.18.

          "Letter  of Credit  Application"  shall  mean the  standard  letter of
     credit  application  employed by the Lender from time to time in connection
     with letters of credit.

          "Letter of Credit  Fee"  shall mean each fee  payable to the Lender by
     the  Borrower  pursuant  to  Section  2.19 upon or in  connection  with the
     issuance of a Letter of Credit.

          "Lien" shall mean any interest in Property securing an obligation owed
     to, or a claim by, a Person other than the owner of such Property,  whether
     such interest is based on common law, statute, or contract,  and including,
     but not limited to, the lien or security  interest arising from a mortgage,
     encumbrance, pledge, security agreement, conditional sale or trust receipt,
     or a lease, consignment, or bailment for security purposes (other than true
     leases  or  true  consignments),   liens  of  mechanics,  materialmen,  and
     artisans,  maritime  liens  and  reservations,  exceptions,  encroachments,
     easements, rights of way, covenants, conditions,  restrictions, leases, and
     other title exceptions and encumbrances  affecting Property which secure an
     obligation  owed to, or a claim by, a Person  other  than the owner of such
     Property (for the purpose of this  Agreement,  the Borrower shall be deemed
     to be the owner of any Property which it has acquired or holds subject to a
     conditional sale agreement,  financing lease, or other arrangement pursuant
     to which title to the Property has been retained by or vested in some other
     Person for security purposes), and the filing or recording of any financing
     statement or other security instrument in any public office.

          "Limitation  Period"  shall mean any period  while any amount  remains
     owing on the Note and interest on such amount, calculated at the applicable
     interest rate,  plus any fees or other sums payable under any Loan Document
     and deemed to be interest under  applicable law, would exceed the amount of
     interest which would accrue at the Highest Lawful Rate.

          "Loan" shall mean any loan made by the Lender to or for the benefit of
     the Borrower  pursuant to this Agreement and any payment made by the Lender
     under a Letter of Credit.

          "Loan  Balance"  shall mean, at any time,  the  outstanding  principal
     balance of the Note at such time, plus the L/C Exposure at such time.

          "Loan Documents"  shall mean this Agreement,  the Note, the Letters of
     Credit Applications,  the Letters of Credit, the Security Instruments,  the
     Subordination  Agreement  and all other  documents and  instruments  now or
     hereafter  delivered  pursuant to the terms of or in  connection  with this
     Agreement,  the Note,  the Letters of Credit  Applications,  the Letters of
     Credit,  or the Security  Instruments,  and all renewals and extensions of,
     amendments  and  supplements  to,  and  restatements  of, any or all of the
     foregoing from time to time in effect.

                                       8
<PAGE>

          "Lockbox" means the Lockbox as defined in the Lockbox Agreement.

          "Lockbox  Agreement"  means the agreement in the form  satisfactory to
     Lender between Lender and Borrower  establishing the Lockbox with Lender in
     which all revenues  under Accounts  Receivable and all revenues  payable by
     Purchasers of Production to TEI will be directed to the Lockbox.

          "Material  Adverse  Effect"  shall mean (a) any adverse  effect on the
     business, operations,  properties, financial condition, or prospects of the
     Borrower which  materially  increases the risk that any of the  Obligations
     will not be repaid as and when due, or (b) any material adverse effect upon
     the Collateral.

          "Net Income" shall mean,  for any period,  the net income (or loss) of
     the  Borrower,  on a  consolidated  basis,  for such period,  determined in
     accordance with GAAP.

          "Net Proceeds" means (a) with respect to any sale, lease,  transfer or
     other disposition of any asset by any Person,  the aggregate amount of cash
     and non-cash proceeds from such transaction  received by, or paid to or for
     the account of, such Person, net of customary and reasonable  out-of-pocket
     costs,  fees, and expenses,  and (b) with respect to the issuance of equity
     securities,  debt securities, or similar instruments,  or the incurrence of
     Indebtedness, the cash and non-cash proceeds received from such issuance or
     incurrence,  net of attorneys' fees,  investment banking fees,  accountants
     fees,  underwriting  discounts and commissions and other customary fees and
     expenses  actually  incurred in  connection  with such  issuance.  Non-cash
     proceeds  include  any  proceeds  received  by way of  deferred  payment of
     principal  calculated  on a combined  basis as of such time  pursuant  to a
     note,  installment  receivable,  purchase price adjustment  receivable,  or
     otherwise, but only as and when received.

          "Note" shall mean the  promissory  note of the  Borrower,  in the form
     attached  hereto as Exhibit I, together with all renewals,  extensions  for
     any period, increases, and rearrangements thereof.

          "Obligations"  shall mean, without  duplication,  (a) all Indebtedness
     evidenced by the Note, (b) the Reimbursement Obligations,  (c) the undrawn,
     unexpired amount of all outstanding  Letters of Credit,  (d) the obligation
     of the Borrower for the payment of Commitment Fees,  Letter of Credit Fees,
     and  reimbursement of engineering  expenses,  and (e) all other obligations
     and  liabilities  of the Borrower to the Lender,  now existing or hereafter
     incurred,  under,  arising out of or in connection  with any Loan Document,
     and to the  extent  that any of the  foregoing  includes  or  refers to the
     payment of amounts deemed or constituting interest, only so much thereof as
     shall have accrued,  been earned and which remains  unpaid at each relevant
     time of determination.

          "Oil and Gas Properties" shall mean fee, leasehold, or other interests
     in or under  mineral  estates  or oil,  gas,  and other  liquid or  gaseous
     hydrocarbon leases with respect to Properties situated in the United States
     or  offshore  from  any  State of the  United  States,  including,  without
     limitation,  overriding  royalty and royalty  interests,  leasehold  estate

                                       9
<PAGE>

     interests, net profits interests, production payment interests, and mineral
     fee interests, together with contracts executed in connection therewith and
     all tenements,  hereditaments,  appurtenances and Properties  appertaining,
     belonging, affixed, or incidental thereto.

          "PEI"  has the  meaning  given to such  term in the  preamble  of this
     Agreement.

          "PEII"  has the  meaning  given to such term in the  preamble  of this
     Agreement.

          "Permitted  Liens"  shall  mean (a) Liens for taxes,  assessments,  or
     other governmental  charges or levies not yet due or which (if foreclosure,
     distraint,   sale,  or  other  similar  proceedings  shall  not  have  been
     initiated) are being  contested in good faith by  appropriate  proceedings,
     and such reserve as may be required by GAAP shall have been made  therefor,
     (b)  Liens  (including,  but  not  limited  to,  pledges  or  deposits)  in
     connection  with  workers'  compensation,  unemployment  insurance or other
     social  security  (other  than Liens  created  by  Section  4068 of ERISA),
     old-age pension,  or public liability  obligations which are not yet due or
     which are being contested in good faith by appropriate proceedings, if such
     reserve as may be required by GAAP shall have been made therefor, (c) Liens
     in favor of vendors, carriers, warehousemen, repairmen, mechanics, workmen,
     materialmen,  construction, or similar Liens arising by operation of law in
     the ordinary course of business in respect of obligations which are not yet
     due or which are being contested in good faith by appropriate  proceedings,
     if such  reserve as may be required by GAAP shall have been made  therefor,
     (d) Liens in favor of operators  and  non-operators  under joint  operating
     agreements  or similar  contractual  arrangements  arising in the  ordinary
     course of the  business of the  Borrower  to secure  amounts  owing,  which
     amounts are not yet due or are being contested in good faith by appropriate
     proceedings,  if such  reserve as may be  required  by GAAP shall have been
     made  therefor,  (e) Liens  under  production  sales  agreements,  division
     orders, operating agreements, and other agreements customary in the oil and
     gas business for processing,  producing,  and selling hydrocarbons securing
     obligations not  constituting  Indebtedness and provided that such Liens do
     not secure obligations to deliver  hydrocarbons at some future date without
     receiving full payment therefor within 90 days of delivery,  (f) easements,
     rights of way,  restrictions,  and other  similar  encumbrances,  and minor
     defects in the chain of title which are customarily accepted in the oil and
     gas financing  industry,  none of which interfere with the ordinary conduct
     of the business of the Borrower or materially detract from the value or use
     of the  Property to which they apply,  (g) Liens in favor of the Lender and
     other Liens expressly  permitted under the Security  Instruments (h) second
     Liens (A) covering TEI's  Borrowing Base Oil and Gas Properties  located in
     Louisiana as described on Exhibit V attached  hereto and (B) first Liens on
     the  capital  stock  of  each  TEI,  PEI  and  PEII,  all in  favor  of the
     Stockholders  but subject in each case to the  Subordination  Agreement and
     (i) any other  Liens  approved  by Lender in its sole  discretion  securing
     Indebtedness subordinated to the Obligations.

          "Person" shall mean an individual,  corporation,  partnership,  trust,
     unincorporated   organization,   government,   any   agency  or   political
     subdivision of any government, or any other form of entity.

                                       10
<PAGE>

          "Plan" shall mean,  at any time,  any  employee  benefit plan which is
     covered  by ERISA and in  respect  of which the  Borrower  or any  Commonly
     Controlled  Entity is (or, if such plan were terminated at such time, would
     under  Section 4069 of ERISA be deemed to be) an  "employer"  as defined in
     Section 3(5) of ERISA.

          "Principal  Office" shall mean the  principal  office of the Lender in
     Houston,  Texas,  presently  located at 2550  North  Loop West,  Suite 100,
     Houston, Texas 77092.

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

          "Purchasers of Production" means the Persons listed on Exhibit VII and
     all other Persons who purchase  Hydrocarbons  attributable  or allocable to
     Borrower's  net  revenue  interest  in  the  Borrowing  Base  Oil  and  Gas
     Properties and are approved by Lender in writing.

          "Rate Management Transaction" shall mean any transaction (including an
     agreement  with respect  thereto)  now  existing or hereafter  entered into
     between  Borrower and Lender or a Person  acceptable to the Lender,  in its
     sole  discretion,   which  is  a  rate  swap,  basis  swap,   forward  rate
     transaction, commodity swap, commodity option, equity or equity index swap,
     equity or equity index option, bond option,  interest rate option,  foreign
     exchange   transaction,   cap  transaction,   floor   transaction,   collar
     transaction, forward transaction, currency swap transaction, cross-currency
     rate swap  transaction,  currency  option or any other similar  transaction
     (including  any option with  respect to any of these  transactions)  or any
     combination  thereof,  whether linked to on or more interest rates, foreign
     currencies, commodity prices, equity prices or other financial measures.

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

          "Regulatory Change" shall mean the passage, adoption,  institution, or
     amendment of any  federal,  state,  local,  or foreign  Requirement  of Law
     (including,  without  limitation,  Regulation  D),  or any  interpretation,
     directive,  or  request  (whether  or not  having  the force of law) of any
     Governmental  Authority or monetary authority charged with the enforcement,
     interpretation, or administration thereof, occurring after the Closing Date
     and applying to a class of banks including the Lender.

          "Reimbursement  Obligation"  shall mean the obligation of the Borrower
     to provide to the Lender or reimburse  the Lender for any amounts  payable,
     paid, or incurred by the Lender with respect to Letters of Credit.

          "Release of  Hazardous  Substances"  shall mean any  emission,  spill,
     release, disposal, or discharge,  except in accordance with a valid permit,
     license,  certificate,  or approval of the relevant Governmental Authority,
     of any  Hazardous  Substance  into or upon  (a) the air,  (b)  soils or any
     improvements located thereon, (c) surface water or groundwater,  or (d) the
     sewer or septic system, or the waste treatment, storage, or disposal system
     servicing any Property of the Borrower.

                                       11
<PAGE>

          "Requirement of Law" shall mean, as to any Person,  the certificate or
     articles of  incorporation  and by-laws,  partnership  agreements  or other
     organizational  or governing  documents of such Person,  and any applicable
     law, treaty,  ordinance,  order,  judgment,  rule, decree,  regulation,  or
     determination  of an arbitrator,  court, or other  Governmental  Authority,
     including, without limitation, rules, regulations, orders, and requirements
     for permits, licenses, registrations, approvals, or authorizations, in each
     case as such now exist or may be hereafter amended and are applicable to or
     binding  upon such Person or any of its Property or to which such Person or
     any of its Property is subject.

          "Reserve  Report"  shall  mean each  report  delivered  to the  Lender
     pursuant to Section 5.4.

          "Responsible  Officer"  shall mean, as to any Person,  its  President,
     Chief Executive Officer or Chief Financial Officer.

          "Security  Instruments" shall mean the security  instruments  executed
     and delivered in satisfaction of the condition set forth in Section 3.1(f),
     and all other  documents and  instruments  at any time executed as security
     for all or any  portion  of the  Obligations,  as such  instruments  may be
     amended, restated, or supplemented from time to time.

          "Stockholder Notes" means the promissory notes executed by Borrower in
     favor of the Stockholders in the aggregate amount of $2,600,000 pursuant to
     the Stock Purchase Agreement subject to aggregate amount adjustments but in
     no event greater than $250,000.

          "Stockholders"  means all the stockholders of each PEI, PEII, and TEI,
     as the "Sellers" under the Stock Purchase Agreement in form satisfactory to
     Lender in its sole discretion.

          "Stockholders'  Equity"  means,  at any time, the sum of the following
     accounts set forth on the  consolidated  Financial  Statements of Borrower,
     prepared  in  accordance  with  GAAP:  (A) the par or  stated  value of all
     outstanding  capital  stock  (common and  preferred);  (B) capital  surplus
     including paid in capital; and (C) retained earnings.

