EXHIBIT  10.16
                 INTERNATIONAL JOINT VENTURE OPERATING AGREEMENT







                                     BETWEEN




                         LIBERTY TECHNICAL SERVICES LTD.




                    YINKA FOLAWIYO PETROLEUM COMPANY LIMITED





                   AGREEMENT COVERING:   CONCESSION BLOCK 309


<PAGE>
                                TABLE OF CONTENTS


ARTICLE                                                           PAGE
----------------------------------------------------------------  ----

ARTICLE I
DEFINITIONS                                                       -1-

ARTICLE II
EFFECTIVE DATE AND TERM                                           -7-

ARTICLE III
PARTICIPATING INTEREST                                            -7-
3.1   Participating Interest                                      -7-
3.2   Ownership, Obligations and Liabilities                      -8-
3.3   Government Participation                                    -8-

ARTICLE IV
PROJECT MANAGER                                                   -9-
4.1  Designation of Project Manager                               -9-
4.2  Rights and Duties of Project Manager                         -9-
4.3  Employees of Operator                                        -11-
4.4  Information Supplied by Operator                             -11-
4.5  Settlement of Claims and Lawsuits                            -12-
4.6  Liability of Operator                                        -13-
4.7  Insurance Obtained by Operator                               -14-
4.8  Commingling of Funds                                         -15-
4.9  Resignation of Operator                                      -16-
4.10  Removal of Operator                                         -16-
4.11  Appointment of Successor                                    -17-

ARTICLE V
OPERATING COMMITTEE                                               -18-
5.1  Establishment of Operating Committee                         -18-
5.2  Powers and Duties of Operating Committee                     -18-
5.3  Authority to Vote                                            -19-
5.4  Subcommittees                                                -19-
5.5  Notice of Meeting                                            -19-
5.6  Contents of Meeting Notice                                   -19-
5.7  Location of Meetings                                         -20-
5.8  Operator's Duties for Meetings                               -20-
5.9  Voting Procedure                                             -20-
5.10  Record of Votes                                             -20-
5.11  Minutes                                                     -20-
5.12  Voting by Notice                                            -21-
5.13  Effect of Vote                                              -21-

                                       i
<PAGE>
ARTICLE VI
WORK PROGRAMS AND BUDGETS                                         -22-
6.1  Exploration and Appraisal                                    -22-
6.2  Development                                                  -24-
6.3  Production                                                   -25-
6.4  Itemization of Expenditures                                  -25-
6.5  Contract Awards                                              -25-
6.6  Authorization for Expenditure ("AFE") Procedure              -27-
6.7  Overexpenditures of Work Programs and Budgets                -28-

ARTICLE VII
OPERATIONS BY LESS THAN ALL PARTIES                               -28-
7.1  Limitation on Applicability                                  -28-
7.2  Procedure to Propose Exclusive Operations                    -29-
7.3  Responsibility for Exclusive Operations                      -32-
7.4  Consequences of Exclusive Operations                         -32-
7.5  Premium to Participate in Exclusive Operations               -36-
7.6  Order of Preference of Operations                            -39-
7.7  Stand By Costs                                               -40-
7.8  Special Considerations Regarding Deepening and Sidetracking  -40-
7.9  Miscellaneous                                                -41-

ARTICLE VIII
DEFAULT                                                           -42-
8.1  Default and Notice                                           -42-
8.2  Operating Committee Meetings and Data                        -43-
8.3  Allocation of Defaulted Accounts                             -43-
8.4  Transfer of Interest                                         -44-
8.5  Continuation of Interest                                     -45-
8.6  Abandonment                                                  -45-
8.7  Sale of Hydrocarbons                                         -45-
8.8  No Right of Set Off                                          -46-

ARTICLE IX
DISPOSITION OF PRODUCTION                                         -46-
9.1  Right and Obligation to Take In Kind                         -46-
9.2  Offtake Agreement for Crude Oil                              -46-
9.3  Separate Agreement for Natural Gas                           -47-

ARTICLE X
ABANDONMENT OF WELLS                                              -48-
10.1  Abandonment of Wells Drilled as Joint Operations            -48-
10.2  Abandonment of Exclusive Operations                         -49-

ARTICLE XI
SURRENDER, EXTENSIONS AND RENEWALS                                -49-
11.1  Surrender                                                   -49-
11.2  Extension of the Term                                       -49-

ARTICLE XII
TRANSFER OF INTEREST OR RIGHTS                                    -50-
12.1  Obligation                                                  -50-
12.2  Rights                                                      -53-

ARTICLE XIII
WITHDRAWAL FROM AGREEMENT                                         -53-
13.1  Right of Withdrawal                                         -53-
13.2  Partial or Complete Withdrawal                              -54-
13.3  Voting                                                      -54-
13.4  Obligations and Liabilities                                 -55-
13.5  Emergency                                                   -55-
13.6  Assignment                                                  -55-
13.7  Approvals                                                   -55-
13.8  Abandonment Security                                        -56-
13.9  Withdrawal or Abandonment by all Parties                    -57-

                                       ii
<PAGE>
ARTICLE XIV
RELATIONSHIP OF PARTIES AND TAX                                   -57-
14.1  Relationship of Parties                                     -57-
14.2  Tax                                                         -57-
14.3  United States Tax Election                                  -58-

ARTICLE XV
CONFIDENTIAL INFORMATION - PROPRIETARY TECHNOLOGY                 -59-
15.1  Confidential Information                                    -59-
15.2  Continuing Obligations                                      -60-
15.3  Proprietary Technology                                      -60-
15.4  Trades                                                      -60-

ARTICLE XVI
FORCE MAJEURE                                                     -60-
16.1  Obligations                                                 -60-
16.2  Definition of Force Majeure                                 -61-

ARTICLE XVII
NOTICES                                                           -61-

ARTICLE XVIII
APPLICABLE LAW AND DISPUTE RESOLUTION                             -62-
18.1  Applicable Law                                              -62-
18.2  Dispute Resolution                                          -62-

ARTICLE XIX
ALLOCATION OF COST RECOVERY RIGHTS                                -65-
19.1  Allocation of Total Production                              -65-
19.2  Allocation of Cost Oil                                      -65-
19.3  Allocation of Profit Oil                                    -65-
19.4  Allocation of Excess Cost Oil                               -65-

ARTICLE XX
GENERAL PROVISIONS                                                -66-
20.1  Conflicts of Interest                                       -66-
20.2  Public Announcements                                        -66-
20.3  Successors and Assigns                                      -67-
20.4  Waiver                                                      -67-
20.5  Severance of Invalid Provisions                             -67-
20.6  Modifications                                               -67-
20.7  Headings                                                    -67-
20.8  Singular and Plural                                         -67-
20.9  Gender                                                      -68-
20.10  Counterpart Execution                                      -68-
20.11  Entirety                                                   -68-


Exhibit  "A"  -  Accounting  Procedure

Exhibit  "B"  -  Contract  Area


                                       iii
<PAGE>
                       PROJECT MANAGEMENT AGREEMENT [SIC]

THIS  AGREEMENT  is  made  as  of  the  Effective  Date  among

     YINKA  FOLAWIYO  PETROLEUM  COMPANY  LIMITED,  a 
     company incorporated in Nigeria

     (hereinafter  referred  to  as  "Owner");

                                       and

     LIBERTY  TECHNICAL  SERVICES  LTD.,  a  company
     incorporated in Calgary, Canada

     (hereinafter  referred  to  as  "Project  Manger");

     Above  may  sometimes  individually  be  referred  to  as  "Party"  and
     collectively as the  "Parties".

WITNESSETH

WHEREAS,  the  Parties  have  entered  into  a  Project  Management  Agreement
(hereinafter  referred  to as "Agreement") covering certain areas located in the
Nigeria  Concession  309,  referred  to  as  the  Concession  Area,  and  more
particularly  described  in  Exhibit  "B"  to  this  Agreement;  and

WHEREAS,  the  Parties  desire to define their respective rights and obligations
with  respect  to  their  operations  under  the  Concession.

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:

                                    ARTICLE I
                                   DEFINITIONS

As  used in this Agreement, the following words and terms shall have the meaning
ascribed  to  them  below:

1.1     ACCOUNTING  PROCEDURE  means  the  rules,  provisions and conditions set
forth  and  contained  in  Exhibit  A  to  this  Agreement.

1.2     AFE  means  an  authorization  for  expenditure pursuant to Article 6.6.


<PAGE>
1.3     AFFILIATE  means  a  company,  partnership  or  other legal entity which
controls,  or  is  controlled  by,  or  which  is  controlled by an entity which
controls  a  Party.  Control  means  the  ownership  directly  or  indirectly of
Check  one  Alternative

[ ]     ALTERNATIVE  NO.  1

        more  than  fifty  (50)  percent

[X]     ALTERNATIVE  NO.  2

        fifty  (50)  percent  or  more

        of  the  shares  or  voting  rights,  in a company, partnership or legal
        entity.

1.4     AGREED  INTEREST  RATE  means interest compounded on a monthly basis, at
the  rate  per annum equal to the one (1) month term, LIBOR rate for U.S. Dollar
deposits,  as  published by The Wall Street Journal or if not published, then by
                            -----------------------
the  Financial  Times of London, plus TWO  percent (2%), applicable on the first
     --------------------------
Business  Day  prior  to  the  due  date  of payment and thereafter on the first
Business  Day  of  each succeeding one (1) month term.  If the aforesaid rate is
contrary  to  any applicable usury law, the rate of interest to be charged shall
be  the  maximum  rate  permitted  by  such  applicable  law.

1.5     AGREEMENT  means  this agreement, together with the Exhibits attached to
this  agreement.

1.6     APPRAISAL  WELL means any well whose purpose at the time of commencement
of  drilling  such  well  is  the  determination  of the extent or the volume of
Hydrocarbon  reserves  contained  in  an  existing  Discovery.

1.7     BARREL  means  a  quantity  consisting  of  forty-two (42) United States
gallons,  corrected  to a temperature of sixty (60) degrees Fahrenheit under one
(1)  atmosphere  of  pressure.

1.8     BUSINESS  DAY  means  a  day  on  which the banks in NEW YORK/LONDON are
customarily  open  for  business.

1.9     CALENDAR  QUARTER  means  a  period  of three (3) months commencing with
January  1  and  ending  on the following March 31, a period of three (3) months
commencing  with  April 1 and ending on the following June 30, a period of three
(3) months commencing with July 1 and ending on the following September 30, or a
period of three (3) months commencing with October 1 and ending on the following
December  31  according  to  the  Gregorian  Calendar.

1.10     CALENDAR  YEAR  means  a  period  of twelve (12) months commencing with
January  1  and  ending  on the following December 31 according to the Gregorian
Calendar.


<PAGE>
1.11     CASH  PREMIUM  means  the  payment made pursuant to Article 7.5(B) by a
Non-Consenting  Party  to  reinstate  its  rights to participate in an Exclusive
Operation.

1.12     COMMERCIAL  DISCOVERY  means  any  discovery  of  Hydrocarbons which is
sufficient to entitle the Parties to apply for authorization from the Government
to  commence  exploitation.

1.13     COMPLETION  means  an operation intended to complete a well through the
Christmas tree as a producer of Hydrocarbons in one or more Zones including, but
not  limited  to, the setting of production casing, perforating, stimulating the
well  and  production  Testing  conducted in such operation.  COMPLETE and other
derivatives  shall  be  construed  accordingly.

1.14     CONSENTING PARTY means a Party who agrees to participate in and pay its
share  of  the  cost  of  an  Exclusive  Operation.

1.15     JOINT  VENTURE  AGREEMENT  means the instrument concluded between Yinka
Folawiyo Petroleum Limited and the Parties identified in the second paragraph of
this  Agreement  and  any  extension,  renewal or amendment thereof agreed to in
writing  by  the  Parties.

1.16     CONCESSION  AREA  means as of the Effective Date the surface area which
is described in Exhibit B to this Agreement.  The perimeter or perimeters of the
Concession Area shall correspond to that area covered by the Concession, as such
area  may  vary from time to time during the term of validity of the Concession.

1.17     COST  OIL  means  that  portion of the total production of Hydrocarbons
which  is  allocated  to  the  Parties  under the Concession for the recovery of
Petroleum  Costs.

1.18     DAY  means  a  calender  day  unless  otherwise  specifically provided.

1.19     DEFAULTING  PARTY  shall  have  the  meaning  ascribed  in Article 8.1.

1.20     DEEPENING  means an operation whereby a well is drilled to an objective
Zone  below  the deepest Zone in which the well was previously drilled, or below
the  deepest  Zone  proposed  in  the  associated  AFE, whichever is the deeper.
DEEPEN  and  other  derivatives  shall  be  construed  accordingly.

1.21     DEVELOPMENT PLAN means a plan for the development, of Hydrocarbons from
an  Exploitation  Area  covering  all  or  a  portion  of  the  Contract  Area.

1.22     DEVELOPMENT  WELL  means  any  well  drilled  for  the  production  of
Hydrocarbons  pursuant  to  a  Development  Plan.

1.23     DISCOVERY  means the discovery of an accumulation of Hydrocarbons whose
existence  until  that  moment  was  unknown.


<PAGE>

Check  if  desired.

[X]     OPTIONAL  LANGUAGE

;  provided  Hydrocarbons  are  recovered at the surface in a flow measurable by
conventional  production  test  methods.

1.24     EFFECTIVE  DATE  means  the  date  this  Agreement comes into effect as
stated  in  Article  II.

1.25     ENTITLEMENT  means  a quantity of Hydrocarbons of which a Party has the
right  and  obligation  to  take  delivery  pursuant  to  the  Contract  or,  if
applicable,  an  offtake  agreement,  and  shall  be  derived  from that Party's
Participating  Interest  in  the  Hydrocarbons  produced  after  adjustment  for
overlifts  and  underlifts.

1.26     EXCESS  COST  OIL  shall  have  the  meaning  ascribed in Article 19.4.

1.27     EXCLUSIVE  OPERATION  means those operations and activities carried out
by  Operator,  pursuant  to this Agreement, the costs of which are chargeable to
the  account of less than all the Parties.  BUT WILL NOT BE DRILLED WITHIN 25 KM
OF  EXISTING  WELL  CAPABLE  OF  PROD.

1.28     EXCLUSIVE WELL means a well drilled pursuant to an Exclusive Operation.

1.29     EXPLOITATION  AREA  means  that  part  of  the Concession Area which is
established  pursuant  to the Concession or if the Concession does not establish
an  Exploitation Area, then that part of the Concession Area which is delineated
in  a  Development  Plan  approved  as  a  Joint  Operation  or  as an Exclusive
Operation.

1.30     EXPLOITATION  PERIOD  means  any and all periods of Exploitation during
which  the  production  and  removal  of  Hydrocarbons  is  permitted  under the
Concession.

1.31     EXPLORATION  PERIOD means any and all periods of exploration set out in
the  Concession.

1.32     EXPLORATION  WELL  means  any  well  drilled  during  the  course  of
exploration  work  other  than  an  Appraisal  Well  or  Development  Well.

1.33     G  & G DATA means only geological, geophysical and geochemical data and
other  information  that  is  not  obtained  through  a  well  bore.

1.34     GOVERNMENT  means  the  government  of  Federal  Government of Nigeria.

1.35     GOVERNMENT  OIL  COMPANY  means Nigeria National Petroleum Corporation.

<PAGE>

1.36     GROSS  NEGLIGENCE  means any act or failure to act (whether sole, joint
or  concurrent) by a Party which was intended to cause, or which was in reckless
disregard of or wanton indifference to, harmful consequences such Party knew, or
should  have known, such act or failure would have had on the safety or property
of  another  person  or  entity,  but shall not include any error of judgment or
mistake  made  by  such  Party  in  the  exercise in good faith of any function,
authority  or  discretion  conferred  on  the  Party  employing  such under this
Agreement.

1.37     HYDROCARBONS  means  all  substances  including  liquid  and  gaseous
hydrocarbons  which  are  subject  to  and  covered  by  the  Concession.

1.38     IN KIND PREMIUM means the grant of interest in production made pursuant
to  Article  7.5(C)  by  a Non-Consenting Party to reinstate its rights under an
Exclusive  Operation.

1.39     JOINT  ACCOUNT  means the accounts maintained by Operator in accordance
with  the provisions of this Agreement and of the Accounting Procedure for Joint
Operations.

1.40     JOINT  OPERATIONS  means those operations and activities carried out by
Operator  pursuant  to  this Agreement, the costs of which are chargeable to all
Parties.

1.41     JOINT  PROPERTY  means,  at  any  point in time, all wells, facilities,
equipment,  materials,  information,  funds  and the property held for the Joint
Account.

1.42     MINIMUM  WORK  OBLIGATIONS  means  those  work  and/or  expenditure
obligations  specified  in  the  Contract  which  must  be performed in order to
satisfy  the  obligations  of  the  Contract.

1.43     NON-CONSENTING  PARTY means a Party who elects not to participate in an
Exclusive  Operation.

1.44     NON-OPERATOR(S) means the Party or Parties to this Agreement other than
Operator.

1.45     OPERATING  COMMITTEE means the committee constituted in accordance with
Article  V.

1.46     OPERATOR  means  a  Party  to  this  Agreement  designated  as  such in
accordance  with  this  Agreement.

1.47     PARTICIPATING  INTEREST means the undivided percentage interest of each
Party  in  the  rights  and  obligations  derived  from  the  Contract  and this
Agreement.

1.48     PARTY  means  any  of the entities named in the first paragraph to this
Agreement  and  any  respective  successors  or  assigns  in accordance with the
provisions  of  this  Agreement.


<PAGE>
1.49     PETROLEUM  COSTS  means  costs and expenses incurred by the Parties and
allowed  to  be  recovered  pursuant  to  the  Contract.

1.50     PLUGGING  BACK  means  a  single  operation  whereby  a  deeper Zone is
abandoned  in  order to attempt a Completion in a shallower Zone.  PLUG BACK and
other  derivatives  shall  be  construed  accordingly.

1.51     PROFIT  OIL means that portion of the total production of Hydrocarbons,
in  excess of Cost Oil, which is allocated to the Parties under the terms of the
Contract.

1.52     RECOMPLETION  means  an  operation  whereby a Completion in one Zone is
abandoned  in  order  to  attempt  a  Completion  in a different Zone within the
existing  wellbore.  RECOMPLETE  and  other  derivatives  shall  be  construed
accordingly.

1.53     REWORKING  means an operation conducted in the wellbore of a well after
it  is  Completed  to  secure, restore, or improve production in a Zone which is
currently  open to production in the wellbore.  Such operations include, but are
not  limited  to, well stimulation operations, but exclude any routine repair or
maintenance  work,  or  drilling,  Sidetracking,  Deepening,  Completing,
Recompleting, or Plugging Back of a well.  REWORK and other derivatives shall be
construed  accordingly.

