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                           PURCHASE AND SALE AGREEMENT


This Purchase and Sale Agreement (the "Agreement") is entered into effective as
of May 31, 1999, by and between Costilla Redeco Energy L.L.C., a limited
liability company formed and existing under the laws of the State of Texas
("CRE") and Castle Exploration Company, Inc., a company formed and existing
under the laws of Pennsylvania ("CECI"). The companies and individuals named
above may sometimes individually be referred to as "Party" and collectively as
the "Parties".

                                    RECITALS

WHEREAS Costilla Energy, Inc., a corporation formed and existing under the laws
of the State of Delaware ("Costilla") is the sole member of CRE, which is in
turn the sole member of Resource Development Company, Ltd. L.L.C. (DE), a
limited liability company formed and existing under the laws of the State of
Delaware ("Resource"); and

WHEREAS CRE owns 100% of the beneficial interest in the Ordinary Shares of
Redeco Petroleum Company Limited, a company formed and existing under the laws
of the Isle of Guernsey, Channel Island, U.K. ("Petroleum") and 100% of the
membership interest in Resource Development Company Limited LLC (DE), a limited
liability company organized and existing under the laws of the State of Delaware
("Resource"); and

WHEREAS Petroleum has been awarded by the Republic of Romania a 50% interest in
three concessions in Romania covering Block EP I-15 Constanta, Block EP I-11
Alexandria, and Block EP II-1 Sud Bucuresti (the "Romanian Concessions"); and

WHEREAS Resource holds an oil and gas exploration and production concession with
the Republic of Moldova under that certain Concession Agreement of July 5, 1995.

WHEREAS Costilla is a party to that certain Purchase and Sale Agreement with
Redeco Energy Inc. dated as of October 1, 1998 as amended April 30, 1999 and May
25, 1999 (the "Redeco Agreement") the terms of which are more fully described
below.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements and obligations set out below and to be performed, the Parties agree
as follows:

                                   WITNESSETH:

This Agreement when executed by all parties hereto states the terms of the
acquisition ("Acquisition") by CECI of the Assets, as hereinafter defined.

1.  Assets to be Acquired. Subject to the terms of this Agreement, CECI is
    purchasing and

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    CRE is selling all of CRE's right, title and interest in Petroleum, and
    thereby the Romanian Concessions held by Petroleum and, subject to the
    escrow terms described in Section 4 below, all of CRE's right, title and
    interest in Resource, and thereby the Moldovan Concession. CECI is
    purchasing and CRE is selling all tangible property owned by CRE and located
    in the CRE office in Oklahoma City, Oklahoma as well as all rights held by
    CRE and its affiliates to the trade name "Redeco". All of the above,
    including the leases, contracts, data and liabilities associated therewith
    (hereinafter collectively called the "Assets") are scheduled on CRE's pro
    forma consolidated balance sheet, and the attachments thereto, prepared as
    of May 1, 1999 (the "Closing Balance Sheet"), a copy of which is attached
    hereto as Exhibit A. CRE shall be responsible for all accounts payable shown
    on the Closing Balance Sheet and other payables incurred before May 1, 1999,
    and CECI shall be responsible for accounts payable accruing thereafter. CECI
    will assume no other liabilities other than the lease for CRE's offices and
    office equipment in Oklahoma City, Oklahoma, as set forth in Exhibit A.

2.  Consideration. As consideration for the Assets, CECI agrees to assume the
    office and equipment leases held by CRE in Oklahoma City as described on
    Exhibit A, assumes Costilla's rights and obligation under the Redeco
    Agreement, and to bear the next $100,000 in expenses to be incurred to
    Resource in Moldova as described in Section 4 hereof.

    The Assets being conveyed hereby are subject to the Redeco Agreement.
    Costilla granted to Redeco a net profits interest equal to 25% of the 50%
    interest in each of the Romanian Concessions held by CRE (the "Romanian Net
    Profits Interests") and a net profits interest equal to 12 1/2% of the 100%
    interest held by CRE in the Moldovan Concession (the "Moldovan Net Profits
    Interest"), both of which net profits interests to be computed and paid as
    set forth in the Redeco Agreement.

3.  Assignment of Petroleum. CRE shall execute to the benefit of CECI documents
    in the forms attached hereto as Exhibit C to transfer the beneficial
    interest in all of the Ordinary Shares of Petroleum.

4.  Moldova Escrow. CRE will assign the membership interest held by it in
    Resource into an escrow pursuant to the terms of the Escrow Agreement
    attached hereto as Exhibit C. CECI shall bear the next $100,000 in expenses
    accruing to Resource in Moldova. At any time up until June 30, 2000, CECI
    may elect to take assignment from escrow all of CRE's membership interest in
    Resource by payment of $1.00 to CRE. The CRE membership interest is subject
    to the Letter Agreement with Tahmah Energy dated April 16, 1999, a true and
    correct copy of which has been previously provided to CECI.