          "Stock Purchase Agreement" means that certain Stock Purchase Agreement
     dated effective June 1, 2004 between CYMRI and the Stockholders.

          "Subordination  Agreement" means that certain Subordination  Agreement
     dated as of even date herewith among Lender,  Borrower and the Stockholders
     in form satisfactory to Lender in its sole discretion.

          "Subsidiary"  shall mean,  as to any Person,  a  corporation  of which
     shares of stock having  ordinary voting power (other than stock having such
     power only by reason of the happening of a contingency) to elect a majority
     of the board of directors or other managers of such  corporation are at the
     time owned, or the management of which is otherwise controlled, directly or
     indirectly through one or more intermediaries, or both, by such Person.

                                       12
<PAGE>

          "Superfund  Site" shall mean those sites  listed on the  Environmental
     Protection  Agency National  Priority List and eligible for remedial action
     or any  comparable  state  registries  or list in any  state of the  United
     States.

          "TEI"  has the  meaning  given to such  term in the  preamble  of this
     Agreement.

          "Transferee"  shall  mean any  Person  to which the  Lender  has sold,
     assigned,   transferred,   or  granted  a  participation   in  any  of  the
     Obligations,  as  authorized  pursuant  to  Section  8.1,  and  any  Person
     acquiring, by purchase,  assignment,  transfer, or participation,  from any
     such purchaser,  assignee,  transferee,  or  participant,  any part of such
     Obligations.

          "UCC" shall mean the Uniform  Commercial  Code as from time to time in
     effect in the State of Texas.

     1.3 Undefined Financial  Accounting Terms.  Undefined financial  accounting
terms used in this Agreement  shall be defined  according to GAAP at the time in
effect.

     1.4  References.  References  in this  Agreement  to Exhibit,  Article,  or
Section numbers shall be to Exhibits,  Articles,  or Sections of this Agreement,
unless  expressly  stated  to the  contrary.  References  in this  Agreement  to
"hereby,"  "herein,"  "hereinafter,"   "hereinabove,"  "hereinbelow,"  "hereof,"
"hereunder"  and  words of  similar  import  shall be to this  Agreement  in its
entirety and not only to the particular  Exhibit,  Article,  or Section in which
such reference appears.

     1.5 Articles and Sections.  This Agreement,  for convenience only, has been
divided into  Articles and Sections;  and it is  understood  that the rights and
other  legal  relations  of the parties  hereto  shall be  determined  from this
instrument  as an entirety and without  regard to the  aforesaid  division  into
Articles and Sections and without  regard to headings  prefixed to such Articles
or Sections.

     1.6 Number and Gender. Whenever the context requires, reference herein made
to the single number shall be  understood  to include the plural;  and likewise,
the plural shall be  understood to include the  singular.  Definitions  of terms
defined in the singular or plural shall be equally  applicable  to the plural or
singular,  as the case may be, unless  otherwise  indicated.  Words denoting sex
shall be construed  to include the  masculine,  feminine  and neuter,  when such
construction  is  appropriate;  and specific  enumeration  shall not exclude the
general but shall be construed as cumulative.

     1.7 Incorporation of Exhibits.  The Exhibits attached to this Agreement are
incorporated  herein and shall be  considered a part of this  Agreement  for all
purposes.

                                       13
<PAGE>

                                   ARTICLE II

                                TERMS OF FACILITY
                                -----------------

     2.1 Revolving Line of Credit.

          (a) Upon the terms and conditions (including,  without limitation, the
     right of the Lender to  decline to make any Loan so long as any  Default or
     Event of Default exists) and relying on the  representations and warranties
     contained  in this  Agreement,  the Lender  agrees,  during the  Commitment
     Period,  to make Loans,  in  immediately  available  funds at the Principal
     Office,  to or for the  benefit of the  Borrower,  from time to time on any
     Business Day designated by the Borrower  following receipt by the Lender of
     a  Borrowing  Request;  provided,  however,  no Loan shall  exceed the then
     existing Available Commitment.

          (b)  Subject to the terms of this  Agreement,  during  the  Commitment
     Period, the Borrower may borrow, repay, and reborrow such funds. Except for
     prepayments  made pursuant to Section 2.8, each borrowing and prepayment of
     principal of Loans shall be in an amount at least equal to  $100,000.  Each
     borrowing or prepayment shall be deemed a separate  borrowing or prepayment
     for purposes of the foregoing.

          (c) The Loans made under this Section 2.1 shall be made and maintained
     at the Principal Office and shall be evidenced by the Note.

     2.2 Use of Loan Proceeds.

          (a) Proceeds of all Loans shall be used solely for (i) the acquisition
     of all of the equity  interests in PEI,  PEII and TEI by CYMRI  pursuant to
     the  terms  of the  Stock  Purchase  Agreement,  (ii) the  acquisition  and
     development of Oil and Gas  Properties,  (iii) payment of fees and expenses
     hereunder and/or (iv) for general corporate purposes.

          (b)  Letters  of Credit  shall be used  solely for  general  corporate
     purposes provided,  however,  no Letter of Credit may be used in lieu or in
     support of stay or appeal bonds.

     2.3 Interest.  Subject to the terms of this Agreement  (including,  without
limitation,  Section 2.15), interest on the Loans shall accrue and be payable at
a rate per annum  equal to the  Floating  Rate.  Interest  on all Loans 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) during
the period for which payable.  Interest  provided for herein shall be calculated
on unpaid sums actually  advanced and outstanding  pursuant to the terms of this
Agreement and only for the period from the date or dates of such advances  until
repayment. Notwithstanding the foregoing, interest on past-due principal and, to
the extent permitted by applicable law, past-due  interest,  shall accrue at the
Default  Rate,  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) during the period for which  payable,  and shall be payable  upon demand by
the Lender at any time as to all or any portion of such interest.

                                       14
<PAGE>

     2.4  Repayment of Loans and  Interest.  Accrued and unpaid  interest on the
outstanding Loans under the Note shall be due and payable monthly  commencing on
the last day of December,  2004, and continuing on the last day of each calendar
month thereafter while any amount of the outstanding  principal  balance remains
outstanding, the payment in each instance to be the amount of interest which has
accrued and remains unpaid in respect of the outstanding  principal balance. The
outstanding  principal balance on the Note, together with all accrued and unpaid
interest thereon, shall be due and payable on the Commitment Termination Date.

     2.5  Outstanding  Amounts.  The outstanding  principal  balance of the Note
reflected  by the  notations  by the  Lender  on its  records  shall  be  deemed
rebuttably  presumptive  evidence of the principal amount owing on the Note. The
liability for payment of principal  and interest  evidenced by the Note shall be
limited to principal amounts actually advanced and outstanding  pursuant to this
Agreement  and  interest on such  amounts  calculated  in  accordance  with this
Agreement.

     2.6 Time, Place, and Method of Payments.  All payments required pursuant to
this Agreement or the Note shall be made in lawful money of the United States of
America and in  immediately  available  funds,  shall be deemed  received by the
Lender on the next Business Day following  receipt if such receipt is after 2:00
p.m.,  Central  Standard or Daylight  Savings  Time,  as the case may be, on any
Business Day, and shall be made at the Principal  Office.  Except as provided to
the contrary herein,  if the due date of any payment hereunder or under the 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.

     2.7 Borrowing Base Determinations.

          (a) The Borrowing Base as of the Closing Date is  acknowledged  by the
     Borrower  and the Lender to be  $7,940,000,  which  consists of  $5,250,000
     attributable  to the Borrowing  Base Oil and Gas  Properties and $2,940,000
     attributable  to the Borrowing Base  Accounts.  The amount of the Borrowing
     Base attributable to the Borrowing Base Oil and Gas Properties (as adjusted
     from time to time  under the terms of this  Agreement)  shall be reduced by
     $25,000 on the last day of each month beginning December 31, 2004.

          (b) The Borrowing Base  attributable to the Borrowing Base Oil and Gas
     Properties shall be redetermined  semi-annually beginning April 1, 2005, on
     the basis of  information  supplied by the Borrower in compliance  with the
     provisions  of  this  Agreement,  including,  without  limitation,  Reserve
     Reports,  and all other  information  available to the Lender. In addition,
     the Lender shall,  in the normal course of business  following a request of
     the Borrower,  redetermine the Borrowing Base attributable to the Borrowing
     Base Oil and Gas  Properties;  provided,  however,  the Lender shall not be
     obligated  to respond to more than two such  requests  during any  calendar
     year,  and in no event  shall the Lender be  required  to  redetermine  the
     Borrowing  Base  attributable  to the Borrowing Base Oil and Gas Properties
     more than once in any three-month  period,  including,  without limitation,
     each   scheduled   semi-annual    redetermination   provided   for   above.
     Notwithstanding the foregoing, the Lender may at its discretion redetermine
     the  Borrowing  Base  attributable  to  the  Borrowing  Base  Oil  and  Gas
     Properties and the amount by which the Borrowing Base shall be reduced each
     calendar  month as set forth in Section 2.7(a) at any time and from time to
     time.

                                       15
<PAGE>

          (c) The Borrowing  Base  attributable  to the Borrowing  Base Accounts
     shall be redetermined  monthly  beginning  January 1, 2005, on the basis of
     information  supplied by the Borrower in compliance  with the provisions of
     this  Agreement,   including,   without  limitation,   the  Borrowing  Base
     Certificate  in the form  attached  hereto  as  Exhibit  VI,  and all other
     information  available to the Lender.  Borrower shall deliver the Borrowing
     Base  Certificate on or before the 15th of each month  beginning  December,
     2004.  Notwithstanding  the  foregoing,  the Lender  may at its  discretion
     redetermine the Borrowing Base  attributable to the Borrowing Base Accounts
     at any time and from time to time.

          (d) Upon each  determination of the Borrowing Base by the Lender,  the
     Lender shall notify the Borrower in writing of such determination,  and the
     Borrowing  Base and the amount by which the Borrowing Base shall be reduced
     or increased so  communicated  to the Borrower shall become  effective upon
     such  written  notification  and  shall  remain  in  effect  until the next
     subsequent  determination of the Borrowing Base and the amount by which the
     Borrowing Base shall be reduced.

          (e) The  Borrowing  Base  shall  represent  the  determination  by the
     Lender, in accordance with the applicable definitions and provisions herein
     contained and its customary  lending practices for loans of this nature, of
     the value, for loan purposes, of the Borrowing Base Assets, subject, in the
     case of any increase in the Borrowing Base, to the credit approval  process
     of  the  Lender.   Furthermore,   the   Borrower   acknowledges   that  the
     determination  of the Borrowing Base contains an equity  cushion,  which is
     acknowledged by the Borrower to be essential for the adequate protection of
     the Lender.

     2.8 Mandatory Prepayments.

          (a) If at any time the Loan Balance exceeds the Borrowing Base then in
     effect,  the  Borrower  shall,  within 30 days of notice from the Lender of
     such occurrence,  (i) prepay, or make arrangements acceptable to the Lender
     for the  prepayment  of, the amount of such excess for  application  on the
     Loan Balance,  (ii) provide additional  collateral,  of character and value
     satisfactory  to  the  Lender  in  its  sole  discretion,   to  secure  the
     Obligations  by the  execution  and  delivery  to the  Lender  of  security
     instruments  in form and  substance  satisfactory  to the Lender,  or (iii)
     effect any  combination  of the  alternatives  described in clauses (i) and
     (ii) of this Section and  acceptable to the Lender in its sole  discretion.
     In the event that a mandatory prepayment is required under this Section and
     the Loan  Balance  is less than the  amount  required  to be  prepaid,  the
     Borrower  shall repay the entire Loan Balance and, in  accordance  with the
     provisions of the relevant  Letter of Credit  Applications  executed by the
     Borrower or otherwise to the  satisfaction of the Lender,  deposit with the
     Lender,  as additional  collateral  securing the Obligations,  an amount of
     cash, in immediately  available funds,  equal to the L/C Exposure minus the
     Borrowing  Base. The cash deposited with the Lender in  satisfaction of the
     requirement  provided  in  this  Section  may  be  invested,  at  the  sole
     discretion  of the Lender  and then only at the  express  direction  of the

                                       16
<PAGE>

     Borrower as to  investment  vehicle and  maturity  (which shall be no later
     than the latest expiry date of any then outstanding Letter of Credit),  for
     the account of the Borrower in cash or cash equivalent  investments offered
     by or through the Lender.

          (b) In addition  to the  foregoing,  the  Borrower  shall  immediately
     prepay the principal of the Note in an amount equal to:

               (i) 100% of Net  Proceeds  from  the  disposition  of any  asset,
          excluding sales permitted under this Agreement;

               (ii)  100%  of  insurance  proceeds  in  excess  of  $50,000  per
          occurrence  in  respect  of  any  insurance   policy  required  to  be
          maintained by the Borrower  under the terms of this  Agreement  unless
          Borrower  reinvests  such  proceeds  within  thirty  (30)  days of any
          insurable loss to replace the lost or damaged assets;

               (iii) 50% of the Net  Proceeds  from the sale or issuance  (after
          the date of this Agreement) of any capital stock; and

               (iv) 100% of any  Indebtedness  incurred by any  Borrower,  other
          than Indebtedness permitted under Section 6.1 hereof.

     2.9 Voluntary  Prepayments  of Loans.  Subject to applicable  provisions of
this  Agreement,  the Borrower  shall have the right at any time or from time to
time to prepay Loans  without  prepayment  penalty  provided,  however,  (a) the
Borrower shall pay all accrued and unpaid interest on the amounts  prepaid,  and
(b) no such  prepayment  shall serve to postpone the  repayment  when due of any
Obligation.