1.54     SENIOR  SUPERVISORY PERSONNEL means any supervisory employee of a Party
who  functions  as:

Check  one  Alternative.

[X]     ALTERNATIVE  NO.  1  -  Field  Supervisor  Tier

Such  Party's  designated  manager  or  supervisor who is responsible for, or in
charge of onsite drilling, construction or production and related operations, or
any  other  field  operations;  or

[ ]     ALTERNATIVE  NO.  2  -  Facility  Manager  Tier

Such  Party's  designated  manager  or  supervisor  of  an  onshore  or offshore
installation  or  facility used for operations and activities of such Party, but
excluding  all  managers  or supervisors who are responsible for or in charge of
onsite  drilling, construction or production and related operations or any other
field  operations;  or

[ ]     ALTERNATIVE  NO.  3  -  Resident  Manager  Tier


<PAGE>
Such  Party's senior resident manager, who directs all operations and activities
of  such  Party  in the country or region in which he is resident, but excluding
all  managers  or  supervisors  who  are  responsible  for  or  in  charge  of
installations  or  facilities,  onsite  drilling, construction or production and
related  operations,  or  any  other  field  operations.

And,  in any of the above alternatives, any employee of such Party who functions
at  a  management  level  equivalent  to or superior to the tier selected, or an
officer  or  a  director  of  such  Party.

1.55     SIDETRACKING means the directional control and intentional deviation of
a  well  from  vertical  so as to change the bottom hole location unless done to
straighten  the  hole  or  to drill around junk in the hole or to overcome other
mechanical  difficulties.  SIDETRACK  and  other  derivatives shall be construed
accordingly.

1.56     TESTING  means an operation intended to evaluate the capacity of a Zone
to  produce  Hydrocarbons.  TEST  and  other  derivatives  shall  be  construed
accordingly.

1.57     WORK  PROGRAM  AND BUDGET means a work program for Joint Operations and
budget  therefor  as  described  and  approved  in  accordance  with Article VI.

1.58     ZONE means a stratum of earth containing or thought to contain a common
accumulation  of  Hydrocarbons  separately  producible  from  any  other  common
accumulation  of  Hydrocarbons.

[NOTE:  Definitions  contained in this Agreement must be compared and considered
against definitions under the Contract and under applicable laws and regulations
of  the  host  country.]


                                   ARTICLE II
                             EFFECTIVE DATE AND TERM

2.1     This  Agreement  shall  have  effect from the 1st Day of March, 1992 and
shall,  subject  always to the Parties' continuing obligations under Article XV,
continue  in  effect  until  the  Contract  terminates  or,  otherwise until all
materials,  equipment  and  personal  property used in connection with the Joint
Operations have been removed and disposed of, and final settlement has been made
among  the  Parties.

For  the avoidance of doubt, portions of this Agreement as described in (A), (B)
and  (C)  below  shall  remain  in  effect  until:

     (A) all wells have been properly  abandoned in  accordance  with Article X;
     and

     (B) all obligations, claims, arbitrations and lawsuits have been settled or
     otherwise disposed of in accordance with Article 4.5 and Article XVIII; and

     (C) the time relating to the  protection of  confidential  information  and
     proprietary technology has expired in accordance with Article XVI.

<PAGE>

                                   ARTICLE III
                             PARTICIPATING INTEREST

3.1     Participating  Interest

     (A) The  Participating  Interests shall mean working interest as defined in
     the Joint Venture Agreement of the Parties as of Effective Date are:

<TABLE>
<CAPTION>
<S>                            <C>   <C>
OWNER                          BPO   APO
-----------------------------

_____________________________   15%   42%

Technical Partners              55%   28%

_____________________________   __%

_____________________________   __%
</TABLE>


     (B) If a Party transfers all or part of its Participating Interest pursuant
     to the provisions of this Schedule and the JVA, the Participating Interests
     of the Parties shall be revised accordingly.

3.2     Ownership,  Obligations  and  Liabilities

     (A) Unless  otherwise  provided  in this  Agreement,  all the  rights,  and
     interests  in  and  under  the  Concession,  all  Joint  Property  and  any
     Hydrocarbons  produced from the Concession Area shall, subject to the terms
     of the  Concession,  be owned  by the  Parties  in  accordance  with  their
     respective Participating Interests.

     (B) Unless  otherwise  provided in this  Schedule,  the  obligations of the
     Parties under the Joint Venture  Agreement and all liabilities and expenses
     incurred by Technical  Partner in connection with Joint Operations shall be
     charged to the Joint  Account and all credits to the Joint Account shall be
     shared by the  Parties,  as among  themselves,  in  accordance  with  their
     respective Participating Interests.

     (C) Unless otherwise provided in this Agreement,  all liabilities  incurred
     by any Party in  connection  with  Joint  Operations  shall be borne by the
     Parties in accordance with their respective Participating Interests.

     (D) Each  Party  shall  pay when due,  in  accordance  with the  Accounting
     Procedure,  its  Participating  Interest  share of Joint Account  expenses,
     including cash advances and interest, accrued pursuant to this Agreement.

Check  one  Alternative  if  desired.

<PAGE>
OPTIONAL  PROVISION

3.3     Government  Participation

[X]     ALTERNATIVE  NO.  1

If Government Oil Company elects to participate in the rights and obligations of
Parties  pursuant to Article ____ of the Contract, the Parties shall contribute,
in proportion to their respective Participating Interests, to the interest to be
acquired  by  Government  Oil Company and shall execute such documents as may be
necessary to effect such transfer of interests and the joinder of Government Oil
Company as a party to this Agreement.  All payments received for the transfer of
such  interests  shall  be  credited  to  the  Parties  in  proportion  to their
Participating  Interests.  UNDER NO CIRCUMSTANCES WILL THE TECHNICAL PARTNERS BE
LESS  THAN  24%.

[ ]     ALTERNATIVE  NO.  2

If  Government Oil Company elects to participate in the rights and obligation of
Parties  pursuant to Article ____ of the Contract, the Parties shall contribute,
in proportion to their respective Participating Interests, to the interest to be
acquired  by  Government  Oil Company and shall execute such documents as may be
necessary  to  effect such transfer of interests.  The rights and obligations of
the  Parties  with  respect  to each other shall remain unchanged; however, they
shall  enter  into  a  separate operating agreement with Government Oil  Company
with respect to the rights and obligations of Government Oil Company, on the one
hand,  and  the Parties on the other.  All payments received for the transfer of
such  interests  shall  be  credited  to  the  Parties  in  proportion  to their
Participating  Interests.

                                   ARTICLE IV
                                 PROJECT MANAGER

4.1     Designation  of  Project  Manager

ABACAN  INTERNATIONAL  is  designed  as Project Manager, and agrees to act as an
independent  concessionor  in  accordance  with  the terms and conditions of the
Concession  and  this  Agreement,  which terms and conditions shall apply to any
successor  Project  Manager.

4.2     Rights  and  Duties  of  Project  Manager

     (A) Subject to the terms and conditions of this agreement,  Project Manager
     shall have all the rights,  functions  and duties of Project  Manager under
     the  Concession  and shall have  exclusive  charge of and shall conduct all
     Joint.   Project  Managers  may  employ   independent   contractors  and/or
     operations agents in such Joint Operations.


<PAGE>
     (B) In the conduct of Joint Operations, Project Manager shall:

          (1) Perform Joint  Operations in accordance with the provisions of the
          concession,  this  Agreement  and  the  instructions  of  the  Project
          Management committee;

          (2) Conduct all Joint  Operations  in a diligent,  safe and  efficient
          manner in  accordance  with good and prudent oil filed  practices  and
          conservation   principles  generally  followed  by  the  international
          petroleum industry under similar circumstances;

          (3) Subject to Article 4.6, neither gain a profit nor suffer a loss as
          a  result  of  being  the  Project  Manager  in its  conduct  of Joint
          Operations;

          (4) Perform the duties for the Project Management Committee set out in
          Article V, and prepare and submit to the Project Management  Committee
          the proposed Work Programs, budgets and AFE's as provided in

          (5) Acquire all permits, consents,  approvals, surface or other rights
          that may be required  for or in  connection  with the conduct of Joint
          Operations;

          (6) Permit the  representatives  of any of the  Parties to have at all
          reasonable times and at their own risk and expense  reasonable  access
          to the Joint  Operations  with the  right to  observe  all such  Joint
          Operations and to inspect all Joint Property and to conduct  financial
          audits as provided in the Accounting Procedure;

          (7)  Maintain the  Contract in full force and effect.  Operator  shall
          promptly pay and discharge all  liabilities  and expenses  incurred in
          connection  with Joint  Operations and use its  reasonable  efforts to
          keep and maintain the Joint Property free from all liens,  charges and
          encumbrances arising out of Joint Operations;

          (8) Pay to the Government  for the Joint  Account,  within the periods
          and in the manner  prescribed by the Contract and all applicable  laws
          and regulations,  all periodic  payments,  royalties,  taxes, fees and
          other payments pertaining to Joint Operations, but excluding any taxes
          measured by the incomes of the Parties;

          (9) Carry out the  obligations  of Operator  pursuant to the Contract,
          including,  but not limited to, preparing and furnishing such reports,
          records and information as may be required pursuant to the Contract;


<PAGE>
          (10) Have in accordance with the decisions of the Operating Committee,
          the  exclusive  right and  obligation  to represent the Parties in all
          dealings with the Government with respect to matters arising under the
          Contract and Joint Operations. Operator shall notify the other Parties
          as soon as possible  of such  meetings.  Non-Operators  shall have the
          right to attend such  meetings but only in the capacity of  observers.
          Nothing  contained  in this  Agreement  shall  restrict any Party from
          holding  discussions  with the  Government  with  respect to any issue
          peculiar  to its  particular  business  interests  arising  under this
          Agreement,  but in such  event such Party  shall  promptly  advise the
          Parties,  if  possible,  before and in any event  promptly  after such
          discussions, provided that such Party shall not be required to divulge
          to the Parties any matters  discussed  to the extent the same  involve
          proprietary information on matters not affecting the Parties; and

          (11) Take all  necessary  and proper  measures for the  protection  of
          life,  health,  the  environment  and  property  in  the  case  of  an
          emergency;  provided,  however, that Operator shall immediately notify
          the Parties of the details of such emergency and measures.

Check  if  desired

OPTIONAL  PROVISION:  To  be  included  where  English  law  applies.

[ ]

          (12)  Include,  to  the  extent  practical,   in  its  contracts  with
          independent contractors and to the extent lawful, provisions which:

               (a) ensure such  contractors  can only  enforce  their  contracts
               against Operator;

               (b) permit Operator,  on behalf of itself and  Non-Operators,  to
               enforce contractual  indemnities  against,  and recover loses and
               damages  suffered  by them  (insofar  as  recovered  under  their
               contracts) from such contractors; and

               (c)  require  such  contractors  to take  insurance  required  by
               Article 4.7(F).

4.3     Employees  of  Operator

Subject  to the Contract and this Agreement, Operator shall determine the number
of  employees,  the  selection  of  such  employees,  the  hours of work and the
compensation  to be paid all such employees in connection with Joint Operations.
Operator  shall  employ  only  such  employees,  agents  and  contractors as are
reasonably  necessary  to  conduct  Joint  Operations.

4.4     Information  Supplied  by  Operator

     (A) Operator shall provide  Non-Operators the following data and reports as
     they are currently produced or compiled from the Joint Operations:

          (1) Copies of all electrical logs or surveys;

<PAGE>

          (2) Daily drilling progress reports;

          (3) Copies of all drill stem tests and care analysis report;

          (4) Copies of the plugging reports;

          (5) Copies of the final geological and geophysical maps and reports;

          (6)  Engineering  studies,  development  schedules and annual progress
          reports on development projects;

          (7) Field and well performance  reports,  including  reservoir studies
          and reserve estimates;

          (8) Copies of all reports  relating to Joint  Operations  furnished by
          Operator  to the  Government,  except  magnetic  tapes  which shall be
          stored by Operator and made available for inspection and/or copying at
          the sole expense of the Non-Operator requesting same;

          (9) Other reports as  frequently as is justified by the  activities or
          as instructed by the Operating Committee; and

          (10)  Subject  to  Article  15.3,  such  additional   information  for
          Non-Operators  as they or any of them may request,  provided  that the
          requesting  Party or  Parties  pay the  costs of  preparation  of such
          information  and that the  preparation  of such  information  will not
          unduly burden Operator's  administrative and technical personnel. Only
          Non-Operators  who  pay  such  costs  shall  receive  such  additional
          information.

     (B) Operator shall give Non-Operators access at all reasonable times to all
     other data acquired in the conduct of Joint  Operations.  Any  Non-Operator
     may make copies of such other data at its sole expense.

4.5     Settlement  of  Claims  and  Lawsuits


<PAGE>
     (A)  Operator  shall  promptly  notify the Parties of any and all  material
     claims or suits and such other claims and suits as the Operating  Committee
     may  direct  which  arise out of Joint  Operations  or relate in any way to
     Joint Operations. Operator shall represent the Parties and defend or oppose
     the claim or suit. Operator may in its sole discretion compromise or settle
     any such  claim or suit or any  related  series  of  claims or suits for an
     amount not to exceed the  equivalent  of U.S.  ___________________  Dollars
     (U.S.$100,000.00),  exclusive  of legal  fees.  Operator  shall  obtain the
     approval and direction of the  Operating  Committee on amounts in excess of
     the above  stated  amount.  Each  Non-Operator  shall  have the right to be
     represented  by its own  counsel  at its  own  expense  in the  settlement,
     compromise or defense of such claims or suits.

     (B) Any  Non-Operator  shall promptly notify the other Parties of any claim
     made against such  Non-Operator  by a third party  relating to or which may
     affect the Joint Operations and insofar as such claim relates to or affects
     the Joint Operations such  Non-Operator  shall defend or settle the same in
     accordance  with any directions  given by the Operating  Committee and such
     costs,  expenses  and  damages as are payable  pursuant to such  defense or
     settlement shall be for the Joint Account.

     (C)  Notwithstanding  Article 4.5(A) and Article  4.5(B),  each Party shall
     have the right to participate in any such pursuit, prosecution,  defense or
     settlement  conducted in accordance  with Article 4.5(A) and Article 4.5(B)
     at its sole cost and expense;  provided always that no Party may settle its
     Participating  Interest  share of any claim  without first  satisfying  the
     Operating  Committee that it can do so without prejudicing the interests of
     the Joint Operations.

4.6     Liability  of  Operator

     (A) Except as set out in this Article 4.6, the Party designated as Operator
     shall bear no cost,  expense or liability  resulting  from  performing  the
     duties  and  functions  of the  Operator.  Nothing in this  Article  shall,
     however,  be deemed to relieve the Party  designated  as Operator  from any
     cost,  expense or liability for its  Participating  Interest share of Joint
     Operations.

     (B) The  Parties  shall be  liable  in  proportion  to their  Participating
     Interests  and shall defend and  indemnify  Operator  and its  consultants,
     agents, employees,  officers and directors (the "Indemnitees") from any and
     all costs,  expenses (including reasonable attorneys' fees) and liabilities
     incident to claims, demands or causes of action of every kind and character
     brought  by or on behalf of any  person or entity  for damage to or loss of
     property  or the  environment,  or for injury  to,  illness or death of any
     person or entity, which damage,  loss, injury,  illness or death arises out
     of or is  incident  to any  act or  failure  to act by  Indemnitees  in the
     conduct of or in connection with Joint  Operations  regardless of the cause
     of such damage,  loss,  injury,  illness or death and EVEN THOUGH CAUSED IN
     WHOLE OR IN PART BY A PRE-EXISTING  DEFECT,  THE NEGLIGENCE  (WHETHER SOLE,
     JOINT OR CONCURRENT),  GROSS  NEGLIGENCE,  STRICT  LIABILITY OR OTHER LEGAL
     FAULT OF  OPERATOR  (OR ANY SUCH  AFFILIATE);  provided  that if any Senior
     Supervisory  Personnel  of  Operator,   engage  in  Gross  Negligence  that
     proximately causes the Parties to incur cost, expense or liability for such
     damage, loss, injury, illness or death, then:

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1  -  No  Limitation


<PAGE>
Operator  shall  bear  all  such  costs,  expenses  and  liabilities.


[X]     ALTERNATIVE  NO.  2  -  Joint  Property  Limitation

Operator  shall  bear  only  the  actual  cost, expense and liability to repair,
replace  and/or  remove  Joint  Property  so  damaged  or  lost,  if  any.

[ ]     ALTERNATIVE  NO.  3  -  Financial  Limitation

Operator  shall  bear  only the first ____________________ (U.S. $ _________) of
such  costs,  expenses  and  liabilities.

[ ]     ALTERNATIVE  NO.  4  -  Complete  Limitation

Operator  shall  still  bear  none  of  such  costs,  expenses  and liabilities.

     (C)   Notwithstanding  the  foregoing  under  no  circumstances  shall  any
     Indemnitee (except as a Party to the extent of its Participating  Interest)
     bear any cost,  expense  or  liability  for  environmental,  consequential,
     punitive or any other similar indirect damages or losses, including but not
     limited to those arising from business interruption, reservoir or formation
     damage, inability to produce petroleum, loss of profits,  pollution control
     and environmental amelioration or rehabilitation.

4.7     Insurance  Obtained  by  Operator

     (A)  Operator  shall  procure  and  maintain  or cause to be  procured  and
     maintained  for the Joint  Account all  insurance  in the types and amounts
     required by the Contract and applicable laws, rules and regulations.

     (B) Operator shall obtain such further insurance,  at competitive rates, as
     the Operating Committee may from time to time require.

     (C) Any Party may elect not to  participate in the insurance to be procured
     under Article 4.7(B) provided such Party:

          (1) gives prompt written notice to that effect to Operator;

          (2) does nothing which may interfere with Operator's  negotiations for
          such insurance for the other Parties; and


<PAGE>
          (3)  obtains  and  maintains  such  insurance  (in respect of which an
          annual  certificate  of adequate  coverage from a reputable  insurance
          broker shall be  sufficient  evidence) or other  evidence of financial
          responsibility which fully covers its Participating  Interest share of
          the risks  that  would be  covered  by the  insurance  procured  under
          Article 4.7 (B), and which the Operating Committee may determine to be
          acceptable.  No such  determination of acceptability  shall in any way
          absolve a  non-participating  Party from its  obligation  to meet each
          cash call  including  any cash call in respect  of damages  and losses
          and/or the costs of remedying the same in accordance with the terms of
          this Agreement. If such Party obtains other insurance,  such insurance
          shall  contain  a waiver  of  subrogation  in  favor of all the  other
          Parties and the Operator, but only in respect of their interests under
          this Agreement.

     (D) The cost of insurance in which all the Parties are participating  shall
     be for the Joint  Account and the cost of  insurance in which less than all
     the Parties are participating shall be charged to the Parties participating
     in proportion to their respective Participating Interests.