5.  Representations of CRE. The recitations stated in this Agreement as to CRE
    and its related subsidiaries and assets are true and correct. CRE has good
    and marketable title to the Assets and there are no claims or encumbrances
    on any of the Assets other than as

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    disclosed herein that would impair CECI's ownership after transfer. The
    Closing Balance Sheet is complete and correct in all material respects and
    there are no other liabilities, contingent or otherwise, that exist with
    respect to the Assets which CECI will assume, or which will otherwise have a
    material adverse effect with respect to the Assets. Since the date of the
    Closing Balance Sheet, there has not been any material adverse change with
    respect to the Assets. All required tax returns due to be filed by Petroleum
    and its affiliates, and all taxes due in connection therewith have been
    paid, and no taxing authority, or other governmental authority, has any
    claim with respect to Resource or Petroleum generally, or the Assets in
    particular. There is no suit, action or legal, administrative, arbitration
    or other proceedings or governmental investigation pending to which CRE is a
    party, or, to the knowledge of CRE, threatened which affects Resource,
    Petroleum or the Assets other than the litigation brought by Randolph T.
    Walker against Resource et al previously disclosed to CECI. No consent,
    approval or authorization of, or filing or registration with, any
    governmental or regulatory authority or any other person or entity is
    required to be made or obtained by CRE in connection with the execution,
    delivery or performance of this Agreement, or the consummation of the
    transactions. Resource and Petroleum possesses all permits necessary under
    law or otherwise to own, operate, maintain and use the Assets in the manner
    in which they are now being owned, operated, maintained and used. None of
    such permits shown have been, or to the knowledge of CRE, are threatened to
    be, revoked, canceled, suspended or modified.

6.  Representations of CECI. The recitations stated in this Agreement as to CECI
    are true and correct.

7.  Notice. Except as otherwise specifically provided, all notices authorized or
    required between the Parties by any of the provisions of this Agreement,
    shall be in writing, in English and delivered in person or by courier
    service or by any electronic means of transmitting written communications
    which provides written confirmation of complete transmission, and addressed
    to such Parties as designated below. Oral communication does not constitute
    notice for purposes of this Agreement, and telephone numbers and e-mail for
    the Parties are listed below as a matter of convenience only. Each Party
    shall have the right to change its address at any time and/or designate that
    copies of all such notices be directed to another person at another address,
    by giving written notice thereof to all other Parties.


      CRE                              CECI

      Costilla Redeco Energy LLC       Castle Energy Corporation
      Attn: Henry G. Mussellman        Attn:  Joe Castle
      400 N. Illinois, 10th Floor      One Radnor Corporate Center, Suite 250
      Midland, TX 79701                Radnor, PA 19087
      Phone: (915) 683-3092            Phone: (610-995-9400
      Fax: (915) 688-4089              Fax: (610) 995-0409

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8.  Confidentiality. The Parties further agree that all data furnished to CECI
    by CRE and by CECI to CRE will be on a confidential basis.

9.  Public Disclosure. The parties agree that prior to, at or subsequent to
    Closing, neither party will make any public announcement, press release, or
    other public or private disclosure relating to the purchase and sale or any
    details thereof except such disclosure as might be required by governmental
    authority, securities exchange press release or normal company policy.

10. Expenses. Each party shall pay the fees and expenses of its own counsel and
    accountants incurred in connection with the Acquisition.

11. Brokers. No outside parties have participated in the negotiations of the
    Acquisition on behalf of either party, and no firm or person shall be
    entitled to any finder's or broker's fee with respect to the acquisition.

12. Trade Name. Upon request by CECI, the Parties will execute such other
    documentation required to effect the transfer of the trade name. CECI may
    require CRE and its subsidiaries and affiliates, to cease use of the name
    "Redeco" within a commercially reasonable period of time upon written
    request.

13. Assignment. Parties have the right to sell or assign all or a part of their
    interest; provided, however, that any assignment by CECI of its interest in
    the Moldovan Concession or the Romanian Concessions shall be made expressly
    subject to the Net Profits Interests granted pursuant to this Agreement.

14. Choice of Law. This Agreement shall be governed by, construed, interpreted
    and applied in accordance with the laws of the State of Texas, United States
    of America, excluding any choice of law rules which would refer the matter
    to the laws of another jurisdiction.

15. Dispute Resolution. The terms of the Dispute Resolution Procedure attached
    hereto as Exhibit E dealing with the resolution of disputed matters shall be
    specifically incorporated into and made a part of this Agreement.

16. Non-Waiver. No waiver by any Party of any one or more defaults by another
    Party in the performance of this Agreement shall operate or be construed as
    a waiver of any future default or defaults by the same Party, whether of a
    like or of a different character. Except as expressly provided in this
    Agreement, no Party shall be deemed to have waived, released or modified any
    of its rights under this Agreement unless such Party has expressly stated,
    in writing, that it does waive, release or modify such right.

17. Severability. If and for so long as any provision of this Agreement shall be
    deemed to be judged invalid for any reason whatsoever, such invalidity shall
    not affect the validity or operation of any other provision of this
    Agreement except as shall be necessary to give effect to the construction of
    such invalidity, and any invalid provision shall be deemed

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    severed from this Agreement without affecting the validity of the balance
    hereof.

18. Modification. There shall be no modification of this Agreement except by
    written consent of all Parties.

19. Counterpart Execution. This Agreement is executed in multiple original
    counterparts and each such counterpart shall be deemed an original Agreement
    for all purposes; provided no Party shall be bound to this Agreement unless
    and until all Parties have executed a counterpart.

20. Entirety. This Agreement is the entire agreement of the Parties with respect
    to the subject matter contained herein and supersedes all prior
    understandings and negotiations of the Parties.

    IN WITNESS of their agreement each Party has caused its duly authorized
representative to sign this instrument effective as of this the 31st day of May,
1999.


         Costilla Redeco Energy, LLC


         By: /s/Henry G. Mussellman
             ----------------------------------------------------
             Henry G. Mussellman,
             as Executive Vice President &
             Chief Operating Officer of Costilla Energy, Inc.,
             Sole Member of Costilla Redeco Energy, L.L.C.

         CECI:
         Castle Exploration Company, Inc.


         By: /s/Richard E. Staedtler
             ----------------------------------------------------
             Richard E. Staedtler
             Chief Financial Officer of
             Castle Exploration Company, Inc.




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