     2.10 Commitment Fee. In addition to interest on the Note as provided herein
and  all  other  fees  payable  hereunder  and  to  compensate  the  Lender  for
maintaining  funds  available,   the  Borrower  shall  pay  to  the  Lender,  in
immediately available funds, on the first day of January, 2005, and on the first
day of each calendar month thereafter during the Commitment Period, a fee in the
amount of one-half  percent (1/2%) per annum,  calculated 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),  on the  average  daily  amount of the
Available Commitment during the preceding month.

     2.11 Facility  Fee. In addition to interest on the Note as provided  herein
and all other fees payable  hereunder and to compensate the Lender for the costs
of the extension of credit  hereunder,  the Borrower shall pay to the Lender (i)
on the  Closing  Date,  in  immediately  available  funds,  a facility  fee (the
"Facility  Fee") in the amount of $79,400  and (ii) a Facility  Fee equal to one
percent (1%) on any future increase over the initial  Borrowing Base on the date
of any such Borrowing Base redetermination.

     2.12  Reimbursement for Engineering  Expenses.  In addition to interest and
other  fees  payable  hereunder  and to  compensate  the Lender for the costs of
evaluating  the Borrowing  Base Oil and Gas Properties and reviewing the Reserve
Reports,  the Borrower shall reimburse the Lender all expenses  relating to such
reviews, in immediately  available funds, on the date of each redetermination of
the Borrowing Base.

                                       17
<PAGE>

     2.13 Loans to Satisfy  Obligations  of Borrower.  The Lender may, but shall
not be  obligated  to,  make  Loans for the  benefit of the  Borrower  and apply
proceeds thereof to the satisfaction of any condition, warranty, representation,
or  covenant  of the  Borrower  contained  in this  Agreement  or any other Loan
Document.  Any such Loan shall be evidenced by the Note and shall be made at the
Floating Rate.

     2.14 Security  Interest in Accounts;  Right of Offset.  As security for the
payment and  performance  of the  Obligations,  the Borrower  hereby  transfers,
assigns,  and pledges to the Lender and grants to the Lender a security interest
in all funds of the  Borrower  now or  hereafter or from time to time on deposit
with  the  Lender,  with  such  interest  of  the  Lender  to be  retransferred,
reassigned, and/or released by the Lender, as the case may be, at the expense of
the Borrower  upon payment in full and complete  performance  by the Borrower of
all  Obligations.  All remedies as secured party or assignee of such funds shall
be  exercisable  by the  Lender  upon the  occurrence  of any Event of  Default,
regardless  of whether  the  exercise  of any such  remedy  would  result in any
penalty or loss of interest or profit with  respect to any  withdrawal  of funds
deposited in a time deposit account prior to the maturity thereof.  Furthermore,
the Borrower hereby grants to the Lender the right,  exercisable at such time as
any Obligation  shall mature,  whether by acceleration of maturity or otherwise,
of offset or banker's lien against all funds of the Borrower now or hereafter or
from time to time on deposit with the Lender, regardless of whether the exercise
of any such  remedy  would  result in any  penalty or loss of interest or profit
with respect to any  withdrawal  of funds  deposited  in a time deposit  account
prior to the maturity thereof.

     2.15 General Provisions Relating to Interest.

          (a) It is the intention of the parties hereto to comply  strictly with
     the usury laws of the State of Texas and the United  States of America.  In
     this connection,  there shall never be collected,  charged,  or received on
     the sums advanced  hereunder  interest in excess of that which would accrue
     at the  Highest  Lawful  Rate.  For  purposes  of Chapter  303 of the Texas
     Finance Code (Vernon's  1999),  the Borrower agrees that the Highest Lawful
     Rate shall be the  "weekly  ceiling" as defined in such  Section,  provided
     that the Lender may also rely, to the extent  permitted by applicable  laws
     of the State of Texas or the  United  States  of  America,  on  alternative
     maximum  rates of  interest  under  other laws of the State of Texas or the
     United States of America applicable to the Lender, if greater.

          (b)  Notwithstanding  anything  herein or in the Note to the contrary,
     during any  Limitation  Period,  the interest rate to be charged on amounts
     evidenced by the Note shall be the Highest Lawful Rate, and the obligation,
     if any, of the Borrower for the payment of fees or other charges  deemed to
     be interest under  applicable law shall be suspended.  During any period or
     periods of time following a Limitation  Period,  to the extent permitted by
     applicable laws of the State of Texas or the United States of America,  the
     interest rate to be charged  hereunder  shall remain at the Highest  Lawful
     Rate until such time as there has been paid to the Lender (i) the amount of
     interest in excess of that  accruing  at the  Highest  Lawful Rate that the
     Lender would have received  during the  Limitation  Period had the interest

                                       18
<PAGE>

     rate remained at the otherwise  applicable  rate, and (ii) all interest and
     fees otherwise  payable to the Lender but for the effect of such Limitation
     Period.

          (c) If, under any  circumstances,  the  aggregate  amounts paid on the
     Note or under this  Agreement or any other Loan  Document  include  amounts
     which  by law are  deemed  interest  and  which  would  exceed  the  amount
     permitted  if  the  Highest  Lawful  Rate  were  in  effect,  the  Borrower
     stipulates  that such  payment  and  collection  will have been and will be
     deemed to have been,  to the extent  permitted  by  applicable  laws of the
     State of Texas or the United States of America,  the result of mathematical
     error on the part of the  Borrower  and the  Lender;  and the Lender  shall
     promptly  refund  the amount of such  excess  (to the  extent  only of such
     interest  payments  in excess of that  which  would have  accrued  and been
     payable on the basis of the Highest  Lawful  Rate) upon  discovery  of such
     error by the Lender or notice thereof from the Borrower.  In the event that
     the maturity of any Obligation is accelerated,  by reason of an election by
     the  Lender or  otherwise,  or in the event of any  required  or  permitted
     prepayment,  then the consideration  constituting interest under applicable
     laws may never  exceed the Highest  Lawful  Rate;  and excess  amounts paid
     which by law are deemed  interest,  if any, shall be credited by the Lender
     on the principal amount of the  Obligations,  or if the principal amount of
     the Obligations shall have been paid in full, refunded to the Borrower.

          (d) All sums  paid,  or agreed to be paid,  to the Lender for the use,
     forbearance and detention of the proceeds of any advance  hereunder  shall,
     to  the  extent  permitted  by  applicable  law,  be  amortized,  prorated,
     allocated, and spread throughout the full term hereof until paid in full so
     that the actual rate of interest is uniform but does not exceed the Highest
     Lawful Rate throughout the full term hereof.

     2.16 Letters in Lieu of Transfer Orders. The Lender agrees that none of the
letters in lieu of transfer or division orders provided by the Borrower pursuant
to Section 3.1(f)(v) or Section 5.7 will be sent to the addressees thereof prior
to the  occurrence  and  continuance  of an Event of Default,  at which time the
Lender may,  at its option and in  addition to the  exercise of any of its other
rights and remedies, send any or all of such letters.

     2.17 Power of Attorney.  The Borrower  hereby  designates the Lender as its
agent and attorney-in-fact, to act in its name, place, and stead for the purpose
of completing  and, upon the occurrence and  continuance of an Event of Default,
delivering  any and all of the letters in lieu of transfer  orders  delivered by
the  Borrower  to the Lender  pursuant  to  Section  3.1(f)(v)  or Section  5.7,
including,  without limitation,  completing any blanks contained in such letters
and attaching exhibits thereto describing the relevant Collateral.  The Borrower
hereby  ratifies and confirms all that the Lender shall  lawfully do or cause to
be done by virtue of this power of attorney and the rights  granted with respect
to such power of attorney.  This power of attorney is coupled with the interests
of the Lender in the Collateral,  shall commence and be in full force and effect
as of the  Closing  Date and shall  remain in full force and effect and shall be
irrevocable  so long as any  Obligation  remains  outstanding  or  unpaid or any
Commitment  exists.  The powers  conferred on the Lender by this appointment are
solely to protect the interests of the Lender under the Loan Documents and shall
not impose  any duty upon the Lender to  exercise  any such  powers.  The Lender
shall be accountable  only for amounts that it actually  receives as a result of
the exercise of such powers and shall not be  responsible to the Borrower or any
other Person for any act or failure to act with  respect to such powers,  except
for gross negligence or willful misconduct.

                                       19
<PAGE>

     2.18 Letters of Credit .

          (a) Upon the terms and conditions (including,  without limitation, the
     right of the Lender to decline to issue any Letter of Credit so long as any
     Default or Event of Default exists) and relying on the  representations and
     warranties  contained  in this  Agreement,  the Lender  agrees,  during the
     Commitment  Period,  to issue  Letters of Credit  following the receipt not
     less than two Business Days prior to the requested date for issuance of the
     relevant Letter of Credit,  of a Letter of Credit  Application  executed by
     the  Borrower;  provided,  however,  (a) no Letter of Credit  shall have an
     expiration  date which is more than 360 days after the issuance  thereof or
     subsequent to the Commitment Termination Date, and (b) the Lender shall not
     be obligated  to issue any Letter of Credit if (i) the face amount  thereof
     would exceed the Available  Commitment,  or (ii) after giving effect to the
     issuance thereof, (A) the L/C Exposure, when added to the Loan Balance then
     outstanding, would exceed the Borrowing Base then in effect.

          (b) Should the Lender be called upon by the  beneficiary of any Letter
     of Credit to honor all or any portion of the commitment thereunder, whether
     upon the presentation of drafts or otherwise, such payment by the Lender on
     account of such Letter of Credit shall be treated,  for all purposes,  as a
     Floating Rate Loan and an advance against the Note.

     2.19  Letter of Credit Fee. In addition to interest on the Note as provided
herein and all other fees payable  hereunder,  the Borrower agrees to pay to the
Lender,  on the date of issuance  of each  Letter of Credit,  a fee equal to the
greater of $500 or one percent (1%) per annum, calculated 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),  on the face  amount of such  Letter of
Credit  during the period for which such  Letter of Credit is issued;  provided,
however,  in the event such Letter of Credit is canceled  prior to its  original
expiry  date or a payment is made by the Lender  with  respect to such Letter of
Credit,  the Lender shall,  within 30 days after such cancellation or the making
of such  payment,  rebate to the Borrower the unearned  portion of such fee. The
Borrower  also  agrees to pay to the  Lender on demand its  customary  letter of
credit  transactional  fees,  including,  without  limitation,  amendment  fees,
payable with respect to each Letter of Credit.

     2.20 Assignment of Revenues.  All account debtors under Accounts Receivable
and  all  Purchasers  of  Production  will  receive  written  notification  from
Borrower,  in the form satisfactory to Lender, that all revenues attributable to
Accounts  Receivable  and to the Borrowing Base Oil and Gas Properties are to be
remitted to the Lockbox.  Borrower shall use commercially  reasonable efforts to
assist Lender in obtaining, within thirty (30) days after the Closing Date, from
all such account debtors and all Purchasers of Production, executed documents as
may be needed to instruct such account  debtors and  Purchasers of Production to
remit all such revenues into the Lockbox for transfer to a deposit  account held
by Borrower with Lender.

                                       20
<PAGE>

                                   ARTICLE III

                                   CONDITIONS
                                   ----------

     The  obligations  of the  Lender to enter into this  Agreement  and to make
Loans and issue  Letters  of  Credit  are  subject  to the  satisfaction  of the
following conditions precedent:

     3.1 Receipt of Loan  Documents  and Other  Items.  The Lender shall have no
obligation  under this  Agreement  unless and until all matters  incident to the
consummation  of  the  transactions  contemplated  herein,  including,   without
limitation, the review by the Lender or its counsel of the title of the Borrower
to its Oil and Gas  Properties,  shall be  satisfactory  to the Lender,  and the
Lender shall have received,  reviewed,  and approved the following documents and
other items,  appropriately  executed  when  necessary  and,  where  applicable,
acknowledged by one or more authorized officers of the Borrower, all in form and
substance  satisfactory to the Lender and dated, where applicable,  of even date
herewith or a date prior thereto and acceptable to the Lender:

          (a)  multiple  counterparts  of this  Agreement  as  requested  by the
     Lender;

          (b) the Note;

          (c)  copies  of  the  Articles  of  Incorporation  or  Certificate  of
     Incorporation and all amendments  thereto and the bylaws and all amendments
     thereto  of  each  Borrower  accompanied  by a  certificate  issued  by the
     secretary  or an assistant  secretary  of each  Borrower to the effect that
     each such copy is correct and complete;

          (d)  certificates of incumbency and signatures of all officers of each
     Borrower who are  authorized  to execute  Loan  Documents on behalf of such
     entity each such  certificate  being  executed by a Responsible  Officer of
     each Borrower;

          (e) copies of corporate  resolutions  approving the Loan Documents and
     authorizing the transactions  contemplated herein and therein, duly adopted
     by the board of directors of each Borrower  accompanied by  certificates of
     the secretary or an assistant secretary of each Borrower to the effect that
     such copies are true and correct  copies of  resolutions  duly adopted at a
     meeting or by unanimous  consent of the board of directors of each Borrower
     and that such  resolutions  constitute  all the  resolutions  adopted  with
     respect to such transactions,  have not been amended,  modified, or revoked
     in any  respect,  and are in full  force and  effect as of the date of such
     certificate;