     (E) Operator shall, in respect of all insurance  obtained  pursuant to this
     Article:

          (1) promptly inform the  participating  Parties when such insurance is
          obtained and supply them with copies of the relevant policies when the
          same are issued;

          (2)  arrange  for  the  participating  Parties,   according  to  their
          respective  Participating Interests, to be named as co-insureds on the
          relevant  policies  with  waivers of  subrogation  in favor of all the
          Parties; and

          (3) duly file all claims and take all  necessary  and proper  steps to
          collect any  proceeds  and credit any  proceeds  to the  participating
          Parties in proportion to their respective Participating Interests.

     (F) Operator  shall use its reasonable  efforts to require all  contractors
     performing  work in respect of Joint  Operations to obtain and maintain any
     and all insurance in the types and amounts required by any applicable laws,
     rules and regulations or any decision of the Operating  Committee and shall
     use its  reasonable  efforts to require  all such  contractors  to name the
     Parties as additional  insureds on  contractor's  insurance  policies or to
     obtain  from  their  insurers  waivers of all  rights or  recourse  against
     Operator and Non-Operators.

4.8     Commingling  of  Funds

Check  one  Alternative.

[X]     ALTERNATIVE  NO.  1


<PAGE>
Operator  may  commingle with its own funds the monies which it receives from or
for  the  Joint Account pursuant to this Agreement.  Notwithstanding that monies
of a Non-Operator have been commingled with Operator's funds, the Operator shall
account  to  the Non-Operators for the monies of a Non-Operator advanced or paid
to Operator, whether for the conduct of Joint Operations or as proceeds from the
sale  of  production under this Agreement.  Such monies shall be applied only to
their  intended  use  and  shall  in  no  way be deemed to be funds belonging to
Operator.

Check  if  desired,  in  relation  to  Alternative  No.  1.

OPTIONAL  PROVISION

[ ]     Notwithstanding  Article  4.8,  the  Operating Committee shall have the
right  to  require  Operator to segregate from its own funds the monies which it
receives  from  or  for  the  Joint  Account  pursuant  to  this  Agreement.

Check  if  desired,  in  relation  to  Alternative  No.  1.

OPTIONAL  PROVISION

[ ]     Notwithstanding  Article  4.8,  the  Operating Committee shall have the
right  to  require  Operator  to  segregate  from its own funds the monies which
Operator  receives  from  the  Parties  in  connection  with  operations on each
Exploitation  Area.

[ ]     ALTERNATIVE  NO.2

Operator  may not commingle with its own funds the monies which it receives from
or  for  the  Joint  Account  pursuant  to  this  Agreement.

4.9     Resignation  of  Operator

Subject  to  Article  4.11,  Operator  may  resign as Operator at any time by so
notifying  the other Parties at least one hundred and twenty (120) Days prior to
the  effective  date  of  such  resignation.

4.10     Removal  of  Operator

     (A) Subject to Article  4.11,  Operator  shall be removed  upon  receipt of
     notice from any Non-Operator if:

          (1) An order is made by a court or an effective  resolution  is passed
          for the dissolution,  liquidation,  winding up, or  reorganization  of
          Operator;

          (2)  Operator  dissolves,   liquidates  or  terminates  its  corporate
          existence;

          (3) Operator  becomes  insolvent,  bankrupt or makes an assignment for
          the benefit of creditors; or

<PAGE>

          (4) A receiver  is  appointed  for a  substantial  part of  Operator's
          assets.

     (B) Subject to Article 4.11, Operator may be removed by the decision of the
     Non-Operators if Operator has committed a material breach of this Agreement
     which Operator has failed to commence to rectify within thirty (30) Days of
     receipt of a notice from  Non-Operators  detailing the alleged breach.  Any
     decision of Non-Operators to give notice of breach to Operator or to remove
     Operator under this Article 4.10(B) shall be made by an affirmative vote of
     _______ (2) or more of the total number of Non-Operators holding a combined
     Participating Interest of at least _____________ percent (65%).

Check  if  desired.

OPTIONAL  PROVISION

[ ]  (C) If Operator  together  with any Affiliate of Operator is or becomes the
     holder of a Participating Interest of less than ___________________ percent
     (____%),  then  Operator  shall be required  to  promptly  notify the other
     Parties.  The Operating  Committee shall then vote within  __________ (___)
     Days of such notification on whether or not a successor  Operator should be
     named pursuant to Article 4.11.

Check  if  desired.

OPTIONAL  PROVISION
[X]  (D) If there is a direct or indirect  change in control of Operator  (other
     than a transfer of control to an Affiliate of Operator),  Operator shall be
     required to promptly  notify the other  Parties.  The  Operating  Committee
     shall vote within THIRTY ( 30) Days of such  notification on whether or not
     a successor Operator should be named pursuant to Article 4.11. For purposes
     of this Article, control means the ownership directly or indirectly of: 65%

Check  the  applicable  Alternative.

[ ]     ALTERNATIVE  NO.  1

         more  than  fifty  percent  (50%)

[ ]     ALTERNATIVE  NO.  2

         fifty  percent  (50%)  or  more

         of  the  shares  or  voting  rights  of  Operator.

Check  if  desired.

<PAGE>

OPTIONAL  PROVISION

[ ]  (E) Subject to Article  4.11,  Operator  may be removed at any time without
     cause by the  affirmative  vote of  _______________  (____)  or more of the
     total number of Non-Operators holding a combined  Participating Interest of
     at least _____________ percent (___%).

4.11     Appointment  of  Successor

When  a  change  of  Operator  occurs  pursuant  to Article 4.9 or Article 4.10:

     (A) The  Operating  Committee  shall meet as soon as  possible to appoint a
     successor  Operator  pursuant  to the  voting  procedure  of  Article  5.9.
     However, no Party may be appointed successor Operator against its will.

     (B) If the Operator disputes commission of or failure to rectify a material
     breach alleged  pursuant to Article  4.10(B) and  proceedings are initiated
     pursuant to Article XVIII, no successor  Operator may be appointed  pending
     the conclusion or abandonment of such proceedings.

     (C) If an Operator is removed, other than in the case of Article 4.10(C) or
     Article 4.10(D),  neither Operator nor any Affiliate of Operator shall have
     the right to vote for itself on the  appointment  of a successor  Operator,
     nor be considered as a candidate for the successor Operator.

     (D) A resigning or removed  Operator shall be compensated  out of the Joint
     Account for its reasonable  expenses directly related to its resignation or
     removal, except in the case of Article 4.10(B).

     (E) The Operating  Committee shall arrange for the taking of an independent
     inventory of all Joint Property and Hydrocarbons, and an audit of the books
     and  records of the removed  Operator.  Such  inventory  and audit shall be
     completed,  if possible,  no later than the effective date of the change of
     Operator. The liabilities and expenses of such inventory and audit shall be
     charged to the Joint Account.

     (F) The  resignation  or removal of  Operator  and its  replacement  by the
     successor  Operator  shall not  become  effective  prior to  receipt of any
     necessary governmental approvals.


<PAGE>
     (G) Upon the effective date of the  resignation  or removal,  the successor
     Operator shall succeed to all duties,  rights and authority  prescribed for
     Operator.  The former  Operator  shall  transfer to the successor  Operator
     custody  of all  Joint  Property,  books  of  account,  records  and  other
     documents  maintained  by Operator  pertaining  to the Contract Area and to
     Joint Operations.  Upon delivery of the above described  property and data,
     the former  Operator shall be released and discharged  from all obligations
     and liabilities as Operator accruing after such date.

                                    ARTICLE V
                               OPERATING COMMITTEE

5.1     Establishment  of  Operating  Committee

To  provide for the overall supervision and direction of Joint Operations, there
is  established an Operating Committee composed of representatives of each Party
holding  a  Participating  Interest.  Each  Party  shall  appoint  one  (1)
representative  and  one  (1) alternate representative to serve on the Operating
Committee.  Each  Party  shall  as  soon  as  possible  after  the  date of this
Agreement give notice in writing to the other Parties of the name and address of
its  representative  and  alternate  representative  to  serve  an the Operating
Committee.  Each  Party  shall  have  the right to change its representative and
alternate  at  any  time  by  giving  proper  notice to such effect to the other
Parties.

5.2     Powers  and  Duties  of  Operating  Committee

The  Operating  Committee  shall  have power and duty to authorize and supervise
Joint  Operations  that  are  necessary or desirable to fulfill the Contract and
properly explore and exploit the Contract Area in accordance with this Agreement
and  in  a  manner  appropriate  in  the  circumstances.

5.3     Authority  to  Vote

The  representative  of a Party, or in his absence his alternate representative,
shall  be authorized to represent and bind such Party with respect to any matter
which  is  within  the powers of the Operating Committee and is properly brought
before  the  Operating  Committee.  Each  such  representative shall have a vote
equal  to  the Participating Interest of the Party such person represents.  Each
alternate  representative  shall  be  entitled to attend all Operating Committee
meetings  but  shall  have no vote at such meetings except in the absence of the
representative  for whom he is the alternate.  In addition to the representative
and  alternate  representative,  each  Party  may  also  bring  to any Operating
Committee meetings such technical and other advisors as it may deem appropriate.

5.4     Subcommittees

The  Operating  Committee  may establish such subcommittees, including technical
subcommittees,  as  the Operating Committee may deem appropriate.  The functions
of  such  subcommittees  shall  be  in  an  advisory  capacity  or  as otherwise
determined  unanimously  by  the  Parties.

5.5     Notice  of  Meeting

     (A) Operator may call a meeting of the Operating Committee by giving notice
     to the Parties at least fifteen (15) Days in advance of such meeting.

<PAGE>

     (B) Any  Non-Operator  may request a meeting of the Operating  Committee by
     giving proper notice to all the other Parties. Upon receiving such request,
     Operator shall call such meeting for a date not less than fifteen (15) Days
     nor more than twenty (20) Days after receipt of the request.

     (C) The notice periods above may only be waived with the unanimous  consent
     of all the Parties.

5.6     Contents  of  Meeting  Notice

     (A) Each  notice of a meeting of the  Operating  Committee  as  provided by
     Operator shall contain:

          (1) The date, time and location of the meeting; and

          (2) An agenda of the matters and  proposals  to be  considered  and/or
          voted upon.

     (B) A Party,  by notice to the other  Parties given not less than seven (7)
     Days prior to a  meeting,  may add  additional  matters to the agenda for a
     meeting.

     (C) On the  request  of a  Party,  and with the  unanimous  consent  of all
     Parties,  the Operating  Committee may consider at a meeting a proposal not
     contained in such meeting agenda.

5.7     Location  of  Meetings

All meetings of the Operating Committee shall be held in LONDON , ______________
or  elsewhere  as  may  be  decided  by  the  Operating  Committee.

5.8     Operator's  Duties  for  Meetings

     (A)  With  respect  to  meetings  of  the   Operating   Committee  and  any
     Subcommittee, Operator's duties shall include, but not be limited to:

          (1) Timely preparation and distribution of the agenda;

          (2) Organization and conduct of the meeting; and

          (3) Preparation of a written record or minutes of each meeting.

     (B) Operator  shall have the right to appoint the chairman of the Operating
     Committee and chairman of all subcommittees.

<PAGE>

5.9     Voting  Procedure

Except  as  otherwise  expressly  provided  in  this  Agreement,  all decisions,
approvals  and  other actions of the Operating Committee on all proposals coming
before  it  under  this  Agreement  shall  be decided by the affirmative vote of
__________  (2)  or  more  Parties,  which  are  not  Affiliates,  then  having
collectively  at least ___________ percent (65%) of the Participating Interests.

5.10     Record  of  Votes

The chairman of the Operating Committee shall appoint a secretary who shall make
a  record  of  each  proposal  voted  on  and the results of such voting at each
Operating  Committee  meeting.  Each representative shall sign and be provided a
copy  of  such  record at the end of such meeting and it shall be considered the
final  record  of  the  decisions  of  the  Operating  Committee.

5.11     Minutes

The  secretary  shall  provide  each  Party  with  a  copy of the minutes of the
Operating  Committee  meeting  within  fifteen  (15)  Days  after the end of the
meeting.  Each  Party shall have fifteen (15) Days after receipt of such minutes
to  give notice of its objections to the minutes to the secretary.  A failure to
give  notice  specifying  objection to such minutes within said fifteen (15) Day
period  shall be deemed to be approval of such minutes.  In any event, the votes
recorded  under  Article  5.10  shall take precedence over the minutes described
above.

5.12     Voting  by  Notice

     (A) In lieu of a meeting,  Operator  may submit any proposal for a decision
     of the  Operating  Committee by giving each  representative  proper  notice
     describing the proposal so submitted. Each Party shall communicate its vote
     by  proper  notice to  Operator  and the other  Parties  within  one of the
     following appropriate time periods after receipt of Operator's notice:

          (1)  ____________  (24) hours in the case of operations  which involve
          the use of a drilling  or  completion  rig that is  standing by in the
          Contract Area.

          (2) ____________ (7) Days in the case of all other proposals.

Check  if  AFEs  require  approval.

OPTIONAL  PROVISION

[ ]      (3)  ____________  (20) Days in the case of an AFE or supplemental AFE
          if submitted for approval pursuant to Article 6.6(A).

<PAGE>

     (B)  Except in the case of  Article  5.12(A)(1),  any  Non-Operator  may by
     notice delivered to all Parties within  _____________ ( 7 ) Days of receipt
     of  Operator's  notice  request  that the  proposal be decided at a meeting
     rather than by notice.  In such an event, that proposal shall be decided at
     a meeting duly called for that purpose.

     (C) Except as provided in Article X, any Party failing to  communicate  its
     vote in a timely manner shall be deemed to have voted FOR such proposal.

     (D)  If a  meeting  is  not  requested,  then  at  the  expiration  of  the
     appropriate  time  period,  Operator  shall give each Party a  confirmation
     notice stating the tabulation and results of the vote.

5.13     Effect  of  Vote

All  decisions  taken by the Operating Committee pursuant to this Article, shall
be  conclusive  and  binding  on  all  the  Parties,  except  that:

     (A) If pursuant to this Article, a Joint Operation, other than an operation
     to fulfill the Minimum Work Obligations,  has been properly proposed to the
     Operating  Committee  and the  Operating  Committee  has not approved  such
     proposal  in a timely  manner,  then any Party shall have the right for the
     appropriate  period  specified  below to propose in accordance with Article
     VII, an Exclusive  Operation involving  operations  essentially the same as
     those proposed for such Joint Operation.

          (1) For proposals involving the use of a drilling rig that is standing
          by  in  the  Contract  Area,  such  right  shall  be  exercisable  for
          twenty-four (24) hours after the time specified in Article  5.12(A)(1)
          has expired.

          (2) For  proposals  to  develop  a  Discovery,  such  right  shall  be
          exercisable  for ten (10) Days after the date the Operating  Committee
          was  required to  consider  such  proposal  pursuant to Article 5.6 or
          Article 5.12.

          (3) For all other proposals,  such right shall be exercisable for five
          (5) Days  after  the date the  Operating  Committee  was  required  to
          consider such proposal pursuant to Article 5.6 or Article 5.12.


<PAGE>
     (B) If a Party  voted  against  any  proposal  which  was  approved  by the
     Operating  Committee and which could be conducted as an Exclusive Operation
     pursuant to Article VII other than any  proposal  relating to Minimum  Work
     Obligations, then such Party shall have the right not to participate in the
     operation contemplated by such approval. Any such Party wishing to exercise
     its right of  non-consent  must give  notice  of  non-consent  to all other
     Parties  within  five (5) Days (or  within  twenty-four  (24)  hours if the
     drilling  rig to be used in such  operation  is standing by in the Contract
     Area) following Operating Committee approval of such proposal.  The Parties
     that were not entitled to give or did not give notice of non-consent  shall
     be  Consenting  Parties as to the operation  contemplated  by the Operating
     Committee  approval,  and shall  conduct  such  operation  as an  Exclusive
     Operation  under  Article  VII.  Any Party that gave notice of  non-consent
     shall be a Non-Consenting Party as to such Exclusive Operation.

     (C) If the  Consenting  Parties to an  Exclusive  Operation  under  Article
     5.13(A) or Article 5.13(B) concur, then the Operating Committee may, at any
     time,  pursuant to this  Article,  reconsider  and approve,  decide or take
     action on any proposal  that the  Operating  Committee  declined to approve
     earlier, or modify or revoke an earlier approval, decision or action.

                                   ARTICLE VI
                            WORK PROGRAMS AND BUDGETS

6.1     Exploration  and  Appraisal

     (A)  Within  ____________  (90) Days  after the date of  execution  of this
     Agreement,  Operator  shall  deliver to the Parties a proposed Work Program
     and Budget  detailing the Joint  Operations to be performed in the Contract
     Area for the remainder of the current  Calendar  Year and, if  appropriate,
     for the following  Calendar Year.  Within  _____________  (45) Days of such
     delivery, the Operating Committee shall meet to consider and to endeavor to
     agree on a Work Program and Budget.

     (B) On or before the 1st of OCTOBER of each Calendar  Year,  Operator shall
     deliver to the Parties a proposed  Work  Program and Budget  detailing  the
     Joint  Operations  to be performed in the Contract  Area for the  following
     Calendar Year. Within forty-five (45) Days of such delivery,  the Operating
     Committee shall meet to consider and to endeavor to agree on a Work Program
     and Budget.


<PAGE>
     (C) If a Discovery is made,  Operator shall deliver any notice of Discovery
     required  under the  Contract  and shall as soon as possible  submit to the
     Parties a report containing  available details concerning the Discovery and
     Operator's  recommendation as to whether the Discovery merits appraisal. If
     the Operating  Committee  determines that the Discovery  merits  appraisal,
     Operator  within  __________  (20) Days,  shall  deliver  to the  Parties a
     proposed Work Program and Budget for the appraisal of the Discovery. Within
     __________ (10) Days of such delivery,  or earlier if necessary to meet any
     applicable deadline under the Contract,  the Operating Committee shall meet
     to consider,  modify and then either  approve or reject the appraisal  Work
     Program and Budget. If the appraisal Work Program and Budget is approved by
     the Operating Committee,  Operator shall take such steps as may be required
     under the  Contract to secure  approval of the  appraisal  Work Program and
     Budget by the  Government  and  Government  Oil  Company.  In the event the
     Government or the Government Oil Company  requires changes in the appraisa1
     Work Program and Budget,  the matter shall be  resubmitted to the Operating
     Committee for further consideration.

     (D) The Work  Program  and Budget  agreed  pursuant to this  Article  shall
     include the Minimum Work Obligations, or at least that part of such Minimum
     Work  Obligations  required to be carried out during the  Calendar  Year in
     question  under  the terms of the  Contract.  If  within  the time  periods
     prescribed  in this Article the  Operating  Committee is unable to agree on
     such Work Program and Budget,  Operator  shall take such actions,  but only
     such  actions  for the Joint  Account  as are  necessary  to  maintain  the
     Contract in full force and effect,  including  the  commencement  of a Work
     Program and Budget to fulfill the Minimum Work Obligations required for the
     given Calendar Year.