          (f)  multiple  counterparts,  as  requested  by  the  Lender,  of  the
     following  Security  Instruments  creating,  evidencing,   perfecting,  and
     otherwise  establishing  Liens  in  favor  of  the  Lender  in  and  to the
     Collateral  or  other  items  described   below   otherwise   securing  the
     Obligations:

               (i) (A) Mortgage, Deed of Trust,  Indenture,  Security Agreement,
          Assignment  of  Production,  and Financing  Statement  executed by the
          CYMRI and (B) Act of Mortgage and Security  Agreement  executed by the
          TEI,  collectively,  covering all Oil and Gas  Properties of the CYMRI
          and TEI and all improvements,  personal property, and fixtures related
          thereto;

                                       21
<PAGE>

               (ii)  Financing   Statements   from  the  Borrower,   as  debtor,
          constituent to the instrument described in clause (i) above;

               (iii)  Security  Agreement  executed  by  the  Borrower  pledging
          accounts,   contract  rights,  and  all  other  personal  property  of
          Borrower;

               (iv)   Financing   Statement   from  the  Borrower,   as  debtor,
          constituent to the instrument described in clause (iii) above;

               (v) undated  letters,  in form and substance  satisfactory to the
          Lender,  executed by the Borrower to each  Purchaser of Production and
          disburser of the proceeds of production  from or  attributable  to the
          Borrowing  Base  Oil  and Gas  Properties,  together  with  additional
          letters with the addressees left blank,  authorizing and directing the
          addressees to make future payments attributable to production from the
          Borrowing Base Oil and Gas Properties directly to the Lender;

               (vi) Pledge of Certificates of Deposit executed by F.M. Cantrell,
          Jr. covering the Certificates of Deposit;

               (vii)  the   executed   (A)  Notice  of   Security   Interest  in
          Certificates of Deposit and (B) Confirmation of Pledge of Certificates
          of Deposit in the forms  attached  to the  Pledge of  Certificates  of
          Deposit as Schedules B and C, respectively;

               (viii) the Stock Pledge  Agreement from CYMRI covering all of its
          equity  interests in PEI, PEII,  and TEI,  together with (A) the stock
          certificates  evidencing  such  equity  interests  and (B) blank stock
          powers relating thereto; and

               (ix) (A) an  executed  Assignment  of Notes and Liens -  Guaranty
          Bank and (B)  terminations  Hibernia Bank Credit Facility and releases
          of the liens and  security  interest  granted  thereunder  in form and
          substance satisfactory to Lender in its discretion.

          (g) unaudited Financial Statements of the Borrower as of September 30,
     2004;

          (h) certificates dated as of a recent date from the Secretary of State
     or other  appropriate  Governmental  Authority  evidencing the existence or
     qualification  and  good  standing  of  each  Borrower  in  its  respective
     jurisdiction of incorporation and in any other  jurisdictions where it does
     business;

          (i) results of searches of the UCC Records of the  Secretary  of State
     of the State of Texas from a source acceptable to the Lender and reflecting
     no Liens against any of the Collateral as to which  perfection of a Lien is
     accomplished by the filing of a financing  statement other than in favor of
     the Lender;

                                       22
<PAGE>

          (j) confirmation,  acceptable to the Lender, of the title of CYMRI and
     TEI to the Borrowing Base Oil and Gas  Properties,  free and clear of Liens
     other than Permitted Liens;

          (k)  all  operating,   lease,  sublease,   royalty,  sales,  exchange,
     processing,  farmout, bidding, pooling, unitization,  communitization,  and
     other  agreements  relating to the  Borrowing  Base Oil and Gas  Properties
     requested by the Lender;

          (l)  engineering  reports  covering  the  Borrowing  Base  Oil and Gas
     Properties;

          (m) the opinion of Hirsch & Westheimer,  counsel to the Borrower,  and
     an opinion of counsel to Borrower that is licensed to practice in Louisiana
     covering  the  Security  Instruments  that are  required to be filed in the
     State of Louisiana  regarding,  among other things, the perfection of Liens
     and  enforceability  thereof,  in the form and substance  acceptable to the
     Lender in its discretion;

          (n) certificates  evidencing the insurance  coverage required pursuant
     to Section 5.18;

          (o) payment of the Facility Fee;

          (p) payment of the fees described in Section 5.14;

          (q) evidence satisfactory to Lender that the transactions evidenced by
     the Stock  Purchase  Agreement  have been  consummated  and all  conditions
     therein have been satisfied, unless waived by Lender in writing;

          (r) an executed Subordination Agreement; and

          (s)  such  other   agreements,   documents,   instruments,   opinions,
     certificates,  waivers, consents, and evidence as the Lender may reasonably
     request.

     3.2 Each Loan and Letter of Credit. In addition to the conditions precedent
stated elsewhere  herein,  the Lender shall not be obligated to make any Loan or
issue any Letter of Credit unless:

          (a) CYMRI shall have  delivered  to the Lender a Borrowing  Request at
     least one Business Day prior to the requested  date for the relevant  Loan,
     or a Letter of Credit  Application  at least two Business Days prior to the
     requested  issuance  date  for the  relevant  Letter  of  Credit  and  each
     statement  or  certification  made in such  Borrowing  Request or Letter of
     Credit  Application,  as the case may be,  shall be true and correct in all
     material  respects on the  requested  date for such Loan or the issuance of
     such Letter of Credit;

          (b) no Event of  Default  or  Default  shall  exist or will occur as a
     result of the making of the requested Loan or the issuance of the requested
     Letter of Credit;

                                       23
<PAGE>

          (c) if requested  by the Lender,  the  Borrower  shall have  delivered
     evidence  satisfactory  to the  Lender  substantiating  any of the  matters
     contained in this  Agreement  which are necessary to enable the Borrower to
     qualify for such Loan or the issuance of such Letter of Credit;

          (d) the Lender  shall  have  received,  reviewed,  and  approved  such
     additional  documents  and  items as  described  in  Section  3.1 as may be
     requested by the Lender with respect to such Loan or Letter of Credit;

          (e) no event shall have occurred which,  in the reasonable  opinion of
     the Lender, could have a Material Adverse Effect;

          (f)  each of the  representations  and  warranties  contained  in this
     Agreement  shall be true and correct  (unless they speak to a specific date
     or are based on facts which have changed by  transactions  contemplated  or
     expressly  permitted by this  Agreement) and shall be deemed to be repeated
     by the  Borrower  as if made on the  requested  date for  such  Loan or the
     issuance of such Letter of Credit;

          (g) all of the Security  Instruments shall be in full force and effect
     and provide to the Lender the security intended thereby;

          (h) neither the consummation of the transactions  contemplated  hereby
     nor the making of such Loan nor the issuance of such Letter of Credit shall
     contravene, violate, or conflict with any Requirement of Law;

          (i) the Borrower  shall hold full legal title to the Collateral and be
     the sole beneficial owner thereof;

          (j)  the  Lender  shall  have  received  the   reimbursement   of  all
     engineering  expenses,  and other fees payable to the Lender  hereunder and
     reimbursement  from the  Borrower,  or special legal counsel for the Lender
     shall have received payment from the Borrower,  for (i) all reasonable fees
     and expenses of counsel to the Lender for which the Borrower is responsible
     pursuant to applicable  provisions of this Agreement and for which invoices
     have  been  presented  as of or prior to the date of the  relevant  Loan or
     Letter of Credit  Application,  and (ii)  estimated  fees charged by filing
     officers  and  other  public  officials  incurred  or  to  be  incurred  in
     connection with the filing and recordation of any Security Instruments, for
     which  invoices  have  been  presented  as of or  prior  to the date of the
     requested Loan or Letter of Credit Application; and

          (k) all  matters  incident  to the  consummation  of the  transactions
     hereby contemplated shall be satisfactory to the Lender.

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<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     To induce the Lender to enter into this Agreement and to make the Loans
and issue Letters of Credit, the Borrower represents and warrants to the Lender
(which representations and warranties shall survive the delivery of the Note)
that:

     4.1 Due  Authorization.  The execution and delivery by the Borrower of this
Agreement  and the  borrowings  hereunder,  the  execution  and  delivery by the
Borrower of the Note,  the  repayment of the Note and interest and fees provided
for in the Note and this  Agreement,  the execution and delivery of the Security
Instruments  by the  Borrower  and the  performance  of all  obligations  of the
Borrower  under the Loan  Documents are within the power of the  Borrower,  have
been duly authorized by all necessary  corporate action by the Borrower,  and do
not and will not (a)  require  the consent of any  Governmental  Authority,  (b)
contravene or conflict with any  Requirement  of Law, (c) contravene or conflict
with any indenture,  instrument,  or other  agreement to which the Borrower is a
party or by  which  any  Property  of the  Borrower  may be  presently  bound or
encumbered,  or (d) result in or require the creation or  imposition of any Lien
in,  upon  or of  any  Property  of  the  Borrower  under  any  such  indenture,
instrument, or other agreement, other than the Loan Documents.

     4.2 Corporate  Existence.  Each Borrower is a corporation  duly  organized,
legally  existing,  and  in  good  standing  under  the  laws  of its  state  of
incorporation  and is duly  qualified  as a foreign  corporation  and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business  necessitates same, other than those  jurisdictions  wherein the
failure to so qualify will not have a Material Adverse Effect.

     4.3  Valid  and  Binding  Obligations.  All Loan  Documents  to which  each
Borrower is a party,  when duly  executed and  delivered by each such  Borrower,
will be the  legal,  valid,  and  binding  obligations  of each  such  Borrower,
enforceable against each Borrower in accordance with their respective terms.

     4.4  Security  Instruments.  The  provisions  of each  Security  Instrument
executed by the  Borrower  are  effective  to create in favor of the  Lender,  a
legal,  valid,  and enforceable  Lien in all right,  title,  and interest of the
Borrower  in  the  Collateral  described  therein,  which  Liens,  assuming  the
accomplishment  of recording and filing in accordance with applicable laws prior
to the intervention of rights of other Persons, shall constitute fully perfected
first-priority  Liens on all right,  title,  and interest of the Borrower in the
Collateral described therein.

     4.5 Title to Assets. The Borrower has good and indefeasible title to all of
their Properties, free and clear of all Liens except Permitted Liens.

     4.6 Score and Accuracy of Financial Statements. The Financial Statements of
the Borrower as of September 30, 2004, present fairly the financial position and
results of operations and cash flows of the Borrower as at the relevant point in
time or for the period  indicated,  as applicable.  No event or circumstance has
occurred since such dates which could  reasonably be expected to have a Material
Adverse Effect.

                                       25
<PAGE>

     4.7 No Material  Misstatements.  No  information,  exhibit,  statement,  or
report  furnished  to the  Lender  by or at the  direction  of the  Borrower  in
connection  with this Agreement  contains any material  misstatement  of fact or
omits to state a  material  fact or any fact  necessary  to make the  statements
contained therein not misleading as of the date made or deemed made.

     4.8 Liabilities,  Litigation, and Restrictions.  Other than as listed under
the heading  "Liabilities"  on Exhibit IV attached  hereto,  the Borrower has no
liabilities,  direct,  or contingent,  which may materially and adversely affect
its business or  operations or its  ownership of the  Collateral.  Except as set
forth under the heading  "Litigation"  on Exhibit IV hereto,  no  litigation  or
other  action of any  nature  affecting  the  Borrower  is  pending  before  any
Governmental  Authority or, to the best  knowledge of the  Borrower,  threatened
against or affecting the Borrower  which might  reasonably be expected to result
in any impairment of its ownership of any Collateral or have a Material  Adverse
Effect. To the best knowledge of the Borrower,  after due inquiry, no unusual or
unduly  burdensome   restriction,   restraint  or  hazard  exists  by  contract,
Requirement  of Law, or otherwise  relative to the business or operations of the
Borrower or the  ownership and  operation of the  Collateral  other than such as
relate  generally  to Persons  engaged in business  activities  similar to those
conducted by the Borrower.

     4.9  Authorizations;  Consents.  Except as expressly  contemplated  by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with,  any  Governmental  Authority or any other Person is
required to  authorize  or is otherwise  required in  connection  with the valid
execution and delivery by the Borrower of the Loan  Documents or any  instrument
contemplated  hereby, the repayment by the Borrower of the Note and interest and
fees provided in the Note and this Agreement, or the performance by the Borrower
of the Obligations.

     4.10  Compliance  with Laws.  The  Borrower  and the  Borrower's  Property,
including, without limitation, the Borrowing Base Oil and Gas Properties, are in
compliance  with  all  applicable   Requirements  of  Law,  including,   without
limitation,  Environmental Laws, the Natural Gas Policy Act of 1978, as amended,
and ERISA, except to the extent non-compliance with any such Requirements of Law
could not reasonably be expected to have a Material Adverse Effect.

     4.11 ERISA.  The Borrower does not maintain nor has it maintained any Plan.
The  Borrower  does  not  currently  contribute  to or have  any  obligation  to
contribute to or otherwise have any liability with respect to any Plan.

     4.12 Environmental  Laws. To the best knowledge and belief of the Borrower,
except as would not have a Material  Adverse Effect,  or as described on Exhibit
IV under the heading "Environmental Matters:"

          (a) no Property of the  Borrower is  currently on or has ever been on,
     or is adjacent to any Property which is on or has ever been on, any federal
     or state list of Superfund Sites;

          (b) no Hazardous Substances have been generated,  transported,  and/or
     disposed  of by the  Borrower  at a site  which  was,  at the  time of such
     generation,  transportation,  and/or  disposal,  or  has  since  become,  a
     Superfund Site;

                                       26
<PAGE>

          (c) except in accordance  with  applicable  Requirements of Law or the
     terms of a valid permit, license,  certificate, or approval of the relevant
     Governmental  Authority, no Release of Hazardous Substances by the Borrower
     or from, affecting,  or related to any Property of the Borrower or adjacent
     to any Property of the Borrower has occurred; and

          (d) no Environmental Complaint has been received by the Borrower.

     4.13   Compliance  with  Federal   Reserve   Regulations.   No  transaction
contemplated   by  the  Loan  Documents  is  in  violation  of  any  regulations
promulgated by the Board of Governors of the Federal Reserve System,  including,
without limitation, Regulations T, U, or X.

     4.14 Investment Company Act Compliance. No Borrower is, nor is any Borrower
directly or indirectly controlled by or acting on behalf of any Person which is,
an  "investment  company" or an "affiliated  person" of an "investment  company"
within the meaning of the Investment Company Act of 1940, as amended.

     4.15  Public  Utility  Holding  Company  Act  Compliance.  No Borrower is a
"holding  company," or an "affiliate" of a "holding company" or of a "subsidiary
company"  of a  "holding  company,"  within the  meaning  of the Public  Utility
Holding Company Act of 1935, as amended.

     4.16 Proper Filing of Tax Returns;  Payment of Taxes Due. Each Borrower has
duly and properly  filed its United  States  income tax return and all other tax
returns which are required to be filed and has paid all taxes due except such as
are being  contested  in good  faith  and as to which  adequate  provisions  and
disclosures have been made. The respective  charges and reserves on the books of
the Borrower with respect to taxes and other governmental charges are adequate.

     4.17  Refunds.  Except  as  described  on  Exhibit  IV  under  the  heading
"Refunds," no orders of,  proceedings  pending before, or other requirements of,
the Federal Energy Regulatory Commission,  the Texas Railroad Commission, or any
Governmental  Authority  exist which could result in the Borrower being required
to refund any material  portion of the proceeds  received or to be received from
the sale of  hydrocarbons  constituting  part of the Borrowing  Base Oil and Gas
Properties.

     4.18 Gas  Contracts.  Except as  described  on Exhibit IV under the heading
"Gas  Contracts,"  the Borrower (a) is not obligated in any material  respect by
virtue of any prepayment made under any contract  containing a "take-or-pay"  or
"prepayment"  provision or under any similar  agreement to deliver  hydrocarbons
produced from or allocated to any of the Borrowing  Base Oil and Gas  Properties
at some future date without  receiving full payment  therefor  within 90 days of
delivery,  and (b) has not produced gas, in any material amount, subject to, and
neither the Borrower nor any of the  Borrowing  Base Oil and Gas  Properties  is
subject to,  balancing  rights of third  parties or subject to balancing  duties
under  governmental  requirements,  except  as to such  matters  for  which  the
Borrower has established  monetary  reserves  adequate in amount to satisfy such
obligations and has segregated such reserves from other accounts.

     4.19  Intellectual  Property.  The Borrower  owns or is licensed to use all
Intellectual  Property  necessary  to  conduct  all  business  material  to  its
condition (financial or otherwise),  business, or operations as such business is
currently conducted. No claim has been asserted or is pending by any Person with
the  respect to the use of any such  Intellectual  Property  or  challenging  or
questioning the validity or effectiveness of any such Intellectual Property; and

                                       27
<PAGE>

the  Borrower  knows  of no valid  basis  for any  such  claim.  The use of such
Intellectual  Property by the  Borrower  does not  infringe on the rights of any
Person,  except for such claims and  infringements  as do not, in the aggregate,
give rise to any material liability on the part of the Borrower.

     4.20  Casualties  or Taking of Property.  Except as disclosed on Exhibit IV
under the heading  "Casualties,"  since September 30, 2004, neither the business
nor any  Property of the Borrower has been  materially  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.

     4.21  Locations  of  Borrower.  The  principal  place of business and chief
executive  office of each  Borrower is located at the address of CYMRI set forth
in Section 8.3 or at such other  location as the  Borrower  may have,  by proper
written notice hereunder,  advised the Lender, provided that such other location
is within a state in which appropriate financing statements from the Borrower in
favor of the Lender have been filed.

     4.22 Subsidiaries.  The Borrower has no Subsidiaries except those described
on Exhibit IV under the heading "Subsidiaries".

     4.23  Purchasers  of  Production.   The  Persons  who  are  purchasing  the
Borrower's interests in oil and gas produced from the Borrowing Base Oil and Gas
Properties  as of the date of this  Agreement  are  identified  on  Exhibit  VII
attached hereto.

                                   ARTICLE V

                              AFFIRMATIVE COVENANTS
                              ---------------------

     So long as any Obligation  remains  outstanding or unpaid or any Commitment
exists, the Borrower shall:

     5.1 Maintenance and Access to Records. Keep adequate records, in accordance
with GAAP, of all its  transactions  so that at any time, and from time to time,
its true  and  complete  financial  condition  may be  readily  determined,  and
promptly  following  the  reasonable  request of the Lender,  make such  records
available  for  inspection  by the Lender and,  at the expense of the  Borrower,
allow the Lender to make and take away copies thereof.

     5.2 Quarterly Financial Statements; Compliance Certificates. Deliver to the
Lender, (a) on or before the 45th day after the close of each of the first three
quarterly  periods of each fiscal year of the Borrower,  a copy of the unaudited
Financial  Statements  of  the  Borrower,  on  a  consolidated  basis  and  on a
consolidating  basis,  as at the  close of such  quarterly  period  and from the
beginning  of  such  fiscal  year  to the end of  such  period,  such  Financial
Statements  to  be  certified  by a  Responsible  Officer  of  CYMRI  as a  fair
presentation of the condition of the Borrower, subject to changes resulting from

                                       28
<PAGE>

normal year-end audit  adjustments,  and (b) on or before the 45th day after the
close of each fiscal quarter,  with the exception of the last fiscal quarter,  a
Compliance Certificate.

     5.3 Annual Financial  Statements.  Deliver to the Lender,  on or before the
90th day after  the close of each  fiscal  year of the  Borrower,  a copy of the
annual audited Financial Statements of the Borrower, on a consolidated basis and
on  a  consolidating  basis,   satisfactory  to  the  Lender  and  a  Compliance
Certificate.

     5.4 Oil and Gas Reserve Reports.

          (a)  Deliver to the  Lender no later than March 1 of each year  during
     the term of this  Agreement,  engineering  reports  in form  and  substance
     satisfactory   to   the   Lender,   certified   by   any   nationally-   or
     regionally-recognized independent consulting petroleum engineers acceptable
     to the Lender as fairly  and  accurately  setting  forth (i) the proven and
     producing,  shut-in,  behind-pipe,  and  undeveloped  oil and gas  reserves
     (separately  classified as such) attributable to the Borrowing Base Oil and
     Gas  Properties as of January 1 of the year for which such reserve  reports
     are  furnished,  (ii) the aggregate  present value of the future net income
     with respect to such Borrowing Base Oil and Gas Properties, discounted at a
     stated per annum  discount  rate of proven and  producing  reserves,  (iii)
     projections of the annual rate of production,  gross income, and net income
     with respect to such proven and producing  reserves,  and (iv)  information
     with  respect  to  the   "take-or-pay,"   "prepayment,"  and  gas-balancing
     liabilities of the Borrower.

          (b)  Deliver  to the  Lender no later  than  September  1 of each year
     during  the  term of  this  Agreement,  engineering  reports  in  form  and
     substance  satisfactory  to the Lender prepared by or under the supervision
     of a Responsible  Officer of the Borrower evaluating the Borrowing Base Oil
     and Gas Properties as of July 1 of the year for which such reserve  reports
     are furnished and updating the information provided in the reports pursuant
     to Section 5.4(a).

          (c) Each of the reports  provided  pursuant to this  Section  shall be
     submitted to the Lender together with  additional data concerning  pricing,
     quantities of production  from the Borrowing  Base Oil and Gas  Properties,
     volumes of production  sold,  purchasers  of  production,  gross  revenues,
     expenses,  and such other  information  and engineering and geological data
     with respect thereto as the Lender may reasonably request.

     5.5 Title  Opinions;  Title  Defects.  Within 30 days following the Closing
Date and promptly any time thereafter upon the request of the Lender, furnish to
the Lender title opinions,  in form and substance and by counsel satisfactory to
the Lender,  or other  confirmation of title acceptable to the Lender,  covering
Oil and Gas Properties  constituting not less than 81% of the value,  determined
by the  Lender  in its  sole  discretion,  of the  Borrowing  Base  Oil  and Gas
Properties;  provided,  however,  that within such 30-day  period  following the
Closing Date the  Borrowing  Base Oil and Gas  Properties  owned by TEI shall be
covered by current  title  opinions  delivered  to Lender in form and  substance
satisfactory to the Lender (and not by other  confirmation of title).  Promptly,
but in any  event  within 60 days  after  notice  by the  Lender of any  defect,
material in the opinion of the Lender in value,  in the title of the Borrower to
any of its Oil and Gas Properties,  clear such title defects,  and, in the event
any such title defects are not cured in a timely  manner,  pay all related costs
and fees incurred by the Lender to do so.

     5.6  Notices of Certain  Events.  Deliver to the Lender,  immediately  upon
having   knowledge  of  the  occurrence  of  any  of  the  following  events  or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of the Borrower and setting forth the relevant event or circumstance and

                                       29
<PAGE>

the  steps  being  taken  by  the  Borrower   with  respect  to  such  event  or
circumstance:

          (a) any Default or Event of Default;

          (b) any default or event of default under any  contractual  obligation
     of any Borrower,  or any litigation,  investigation,  or proceeding between
     any Borrower and any  Governmental  Authority which, in either case, if not
     cured or if adversely  determined,  as the case may be, could reasonably be
     expected to have a Material Adverse Effect;

          (c) any litigation or proceeding involving any Borrower as a defendant
     or in which any Property of any Borrower is subject to a claim and in which
     the  amount  involved  is  $50,000  or more  and  which is not  covered  by
     insurance or in which injunctive or similar relief is sought;

          (d)  the  receipt  by  the  Borrower  of  any  written   Environmental
     Complaint;

          (e) any actual, proposed, or threatened testing or other investigation
     by any Governmental  Authority or other Person concerning the environmental
     condition  of, or relating  to, any Property of the Borrower or adjacent to
     any Property of the Borrower  following any allegation of a violation of an
     Environmental Complaint;

          (f) any  Release of  Hazardous  Substances  by the  Borrower  or from,
     affecting,  or related to any  Property of the  Borrower or adjacent to any
     Property of the Borrower except in accordance with applicable  Requirements
     of Law or the terms of a valid permit, license, certificate, or approval of
     the relevant Governmental  Authority, or the violation of any Environmental
     Law, or the revocation,  suspension,  or forfeiture of or failure to renew,
     any permit, license,  registration,  approval, or authorization which could
     reasonably be expected to have a Material Adverse Effect;

          (g) the change in identity or address of any Person  remitting  to the
     Borrower  proceeds  from  the  sale  of  hydrocarbon   production  from  or
     attributable to any Borrowing Base Oil and Gas Properties;

          (h) any change in the senior management of the Borrower; and

          (i) any other event or condition which could reasonably be expected to
     have a Material Adverse Effect.

     5.7 Letters in Lieu of Transfer  Orders;  Division  Orders.  Promptly  upon
request by the Lender at any time and from time to time, and without  limitation
on the rights of the Lender  pursuant to Sections  2.16 and 2.17,  execute  such
letters in lieu of transfer  orders,  in  addition to the letters  signed by the

                                       30
<PAGE>

Borrower and delivered to the Lender in  satisfaction of the condition set forth
in Section  3.1(f)(v) and/or division and/or transfer orders as are necessary or
appropriate to transfer and deliver to the Lender  proceeds from or attributable
to the Borrowing Base Oil and Gas Properties.

     5.8  Additional  Information.  Furnish  to the  Lender,  promptly  upon the
request of the Lender, such additional financial or other information concerning
the assets,  liabilities,  operations,  and  transactions of the Borrower as the
Lender may from time to time request,  including,  without  limitation,  updated
lists of additional or new  Purchases of  Production;  and notify the Lender not
less than ten Business  Days prior to the  occurrence  of any condition or event
that may change the proper location for the filing of any financing statement or
other  public  notice or recording  for the purpose of  perfecting a Lien in any
Collateral,  including,  without  limitation,  any  change  in its  name  or the
location of its principal place of business or chief executive office;  and upon
the request of the Lender,  execute such additional Security  Instruments as may
be necessary or appropriate in connection therewith.

     5.9  Compliance  with Laws.  Except to the extent the  failure to comply or
cause  compliance  would not have a Material  Adverse  Effect,  comply  with all
applicable Requirements of Law, including,  without limitation,  (a) the Natural
Gas Policy Act of 1978, as amended,  (b) ERISA, (c) Environmental  Laws, and (d)
all permits, licenses, registrations,  approvals, and authorizations (i) related
to any natural or environmental  resource or media located on, above, within, in
the vicinity of,  related to or affected by any Property of the  Borrower,  (ii)
required  for the  performance  of the  operations  of the  Borrower,  or  (iii)
applicable to the use, generation,  handling, storage, treatment,  transport, or
disposal of any Hazardous  Substances;  and cause all  employees,  crew members,
agents, contractors, subcontractors, and future lessees (pursuant to appropriate
lease  provisions)  of the  Borrower,  while such Persons are acting  within the
scope  of  their  relationship  with  the  Borrower,  to  comply  with  all such
Requirements of Law as may be necessary or appropriate to enable the Borrower to
so comply.