     (E) Subject to Article  6.7,  approval of any such Work Program and Budget,
     which includes:

          (1)  an   Exploration   Well,   whether  by  drilling,   Deepening  or
          Sidetracking, shall include approval for:

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1  -  No  Casing  Point  Election

All expenditures necessary for drilling, Testing and Completing such Exploration
Well.

[X]     ALTERNATIVE  NO. 2 - Casing Point Election - (This alternative shall not
apply  where Minimum Work Obligations require Testing and Completing of a well.)

Only  expenditures  necessary  for  drilling and open-hole Testing of such well.
When  an  Exploration Well has reached its authorized depth, all logs, cores and
other  approved  tests  have  been  conducted  and  the results furnished to the
Parties,  Operator  shall  submit  to  the  Parties  in  accordance with Article
5.12(A)(1)  an  election  to  participate  in  an attempt to Complete such well.
Operator  shall  include  in  such  submission Operator's recommendation on such
Completion  attempt  and  on  AFE  for  such  Completion  Costs.

          (2) an Appraisal Well, whether by drilling, Deepening or Sidetracking,
          shall include approval for:

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1  -  No  Casing  Point  Election

All  expenditures  necessary for drilling, Testing and Completing such Appraisal
Well.


<PAGE>
[X]     ALTERNATIVE  NO. 2 - Casing Point Election - (This alternative shall not
apply  where Minimum Work Obligations require Testing and Completing of a well.)

Only  expenditures necessary for drilling, Sidetracking and open-hole Testing of
such  well.  When  an Appraisal Well has reached its authorized depth, all logs,
cores  and other approved tests have been conducted and the results furnished to
the  Parties,  Operator  shall  submit to the Parties in accordance with Article
5.12(A)(1)  an  election  to  participate  in  an attempt to Complete such well.
Operator  shall  include  in  such  submission Operator's recommendation an such
Completion  attempt  and  on  AFE  for  such  Completion  Costs.

     (F) Any Party desiring to propose a Completion  attempt,  or an alternative
     Completion  attempt,  must do so within the time period provided in Article
     5.12(A)(1) by notifying all other Parties.  Any such proposal shall include
     an AFE for such Completion Costs.

6.2     Development

     (A)  If  the  Operating  Committee  determines  that  a  Discovery  may  be
     commercial,  the Operator  shall,  as soon as  practicable,  deliver to the
     Parties a Development  Plan together with the first annual Work Program and
     Budget and  provisional  Work Programs and Budgets for the remainder of the
     development of the Discovery, which shall contain, inter alia:

          (1) Details of the proposed work to be undertaken,  personnel required
          and  expenditures  to be incurred,  including the timing of same, on a
          Calendar Year basis;

          (2) An estimated date for the commencement of production;

          (3) A delineation of the proposed Exploitation Area; and

          (4) Any other information requested by the Operating Committee.

     (B) After receipt of the Development  Plan, or earlier if necessary to meet
     any applicable  deadline under the Contract,  the Operating Committee shall
     meet to consider,  modify and then either approve or reject the Development
     Plan and the first  annual  Work  Program  and Budget  for the  development
     submitted by Operator. If the Development Plan is approved by the Operating
     Committee,  Operator  shall,  as soon as  possible,  deliver  any notice of
     Commercial  Discovery required under the Contract and take such other steps
     as may be required under the Contract to secure approval of the Development
     Plan by the  Government  and  Government  Oil  Company.  In the  event  the
     Government or Government Oil Company  requires  changes in the  Development
     Plan,  the matter  shall be  resubmitted  to the  Operating  Committee  for
     further consideration.


<PAGE>
     (C) If the  Development  Plan is approved,  such work shall be incorporated
     into and form part of annual Work Programs and Budgets,  and Operator shall
     on or before  DEC.  1st of each  Calendar  Year  submit a Work  Program and
     Budget for the Exploitation  Area, for the following  Calendar Year. Within
     forty-five  (45) Days after such submittal,  the Operating  Committee shall
     endeavor to agree to such Work Program and Budget,  including any necessary
     or  appropriate  revisions  to the Work Program and Budget for the approved
     Development Plan.

6.3     Production

On  or before the 1st day of DECEMBER each Calendar Year, Operator shall deliver
to the Parties a proposed production Work Program and Budget detailing the Joint
Operations to be performed in the Exploitation Area and the projected production
schedule  for  the following Calendar Year.  Within forty-five (45) Days of such
delivery, the Operating Committee shall agree upon a production Work Program and
Budget.

6.4     Itemization  of  Expenditures

     (A) During the  preparation  of the proposed  Work Programs and Budgets and
     Development Plans contemplated in this Article, Operator shall consult with
     the  Operating  Committee  regarding the contents of such Work Programs and
     Budgets and Development Plans.

     (B) Each Work Program and Budget and Development Plan submitted by Operator
     shall contain an itemized estimate of the costs of Joint Operations and all
     other  expenditures  to be made for the Joint  Account  during the Calendar
     Year in question.

     (C) The Work Program and Budget shall  designate the portion or portions of
     the Contract Area in which Joint  Operations  itemized in such Work Program
     and Budget are to be  conducted  and shall  specify  the kind and extent of
     such  operations  in  such  detail  as the  Operating  Committee  may  deem
     suitable.

6.5     Contract  Awards

Operator  shall  award  each  contract  for  approved  Joint  Operations  on the
following  basis  (the  amounts  stated  are  in  thousands  of  U.S.  Dollars):

<TABLE>
<CAPTION>
<S>                                   <C>           <C>           <C>
                                      PROCEDURE A   PROCEDURE B   PROCEDURE C
                                      ------------  ------------  -----------

Exploration and Appraisal Operations  $     0 to $  $ _____ to $           >$
------------------------------------  ------------  ------------  -----------

Development Operations                $     0 to $  $ _____ to $           >$
                                      ------------  ------------  -----------

Production Operations                 $     0 to $  $ _____ to $           >$
------------------------------------  ------------  ------------  -----------
</TABLE>

Procedure


<PAGE>
     (A) Intentionally deleted.

Procedure

     (B) Operator shall:

          (1) Provide  the Parties  with a list of the  entities  whom  Operator
          proposes to invite to tender for the said contract;

          (2) Add to such  list any  entity  whom a Party  requests  to be added
          within fourteen (14) Days of receipt of such list;

          (3) Complete the tendering process within a reasonable period of time;

          (4) Inform the Parties of the  entities to whom the  contract has been
          awarded,  provided that before awarding contracts to Affiliates of the
          Operator   which  exceed  U.S.   Dollars   ________________   (U.S.  $
          100,000.00),  Operator  shall  obtain the  approval  of the  Operating
          Committee;

          (5)  Circulate to the Parties a competitive  bid analysis  stating the
          reasons for the choice made; and

          (6) Upon the request of a Party, provide such Party with a copy of the
          final version of the contract awarded.

Procedure

     (C) Operator shall:

          (1) Provide  the Parties  with a list of the  entities  whom  Operator
          proposes to invite to tender for the said contract;

          (2) Add to such  list any  entity  whom a Party  requests  to be added
          within fourteen (14) Days of receipt of such list;

          (3) Prepare and dispatch  the tender  documents to the entities on the
          list as aforesaid and to Non-Operators;

          (4) After the expiration of the period allowed for tendering, consider
          and analyze the details of all bids received;


<PAGE>
          (5) Prepare and circulate to the Parties a  competitive  bid analysis,
          stating  Operator's  recommendation  as to  the  entity  to  whom  the
          contract should be awarded, the reasons therefore,  and the technical,
          commercial and contractual terms to be agreed upon;

          (6) Obtain the approval of the Operating  Committee to the recommended
          bid; and

          (7) Upon the request of a Party, provide such Party with a copy of the
          final version of the contract.

6.6     Authorization  for  Expenditure  ("AFE")  Procedure

     (A) Prior to incurring any commitment or expenditure, which is estimated to
     be:

          (1) In excess of U.S. Dollars ______________ (U.S.  $100,000.00) in an
          exploration or appraisal Work Program and Budget;

          (2) In excess of U.S. Dollars  _______________ (U.S. $100,000.00) in a
          development Work Program and Budget.; and

          (3) In excess of U.S. Dollars  _______________ (U.S. $100,000.00) in a
          production Work Program and Budget.

Operator  shall  send  to  each  Non-Operator  an AFE containing Operator's best
estimate  of  the  total  funds  required  to carry out such work; the estimated
timing  of  expenditures,  and  any  other  necessary  supportive  information.
Notwithstanding  the  above, the Operator shall not be obliged to furnish an AFE
to  the  Parties  before  incurring any commitment or expenditures in connection
with  the  workover  of  the well or wells where such workover is pursuant to an
approved  production  Work  Program  and  Budget.

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1

          (B) All AFE's shall be for  informational  purposes only and, provided
          the work and the funds to be expended  therefor are  authorized in the
          current  Work  Program and Budget,  Operator  shall not be required to
          obtain approval for such AFE prior to commencement of work.

[X]     ALTERNATIVE  NO.  2

          b.   Prior to expending  any monies or incurring any  commitments  for
               work,  Operator  shall  obtain  the  approval  of  the  Operating
               Committee to such AFE.


<PAGE>
Check  if  desired.

OPTIONAL  PROVISION

[ ]     Any  Party  voting  to  disapprove  an  AFE issued in furtherance of an
approved Work Program and Budget shall demonstrate that such disapproval is duly
justified  and  shall  state  the  reasons  for  such  disapproval.

     (C) The restrictions  contained in this Article shall be without  prejudice
     to Operator's rights to make expenditures as set out in Article  4.2(B)(11)
     and Article 13.5.

6.7     Overexpenditures  of  Work  Programs  and  Budgets

     (A) For  expenditures  on any line item of an  approved  Work  Program  and
     Budget,   Operator  shall  be  entitled  to  incur  without   furnishing  a
     supplemental  AFE an  overexpenditure  for such line item up to ten percent
     (10%) of the authorized amount for such line item; provided that cumulative
     total of all  overexpenditures  for a Calendar  Year shall not exceed  five
     percent (5%) of the total Work Program and Budget in question.

     (B) At such time that Operator is certain that the limits of Article 6.7(A)
     will  be  exceeded,  Operator  shall  furnish  a  supplemental  AFE for the
     estimated  overexpenditures to the Operating Committee for its approval and
     shall  provide  the  Parties  with full  details of such  overexpenditures.
     Operator shall promptly give notice of the amounts of overexpenditures when
     actually incurred.

                                   ARTICLE VII
                       OPERATIONS BY LESS THAN ALL PARTIES

7.1     Limitation  on  Applicability

     (A) No operations may be conducted in furtherance of the Contract except as
     Joint  Operations  under Article V, or as Exclusive  Operations  under this
     Article.  No Exclusive  Operation shall be conducted which conflicts with a
     Joint Operation.

     (B) Operations  which are required to fulfill the Minimum Work  Obligations
     must be proposed and conducted as Joint Operations under Article V, and may
     not be proposed or conducted as Exclusive Operations under this Article.


<PAGE>
Check  if  desired.

OPTIONAL  PROVISION

[X]     Except  for  Exclusive  Operations  relating  to  Deepening,  Testing,
Completing,  Sidetracking,  Plugging  Back, Recompletions or Reworking of a well
drilled  to fulfill the Minimum Work Obligations, no Exclusive Operations may be
proposed  or  conducted  until the Minimum Work Obligations for the then current
Contract  period  are  fulfilled.

     (C) No Party may  propose  or  conduct an  Exclusive  Operation  under this
     Article,  unless and until such Party has properly  exercised  its right to
     propose an Exclusive  Operation pursuant to Article 5.13, or is entitled to
     conduct an Exclusive Operation pursuant to Article X.

     (D)  Subject  to this  Article,  any  operation  that may be  proposed  and
     conducted  as a Joint  Operation,  other  than  operations  pursuant  to an
     approved  Development  Plan,  may be proposed and conducted as an Exclusive
     Operation.

7.2     Procedure  to  Propose  Exclusive  Operations

     (A) Subject to Article  7.1, if any Party  proposes to conduct an Exclusive
     Operation,  such Party shall give notice of the  proposed  operation to all
     Parties,  other than  Parties  who have  relinquished  their  Participating
     Interest in the Exploitation Area in which the proposed  operation is to be
     conducted.  Such notice shall specify that such operation is proposed as an
     Exclusive  Operation,   the  work  to  be  performed,   the  location,  the
     objectives, and estimated cost of such operation.

     (B) Any Party  entitled  to  receive  such  notice  shall have the right to
     participate in the proposed operation.

          (1) For proposals to Deepen,  Test,  Complete,  Sidetrack,  Plug Back,
          Recomplete  or  Rework  involving  the use of a  drilling  rig that is
          standing by in the Contract  Area,  any such Party wishing to exercise
          such right must so notify Operator within twenty-four (24) hours after
          receipt of the notice proposing the Exclusive Operation.

          (2) For  proposals  to  develop  a  Discovery,  any Party  wishing  to
          exercise  such  right must so notify  the Party  proposing  to develop
          within  twenty  (20) Days after  receipt of the notice  proposing  the
          Exclusive Operation.

          (3) For all other  proposals,  any such Party wishing to exercise such
          right must so notify  Operator  within ten (10) Days after  receipt of
          the notice proposing the Exclusive Operation;


<PAGE>
     (C) Failure of a Party to whom a proposal  notice is  delivered to properly
     reply within the period  specified  above shall  constitute  an election by
     that Party not to participate in the proposed operation.

     (D) If all Parties properly exercise their rights to participate,  then the
     proposed  operation shall be conducted as a Joint  Operation.  The Operator
     shall commence such Joint  Operation as promptly as practicable and conduct
     it with due diligence.

     (E) If less than all  Parties  entitled  to receive  such  proposal  notice
     properly exercise their rights to participate, then:

Check  one  Alternative.

[X]     ALTERNATIVE  NO.  1

          (1) The Party  proposing  the Exclusive  Operation,  together with any
          other  Consenting  Parties,  shall have the right  exercisable for the
          applicable  notice  period  set out in  Article  7.2(B),  to  instruct
          Operator   (subject  to  Article  7.9(G))  to  conduct  the  Exclusive
          Operation.

          (2) If the Exclusive  Operation is conducted,  the Consenting  Parties
          shall bear the sole liability and expense of such Exclusive  Operation
          in a  fraction,  the  numerator  of which is such  Consenting  Party's
          Participating Interest as stated in Article 3.1(A) and the denominator
          of  which  is the  aggregate  of the  Participating  Interests  of the
          Consenting  Parties  as stated in  Article  3.1(A),  or in such  other
          proportion  totaling one hundred  percent (100%) of such liability and
          expense as the Consenting Parties may agree.

          (3)  If  such  Exclusive  Operation  has  not  been  commenced  within
          ______________ (180) Days (excluding any extension specifically agreed
          by all Parties or allowed by the force  majeure  provisions of Article
          XVI), the right to conduct such Exclusive  Operation shall  terminate.
          If any Party  still  desires  to  conduct  such  Exclusive  Operation,
          written  notice  proposing  such  operation must be resubmitted to the
          Parties in accordance  with Article V, as if no proposal to conduct an
          Exclusive Operation had been previously made.

[ ]     ALTERNATIVE  NO.  2

          (1) Immediately  after the expiration of the applicable  notice period
          set out in Article  7.2(B),  the Operator  shall notify all Parties of
          the names of the  Consenting  Parties  and the  recommendation  of the
          proposing  Party as to whether the  Consenting  Parties should proceed
          with the Exclusive Operation.


<PAGE>
          (2)  Concurrently,  Operator shall request the  Consenting  Parties to
          specify the Participating Interest each Consenting Party is willing to
          bear in the Exclusive Operation.

          (3) Within  twenty-four (24) hours after receipt of such notice,  each
          Consenting  Party shall  respond to the  Operator  stating  that it is
          willing to bear a Participating  Interest in such Exclusive  Operation
          equal to:

               (a) Only its Participating Interest as stated in Article 3.1(A);

               (b) A fraction, the numerator of which is such Consenting Party's
               Participating  Interest  as  stated  in  Article  3.1(A)  and the
               denominator  of  which  is the  aggregate  of  the  Participating
               Interests of the Consenting  Parties as stated in Article 3.1(A);
               or

               (c) The total of its  Participating  Interest as  contemplated by
               Article  7.2(E)(3)(b)  plus  all or any  part  of the  difference
               between  one  hundred   percent  (100%)  and  the  total  of  the
               Participating   Interests  subscribed  by  the  other  Consenting
               Parties.

          (4) Any  Consenting  Party  failing  to  advise  Operator  within  the
          response  period set out above shall be deemed to have elected to bear
          the Participating  Interest set out in Article  7.2(E)(3)(b) as to the
          Exclusive Operation.

          (5) If,  within the  response  period set out  above,  the  Consenting
          Parties  subscribe  less  than  one  hundred  percent  (100%)  of  the
          Participating Interest in the Exclusive Operation, the Party proposing
          such  Exclusive  Operation  shall  be  deemed  to have  withdrawn  its
          proposal for the Exclusive  Operation,  unless within twenty-four (24)
          hours  of the  expiry  of  the  response  period  set  out in  Article
          7.2(E)(3),  the proposing Party notifies the other Consenting  Parties
          that the  proposing  Party shall bear the  unsubscribed  Participating
          Interest.

          (6)  If one  hundred  percent  (100%)  subscription  to  the  proposed
          Exclusive  Operation is obtained,  Operator shall promptly  notify the
          Consenting Parties of their  Participating  Interests in the Exclusive
          Operation.

          (7) As soon as any Exclusive Operation is fully subscribed pursuant to
          Article 7.2(E)(6) Operator (subject to Article 7.9(G)), shall commence
          such  Exclusive  Operation as promptly as  practicable  and conduct it
          with due diligence in accordance with this Agreement.


<PAGE>
          (8)  If  such  Exclusive  Operation  has  not  been  commenced  within
          ____________ (180) Days (excluding any extension  specifically  agreed
          by all Parties or allowed by the force  majeure  provisions of Article
          XVI), the right to conduct such Exclusive  Operation shall  terminate.
          If any Party  still  desires  to  conduct  such  Exclusive  Operation,
          written  notice  proposing  such  operation must be resubmitted to the
          Parties in accordance  with Article V, as if no proposal to conduct an
          Exclusive Operation had been previously made.

7.3     Responsibility  for  Exclusive  Operations

     (A) The Consenting  Parties shall bear in accordance with the Participating
     Interests  agreed  under  Article  7.2(E) the entire cost and  liability of
     conducting an Exclusive  Operation and shall  indemnify the  Non-Consenting
     Parties from any and all costs and  liabilities  incurred  incident to such
     Exclusive  Operation  (included  but not limited to all costs,  expenses or
     liabilities for environmental, consequential, punitive or any other similar
     indirect damages or losses arising from business interruption, reservoir or
     formation  damage,  inability  to  produce  petroleum,   loss  of  profits,
     pollution control and  environmental  amelioration or  rehabilitation)  and
     shall keep the Contract  Area free and clear of all liens and  encumbrances
     of every kind created by or arising from such Exclusive Operation.

     (B)  Notwithstanding  Article 7.3(A), each Party shall continue to bear its
     Participating  Interest  share of the cost and  liability  incident  to the
     operations in which it participated,  including but not limited to plugging
     and abandoning and restoring the surface  location,  but only to the extent
     those costs were not increased by the Exclusive Operation.

7.4     Consequences  of  Exclusive  Operations

     (A) With regard to any Exclusive Operation, for so long as a Non-Consenting
     Party has the option to re-instate the rights it relinquished under Article
     7.4(B) below,  such  Non-Consenting  Party shall be entitled to have access
     concurrently with the Consenting Parties, to all data and other information
     relating to such Exclusive Operation,  other than G & G Data obtained in an
     Exclusive  Operation.  If a  Non-Consenting  Party  desires to receive  and
     acquire the right to use such G & G Data,  then such  Non-Consenting  Party
     shall  have the  right to do so by  paying to the  Consenting  Parties  its
     Participating  Interest  share  as set out in  Article  3.1(A)  of the cost
     incurred in obtaining such G & G Data.

     (B) With regard to any Exclusive  Operation  and subject to Article  7.4(C)
     (and Article 7.8, if selected) below,  each  Non-Consenting  Party shall be
     deemed to have relinquished to the Consenting  Parties,  and the Consenting
     Parties  shall  be  deemed  to  own,  in  proportion  to  their  respective
     Participating Interests in the Exclusive Operation:

          (1) All of each such  Non-Consenting  Party's right to  participate in
          further  operations  on any  Discovery  made  in the  course  of  such
          Exclusive Operation; and


<PAGE>
          (2) All of each such  Non-Consenting  Party's  right  pursuant  to the
          Contract to take and dispose of Hydrocarbons produced and saved:

               (a)  From  the  well  in  which  such  Exclusive   Operation  was
               conducted, and

               (b) From any wells drilled to appraise or develop a Discovery.

     (C) A Non-Consenting  Party shall have the following and only the following
     options to reinstate the rights it relinquished pursuant to Article 7.4(B):

          (1) If the  Consenting  Parties decide to appraise a Discovery made in
          the course of an Exclusive  Operation,  the  Consenting  Parties shall
          submit to each  Non-Consenting  Party the approved  appraisal program.
          For thirty (30) Days (or  forty-eight  (48) hours if the  drilling rig
          which is to be used in such  appraisal  program is  standing by in the
          Contract   Area)  from  receipt  of  such  appraisal   program,   each
          Non-Consenting  Party shall have the option to reinstate the rights it
          relinquished  pursuant to Article  7.4(B) and to  participate  in such
          appraisal program.  The Non-Consenting  Party may exercise such option
          by  notifying  Operator  within the period  specified  above that such
          Non-Consenting  Party agrees to bear its Participating  Interest share
          of the expense and  liability of such  appraisal  program,  to pay the
          lump sum amount as set out in Article 7.5(A) and to pay:

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1

The  Cash  Premium  as  set  out  in  Article  7.5(B);

[ ]     ALTERNATIVE  NO.  2

The  In  Kind  Premium  as  set  out  in  Article  7.5(C);

[ ]     ALTERNATIVE  NO.  3

At  the  choice  of  the Non-Consenting Party exercising such option, either the
Cash  Premium  as set out in Article 7.5(B) or the In Kind Premium as set out in
Article  7.5(C).


<PAGE>
          (2) If the  Consenting  Parties  decide to develop a Discovery made or
          appraised  in the course of an  Exclusive  Operation,  the  Consenting
          Parties shall submit to the Non-Consenting  Parties a Development Plan
          substantially  in the form intended to be submitted to the  Government
          under  the  Contract.  For  sixty  (60)  Days  from  receipt  of  such
          Development  Plan or such  lesser  period  of time  prescribed  by the
          Contract, each Non-Consenting Party shall have the option to reinstate
          the  rights  it  relinquished   pursuant  to  Article  7.4(B)  and  to
          participate in such  Development  Plan. The  Non-Consenting  Party may
          exercise  such  option  by  notifying  the Party  proposing  to act as
          Operator for such  Development  Plan within the period specified above
          that  such  Non-Consenting  Party  agrees  to bear  its  Participating
          Interest share of the liability and expense of such  Development  Plan
          and such future  operating  and producing  costs,  to pay the lump sum
          amount as set out in Article 7.5(A) and to pay:

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1

The  Cash  Premium  as  set  out  in  Article  7.5(B);

[ ]     ALTERNATIVE  NO.  2

The  In  Kind  Premium  as  set  out  in  Article  7.5(C);

[ ]     ALTERNATIVE  NO.  3

At  the  choice  of  the Non-Consenting Party exercising such option, either the
Cash  Premium  as set out in Article 7.5(B) or the In Kind Premium as set out in
Article  7.5(C).

          (3) If the  Consenting  Parties  decide  to  Deepen,  Test,  Complete,
          Sidetrack,  Plug Back, Recomplete or Rework an Exclusive Well and such
          further  operation was not included in the original  proposal for such
          Exclusive   Well,   the   Consenting   Parties  shall  submit  to  the
          Non-Consenting  Parties the approved  AFE for such further  operation.
          For thirty (30) Days (or  forty-eight  (48) hours if the  drilling rig
          which is to be used in such  operation  is standing by in the Contract
          Area) from receipt of such AFE, each  Non-Consenting  Party shall have
          the option to reinstate the rights it relinquished pursuant to Article
          7.4(B) and to participate in such operation.  The Non-Consenting Party
          may exercise such option by notifying  the Operator  within the period
          specified  above  that such  Non-Consenting  Party  agrees to bear its
          Participating  Interest  share of the  liability  and  expense of such
          further  operation,  to pay the lump sum  amount as set out in Article
          7.5(A) and to pay:

Check  one  Alternative.

[X]     ALTERNATIVE  NO.  1

The  Cash  Premium  as  set  out  in  Article  7.5(B);

[ ]     ALTERNATIVE  NO.  2

The  In  Kind  Premium  as  set  out  in  Article  7.5(C);

<PAGE>
[ ]     ALTERNATIVE  NO.  3

At  the  choice  of  the Non-Consenting Party exercising such option, either the
Cash  Premium  as set out in Article 7.5(B) or the In Kind Premium as set out in
Article  7.5(C).

     (D) If a  Non-Consenting  Party does not  properly  and in a timely  manner
     exercise  such option,  including  paying in a timely  manner in accordance
     with Article 7.5,  all lump sum amounts and Cash  Premiums,  if any, due to
     the Consenting Parties,  such Non-Consenting Party shall have forfeited the
     options as set out in Article  7.4(C) and the right to  participate  in the
     proposed  program,  unless such  program,  plan or operation is  materially
     modified or expanded.

     (E) A  Non-Consenting  Party shall become a Consenting Party with regard to
     an  Exclusive  Operation  at such time as the  Non-Consenting  Party  gives
     proper notice pursuant to Article 7.4(C); provided that such Non-Consenting
     Party  shall in no way be deemed to be entitled to any lump sum amount Cash
     Premium or In Kind Premium paid incident to such Exclusive  Operation.  The
     Participating  Interest  of such  Non-Consenting  Party  in such  Exclusive
     Operation  shall be its  Participating  Interest set out in Article 3.1(A).
     The  Consenting  Party shall  contribute in proportion to their  respective
     Participating  Interests in such  Exclusive  Operation,  the  Participating
     Interest of the  Non-Consenting  Party.  If all Parties  participate in the
     proposed  operation,  then such  operation  shall be  conducted  as a Joint
     Operation pursuant to Article V.

     (F) If after the expiry of the period in which a  Non-Consenting  Party may
     exercise its option to  participate  in a Development  Plan the  Consenting
     Parties  desire to  proceed,  the Party  chosen by the  Consenting  Parties
     proposing to act as Operator for such development, shall give notice to the
     Government  under the  appropriate  provision of the Contract  requesting a
     meeting to advise the Government that the Consenting  Parties  consider the
     Discovery  to  be a  Commercial  Discovery.  Following  such  meeting  such
     Operator  for such  development  shall apply for an  Exploitation  Area (if
     applicable  in the  Contract).  Unless the  Development  Plan is materially
     modified or expanded  prior to the  commencement  of operations  under such
     plan, each Non-Consenting Party to such Development Plan shall:

          (1) If the Contract so allows,  elect not to apply for an Exploitation
          Area  covering  such  development  and  forfeit  all  interest in such
          Exploitation Area, or

          (2) If the Contract does not so allow, be deemed to have:

               (a) Elected not to apply for an  Exploitation  Area covering such
               development;

               (b) Forfeited all economic interest in such Exploitation Area;


<PAGE>
               (c) Assumed a fiduciary  duty to exercise  its legal  interest in
               such Exploitation Area for the benefit of the Consenting Parties.

In  either case such Non-Consenting Party shall be deemed to have withdrawn from
this  Agreement  to the extent it relates to such Exploitation Area, even if the
Development  Plan  is  modified  or  expanded  subsequent to the commencement of
operations  under  such  Development  Plan.

7.5     Premium  to  Participate  in  Exclusive  Operations

     (A) Within  thirty (30) Days of the  exercise of its option  under  Article
     7.4(C), each such Non-Consenting  Party shall pay in immediately  available
     funds  to the  Consenting  Parties  who  took  the  risk of such  Exclusive
     Operations  in proportion to their  respective  Participating  Interests in
     such  Exclusive  Operations  a lump  sum  amount  payable  in the  currency
     designated by such Consenting Parties.  Such lump sum amount shall be equal
     to  such  Non-Consenting   Party's  Participating  Interest  share  of  all
     liabilities and expenses,  including overhead,  that were incurred in every
     Exclusive  Operations  relating to the Discovery,  or well, as the case may
     be, in which the  Non-Consenting  Party  desires to reinstate the rights it
     relinquished  pursuant to Article 7.4(B), and that were not previously paid
     by such Non-Consenting Party.

     (B) In addition to Article  7.5(A),  if a Cash Premium is due,  then within
     thirty (30) Days of the  exercise of its option under  Article  7.4(C) each
     such Non-Consenting Party shall pay in immediately  available funds, in the
     currency  designated  by the  Consenting  Parties who took the risk of such
     Exclusive  Operations,  to such  Consenting  Parties in proportion to their
     respective Participating Interests a Cash Premium equal to the total of:

          (1)  _______________  percent  (500%) of such  Non-Consenting  Party's
          Participating   Interest  share  of  all   liabilities  and  expenses,
          including  overhead,  that were incurred in any  Exclusive  Operations
          relating  to the  obtaining  of the  portion  of the G & G Data  which
          pertains to the Discovery,  and that were not previously  paid by such
          Non-Consenting Party; plus

          (2)  ____________  percent  (  500%)  of such  Non-Consenting  Party's
          Participating   Interest  share  of  all   liabilities  and  expenses,
          including  overhead,  that were incurred in any  Exclusive  Operations
          relating   to   the   drilling,    Deepening,   Testing,   Completing,
          Sidetracking,   Plugging  Back,  Recompleting  and  Reworking  of  the
          Exploration Well which made the Discovery in which the  Non-Consenting
          Party  desires to  reinstate  the rights it  relinquished  pursuant to
          Article   7.4(B),   and  that  were  not   previously   paid  by  such
          Non-Consenting Party; plus


<PAGE>
          (3)  _____________  percent  ( 500  %) of the  Non-Consenting  Party's
          Participating   Interest  share  of  all   liabilities  and  expenses,
          including  overhead,  that were incurred in any  Exclusive  Operations
          relating   to   the   drilling,    Deepening,   Testing,   Completing,
          Sidetracking,   Plugging  Back,  Recompleting  and  Reworking  of  the
          Appraisal   Well(s)  which  delineated  the  Discovery  in  which  the
          Non-Consenting  Party desires to reinstate the rights it  relinquished
          pursuant to Article 7.4(B),  and that were not previously paid by such
          Non-Consenting Party.

     (C) In  addition  to Article  7.5(A),  if an In-Kind  Premium is due,  each
     Non-Consenting  Party exercising its option under Article 7.4(C),  shall be
     deemed to grant to the Consenting  Parties,  and the Consenting Parties, in
     proportion to their Participating  Interests,  shall be deemed to accept an
     In Kind  Premium,  until  such time as the In Kind  Premium  has been fully
     satisfied.  The In Kind Premium shall be the right to own, take in kind and
     separately  dispose of  Hydrocarbons  produced  out of one hundred  percent
     (100%) of the  Non-Consenting  Party's  Entitlement  to  future  production
     (including Cost Oil, Profit Oil and, where  applicable  under the Contract,
     gas)  from  the   Exploitation   Area  for  the   Discovery  in  which  the
     Non-Consenting  Party  desires  to  reinstate  the  rights it  relinquished
     pursuant to Article  7.4(B)(2)(a) and (b) (or if applicable,  from only the
     well in which the  Non-Consenting  Party desires to reinstate the rights it
     relinquished pursuant to Article  7.4(B)(2)(a)).  The value in U.S. Dollars
     of the In Kind Premium shall equal a total of:

          (1)  ___________  percent  (500%)  of  such   Non-Consenting   Party's
          Participating   Interest  share  of  all   liabilities  and  expenses,
          including  overhead,  that were incurred in any  Exclusive  Operations
          relating  to the  obtaining  of the  portion  of the G & G Data  which
          pertains to the Discovery,  and that were not previously  paid by such
          Non-Consenting Party; plus

          (2)  ___________  percent  (500%)  of  such   Non-Consenting   Party's
          Participating   Interest  share  of  all   liabilities  and  expenses,
          including  overhead,  that were incurred in any  Exclusive  Operations
          relating   to   the   drilling,    Deepening,   Testing,   Completing,
          Sidetracking,   Plugging  Back,  Recompleting  and  Reworking  of  the
          Exploration Well which made the Discovery in which the  Non-Consenting
          Party  desires to  reinstate  the rights it  relinquished  pursuant to
          Article   7.4(B),   and  that  were  not   previously   paid  by  such
          Non-Consenting Party; plus

          (3)  ____________   percent  (500%)  of  the  Non-Consenting   Party's
          Participating   Interest  share  of  all   liabilities  and  expenses,
          including  overhead,  that were incurred in any  Exclusive  Operations
          relating   to   the   drilling,    Deepening,   Testing,   Completing,
          Sidetracking,   Plugging  Back,  Recompleting  and  Reworking  of  the
          Appraisal   Well(s)  which  delineated  the  Discovery  in  which  the
          Non-Consenting  Party desires to reinstate the rights it  relinquished
          pursuant to Article 7.4(B),  and that were not previously paid by such
          Non-Consenting Party; plus


<PAGE>
     (D) The In Kind Premium shall be deemed fully  satisfied when the aggregate
     value (determined in U.S. Dollars in accordance with Article 7.5(F)) of the
     Hydrocarbons  received by the Consenting  Parties as In Kind Premium equals
     the sum of the  amounts  calculated  in U.S.  Dollars  pursuant  to Article
     7.5(C)).  After such satisfaction the Consenting  Parties' right to such In
     Kind Premium shall terminate, and such Non-Consenting Party shall own, take
     and dispose of its Entitlement from such Exploitation Area. Production from
     other fields in the Contract Area,  outside such Exploitation Area (whether
     Cost Oil or Profit Oil) shall not be used to satisfy  the In Kind  Premium.
     Any obligation of the  Non-Consenting  Party to satisfy the In Kind Premium
     shall terminate with the cessation of production from the Exploitation Area
     (or well, as the case may be) which the In Kind Premium  encumbers,  and in
     such event, no cash payment,  in lieu of production,  shall be due from the
     Non-Consenting Party for the unsatisfied balance of the In Kind Premium.

     (E)  Within  ninety  (90)  Days  after  the  Completion  of  any  Exclusive
     Operation, the Operator shall furnish to each Non-Consenting Party that has
     granted  an In Kind  Premium  in respect  of such  Exclusive  Operation  an
     inventory of the  equipment in and  connected to the well,  and an itemized
     statement of the cost of such Exclusive Operation,  including equipping the
     well for production.  Each Calendar Quarter during the period of satisfying
     an In Kind Premium,  Operator shall furnish to the  Non-Consenting  Parties
     that have granted  such In Kind Premium an itemized  statement of all costs
     and liabilities  incurred in the Exclusive  Operation(s),  establishing the
     value of such In Kind Premium  together with a statement of the quantity of
     Hydrocarbons  produced  to satisfy  such In Kind  Premium and the amount of
     proceeds  realized  from the sale of such  production  during the preceding
     Calendar Quarter.

     (F) For the purpose of determining satisfaction of the In Kind Premium, the
     value of the Hydrocarbons received by a Consenting Party as In Kind Premium
     shall be the  weighted  average  price  per  Barrel  (f.o.b.  the  point of
     delivery of the Cost Oil and Profit Oil to the  Consenting  Parties)  which
     such  Consenting  Party  receives  from  the sale of such  Hydrocarbons  to
     non-affiliated  purchasers,  in arms  length  transactions.  For  sales  to
     Affiliates, the price so used shall be the price at which Hydrocarbons of a
     similar  grade,   gravity  and  quality   (adjusted  for  differentials  in
     accordance  with  regularly  established  practice)  were sold generally on
     world markets,  during the particular period of sale, in free and fair arms
     length  transactions,   with  due  adjustments  being  made  for  differing
     geographical locations.  Notwithstanding the fact that royalty or any other
     payment  obligation  to  the  Government  is  based  on  an  "official"  or
     "Government"   stated  price,   the  price  used  for  calculation  of  the
     satisfaction  of the In Kind  Premium  shall  be the  price  determined  in
     accordance with this Article.

     (G) In determining  the quantity of  Hydrocarbons  produced for purposes of
     the In Kind Premium,  the  Consenting  Parties shall use industry  accepted
     methods such as but not limited to metering or periodic well tests.


<PAGE>
     (H) During the period of time Consenting Parties are entitled to an In Kind
     Premium,  such  Consenting  Parties shall be responsible for the payment of
     all royalties,  charges,  taxes,  and all other burdens  established by the
     Contract directly related to such In Kind Premium.

     (I) Any amount  realized from the sale or other  disposition  of equipment,
     which was  acquired in  connection  with an Exclusive  Operation,  shall be
     credited against the satisfaction of the In Kind Premium.

     (J)  On   satisfaction   of  the  In  Kind  Premium,   the  right  of  such
     Non-Consenting  Party to own,  take in kind and  separately  dispose of its
     Entitlement granted under Article 7.5(C), shall be reinstated automatically
     as of 7:00 a.m.  on the Day  following  the Day on which such  satisfaction
     occurs.