     5.10  Payment of  Assessments  and  Charges.  Pay all  taxes,  assessments,
governmental  charges,  rent, and other  Indebtedness  which,  if unpaid,  might
become a Lien against the Property of the Borrower,  except any of the foregoing
being  contested in good faith and as to which  adequate  reserve in  accordance
with  GAAP has been  established  or  unless  failure  to pay  would  not have a
Material Adverse Effect.

     5.11  Maintenance of Corporate  Existence and Good  Standing.  Maintain its
corporate  existence or qualification  and good standing in its jurisdictions of
incorporation  and in all  jurisdictions  wherein  the  Property  now  owned  or
hereafter acquired or business now or hereafter conducted necessitates same.

     5.12 Payment of Note; Performance of Obligations. Pay the Note according to
its  terms  and do  and  perform  every  act  and  discharge  all  of its  other
Obligations.

     5.13 Further  Assurances.  Promptly  cure any defects in the  execution and
delivery of any of the Loan Documents and all agreements  contemplated  thereby,
and execute,  acknowledge,  and deliver such other assurances and instruments as
shall,  in the opinion of the Lender,  be  necessary to fulfill the terms of the
Loan Documents.

                                       31
<PAGE>

     5.14 Initial Fees and Expenses of Counsel to Lender.  On the Closing  Date,
promptly  reimburse the Lender for all reasonable  fees and expenses,  including
estimated  recording  fees, of Porter & Hedges,  L.L.P.,  special counsel to the
Lender,   in  connection   with  the  preparation  of  this  Agreement  and  all
documentation  contemplated hereby, the satisfaction of the conditions precedent
set forth herein,  the filing and recordation of Security  Instruments,  and the
consummation of the transactions contemplated in this Agreement.

     5.15  Subsequent  Fees and Expenses of Lender.  Upon request by the Lender,
promptly  reimburse the Lender (to the fullest extent  permitted by law) for all
amounts reasonably expended, advanced, or incurred by or on behalf of the Lender
to satisfy any  obligation of the Borrower under any of the Loan  Documents;  to
collect the Obligations;  to ratify,  amend, restate, or prepare additional Loan
Documents,  as the case may be;  for the  filing  and  recordation  of  Security
Instruments;  to  enforce  the  rights  of the  Lender  under  any  of the  Loan
Documents; and to protect the Properties or business of the Borrower, including,
without limitation,  the Collateral,  which amounts shall be deemed compensatory
in nature and  liquidated as to amount upon notice to the Borrower by the Lender
and which amounts shall include,  but not be limited to (a) all court costs, (b)
reasonable  attorneys'  fees, (c)  reasonable  fees and expenses of auditors and
accountants  incurred  to protect  the  interests  of the  Lender,  (d) fees and
expenses incurred in connection with the participation by the Lender as a member
of the creditors' committee in a case commenced under any Insolvency Proceeding,
(e) fees and expenses  incurred in connection  with lifting the  automatic  stay
prescribed  in  ss.362  Title 11 of the  United  States  Code,  and (f) fees and
expenses  incurred in connection with any action pursuant to ss.1129 Title 11 of
the United States Code all reasonably  incurred by the Lender in connection with
the collection of any sums due under the Loan Documents,  together with interest
at the per annum interest rate equal to the Floating Rate, calculated on a basis
of a calendar year of 365 or 366 days,  as the case may be,  counting the actual
number of days elapsed,  on each such amount from the date of notification  that
the same was expended,  advanced, or incurred by the Lender until the date it is
repaid to the Lender,  with the  obligations  under this Section  surviving  the
non-assumption  of this  Agreement  in a case  commenced  under  any  Insolvency
Proceeding  and being  binding  upon the  Borrower  and/or a trustee,  receiver,
custodian, or liquidator of the Borrower appointed in any such case.

     5.16 Operation of Oil and Gas Properties.  Develop,  maintain,  and operate
its Oil and Gas  Properties  in a prudent and  workmanlike  manner in accordance
with industry standards and every Requirement of Law.

     5.17 Maintenance and Inspection of Properties. Maintain all of its tangible
Properties in good repair and condition,  ordinary wear and tear excepted;  make
all  necessary  replacements  thereof and operate such  Properties in a good and
workmanlike  manner;  and permit any authorized  representative of the Lender to
visit and inspect, at the expense of the Borrower,  any tangible Property of the
Borrower.

     5.18  Maintenance  of  Insurance.  Maintain  insurance  with respect to its
Properties and  businesses  against such  liabilities,  casualties,  risks,  and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Lender,  maintained by Borrower,  and, upon any renewal of any
such  insurance  and at other times upon  request by the Lender,  furnish to the
Lender  evidence,  satisfactory  to the  Lender,  on  the  Closing  Date  of the
maintenance of such  insurance.  The Lender shall have the right to request that

                                       32
<PAGE>

it be named as a loss payee  under any such  renewals of  insurance.  The Lender
shall have the right to collect,  and the Borrower hereby assigns to the Lender,
any and all monies  that may become  payable  under any  policies  of  insurance
relating to business  interruption or by reason of damage,  loss, or destruction
of any of the Collateral.  In the event of any damage,  loss, or destruction for
which insurance proceeds relating to business  interruption or Collateral exceed
$100,000.00,  the Lender  may,  at its  option,  apply all such sums or any part
thereof received by it toward the payment of the Obligations, whether matured or
unmatured,  application to be made first to interest and then to principal,  and
shall deliver to the Borrower the balance,  if any, after such  application  has
been made.  In the event of any such  damage,  loss,  or  destruction  for which
insurance proceeds are $100,000.00 or less, provided that no Default or Event of
Default  has  occurred  and is  continuing,  the Lender  shall  deliver any such
proceeds  received  by it to the  Borrower.  In the  event the  Lender  receives
insurance proceeds not attributable to Collateral or business interruption,  the
Lender shall deliver any such proceeds to the Borrower.

     5.19  INDEMNIFICATION.  INDEMNIFY AND HOLD THE LENDER AND ITS SHAREHOLDERS,
OFFICERS, DIRECTORS,  EMPLOYEES, AGENTS,  ATTORNEYS-IN-FACT,  AND AFFILIATES AND
EACH TRUSTEE FOR THE BENEFIT OF THE LENDER  (COLLECTIVELY  THE "LENDER PARTIES")
UNDER ANY LOAN DOCUMENT  HARMLESS  FROM AND AGAINST ANY AND ALL CLAIMS,  LOSSES,
DAMAGES,  LIABILITIES,  FINES, PENALTIES,  CHARGES,  ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS  AND  ORDERS,   JUDGMENTS,   REMEDIAL   ACTIONS,   REQUIREMENTS  AND
ENFORCEMENT  ACTIONS  OF ANY  KIND,  AND ALL  COSTS  AND  EXPENSES  INCURRED  IN
CONNECTION  THEREWITH  (INCLUDING,  WITHOUT  LIMITATION,   ATTORNEYS'  FEES  AND
EXPENSES),  ARISING  DIRECTLY OR INDIRECTLY,  IN WHOLE OR IN PART,  FROM (A) THE
PRESENCE OF ANY HAZARDOUS  SUBSTANCES ON, UNDER,  OR FROM ANY BORROWING BASE OIL
AND GAS PROPERTIES OF THE BORROWER,  WHETHER PRIOR TO OR DURING THE TERM HEREOF,
(B) ANY ACTIVITY  CARRIED ON OR UNDERTAKEN ON OR OFF ANY BORROWING  BASE OIL AND
GAS PROPERTIES OF THE BORROWER,  WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND
WHETHER  BY  THE  BORROWER  OR  ANY  PREDECESSOR  IN  TITLE,  EMPLOYEE,   AGENT,
CONTRACTOR,  OR  SUBCONTRACTOR  OF THE  BORROWER OR ANY OTHER PERSON AT ANY TIME
OCCUPYING  OR  PRESENT  ON SUCH  PROPERTY,  IN  CONNECTION  WITH  THE  HANDLING,
TREATMENT,  REMOVAL,  STORAGE,  DECONTAMINATION,   CLEANUP,  TRANSPORTATION,  OR
DISPOSAL OF ANY HAZARDOUS  SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER
SUCH PROPERTY,  (C) ANY RESIDUAL  CONTAMINATION  ON OR UNDER ANY PROPERTY OF THE
BORROWER,  (D) ANY CONTAMINATION OF ANY BORROWING BASE OIL AND GAS PROPERTIES OR
NATURAL  RESOURCES  ARISING IN CONNECTION  WITH THE GENERATION,  USE,  HANDLING,
STORAGE,  TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER
OR ANY EMPLOYEE,  AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER WHILE SUCH
PERSONS ARE ACTING  WITHIN THE SCOPE OF THEIR  RELATIONSHIP  WITH THE  BORROWER,
IRRESPECTIVE  OF WHETHER ANY OF SUCH  ACTIVITIES  WERE OR WILL BE  UNDERTAKEN IN
ACCORDANCE  WITH  APPLICABLE  REQUIREMENTS  OF LAW, OR (E) THE  PERFORMANCE  AND
ENFORCEMENT OF ANY LOAN DOCUMENT,  ANY ALLEGATION BY ANY BENEFICIARY OF A LETTER

                                       33
<PAGE>

OF CREDIT OF A WRONGFUL  DISHONOR  BY THE  LENDER OF A CLAIM OR DRAFT  PRESENTED
THEREUNDER,  OR ANY OTHER ACT OR OMISSION IN  CONNECTION  WITH OR RELATED TO ANY
LOAN  DOCUMENT OR THE  TRANSACTIONS  CONTEMPLATED  THEREBY,  INCLUDING,  WITHOUT
LIMITATION,  ANY OF THE  FOREGOING  IN THIS  SECTION  ARISING  FROM  NEGLIGENCE,
WHETHER  SOLE OR  CONCURRENT,  ON THE PART OF THE  LENDER  PARTIES OR ANY OF ITS
SHAREHOLDERS,  OFFICERS,  DIRECTORS,  EMPLOYEES, AGENTS,  ATTORNEYS-IN-FACT,  OR
AFFILIATES  OR ANY TRUSTEE FOR THE BENEFIT OF THE LENDER UNDER ANY LOAN DOCUMENT
BUT NOT  INCLUDING  ANY OF THE  FOREGOING  ARISING FROM THE GROSS  NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE LENDER PARTIES; WITH THE FOREGOING INDEMNITY SURVIVING
SATISFACTION OF ALL  OBLIGATIONS  AND THE TERMINATION OF THIS AGREEMENT,  UNLESS
ALL SUCH  OBLIGATIONS  HAVE BEEN SATISFIED  WHOLLY IN CASH FROM THE BORROWER AND
NOT BY WAY OF  REALIZATION  AGAINST  ANY  COLLATERAL  OR THE  CONVEYANCE  OF ANY
PROPERTY IN LIEU THEREOF,  PROVIDED THAT SUCH INDEMNITY  SHALL NOT EXTEND TO ANY
ACT OR OMISSION BY THE LENDER WITH  RESPECT TO ANY  PROPERTY  SUBSEQUENT  TO THE
LENDER  BECOMING THE OWNER OF SUCH  PROPERTY AND WITH RESPECT TO WHICH  PROPERTY
SUCH CLAIM, LOSS, DAMAGE, LIABILITY, FINE, PENALTY, CHARGE,  PROCEEDING,  ORDER,
JUDGMENT,  ACTION, OR REQUIREMENT  ARISES SUBSEQUENT TO THE ACQUISITION OF TITLE
THERETO BY THE LENDER.

     5.20  Operating  Accounts.  Establish  and maintain  with Lender all of its
principal operating accounts and related deposit accounts.

     5.21 Hedging  Transaction  Reports.  For each Commodity  Hedge Agreement to
which Borrower is a party, if any, deliver to Lender  contemporaneously with the
quarterly  Financial  Statements a detailed  report  setting out  Borrower's (i)
position as of the end of such calendar quarter  including,  but not limited to,
Borrower's  settlement  payments and receipts  during such calendar  quarter and
settlement payables and receivables as of the end of such calendar quarter,  (ii
) volumes  hedged,  (iii) prices at which such  volumes  were hedged,  (iii) the
period  covered  under  each  Commodity  Hedge  Agreement  and  (iv)  any  other
information which Lender may request.

     5.22 Aged Accounts  Reports.  Deliver to Lender, on or before the thirtieth
(30th)  day after the end of each  calendar  month,  a detailed  aging  accounts
receivable  report and a detailed aging accounts  payable report effective as of
the end of such  calendar  month in  accordance  with the invoice  dates of such
accounts payable, all such reports to be prepared in accordance with GAAP.

     5.23 Production and Expense  Reports.  Deliver to Lender,  on or before the
forty-fifth  (45th) day after the end of each calendar  month,  a production and
expense report covering quantities of production from the Borrowing Base Oil and
Gas  Properties,  volumes of production  sold,  Purchasers of Production,  gross
revenues and expenses (including lease operating expenses).

                                       34
<PAGE>

     5.24  Operating  Budget  Forecasts.   Commencing   January  31,  2005,  and
continuing on the last day of each  subsequent  month,  deliver to Lender with a
rolling revenue,  lease operating expense,  capital  expenditure and general and
administrative  expense forecast, in form satisfactory to Lender (the "Operating
Budget  Forecasts"),  by  month  for the  succeeding  12-month  period  covering
Borrower's interest in the Borrowing Base Oil and Gas Properties.  The Operating
Budget  Forecasts  will include a brief  discussion by Borrower of all operating
and financial  variances from the prior Operating  Budget Forecast  delivered to
Lender.

     5.25 Assignments of Proceeds and Accounts Receivable  Debtors.  Ensure that
within 30 days of the Closing Date all Purchasers of Production  relating to the
Borrowing Base Oil and Gas Properties of TEI and all Accounts Receivable debtors
of PEI  and  PEII  have  received,  signed  and  returned  a form of  Notice  of
Assignment  of  Proceeds  or other  written  notification  in  writing,  in form
satisfactory  to Lender,  including  such Persons'  agreements to remit all such
proceeds and revenues into the Lockbox.

     5.26 Lockbox Agreement. Execute and deliver to Lender the Lockbox Agreement
within 30 days of the Closing Date.

     5.27 Stock Certificates.  Obtain and deliver to the Stockholders, within 30
days of the Closing  Date,  new or  replacement  Stock  Certificates  evidencing
CYMRI's  stock  ownership  in PEI,  PEII and TEI and covered by the Stock Pledge
Agreement;  provided  that  such  delivery  of the Stock  Certificates  shall be
subject to the Subordination Agreement.

     5.28  Certificates  of  Deposit.  Immediately  upon  the  maturity  of each
Certificate  of  Deposit,  cause  F.M.  Cantrell,  Jr.  to  transfer  the  funds
thereunder to Lender for the issuance of new certificates of deposit by Lender.


                                   ARTICLE VI

                               NEGATIVE COVENANTS
                               ------------------

     So long as any Obligation  remains  outstanding or unpaid or any Commitment
exists, no Borrower will:

     6.1  Indebtedness.   Create,   incur,   assume,  or  suffer  to  exist  any
Indebtedness,  whether  by way of  loan or  otherwise;  provided,  however,  the
foregoing  restriction  shall not apply to (a) the  Obligations,  (b)  unsecured
accounts  payable  incurred in the ordinary  course of  business,  which are not
unpaid in excess of 90 days beyond  invoice date or are being  contested in good
faith and as to which such reserve as is required by GAAP has been made, accrued
or deferred taxes and other  liabilities not  constituting  borrowed money,  (c)
crude oil, natural gas, or other hydrocarbon  Commodity Hedge Agreements in form
and substance and with a Person acceptable to the Lender, provided that (i) each
commitment issued under such agreement must also be approved by the Lender, (ii)
such agreements  shall not be entered into with respect to Borrower's  Borrowing
Base Oil and Gas Properties  constituting  more than 75% of the present value of
estimated  future net revenues,  computed using a discount  factor of 9%, of all
proved developed producing Borrowing Base Oil and Gas Properties, and (iii) that

                                       35
<PAGE>

the floor  prices in such  agreements  are not less than the prices  used by the
Lender in its most recent  Borrowing Base  determination  (except in relation to
that certain Rate  Management  Transaction  dated effective June 1, 2003 between
CYMRI and Macquarie Bank Ltd.  documented as transaction number HH0504799),  (d)
Rate Management Transactions, in form and substance and with a Person acceptable
to the Lender,  (e)  Indebtedness  secured by  Permitted  Liens or (f) any other
Indebtedness  subordinated  to the Obligation on terms approved by Lender in its
discretion.

     6.2 Contingent  Obligations.  Create, incur, assume, or suffer to exist any
Contingent  Obligation;  provided,  however, the foregoing restriction shall not
apply to (a)  performance  guarantees  and  performance  surety  or other  bonds
provided in the  ordinary  course of business,  or (b) trade credit  incurred or
operating leases entered into in the ordinary course of business.

     6.3 Liens. Create, incur, assume, or suffer to exist any Lien on any of its
Oil and Gas  Properties  or any other  Property,  whether now owned or hereafter
acquired;  provided,  however,  the  foregoing  restrictions  shall not apply to
Permitted Liens.

     6.4 Sales of Assets. Without the prior written consent of the Lender, sell,
transfer,  or otherwise  dispose of, in one or any series of  transactions,  any
Collateral or other Property,  whether now owned or hereafter acquired, or enter
into any agreement to do so; provided,  however, the foregoing restriction shall
not apply to (a) the sale of hydrocarbons or inventory in the ordinary course of
business  provided that no contract for the sale of hydrocarbons  shall obligate
the Borrower to deliver hydrocarbons produced from any of the Borrowing Base Oil
and Gas Properties at some future date without  receiving full payment  therefor
within 90 days of  delivery,  or (b) the sale or other  disposition  of Property
destroyed,  lost, worn out,  damaged,  or having only salvage value or no longer
used or useful in the business of the Borrower.

     6.5 Leasebacks.  Enter into any agreement to sell or transfer any Borrowing
Base Oil and Gas Properties and thereafter rent or lease as lessee such Property
or other  Property  intended for the same use or purpose as the Property sold or
transferred.

     6.6 Sale or Discount of Receivables. Except to minimize losses on bona fide
debts previously  contracted,  discount or sell with recourse,  or sell for less
than  the  greater  of the  face  or  market  value  thereof,  any of its  notes
receivable or accounts receivable.

     6.7 Loans or Advances. Make or agree to make or allow to remain outstanding
any  loans  or  advances  to  any  Person;  provided,   however,  the  foregoing
restrictions shall not apply to (a) advances or extensions of credit in the form
of accounts  receivable  incurred in the  ordinary  course of business  and upon
terms common in the industry for such  accounts  receivable,  or (b) advances to
employees of the Borrower for the payment of expenses in the ordinary  course of
business.

     6.8 Investments.  Acquire  Investments in, or purchase or otherwise acquire
all or substantially all of the assets of, any Person;  provided,  however,  the
foregoing  restriction shall not apply to the purchase or acquisition of (a) Oil
and Gas Properties, (b) Investments in the form of (i) debt securities issued or
directly and fully guaranteed or insured by the United States  Government or any
agency or  instrumentality  thereof,  with  maturities of no more than one year,
(ii)  commercial  paper of a domestic issuer rated at the date of acquisition at

                                       36
<PAGE>

least  P-2 by  Moody's  Investor  Service,  Inc.  or A-2 by  Standard  &  Poor's
Corporation  and with  maturities  of no more  than  one  year  from the date of
acquisition,   or  (iii)  repurchase  agreements  covering  debt  securities  or
commercial paper of the type permitted in this Section, certificates of deposit,
demand deposits,  eurodollar time deposits, overnight bank deposits and bankers'
acceptances,  with  maturities  of no  more  than  one  year  from  the  date of
acquisition,  issued by or  acquired  from or through  the Lender or any bank or
trust company organized under the laws of the United States or any state thereof
and  having  capital  surplus  and  undivided   profits   aggregating  at  least
$100,000,000.00,  (c) other short-term  Investments similar in nature and degree
of risk to those  described in clause (b) of this Section,  or (d)  money-market
funds.

     6.9 Dividends and Distributions.  Declare, pay, or make, whether in cash or
Property of the Borrower, any dividend or distribution on, or purchase,  redeem,
or otherwise  acquire for value,  any share of any class of its capital stock at
any time.

     6.10 Issuance of Stock; Changes in Corporate  Structure.  Issue or agree to
issue additional  shares of capital stock, in one or any series of transactions;
enter into any transaction of consolidation, merger, or amalgamation; liquidate,
wind up, or dissolve or suffer any  liquidation or dissolution or enter or agree
to enter into any arrangement that would result in a Change of Control.

     6.11 Transactions with Affiliates.  Directly or indirectly,  enter into any
transaction (including the sale, lease, or exchange of Property or the rendering
of  service)  with any of its  Affiliates,  other than upon fair and  reasonable
terms no less  favorable  than could be obtained in an arm's length  transaction
with a Person which was not an Affiliate.

     6.12 Lines of Business. Expand, on its own or through any Subsidiary,  into
any line of business other than those in which the Borrower is engaged as of the
date hereof.

     6.13 Plan Obligations.  Assume or otherwise become subject to an obligation
to  contribute  to or maintain  any Plan or acquire any Person  which has at any
time had an obligation to contribute to or maintain any Plan.

     6.14 Current  Ratio.  Permit,  as of the close of any fiscal  quarter,  the
ratio of (i) the sum of Current  Assets  plus the unused  portion of this credit
facility to (ii) Current Liabilities to be less than 1.00 to 1.00.

     6.15  EBITDA to  Interest  Ratio.  Permit,  as of the  close of any  fiscal
quarter,  calculated on a consolidated  basis, the ratio of (a) quarterly EBITDA
to (b)  Interest  Expense  to be less than  3.50 to 1.00  beginning  the  fiscal
quarter  ending  December  31, 2005 or less than 3.00 to 1.00 for the end of the
first four fiscal  quarters  subsequent to the Closing Date. This ratio shall be
tested on an annualized basis for the first three quarters following the Closing
Date and,  beginning  on the end of the  fourth  fiscal  quarter  following  the
Closing Date, on a rolling four-quarter basis.

     6.16 Debt to  Capitalization  Ratio.  Permit, as of the close of any fiscal
quarter,  Borrower's  ratio  of Loan  Balance  to the  sum of (i)  Stockholder's
Equity,  plus (ii) the Loan  Balance,  plus (iii) the  outstanding  Indebtedness
under the Stockholder Notes to be more than 0.60 to 1.00.

                                       37
<PAGE>

                                   ARTICLE VII

                                EVENTS OF DEFAULT
                                -----------------

     7.1  Enumeration  of Events of Default.  Any of the following  events shall
constitute an Event of Default:

          (a) default  shall be made in the payment when due of any  installment
     of principal or interest under this Agreement or the Note or in the payment
     when due of any fee or other sum payable  under any Loan  Document and such
     default shall have continued for five days;

          (b) default  shall be made by any  Borrower in the due  observance  or
     performance  of  any  of  their  respective   obligations  under  the  Loan
     Documents, and such default shall continue for 30 days after the earlier of
     notice  thereof to the Borrower by the Lender or  knowledge  thereof by any
     Borrower;

          (c) any  representation or warranty made by any Borrower in any of the
     Loan  Documents  proves to have been untrue in any material  respect or any
     representation, statement (including Financial Statements), certificate, or
     data furnished or made to the Lender in connection  herewith proves to have
     been untrue in any  material  respect as of the date the facts  therein set
     forth were stated or certified;

          (d) default  shall be made by any Borrower (as  principal or guarantor
     or other  surety) in the  payment or  performance  of any bond,  debenture,
     note,  Commodity Hedge  Agreement,  Rate Management  Transaction,  or other
     Indebtedness  or under any credit  agreement,  loan  agreement,  indenture,
     promissory note, or similar agreement or instrument  executed in connection
     with any of the foregoing,  and such default shall remain unremedied for in
     excess of the period of grace, if any, with respect thereto;

          (e) any Borrower shall (i) apply for or consent to the  appointment of
     a receiver,  trustee,  or liquidator of it or all or a substantial  part of
     its  assets,  (ii)  file a  voluntary  petition  commencing  an  Insolvency
     Proceeding,  (iii) make a general  assignment for the benefit of creditors,
     (iv) be  unable,  or admit  in  writing  its  inability,  to pay its  debts
     generally as they become due, or (v) file an answer  admitting the material
     allegations of a petition filed against it in any Insolvency Proceeding;

          (f) an  order,  judgment,  or  decree  shall be  entered  against  any
     Borrower  by any  court of  competent  jurisdiction  or by any  other  duly
     authorized authority, on the petition of a creditor or otherwise,  granting
     relief  in any  Insolvency  Proceeding  or  approving  a  petition  seeking
     reorganization  or an  arrangement  of its debts or  appointing a receiver,
     trustee,  conservator,  custodian,  or  liquidator  of it  or  all  or  any
     substantial part of its assets, and such order,  judgment,  or decree shall
     not be dismissed or stayed within 60 days;

          (g) the levy  against any  significant  portion of the Property of any
     Borrower,  or any execution,  garnishment,  attachment,  sequestration,  or
     other writ or similar  proceeding  which is not  permanently  dismissed  or
     discharged within 90 days after the levy;

                                       38
<PAGE>

          (h) a final and  non-appealable  order,  judgment,  or decree shall be
     entered against any Borrower for money damages and/or  Indebtedness  due in
     an amount in excess of $500,000,  and such order, judgment, or decree shall
     not be dismissed or stayed within 60 days;

          (i) any Borrower shall have (i) concealed,  removed,  or diverted,  or
     permitted to be concealed,  removed,  or diverted,  any material portion of
     its Property, with intent to hinder, delay, or defraud its creditors or any
     of them,  (ii) made or suffered a transfer of any  material  portion of its
     Property  which  maybe   fraudulent   under  any   bankruptcy,   fraudulent
     conveyance,  or similar law,  (iii) made any transfer of its Property to or
     for the  benefit of a creditor  at a time when  other  creditors  similarly
     situated  have  not  been  paid,  or  (iv)  suffered  or  permitted,  while
     insolvent,  any creditor to obtain a Lien upon any of its Property  through
     legal proceedings or distraint which is not vacated within 30 days from the
     date thereof;

          (j) any  Security  Instrument  shall for any reason  not, or cease to,
     create valid and perfected  first-priority Liens subject to Permitted Liens
     against the Collateral  purportedly  covered  thereby or any Borrower shall
     assert that any  Security  Instrument  does not or  discontinues  to create
     valid Liens thereunder;

          (k) the  occurrence  of a Material  Adverse  Effect and the same shall
     remain  unremedied  for in  excess  of 30 days  after  notice  given by the
     Lender; or

          (l) the occurrence of a Change of Control.