7.6     Order  of  Preference  of  Operations

     (A) Except as otherwise  specifically  provided in this  Agreement,  if any
     Party  desires to propose the conduct of an  operation  that will  conflict
     with an existing proposal for an Exclusive Operation, such Party shall have
     the right  exercisable for five (5) Days, or twenty-four  (24) hours if the
     drilling rig to be used is standing by in the Contract  Area,  from receipt
     of the  proposal  for the  Exclusive  Operation,  to deliver to all Parties
     entitled to participate in the proposed operation such Party's  alternative
     proposal.  Such alternative proposal shall contain the information required
     under Article 7.2(A).

     (B) Each Party  receiving such proposals  shall elect by delivery of notice
     to  Operator  within  the  appropriate  response  period set out in Article
     7.2(B) to  participate  in one of the  competing  proposals.  Any Party not
     notifying  Operator  within the response period shall be deemed not to have
     voted.

     (C) The proposal  receiving the largest  aggregate  Participating  Interest
     vote shall have priority over all other competing proposals. In the case of
     a tie vote,  the Operator  shall choose among the  proposals  receiving the
     largest  aggregate  Participating  Interest  vote.  Operator  shall deliver
     notice  of such  result  to all  Parties  entitled  to  participate  in the
     operation  within  five  (5)  Days of the end of the  response  period,  or
     twenty-four (24) hours if the drilling rig to be used is standing by in the
     Contract Area.

     (D) Each Party shall then have two (2) Days (or  twenty-four  (24) hours if
     the  drilling  rig to be used is  standing  by in the  Contract  Area) from
     receipt of such notice to elect by  delivery of notice to Operator  whether
     such Party will participate in such Exclusive Operation, or will relinquish
     its interest pursuant to Article 7.4(B). Failure by a Party to deliver such
     notice within such period shall be deemed an election not to participate in
     the prevailing proposal.

Check  if  desired.

OPTIONAL  PROVISION

<PAGE>
[ ]  (E)  Notwithstanding the provisions of Article 7.4(B), if for reasons other
     than  the  encountering  of  granite  or  other  practically   impenetrable
     substance or any other condition in the hole rendering  further  operations
     impracticable,  a well drilled as an Exclusive Operation fails to reach the
     deepest  objective  Zone  described  in the  notice  proposing  such  well,
     Operator shall give notice of such failure to each Non-Consenting Party who
     submitted or voted for an alternative  proposal under this Article to drill
     such well to a shallower  Zone than the deepest  objective Zone proposed in
     the notice  under  which such well was  drilled.  Each such  Non-Consenting
     Party shall have the option  exercisable  for  forty-eight  (48) hours from
     receipt of such notice to participate in the initial proposed Completion of
     such well.  Each such  Non-Consenting  Party may  exercise  such  option by
     notifying the Operator that it wishes to participate in such Completion and
     by paying its share of the cost of drilling  such well to its actual depth,
     calculated  in the  manner  provided  in  Article  7.8(B)(1).  If any  such
     Non-Consenting  Party does not properly  elect to  participate in the first
     Completion proposed for such well, the relinquishment provisions of Article
     7.4(B) shall continue to apply to such Non-Consenting Party's interest.

7.7     Stand  By  Costs

     (A) When an operation has been performed, all tests have been conducted and
     the results of such tests furnished to the Parties, stand by costs incurred
     pending response to any Party's notice proposing an Exclusive Operation for
     Deepening, Testing, Sidetracking,  Completing, Plugging Back, Recompleting,
     Reworking or other  further  operation in such well  (including  the period
     required under Article 7.6 to resolve competing proposals) shall be charged
     and borne as part of the operation just completed.  Stand by costs incurred
     subsequent  to all Parties  responding,  or expiration of the response time
     permitted,  whichever  first  occurs,  shall be charged to and borne by the
     Parties   proposing  the   Exclusive   Operation  in  proportion  to  their
     Participating Interests,  regardless of whether such Exclusive Operation is
     actually conducted.

     (B) If a  further  operation  is  proposed  while  the  drilling  rig to be
     utilized is on  location,  any Party may request and receive up to five (5)
     additional  Days  after  expiration  of  the  applicable   response  period
     specified in Article  7.2(B) within which to respond by notifying  Operator
     that such Party agrees to bear all stand by costs and other costs  incurred
     during such extended  response  period.  Operator may require such Party to
     pay the estimated  stand by time in advance as a condition to extending the
     response  period.  If more than one Party requests such  additional time to
     respond to the  notice,  stand by costs  shall be  allocated  between  such
     Parties  an  a  Day-to-Day  basis  in  proportion  to  their  Participating
     Interests.

Check  if  desired.

[ ]     OPTIONAL  PROVISION

7.8     Special  Considerations  Regarding  Deepening  and  Sidetracking
1.1     
<PAGE>

     (A) An Exclusive  Well shall not be Deepened or  Sidetracked  without first
     affording the  Non-Consenting  Parties in accordance  with this Article the
     opportunity to participate in such operation.

     (B) In the event any  Consenting  Party  desires to Deepen or  Sidetrack an
     Exclusive  Well,  such Party shall initiate the procedure  contemplated  by
     Article 7.2. If a Deepening or Sidetracking  operation is approved pursuant
     to such provisions,  and if any Non-Consenting  Party to the Exclusive Well
     elects to  participate  in such Deepening or  Sidetracking  operation,  the
     payment, if any, pursuant to Article 7.5 of such Non-Consenting Party shall
     be calculated based on the following liabilities and expenses:

          (1) If the proposal is to Deepen or Sidetrack and is made prior to the
          Completion of such well as a Commercial Discovery,  then payment shall
          be based on such Non-Consenting  Party's Participating  Interest share
          of the liabilities  and expenses  incurred in connection with drilling
          the Exclusive  Well from the surface to the depth  previously  drilled
          which   such   Non-Consenting   Party   would   have   paid  had  such
          Non-Consenting  Party agreed to participate  in such  Exclusive  Well,
          plus the Non-Consenting  Party's  Participating  Interest share of the
          liabilities  and  expenses  of  Deepening  or   Sidetracking   and  of
          participating  in any further  operations  on such  Exclusive  Well in
          accordance  with the other  provisions  of this  Agreement;  provided,
          however,  all  liabilities  and expenses for Testing and Completing or
          attempting Completion of the well incurred by Consenting Parties prior
          to the commencement of actual operations to Deepen or Sidetrack beyond
          the  depth  previously  drilled  shall  be for  the  sole  account  of
          Consenting  Parties in the  proportion  their  Participating  Interest
          bears to the aggregate of their Participating Interests.


<PAGE>
          (2) If the  proposal  is to  Deepen  or  Sidetrack  and is made for an
          Exclusive  Well that has been  previously  Completed  as a  Commercial
          Discovery, but is no longer producing,  then payment shall be based on
          the Non-Consenting  Party's Participating  Interest share of all costs
          of  drilling  and  Completing  said well from the surface to the depth
          previously  drilled,  calculated  in the  manner  provided  in Article
          7.8(B)(1),  less those costs recouped by the  Consenting  Parties from
          the  sale  of  production   from  such   Exclusive   Well,   plus  the
          Non-Consenting  Party's  Participating  Interest share of all costs of
          re-entering said well, plus the Non-Consenting  Party's  proportionate
          part   (based  on  the   percentage   of  the   Exclusive   Well  such
          Non-Consenting  Party would have owned had it previously  participated
          in such  Exclusive  Well)  of the  costs  of  salvable  materials  and
          equipment remaining in the hole and salvable surface equipment used in
          connection  with such well shall be determined in accordance  with the
          Accounting  Procedure.  If at the time such Deepening or  Sidetracking
          operation is conducted the  Consenting  Parties have recouped from the
          Exclusive Well the amount  calculated  pursuant to Article 7.5, then a
          Non-Consenting  Party may participate in the Deepening or Sidetracking
          of the  Exclusive  Well with no payment for  liabilities  and expenses
          incurred prior to re-entering the well for Deepening or Sidetracking.

7.9     Miscellaneous

     (A) Each Exclusive Operation shall be carried out by the Consenting Parties
     acting  as the  Operating  Committee,  subject  to the  provisions  of this
     Agreement applied mutatis mutandis to such Exclusive  Operation and subject
                       ----------------
     to the terms and conditions of the Contract.

     (B) The  computation  of  liabilities  and  expenses  incurred in Exclusive
     Operations,   including  the  liabilities  and  expenses  of  Operator  for
     conducting such operations, shall be made in accordance with the principles
     set out in the Accounting Procedure.

     (C) Operator shall maintain separate books,  financial records and accounts
     for Exclusive Operations which shall be subject to the same rights of audit
     and examination as the Joint Account and related  records,  all as provided
     in the Accounting  Procedure.  Said rights of audit and  examination  shall
     extend to each of the  Consenting  Parties  and each of the  Non-Consenting
     Parties  so  long as the  latter  are,  or may be,  entitled  to  elect  to
     participate in such operations.

     (D)  Operator,  if it is not a  Consenting  Party and it is  conducting  an
     Exclusive  Operation  for the  Consenting  Parties,  shall be  entitled  to
     request cash advances and shall not be required to use its own funds to pay
     any cost and  expense  and shall not be obliged  to  commence  or  continue
     Exclusive  Operations until cash advances requested have been made, and the
     Accounting  Procedure  shall apply to Operator in respect of any  Exclusive
     Operations conducted by it.

     (E) Should the  submission of a Development  Plan be approved in accordance
     with Article 5.9, or should any Party propose a  development  in accordance
     with  Article  VII,  with  either  proposal  not calling for the conduct of
     additional  appraisal  drilling,  and  should  any  Party  wish to drill an
     additional  Appraisal Well prior to  development,  then the Party proposing
     the Appraisal Well as an Exclusive  Operation  shall be entitled to proceed
     first,  but  without the right to future  reimbursement  of costs or to any
     Premium,  pursuant  to  Article  7.5.  If, as the result of  drilling  such
     Appraisal Well as an Exclusive Operation,  the Party proposing to apply for
     an  Exploitation  Area  decides to not  develop  the  reservoir,  then each
     Non-Consenting  Party who voted in favor of such  Development Plan prior to
     the drilling of such Appraisal  Well shall pay to the Consenting  Party the
     amount such  Non-Consenting  Party would have paid had such  Appraisal Well
     been drilled as a Joint Operation.


<PAGE>
     (F)  In the  case  of  any  Exclusive  Operation  for  Deepening,  Testing,
     Completing,  Sidetracking,  Plugging  Back,  Recompleting  or  Rework,  the
     Consenting  Parties  shall be permitted to use,  free of cost,  all casing,
     tubing  and other  equipment  in the  well,  that is not  needed  for Joint
     Operations, but the ownership of all such equipment shall remain unchanged.
     On  abandonment of a well after such  Exclusive  Operation,  the Consenting
     Parties  shall  account  for all such  equipment  to the  Parties who shall
     receive their respective Participating Interest shares, in value, less cost
     of salvage.

     (G) If the Operator is a Non-Consenting  Party to an Exclusive Operation to
     develop a Discovery,  then subject to obtaining  any  necessary  Government
     approval  the  Operator  may resign,  but in any event shall  resign on the
     request of the Consenting  Parties,  as Operator for the Exploitation  Area
     for such Discovery and the Consenting Parties shall select a Party to serve
     as Operator.

                                    ARTICLE 8
                                     DEFAULT

8.1     Default  and  Notice

Any  Party  that fails to pay when due its Participating Interest share of Joint
Account  expenses including cash advances and interest, accrued pursuant to this
Agreement  (a  "Defaulting  Party")  shall  be  in default under this Agreement.
Operator,  or  any  other  Party  in  the case of the default of Operator, shall
promptly  give  written  notice  of  such  default to such Party and each of the
non-defaulting  Parties.  The amount not paid by the Defaulting Party shall bear
interest  from  the  date  due  until paid in full.  Interest will be calculated
using  the  Agreed  Interest  Rate.

8.2     Operating  Committee  Meetings  and  Data

After  any  default  has  continued  for five (5) Business Days from the date of
written  notice  of default under Article 8.1, and for as long thereafter as the
Defaulting Party remains in default on any payment due under this Agreement, the
Defaulting Party shall not be entitled to attend Operating Committee meetings or
to  vote  on  any matter coming before the Operating Committee during the period
such  default continues.  Unless agreed otherwise by the non-defaulting Parties,
the  voting  interest  of  each  non-defaulting Party shall be in the proportion
which  its  Participating  Interest  bears  to  the  total  of the Participating
Interests  of  all  the non-defaulting Parties.  Any matters requiring unanimous
vote  of the Parties shall be deemed to exclude the Defaulting Party.  After the
said five (5) Business Days and while the Defaulting Party remains in default as
aforesaid, the Defaulting Party shall not have access to any data or information
relating  to  Joint  Operations, and non-defaulting Parties shall be entitled to
trade  data  without  such  Defaulting  Party's consent and the Defaulting Party
shall  have  no  right  to  any data received on such trade unless and until its
default  is  remedied  in  full.  Notwithstanding  the foregoing, the Defaulting
Party  shall  be deemed to have approved, and shall join with the non-defaulting
Parties  in  taking  any  action  to  maintain  and  preserve  the  Contract.

8.3     Allocation  of  Defaulted  Accounts


<PAGE>
     (A)  Operator  shall,  either at the time of giving  notice of  default  as
     provided in Article 8.1, or by separate notice,  notify each non-defaulting
     Party the sum of money it is to pay as its portion  (such  portion being in
     the ratio that each non-defaulting  Party's Participating Interest bears to
     the Participating  Interests of all non-defaulting  Parties) of such amount
     in default. Each non-defaulting Party shall, if such default continues, pay
     Operator,  within five (5) Business Days after receipt of such notice,  its
     share of the  amount  which the  Defaulting  Party  failed  to pay.  If any
     non-defaulting  Party  fails to pay its share of the  amount in  default as
     aforesaid,  such  non-defaulting  Party shall  thereupon  be in default and
     shall be a Defaulting Party subject to the provisions of this Article.  The
     non-defaulting  Parties which pay the amount owed by any  Defaulting  Party
     shall be entitled to receive  their  respective  share of the principal and
     interest payable by such Defaulting Party pursuant to Article 8.1.

     (B) The total of all  amounts  paid by the  non-defaulting  Parties for the
     Defaulting  Party,  together  with  interest  accrued on such amounts shall
     constitute  a  debt  due  and  owing  by  the   Defaulting   Party  to  the
     non-defaulting  Parties in proportion to such amounts paid. In addition the
     non-defaulting  Parties  may in the manner  contemplated  by this  Article,
     satisfy such debt  (together  with interest) and may accrue an amount equal
     to the  Defaulting  Party's  Participating  Interest share of the estimated
     cost to abandon any Joint Property.

     (C) A  Defaulting  Party may remedy its default by paying to  Operator  the
     total amount due, together with interest  calculated as provided in Article
     8.1, at any time prior to transfer of its interest pursuant to Article 8.4,
     and  upon   receipt  of  such   payment   Operator   shall  remit  to  each
     non-defaulting Party its proportionate share of such amount.

     (D) The  rights  granted  to each  non-defaulting  Party  pursuant  to this
     Article,  shall be in addition  to, and not in  substitution  for any other
     rights  or  remedies  which  each  non-defaulting  Party may have at law or
     equity or pursuant to the other provisions of this Agreement.

8.4     Transfer  of  Interest


<PAGE>
     (A) For  thirty  (30) Days after each  failure by the  Defaulting  Party to
     remedy its default by the thirtieth  (30th) Day following notice of default
     without  prejudice  to any other  rights of the  non-defaulting  Parties to
     recover the amounts paid for the Defaulting  Party,  together with interest
     accrued on such amount, each non-defaulting  Party shall have the option to
     give notice to the  Defaulting  Party  requiring  the  Defaulting  Party to
     transfer its interest to the non-defaulting  Parties. To that end if any of
     the  non-defaulting  Parties so elect, the Defaulting Party shall be deemed
     to have  transferred  and to have  empowered  the  electing  non-defaulting
     Parties to execute on said Defaulting Party's behalf any documents required
     to effect a transfer, of all of its right, title and beneficial interest in
     and  under  this  Agreement  and the  Contract,  and in all wells and Joint
     Property to the electing non-defaulting  Parties. If requested,  each Party
     shall  execute a Power of Attorney in the form  prescribed by the Operating
     Committee.  The Defaulting Party shall, without delay following any request
     from the non-defaulting Parties, do any and all acts required to be done by
     applicable  law or  regulation  in order to render  such  transfer  legally
     valid,  including,  without  limitation,  the obtaining of all governmental
     consents and  approvals,  and shall  execute any and all documents and take
     such other  actions as may be necessary in order to effect prompt and valid
     transfer  of  the  interests   described  above,  free  of  all  liens  and
     encumbrances.  In  the  event  all  Government  approvals  are  not  timely
     obtained,  the Defaulting Party shall hold its  Participating  Interests in
     trust for such non-defaulting Parties who elected to assume such Defaulting
     Party's Participating Interest.

     (B) In the absence of an agreement among the non-defaulting  Parties to the
     contrary,  any such transfer to the non-defaulting  Parties shall be in the
     proportion that the  non-defaulting  Parties have paid the amounts due from
     the Defaulting Party.

     (C) Subject to Article 12.1(C),  on the effective date of such transfer the
     Defaulting  Party shall  forthwith cease to be a Party to this Agreement to
     the extent of the Participating Interest so transferred.  The acceptance or
     non-acceptance  by a  non-defaulting  Party of any portion of a  Defaulting
     Party's Participating  Interest shall be without prejudice to any rights or
     remedies such non-defaulting  Parties have to recover the outstanding debts
     (including interest) owed by the Defaulting Party.

8.5     Continuation  of  Interest

If  within thirty (30) Days after each failure by the Defaulting Party to remedy
its  default  by  the  thirtieth  (30th)  Day  following  notice  of default the
non-defaulting Parties elect to not acquire the Defaulting Party's Participating
Interest  as  provided  in  Article  8.4  and to continue to bear the Defaulting
Party's  Participating  Interest  share  of  liabilities  and expenses, then the
non-defaulting  Parties  shall accumulate all such liabilities and expenses as a
debt  pursuant  to Article VIII, but the Defaulting Party shall continue to be a
Party subject to Article 8.2 and Article 8.7.  If Operator disposes of any Joint
Property  or  any other credit or adjustment is made to the Joint Account, or if
Operator  sells  any  of  the Defaulting Party's Participating Interest share of
Hydrocarbons,  then, in respect of the Defaulting Party's Participating Interest
share  of  the proceeds of such disposal, credit or adjustment or sale, Operator
shall  be  entitled  to  retain  and  to  set  off the same against all amounts,
together with interest accrued on such amount, due and owing from the Defaulting
Party  plus  an  accrued  amount  equal  to the Defaulting Party's Participating
Interest share of the estimated cost to abandon any Joint Property.  Any surplus
remaining  after setting off the same as aforesaid shall be paid promptly to the
Defaulting  Party.

8.6     Abandonment


<PAGE>
If,  within thirty (30) Days after the failure by the Defaulting Party to remedy
its  default  by  the thirtieth (30th) Day as aforesaid, no non-defaulting Party
elects  to  acquire the Defaulting Party's Participating Interest as provided in
Article  8.4,  or to bear the Defaulting Party's Participating Interest share of
liabilities  and  expenses as provided in Article 8.5, then no transfer shall be
made  and  Joint Operations shall be abandoned subject to any necessary consents
and  notices  being  given, and each Party, including the Defaulting Party shall
pay  its  Participating  Interest  share  of  all  costs  of  abandoning  and
relinquishing the Contract.  If abandonment occurs as aforesaid, all monies paid
by  the non-defaulting Parties for the Defaulting Party pursuant to Article 8.3,
together with interest accrued on such amount, shall remain a debt due and owing
by  the  Defaulting  Party.

8.7     Sale  of  Hydrocarbons

If  a Party defaults after the commencement of commercial production and has not
remedied  the default by the thirtieth (30th) Day as aforesaid, then, during the
continuance  of  such default, the Defaulting Party shall not be entitled to its
Participating  Interest  share  of  Hydrocarbons  which shall vest in and be the
property of the non-defaulting Parties, and Operator shall be authorized to sell
such  Hydrocarbons  at  the  best  price obtainable under the circumstances and,
after  deducting  all  costs,  charges  and  expenses  incurred  by  Operator in
connection  with  such  sale,  pay  the  proceeds  proportionately  to  the
non-defaulting  Parties  which  proceeds  shall  be  credited against all monies
advanced  pursuant  to Article 8.3, together with interest accrued thereon.  Any
surplus  remaining  shall  be  paid  to the Defaulting Party, and any deficiency
shall remain a debt due from the Defaulting Party to the non-defaulting Parties.
Notwithstanding  any  such sales by Operator the provisions of Article 8.4 shall
continue  to  apply.

8.8     No  Right  of  Set  Off

Each  Party  acknowledges  and  accepts  that  a  fundamental  principle of this
Agreement  is  that  each  Party  pays  its  Participating Interest share of all
amounts  due  under this Agreement as and when required.  Accordingly, any Party
which  becomes  a  Defaulting  Party  undertakes  that, in respect of either any
exercise by the non-defaulting Parties of any rights under or the application of
any  of the provisions of this Article, such Party shall not raise by way of set
off or invoke as a defense, whether in law or equity, any failure to pay amounts
due  and  owing  under  this Agreement or any alleged or unliquidated claim that
such  Party  may  have  against Operator or any Non-Operator, whether such claim
arises  under this Agreement or otherwise.  Such Party further undertakes not to
raise  by  way  of  defense, whether in law or in equity, that the nature or the
amount  of the remedies granted to the non-defaulting Parties is unreasonable or
excessive.

                                   ARTICLE IX
                            DISPOSITION OF PRODUCTION

9.1     Right  and  Obligation  to  Take  In  Kind


<PAGE>
Except  as  otherwise  provided in this Article, each Party shall have the right
and  obligation to own, take in kind and separately dispose of its Participating
Interest  share  of  total  production  available to the Parties pursuant to the
Contract  from  any  Exploitation Area in such quantities and in accordance with
such  procedures  as  may  be  set forth in the offtake agreement referred to in
Article  9.2  or  in  the  special  arrangements  for natural gas referred to in
Article  9.3.  If Government Oil Company is party to the offtake agreement, then
the  Parties shall endeavour to obtain its agreement to the principles set forth
in  this  Article.

9.2     Offtake  Agreement  for  Crude  Oil

If  crude  oil is to be produced from an Exploitation Area, the Parties shall in
good  faith, and not less than three (3) months prior to first delivery of crude
oil,  negotiate  and  conclude the terms of an agreement to cover the offtake of
crude  oil  produced  under  the  Contract.  The  Government Oil Company may, if
necessary ana practicable, also be party to the offtake agreement.  This offtake
agreement shall, to the extent consistent with the Contract, make provision for:

     (A) The delivery  point,  at which title and risk of loss of  Participating
     Interest  shares of crude oil shall pass to the Parties  interested  (or as
     the Parties may otherwise agree);

     (B) Operator's regular periodic advice to the Parties of estimates of total
     available production for succeeding periods,  Participating Interest shares
     and grades of crude oil, for as far ahead as is necessary  for Operator and
     the Parties to plan offtake arrangements.  Such advice shall also cover for
     each grade of crude oil total  available  production and deliveries for the
     preceding period, inventory and overlifts and underlifts;

     (C)   Nomination  by  the  Parties  to  Operator  of  acceptance  of  their
     Participating   Interest  share  of  total  available  production  for  the
     succeeding  period.  Such  nominations  shall in any one period be for each
     Party's  entire  Participating  Interest  share arising  during that period
     subject to operational  tolerances and agreed minimum  economic cargo sizes
     or as the Parties may otherwise agree;

     (D) Elimination of overlifts and underlifts;

     (E) If offshore loading or a shore terminal for vessel loading is involved,
     risks  regarding  acceptability  of tankers,  demurrage and (if applicable)
     availability of berths;

     (F)  Distribution to the Parties of  Entitlements to ensure,  to the extent
     Parties take delivery of their Entitlements in proportion to the accrual of
     such Entitlements,  that each Party shall receive currently Entitlements of
     grades,  gravities and qualities of  Hydrocarbons  similar to  Hydrocarbons
     received by each other Party;

     (G) To the  extent  that  distribution  of  Entitlements  on such  basis is
     impracticable  due to availability of facilities and minimum cargo sizes, a
     method of making periodic adjustments; and


<PAGE>
     (H) The  option and the right of the other  Parties to sell an  Entitlement
     which a Party fails to nominate for acceptance  pursuant to (C) above or of
     which a Party fails to take delivery,  in accordance with applicable agreed
     procedures,  provided  that such  failure  either  constitutes  a breach of
     Operator's or Parties'  obligations under the terms of the Contract,  or is
     likely to result in the  curtailment or shut-in of  production.  Such sales
     shall be made only to the limited extent  necessary to avoid  disruption in
     Joint  Operations.  Operator  shall give all  Parties as much  notice as is
     practicable of such  situation and that a sale option has arisen.  Any sale
     shall be of the  unnominated or undelivered  Entitlement as the case may be
     and for reasonable periods of time as are consistent with the minimum needs
     of the industry and in no event to exceed twelve (12) months.  The right of
     sale  shall  be  revocable  at  will  subject  to  any  prior   contractual
     commitments.  Sales  to  non-affiliated  third  parties  shall  be for  the
     realized price f.o.b.  the delivery  point.  Sales to any of the Parties or
     their  Affiliates  shall be at current  market  value  f.o.b.  the delivery
     point.  The  Party  arranging  the  sale  shall  pay  to  the  Party  whose
     Entitlement  is  involved  the above price  after  deduction  of all costs,
     including  storage costs,  incurred in respect of such sale and a marketing
     fee of an  agreed  percentage  of the  applicable  price  less  deductions,
     reflecting  actual costs of disposal at immediate  notice.  Current  market
     value  shall  be the  value of the  Entitlement  in  international  markets
     (unless the Entitlement was required to be delivered into the  Government's
     domestic  market,  in which case it shall be the value  therein)  between a
     willing  buyer and a willing  seller  and shall be agreed  between  the two
     Parties  concerned,  or failing  agreement,  determined  by an expert to be
     appointed in accordance with procedures set forth in the offtake agreement.

9.3     Separate  Agreement  for  Natural  Gas

The  Parties recognize that if natural gas is discovered it may be necessary for
the  Parties  to enter into special arrangements for the disposal of the natural
gas,  which are consistent with the Development Plan and subject to the terms of
the  Contract.

                                    ARTICLE X
                              ABANDONMENT OF WELLS

10.1     Abandonment  of  Wells  Drilled  as  Joint  Operations

     (A) Any well  which  has been  drilled  as a Joint  Operation  and which is
     proposed to be plugged  and  abandoned  shall not be plugged and  abandoned
     without the consent of all Parties.

     (B) Should any such Party  fail to reply  within the period  prescribed  in
     Article 5.12(A)(1) or Article  5.12(A)(2),  whichever is applicable,  after
     delivery of notice of the  Operator's  proposal  to plug and  abandon  such
     well,  such  Party  shall  be  deemed  to have  consented  to the  proposed
     abandonment. If all the Parties consent to abandonment,  such well shall be
     plugged and abandoned in accordance with applicable  regulations and at the
     cost,  risk and  expense of the  Parties  who  participated  in the cost of
     drilling such well.


<PAGE>
     (C) If all  Parties do not agree to the  abandonment  of such  well,  those
     wishing to continue  operations shall assume financial  responsibility over
     the well  and  shall be  deemed  to be  Consenting  Parties  conducting  an
     Exclusive  Operation  pursuant  to Article  VII. In the case of a producing
     well, the Consenting  Parties shall be entitled to continue  producing only
     from the Zone open to  production  at the time they assumed  responsibility
     for the well.

     (D) Consenting Parties taking over a well as provided above shall tender to
     each  of  the   Non-Consenting   Parties   such   Non-Consenting   Parties'
     Participating  Interest share of the value of the well's salvable  material
     and equipment, determined in accordance with the Accounting Procedure, less
     the  estimated  cost of salvaging  and the  estimated  cost of plugging and
     abandoning as of the date the Consenting Party assumed  responsibility  for
     the well; provided,  however,  that in the event the estimated plugging and
     abandoning and the estimated cost of salvaging are higher than the value of
     the well's salvable material and equipment,  each of the abandoning Parties
     shall continue to be liable pursuant to Article 7.3(B) for their respective
     Participating Interest shares of the estimated excess cost.

     (E) Each  Non-Consenting  Party shall be deemed to have relinquished to the
     Consenting  Parties in proportion to their  Participating  Interests all of
     its  interest in the wellbore of a produced  well and related  equipment in
     accordance with Article  7.4(B),  insofar and only insofar as such interest
     covers the right to obtain  production  from that wellbore in the Zone then
     open to production.

     (F)  Subject  to  Article  7.9(G),  Operator  shall  continue  to operate a
     produced  well for the account of the  Consenting  Parties at the rates and
     charges  contemplated  by this  Agreement,  plus  any  additional  cost and
     charges  which  may  arise as the  result  of the  separate  allocation  of
     interest in such well.

10.2     Abandonment  of  Exclusive  Operations

This  Article  shall  apply  mutatis mutandis to the abandonment of an Exclusive
                             ----------------
Well  or  any  well in which an Exclusive Operation has been conducted; provided
that  no  well  shall  be permanently plugged and abandoned unless and until all
Parties  having  the  right to conduct further operations in such well have been
notified  of  the  proposed abandonment and afforded the opportunity to elect to
take  over  the  well  in  accordance  with  the  provisions  of this Article X.

                                   ARTICLE XI
                       SURRENDER, EXTENSIONS AND RENEWALS

11.1     Surrender


<PAGE>
     (A) If the Contract  requires  the Parties to surrender  any portion of the
     Contract  Area,  Operator  shall  advise the  Operating  Committee  of such
     requirement  at least one hundred  and twenty  (120) Days in advance of the
     earlier of the date for filing  irrevocable notice of such surrender or the
     date of such  surrender.  Prior to the end of such  period,  the  Operating
     Committee shall determine  pursuant to Article V, the size and shape of the
     surrendered  area,  consistent with the requirements of the Contract.  If a
     sufficient  vote of the Operating  Committee  cannot be attained,  then the
     proposal  supported  by a simple  majority of the  Participating  Interests
     shall be adopted.  If no proposal  attains the support of a simple majority
     of the  Participating  Interests,  then the proposal  receiving the largest
     aggregate  Participating  Interest vote shall be adopted. In the event of a
     tie, the Operator  shall choose among the  proposals  receiving the largest
     aggregate  Participating  Interest  vote. The Parties shall execute any and
     all documents and take such other actions as may be necessary to effect the
     surrender.  Each Party  renounces  all claims and causes of action  against
     Operator  and any other  Parties  on  account  of any area  surrendered  in
     accordance   with  the   foregoing  but  against  its   recommendation   if
     Hydrocarbons are subsequently discovered under the surrendered area.

     (B) A  surrender  of all or any  part of the  Contract  Area  which  is not
     required  by the  Contract  shall  require  the  unanimous  consent  of the
     Parties.

11.2     Extension  of  the  Term

     (A) A  proposal  by any  Party to  extend  the term of the  Exploration  or
     Exploitation Period or any phase of the Contract,  a proposal to enter into
     a new phase of the Exploration Period, and a proposal to extend the term of
     the Contract  shall be brought before the Operating  Committee  pursuant to
     Article V.

     (B) Any Party shall have the right to extend the term of the Exploration or
     Exploitation  Period or any phase of the Contract to enter into a new phase
     of the Exploration Period or extend the term of the Contract. Any Party not
     wishing  to  extend,  shall  have  a  right  to  withdraw,  subject  to the
     requirements of Article XIII.

                                   ARTICLE XII
                         TRANSFER OF INTEREST OR RIGHTS

12.1     Obligation

     (A) Subject always to the requirements of the Contract, the transfer of all
     or part of a Party's  Participating  Interest shall be effective only if it
     satisfies the terms and conditions of this Article.

     (B)  Except in the case of a Party  transferring  all of its  Participating
     Interest,  no  transfer  shall be made by any Party  which  results  in the
     transferor or the transferee holding a Participating  Interest of less than
     ______________   percent  (5%)  or  holding  any  interest   other  than  a
     Participating  Interest  in  the  Contract,  the  Contract  Area  and  this
     Agreement.


<PAGE>
     (C) The transferring Party shall,  notwithstanding the transfer,  be liable
     to the other Parties for any  obligations,  financial or  otherwise,  which
     have vested, matured or accrued under the provision of the Contract or this
     Agreement prior to such transfer.  Such obligations shall include,  without
     limitation,  any proposed  expenditure approved by the Operating Committee,
     prior to the transferring Party notifying the other Parties of its proposed
     transfer.

     (D) The  transferee  shall  have no rights in and under the  Contract,  the
     Contract Area or this  Agreement  unless and until it obtains the necessary
     Government's  approval and  expressly  undertakes in writing to perform the
     obligations  of the  transferor  under the Contract  and this  Agreement in
     respect  of  the   Participating   Interest  being   transferred,   to  the
     satisfaction  of the Parties and furnishes any  guarantees  required by the
     Government or the Contract.

     (E) The  transferee  shall  have no rights in and under the  Contract,  the
     Contract Area or this Agreement  unless each Party has consented in writing
     to such  transfer,  which consent  shall be denied only if such  transferee
     fails  to  establish  to the  reasonable  satisfaction  of each  Party  its
     financial  or technical  capability  to perform its  obligations  under the
     Contract and this Agreement.

     (F)  Nothing   contained  in  this  Article  shall  prevent  a  Party  from
     mortgaging,  pledging, charging or otherwise encumbering all or part of its
     interest  in the  Contract  Area and in and under  this  Agreement  for the
     purpose of security relating to finance provided that:

          (1) such Party shall  remain  liable for all  obligations  relating to
          such interest;

          (2) the encumbrance shall be subject to any necessary  approval of the
          Government  and be expressly  subordinated  to the rights of the other
          Parties under this Agreement; and

          (3) such Party shall ensure that any such mortgage,  pledge, charge or
          encumbrance  shall  be  expressed  to  be  without  prejudice  to  the
          provisions of this Agreement.

Check  one  Optional  Alternative  if  desired.

[X]     OPTIONAL  ALTERNATIVE  NO.  1  -  Preferential  Rights

     (G) Any  transfer  of all or a portion of  Participating  Interest  whether
     directly or indirectly by  assignment,  merger,  consolidation,  or sale of
     stock, or other  conveyance,  other than with or to an Affiliate,  shall be
     subject to the following procedure:


<PAGE>
          (1) Once the transferor Party and a proposed transferee (a third party
          or a Party) have fully  negotiated the final terms and conditions of a
          transfer, such final terms and conditions shall be disclosed in detail
          to all Parties in a written  notification  from the  transferor.  Each
          Party shall have the right to acquire the Participating  Interest from
          the  transferor  on the same  terms  and  conditions  agreed to by the
          proposed  transferee  if,  within  thirty  (30)  Days of  transferor's
          written  notification,  such  Party  delivers  to all other  Parties a
          counter-notification  that  it  accepts  the  agreed  upon  terms  and
          conditions of the transfer without  reservations or conditions.  If no
          Party delivers such counter-notification, the transfer to the proposed
          transferee  may be  made,  subject  to the  other  provisions  of this
          Article  12,  under  terms and  conditions  no more  favorable  to the
          transferee than those set forth in the notice to the Parties, provided
          that the transfer  shall be concluded  within one hundred eighty (180)
          Days  from the date of the  notice  plus  such  reasonable  additional
          period as may be required to secure governmental approvals.

          (2) If more than one Party counter-notifies that it intends to acquire
          the  Participating  Interest  which  is the  subject  of the  proposed
          transfer,  then each such  Party  shall  acquire a  proportion  of the
          Participating Interest to be transferred equal to the ratio of its own
          Participating Interest to the total Participating Interests of all the
          counter-notifying Parties, unless they otherwise agree; and

          (3) In the event that a Party's  proposed  transfer  of part or all of
          its Participating  Interest involves  consideration other than cash or
          involves other  properties  included in a wider  transaction  (package
          deal) then the consideration  payable for the  Participating  Interest
          exclusively shall be allocated a reasonable and justifiable cash value
          by the transferor in any notification to the other Parties. Such other
          Parties may satisfy the  requirements  of this  Article by agreeing to
          pay  such  cash  value  in lieu of the  consideration  payable  in the
          third-party offer.