     7.2 Remedies.

          (a) Upon the  occurrence of an Event of Default  specified in Sections
     7.1(e) or 7.1(f), immediately and without notice, (i) all Obligations shall
     automatically  become  immediately  due and payable,  without  presentment,
     demand, protest, notice of protest,  default, or dishonor, notice of intent
     to accelerate maturity, notice of acceleration of maturity, or other notice
     of any kind,  except as may be provided to the contrary  elsewhere  herein,
     all of  which  are  hereby  expressly  waived  by the  Borrower;  (ii)  the
     Commitment  shall   immediately   cease  and  terminate  unless  and  until
     reinstated  by the  Lender  in  writing;  and  (iii)  the  Lender is hereby
     authorized  at any time  and  from  time to  time,  without  notice  to the
     Borrower  (any such notice  being  expressly  waived by the  Borrower),  to
     set-off and apply any and all deposits (general or special, time or demand,
     provisional or final) held by the Lender and any and all other indebtedness
     at any time  owing by the  Lender to or for the  credit or  account  of the
     Borrower  against any and all of the Obligations  although such Obligations
     may be unmatured.

          (b) Upon the  occurrence  of any Event of  Default  other  than  those
     specified  in Sections  7.1(e) or 7.1(f),  (i) the Lender may, by notice to
     the Borrower,  declare all Obligations immediately due and payable, without
     presentment,  demand,  protest,  notice of protest,  default,  or dishonor,

                                       39
<PAGE>

     notice  of  intent  to  accelerate  maturity,  notice  of  acceleration  of
     maturity,  or other  notice of any kind,  except as may be  provided to the
     contrary  elsewhere herein, all of which are hereby expressly waived by the
     Borrower;  (ii) the Commitment shall immediately cease and terminate unless
     and until  reinstated  by the  Lender in  writing;  and (iii) the Lender is
     hereby authorized at any time and from time to time,  without notice to the
     Borrower  (any such notice  being  expressly  waived by the  Borrower),  to
     set-off and apply any and all deposits (general or special, time or demand,
     provisional or final) held by the Lender and any and all other indebtedness
     at any time  owing by the  Lender to or for the  credit or  account  of the
     Borrower  against any and all of the Obligations  although such Obligations
     may be unmatured.

          (c) Upon the  occurrence  of any Event of Default,  the Lender may, in
     addition  to the  foregoing  in this  Section,  exercise  any or all of its
     rights and remedies provided by law or pursuant to the Loan Documents.

                                  ARTICLE VIII

                                  MISCELLANEOUS
                                  -------------

     8.1 Transfers;  Participations.  The Lender may not, without the consent of
the Borrower,  at any time, sell,  transfer,  assign, or grant participations in
the Obligations or any portion thereof;  provided,  however, (i) that Borrower's
consent will not be  unreasonably  withheld  and (ii) no such  consent  shall be
required if an Event of Default has occurred and is  continuing.  The Lender may
forward  to  each  Transferee  and  prospective  Transferee  all  documents  and
information  relating to such Obligations,  whether furnished by the Borrower or
otherwise  obtained,  as the  Lender  determines  necessary  or  desirable.  The
Borrower agrees that each  Transferee,  regardless of the nature of any transfer
to it,  may  exercise  all  rights  (including,  without  limitation,  rights of
set-off) with respect to the portion of the  Obligations  held by it as fully as
if such  Transferee  were the direct holder  thereof;  subject to any agreements
between such Transferee and the transferor to such Transferee.

     8.2  Survival  of   Representations,   Warranties,   and   Covenants.   All
representations  and warranties of the Borrower and all covenants and agreements
herein  made  shall  survive  the  execution  and  delivery  of the Note and the
Security  Instruments  and  shall  remain  in force  and  effect  so long as any
Obligation is outstanding or any Commitment exists.

     8.3 Notices and Other Communications. Except as to verbal notices expressly
authorized  herein,  which verbal  notices  shall be  confirmed in writing,  all
notices,  requests, and communications  hereunder shall be in writing (including
by telecopy).  Unless  otherwise  expressly  provided  herein,  any such notice,
request,  demand, or other communication shall be deemed to have been duly given
or made when delivered by hand, or, in the case of delivery by mail,  three days
following deposit in the mail, certified mail, return receipt requested, postage
prepaid,   or,  in  the  case  of  telecopy  notice,  when  receipt  thereof  is
acknowledged orally or by written confirmation report, addressed as follows:

                                       40
<PAGE>

          (a) if to the Lender, to:

                           Sterling Bank
                           2550 North Loop West, Suite 100
                           Houston, Texas 77092
                           Attention:  C. Scott Wilson
                           Telecopy: (713) 507-7948

          (b) if to the Borrower, to:

                           The CYMRI Corporation
                           1100 Louisiana, Suite 5151
                           Houston, Texas 77002
                           Attention:  Larry M. Wright
                           Telecopy:  (713) 651-0928

     Any party may, by proper written notice hereunder to the others, change the
individuals or addresses to which such notices to it shall thereafter be sent.

     8.4  Parties  in  Interest.  Subject  to the  restrictions  on  changes  in
corporate structure set forth in Section 6.10 and other applicable  restrictions
contained herein,  all covenants and agreements herein contained by or on behalf
of the  Borrower or the Lender shall be binding upon and inure to the benefit of
the  Borrower  or the  Lender,  as the case may be, and their  respective  legal
representatives, successors, and assigns.

     8.5 Rights of Third Parties.  All provisions  herein are imposed solely and
exclusively  for the  benefit of the Lender and the  Borrower.  No other  Person
shall have any right,  benefit,  priority,  or interest hereunder or as a result
hereof  or have  standing  to  require  satisfaction  of  provisions  hereof  in
accordance  with their terms,  and any or all of such  provisions  may be freely
waived in whole or in part by the  Lender at any time if in its sole  discretion
it deems it advisable to do so.

     8.6 Renewals;  Extensions. All provisions of this Agreement relating to the
Note shall apply with equal force and effect to each  promissory  note hereafter
executed which in whole or in part represents a renewal or extension of any part
of the Indebtedness of the Borrower under this Agreement, the Note, or any other
Loan Document.

     8.7 No Waiver;  Rights Cumulative.  No course of dealing on the part of the
Lender,  its officers or employees,  nor any failure or delay by the Lender with
respect to exercising any of its rights under any Loan Document shall operate as
a waiver  thereof.  The rights of the Lender under the Loan  Documents  shall be
cumulative  and the  exercise  or partial  exercise  of any such right shall not
preclude the exercise of any other right. Neither the making of any Loan nor the
issuance  of a  Letter  of  Credit  shall  constitute  a  waiver  of  any of the
covenants,  warranties,  or conditions of the Borrower  contained herein. In the
event  the  Borrower  is unable  to  satisfy  any such  covenant,  warranty,  or
condition, neither the making of any Loan nor the issuance of a Letter of Credit
shall have the effect of precluding  the Lender from  thereafter  declaring such
inability to be an Event of Default as hereinabove provided.

                                       41
<PAGE>

     8.8  Survival  Upon  Unenforceability.  In the event any one or more of the
provisions  contained in any of the Loan  Documents  or in any other  instrument
referred to herein or executed in connection with the Obligations shall, for any
reason, be held to be invalid,  illegal,  or unenforceable in any respect,  such
invalidity, illegality, or unenforceability shall not affect any other provision
of any Loan Document or of any other  instrument  referred to herein or executed
in connection with such Obligations.

     8.9 Amendments;  Waivers.  Neither this Agreement nor any provision  hereof
may be  amended,  waived,  discharged,  or  terminated  orally,  but  only by an
instrument  in  writing  signed by the party  against  whom  enforcement  of the
amendment, waiver, discharge, or termination is sought.

     8.10  Controlling  Agreement.  In  the  event  of a  conflict  between  the
provisions  of  this  Agreement  and  those  of any  other  Loan  Document,  the
provisions of this Agreement shall control.

     8.11  Disposition  of  Collateral.  Notwithstanding  any term or provision,
express  or  implied,  in any  of the  Security  Instruments,  the  realization,
liquidation,  foreclosure,  or any other  disposition on or of any or all of the
Collateral  shall  be in the  order  and  manner  and  determined  in  the  sole
discretion of the Lender;  provided,  however, that in no event shall the Lender
violate applicable law or exercise rights and remedies other than those provided
in such Security Instruments or otherwise existing at law or in equity.

     8.12  GOVERNING  LAW.  THIS  AGREEMENT  AND THE  NOTE  AND THE  OTHER  LOAN
DOCUMENTS  SHALL BE DEEMED TO BE CONTRACTS  MADE UNDER AND SHALL BE CONSTRUED IN
ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS  WITHOUT  GIVING
EFFECT TO PRINCIPLES  THEREOF RELATING TO CONFLICTS OF LAW;  PROVIDED,  HOWEVER,
THAT  (I)  CHAPTER  345 OF THE  TEXAS  FINANCE  CODE  (WHICH  REGULATES  CERTAIN
REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING  TRIPARTY ACCOUNTS) SHALL NOT APPLY
AND (II) EXCEPT, WITH REGARD TO THE SECURITY  INSTRUMENTS TO THE EXTENT THAT THE
LAWS OR ANY JURISDICTION IN WHICH THE MORTGAGED PROPERTIES NECESSARILY GOVERN.

     8.13  JURISDICTION  AND VENUE.  ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING  DIRECTLY OR INDIRECTLY IN CONNECTION  WITH, OUT OF, RELATED TO, OR FROM
THIS  AGREEMENT  OR ANY  OTHER  LOAN  DOCUMENT  MAY BE  LITIGATED,  AT THE  SOLE
DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITUS IN HOUSTON, HARRIS
COUNTY,  TEXAS.  EACH BORROWER HEREBY SUBMITS TO THE  JURISDICTION OF ANY LOCAL,
STATE,  OR FEDERAL COURT LOCATED IN HOUSTON,  HARRIS COUNTY,  TEXAS,  AND HEREBY
WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF
ANY LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS SECTION.

                                       42
<PAGE>

     8.14 WAIVER OF RIGHTS TO JURY TRIAL.  EACH  BORROWER AND THE LENDER  HEREBY
KNOWINGLY,  VOLUNTARILY,  INTENTIONALLY,  IRREVOCABLY, AND UNCONDITIONALLY WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,  PROCEEDING,  COUNTERCLAIM,  OR
OTHER  LITIGATION  THAT RELATES TO OR ARISES OUT OF ANY OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS  OF THIS  AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE  WITH RESPECT  THERETO.  THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.

     8.15 ENTIRE  AGREEMENT.  THIS AGREEMENT  CONSTITUTES  THE ENTIRE  AGREEMENT
BETWEEN  THE  PARTIES  HERETO  WITH  RESPECT  TO THE  SUBJECT  HEREOF  AND SHALL
SUPERSEDE ANY PRIOR  AGREEMENT  BETWEEN THE PARTIES  HERETO,  WHETHER WRITTEN OR
ORAL,  RELATING  TO THE  SUBJECT  HEREOF,  INCLUDING,  WITHOUT  LIMITATION,  THE
PROPOSED  TERM SHEET DATED  OCTOBER 22,  2004,  FROM THE LENDER TO THE  BORROWER
FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS
REPRESENT,  COLLECTIVELY,  THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY
NOT BE  CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.  THERE ARE NO UNWRITTEN ORAL  AGREEMENTS  AMONG SUCH
PARTIES.

     8.16 CYMRI as Agent.  Each PEI, PEII and TEI hereby appoints CYMRI as their
agent and  attorney-in-fact  to  execute  any  certificates,  requests  or other
documents  deliverable  under  this  Agreement  in the name of each such  party,
collectively  as Borrower,  and Lender shall be  authorized  to rely on any such
executed  certificates,  requests  or  other  documents  as acts of the  parties
constituting "Borrower" without the need of further inquiry or investigation.

     8.17 Amended and Restated Agreement.  This Agreement amends and restates in
its entirety,  but does not extinguish,  the Guaranty Bank Credit  Agreement and
Hibernia Bank Credit Facility.

     8.18 Counterparts.  For the convenience of the parties,  this Agreement may
be executed in multiple  counterparts,  each of which for all purposes  shall be
deemed to be an original,  and all such counterparts  shall together  constitute
but one and the same Agreement.


                   [Signatures appear on the following page.]

                                       43
<PAGE>


     IN WITNESS WHEREOF,  this Agreement is deemed executed  effective as of the
date first above written.

                                       BORROWER:

                                       THE CYMRI CORPORATION


                                       By: /s/ Larry M. Wright
                                          ------------------------------------
                                               Larry M. Wright
                                               Chief Executive Officer


                                       PETROLEUM ENGINEERS, INC.


                                       By: /s/ Larry M. Wright
                                          ------------------------------------
                                               Larry M. Wright
                                               Chief Executive Officer


                                       PETROLEUM ENGINEERS INTERNATIONAL, INC.


                                       By: /s/ Larry M. Wright
                                          ------------------------------------
                                               Larry M. Wright
                                               Chief Executive Officer


                                       TRIUMPH ENERGY, INC.


                                       By: /s/ Larry M. Wright
                                          ------------------------------------
                                               Larry M. Wright
                                               Chief Executive Officer


                                       LENDER:

                                       STERLING BANK



                                       By: /s/ C. Scott Wilson
                                          ------------------------------------
                                               C. Scott Wilson
                                               Senior Vice President