[ ]     OPTIONAL  ALTERNATIVE  NO.  2  -  Right  of  First  Negotiation

     (G) Any  transfer of all or a portion of a Party's  Participating  interest
     whether directly or indirectly by assignment,  merger, consolidation,  sale
     of stock, or other conveyance,  other than with or to an Affiliate shall be
     subject to the following procedure:


<PAGE>
          (1) In the event that a Party  wishes to  transfer  any part or all of
          its  Participating  Interest,  it shall send all other Parties written
          notification  of its  intention  and  invite  them  to  submit  offers
          therefor.  The other Parties shall have thirty (30) Days from the date
          of such notification to deliver a counter-notification  with a binding
          offer  in  accordance  with  Article  12.1(G)(3).  If the  prospective
          transferor Party accepts the offer, the prospective transferor and the
          offering  Party  shall  have  the  next  sixty  (60)  Days in which to
          negotiate  in good faith and  execute  the terms and  conditions  of a
          mutually acceptable transfer agreement.  If the prospective transferor
          does not find any  Party's  offer  acceptable,  or if sixty  (60) Days
          elapse and it is evident to the  prospective  transferor  that a fully
          negotiated  agreement  with an  offering  Party is not  imminent,  the
          prospective  transferor  shall be entitled for a period of one hundred
          eighty (180) Days,  plus such reasonable  additional  period as may be
          necessary   to  secure   governmental   approvals,   to  transfer  its
          Participating Interest to a third party subject to the obligations set
          forth in this Article, so long as terms and conditions of the transfer
          to a third party are more favorable to the prospective transferor than
          the best terms and conditions offered by any Party;

          (2) If more than one Party counter-notifies the prospective transferor
          that it intends to acquire  the  Participating  Interest  which is the
          subject of the proposed transfer, then each such Party shall acquire a
          proportion of the  Participating  Interest to be transferred  equal to
          the ratio of its own Participating Interest to the total Participating
          Interests of all the counter-notifying  Parties, unless they otherwise
          agree;

          (3) All Parties giving such  counter-notice  shall meet to formulate a
          joint offer. Each such Party shall make known to the other Parties the
          highest  price  or  value  in  which  it is  willing  to  offer to the
          prospective  transferor.  The proposal with the highest price or value
          shall be offered to the  prospective  transferor as the joint proposal
          of the Parties  still willing to  participate  in such offer under the
          provisions of (1) and (2) above;

          (4) In the event that a Party's  proposed  transfer  of part or all of
          its Participating  Interest involves  consideration other than cash or
          involves other  properties  included in a wider  transaction  (package
          deal), then the consideration  payable for the Participating  Interest
          exclusively shall be allocated a reasonable and justifiable cash value
          by the  prospective  transferor  in  any  notification  to  the  other
          Parties.  Such other  Parties  may satisfy  the  requirements  of this
          Article  by   agreeing   to  pay  such  cash  value  in  lieu  of  the
          consideration payable in the third-party offer.

12.2     Rights

     (A) Each Party shall have the right,  subject to the  provisions of Article
     12.1, to freely transfer its Participating Interest.

Check  if  desired.

OPTIONAL  PROVISION

[X]  (B) If the transfer of all or a portion of a Party's Participating Interest
     whether directly or indirectly by, assignment, merger, consolidation,  sale
     of stock, or other conveyance is part of a wider transaction (package deal)
     involving such assets,  such transfer shall be subject to Article  12.1(G),
     only if such prospective  transferor's  Participating  Interest  represents
     _____________ percent (35%) or more of the value of such wider transaction.

                                  ARTICLE XIII
                            WITHDRAWAL FROM AGREEMENT


<PAGE>
13.1     Right  of  Withdrawal

     (A) Subject to the provisions of this Article,  any Party may withdraw from
     this  Agreement  and the  Contract  by giving  notice to all other  Parties
     stating its decision to withdraw and  specifying a proposed  effective date
     of  withdrawal  which shall be at least sixty (60) Days,  but not more than
     one hundred  eighty (180) Days after the date of such  notice.  Such notice
     shall be unconditional and irrevocable when given.

     (B)  Notwithstanding  Article  13.1(A) a Party  shall not have the right to
     withdraw  from this  Agreement  and the  Contract  until the  Minimum  Work
     Obligation set forth in the Contract has been  fulfilled.  However,  if the
     Operating  Committee  or any Party  decides  to  accept  new  Minimum  Work
     Obligations  by  voluntarily  extending  the current or entering into a new
     exploration  period  under the  Contract,  a Party that voted  against such
     decision shall not be prevented from withdrawing;  provided that such Party
     delivers notice of its withdrawal to all Parties within thirty (30) Days of
     such vote  pursuant to Article  11.2 and fully  satisfies  its  outstanding
     Minimum Work Obligation, if any.

     (C) Subject to Articles  13.1(A) and (B) and Article  13.5,  the  effective
     date of withdrawal for a withdrawing Party shall be the later of:

          (1) The date proposed in the notice of withdrawal; or

          (2) The date that the withdrawing  Party has fulfilled its obligations
          under this Article.

13.2     Partial  or  Complete  Withdrawal

     (A)  Within   thirty  (30)  Days  of  receipt  each   withdrawing   Party's
     notification,  each of the  other  Parties  may also  give  notice  that it
     desires  to  withdraw  from this  Agreement  and the  Contract.  Should all
     Parties give notice of withdrawal, the Parties shall proceed to abandon the
     Contract Area and terminate the Contract and this  Agreement.  If less than
     all of the Parties  give such notice of  withdrawal,  then the  withdrawing
     Parties  shall  take all  steps to  withdraw  from  the  Contract  and this
     Agreement  on the  earliest  possible  date and  execute  and  deliver  all
     necessary instruments, and documents to assign their Participating Interest
     to  the  Parties  which  are  not  withdrawing,  without  any  compensation
     whatsoever, in accordance with the provisions of Article 13.6.

     (B) If any part of the withdrawing Party's  Participating  Interest remains
     unclaimed  after  sixty  (60)  Days  from the date of the  first  notice of
     withdrawal,  the Parties  shall be deemed to have decided to withdraw  from
     the Contract and this Agreement, unless at least one Party agrees to accept
     the unclaimed Participating Interest.

     (C) Any Party  withdrawing  under Article 11.2 or under this Article shall:
     (1)
<PAGE>

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1

Withdraw  from  the  entirety  of  the Contract Area, including all Exploitation
Areas and all Discoveries made prior to such withdrawal, and thus abandon to the
other  Parties  not  joining  in  its  withdrawal all its rights to Cost Oil and
Profit  Oil generated by Operations after such withdrawal and all rights in such
associated  Joint  Property.

[ ]     ALTERNATIVE  NO.  2

Withdraw  from  all  exploration activities under the Contract, but not from any
Exploitation  Area, Commercial Discovery, or Discovery whether appraised or not,
made  prior  to such withdrawal.  Such withdrawing Party shall retain its rights
in  the Joint Property but only insofar as they relate to any Exploitation Area,
Commercial  Discovery  or  Discovery whether appraised or not, and shall abandon
all  other  rights  in  the  Joint  Property.

13.3     Voting

After  giving  its  notification of withdrawal, a Party shall not be entitled to
vote  on  any  matters coming before the Operating Committee, other than matters
for  which  such  Party  has  financial  responsibility.

13.4     Obligations  and  Liabilities

     (A) A  withdrawing  Party,  prior  to its  withdrawal,  shall  satisfy  all
     obligations  and liabilities it has incurred or attributable to it prior to
     its withdrawal,  including,  without limitation,  any expenditures budgeted
     and/or   approved  by  the  Operating   Committee   prior  to  its  written
     notification  of  withdrawal  (development  projects  included),   and  any
     liability for acts,  occurrences or circumstances  taking place or existing
     prior  to  its  withdrawal.  Furthermore,  any  liens,  charges  and  other
     encumbrances   which  the   withdrawing   Party   placed  on  such  Party's
     Participating  Interest prior to its withdrawal shall be fully satisfied or
     released,  at the withdrawing Party's expense,  prior to its withdrawal.  A
     Party's   withdrawal   shall  not   relieve  it  from   liability   to  the
     non-withdrawing  Parties with  respect to any  obligations  or  liabilities
     attributable  to  the  withdrawing   Party  which  are  not  identified  or
     identifiable at the time of withdrawal.


<PAGE>
     (B)  Notwithstanding  the  foregoing,  a Party  shall not be liable for any
     operations or expenditures it voted against if it sends notification of its
     withdrawal  within five (5) Days (or within  twenty-four  (24) hours if the
     drilling  rig to be used in such  operation  is standing by on the Contract
     Area)  of  the  Operating   Committee  vote  approving  such  operation  or
     expenditure,  nor  shall  such  Party  be  liable  for  any  operations  or
     expenditures approved by the Operating Committee,  excluding those approved
     pursuant to Article 13.5,  after notice has been given  pursuant to Article
     13.1.

13.5     Emergency

A  Party's notification of withdrawal shall not become effective if prior to the
proposed  date  of  withdrawal  a  well  goes out of control or a fire, blowout,
sabotage or other emergency occurs.  The notification of withdrawal shall become
effective  only after the emergency has been contained and the withdrawing Party
has  paid,  or  has  provided,  security  satisfactory  to  the  Parties for its
Participating  Interest  share  of  the  costs  of  such  emergency.

13.6     Assignment

A  withdrawing  Party  shall  assign  its  Participating Interest to each of the
non-withdrawing Parties which shall be allocated to them in the proportion which
each  of  their  Participating  Interests (prior to the withdrawal) bears to the
total  Participating  Interests of all the non-withdrawing Parties (prior to the
withdrawal),  unless  the non-withdrawing Parties agree otherwise.  The expenses
associated with the withdrawal and assignments shall be borne by the withdrawing
Party.

13.7     Approvals

A  withdrawing  Party shall promptly join in such actions as may be necessary or
desirable  to  obtain  any  Government approvals required in connection with the
withdrawal  and  assignments,  and  any  penalties  or  expenses incurred by the
Parties  in  connection  with  such withdrawal shall be borne by the withdrawing
Party.

Check  one  Alternative.

13.8     Abandonment  Security

[X]     ALTERNATIVE  NO.  1  -  Short  Form  Abandonment  Security

     (A) A withdrawing  Party shall provide  Security  satisfactory to the other
     Parties to satisfy any such obligations or liabilities  which were approved
     or accrued  prior to notice of  withdrawal,  but which become due after its
     withdrawal,  including, without limitation,  Security to cover the costs of
     an abandonment, if applicable.

[ ]     ALTERNATIVE  NO.  2  -  Long  Form  Abandonment  Security

If  under the terms of the Contract or applicable law, the Parties are or become
obliged  to  pay  or  contribute  to the cost of abandonment, then the following
provisions  shall  apply:


<PAGE>
     (A) During  preparation of a Development  Plan, the Parties shall negotiate
     and agree a security  agreement,  which shall be completed  and executed by
     all Parties participating in such Development Plan prior to application for
     an  Exploitation   Area.  The  security  agreement  shall  incorporate  the
     following principles:

          (1)  Security  shall be provided by each such Party for each  Calendar
          Year  commencing  with the Calendar Year in which the  Discounted  Net
          Value equals one hundred  twenty-five percent (125%) of the Discounted
          Net Cost.

          (2) The amount of Security  required to be provided by each such Party
          in any Calendar Year  (including  security  previously  provided which
          will still be current throughout such Calendar Year) shall be equal to
          the  amount by which one  hundred  twenty-five  percent  (125%) of the
          Discounted Net Cost exceeds the Discounted Net Value.

"Discounted  Net Cost" means that portion of each Party's anticipated before tax
cost of abandoning a development in accordance with applicable law which remains
after  deduction  of  salvage  value.  Such  portion should be calculated at the
anticipated  time of abandonment and discounted at the Discount Rate to December
31,  of  the  Calendar  Year  in  question.

ADiscounted  Net  Value"  means  the value of each Party's estimated Entitlement
which  remains  after  payment of estimated liabilities and expenses required to
win,  save  and  transport  such  production  to  the  delivery  point and after
deduction  of  estimated applicable taxes, royalties, imposts and levies on such
production.  Such  Entitlement shall be calculated using estimated market prices
and  including  taxes on income, discounted at the Discount Rate to December 31,
of  the  Calendar Year in question.  No account shall be taken of tax allowances
expected  to  be  available  in  respect  of  the  costs  of  abandonment.

"Discount  Rate" means the rate per annum equal to the one (1) month term, LIBOR
rate  for U.S. Dollar deposits as published by The Wall Street Journal or if not
                                               -----------------------
published  then  by  the  Financial  Times  of Londoneffective as of thirty (30)
                          ---------------------------
Business  Days  prior  to  the  start  of  a  Calendar  Year.

     (B)  Failure  to  provide  Security  shall  constitute  default  under this
     Agreement.

     (C)  "Security"  means a standby letter of credit issued by a bank or an on
     demand  bond issued by a  corporation,  such bank or  corporation  having a
     credit rating  indicating it has sufficient worth to pay its obligations in
     all  reasonably  foreseeable  circumstances,  or,  failing the provision of
     either  of  those,  cash  contributed  to a  secure  fund  administered  by
     independent trustees and invested in ____________________________.

13.9     Withdrawal  or  Abandonment  by  all  Parties


<PAGE>
In the event all Parties decide to withdraw or are required to do so pursuant to
this  Article,  the  Parties  agree  that  they  shall be bound by the terms and
conditions  of  this  Agreement  for  so long as may be necessary to wind up the
affairs  of  the  Parties  with  the  Government, to satisfy any requirements of
applicable law or to facilitate the sale, disposition or abandonment of property
or  interests  held  by  the  Joint  Account.

                                   ARTICLE XIV
                         RELATIONSHIP OF PARTIES AND TAX

14.1     Relationship  of  Parties

The  rights,  duties,  obligations  and  liabilities  of  the Parties under this
Agreement shall be individual, not joint or collective.  It is not the intention
of  the  Parties  to  create, nor shall this Agreement be deemed or construed to
create  mining  or other partnership, joint venture, association or trust, or as
authorizing  any  Party  to  act  as an agent, servant or employee for any other
Party  for  any  purpose  whatsoever  except  as  explicitly  set  forth in this
Agreement.  In their relations with each other under this Agreement, the Parties
shall  not  be  considered  fiduciaries  except  as  expressly  provided in this
Agreement.

14.2     Tax

Each  Party  shall  be  responsible  for  reporting  and discharging its own tax
measured  by  the income of the Party and the satisfaction of such Party's share
of  all  contract obligations under the Contract and under this Agreement.  Each
Party  shall  protect,  defend  and  indemnify each other Party from any and all
loss,  cost  or  liability  arising  from  a  failure  or  refusal to report and
discharge  such  taxes  or  satisfy  such  obligations.

Check  if  desired.

[ ]     OPTIONAL  PROVISION

14.3     United  States  Tax  Election


<PAGE>
     (A) If, for United States federal  income tax purposes,  this Agreement and
     the operations  under this Agreement are regarded as a partnership  (and if
     the Parties have not agreed to form a tax  partnership)  each "U.S.  Party"
     (as defined below) elects to be excluded from the application of all of the
     provisions of Subchapter "K",  Chapter 1, Subtitle "A" of the United States
     Internal  Revenue Code of 1986 (the "Code") as permitted and  authorized by
     Section  761 of the Code and the  regulations  promulgated  under the Code.
     ________________, to the extent required by Section 6231(a)(7) of the Code,
     is designated as the tax matters  party,  and is authorized and directed to
     execute  for each U.S.  Party  such  evidence  of this  election  as may be
     required by the Internal Revenue Service,  including specifically,  but not
     by way of limitation, all of the returns, statements, and the data required
     by United States Treasury  Regulations  Section 1.761 and 1.6031-1) d) (2).
     Should there be any requirement  that any U.S. Party give further  evidence
     of this election,  each U.S. Party shall execute such documents and furnish
     such other evidence as may be required by the Internal  Revenue  Service or
     as may be necessary to evidence this election.

     (B) No such U.S.  Party  shall  give any  notice  or take any other  action
     inconsistent with the election made above. If any future income tax laws of
     the United States contain  provisions  similar to those in Subchapter  "K",
     Chapter 1, Subtitle "A" of the United States Internal Revenue Code of 1986,
     under which an election similar to that provided by Section 761 of the Code
     is permitted,  each U.S. Party shall make such election as may be permitted
     or required by such laws. In making the foregoing election, each U.S. Party
     states that the income derived by it from  operations  under this Agreement
     can be adequately determined without the computation of partnership taxable
     income.

     (C) For the  purposes of this  Article,  "U.S.  Party" shall mean any Party
     which is subject  to the income tax law of the United  States of America in
     respect of operations under this Agreement.

     (D) No activity  shall be conducted  under this  Agreement that would cause
     any non U.S. Party to be deemed to be engaged in a trade or business within
     the United States of America under applicable tax laws and regulations.

     (E) A Party  which is not a U.S.  Party shall not be required to do any act
     or  execute  any  instrument  which  might  subject  them  to the  taxation
     jurisdiction of the United States of America.

                                   ARTICLE XV
                CONFIDENTIAL INFORMATION - PROPRIETARY TECHNOLOGY

15.1     Confidential  Information

     (A) Subject to the  provisions of the Contract,  the Parties agree that all
     information  and data acquired or obtained by any Party in respect of Joint
     Operations shall be considered  confidential and shall be kept confidential
     and not be  disclosed  during the term of the  Contract and for a period of
     _______________ (2) years after expiration of the Contract to any person or
     entity not a Party to this Agreement, except:

          (1) To an Affiliate, provided such Affiliate maintains confidentiality
          as provided in this Article;

          (2) To a  governmental  agency or other  entity  when  required by the
          Contract;


<PAGE>
          (3)  To the  extent  such  data  and  information  is  required  to be
          furnished in compliance with any applicable  laws or  regulations,  or
          pursuant to any legal proceedings or because of any order of any court
          binding upon a Party;

          (4) Subject to Article 15.1(B), to potential contractors, contractors,
          consultants  and attorneys  employed by any Party where  disclosure of
          such  data  or   information   is  essential  to  such   contractor's,
          consultant's or attorney's work;

          (5) Subject to Article 15.1(B), to a bona fide prospective  transferee
          of a Party's  Participating  Interest (including an entity with whom a
          Party is conducting bona fide  negotiations  directed toward a merger,
          consolidation  or the  sale  of a  majority  of its or an  Affiliate's
          shares);

          (6)  Subject  to  Article  15.1(B),  to  a  bank  or  other  financial
          institution to the extent appropriate to a Party arranging for funding
          for its obligations under this Agreement;

          (7) To the extent such data and information must be disclosed pursuant
          to any  rules or  requirements  of any  government  or stock  exchange
          having jurisdiction over such Party, or its Affiliates;  provided that
          if any Party desires to disclose  information in an annual or periodic
          report to its or its  Affiliates'  shareholders  and to the public and
          such disclosure is not required  pursuant to any rules or requirements
          of any government or stock exchange, then such Party shall comply with
          Article 20.2;

          (8) To its respective  employees for the purposes of Joint Operations,
          subject to each Party taking customary precautions to ensure such data
          and information is kept confidential;

          (9) Where any data or information which,  through no fault of a Party,
          becomes a part of the public domain.

     (B) Disclosure as pursuant to Article 15.1(A)(4), (5), and (6) shall not be
     made unless prior to such  disclosure the  disclosing  Party has obtained a
     written  undertaking  from  the  recipient  party  to  keep  the  data  and
     information  strictly  confidential and not to use or disclose the data and
     information  except for the express  purpose for which  disclosure is to be
     made.

15.2     Continuing  Obligations

Any  Party  ceasing  to  own  a  Participating  Interest during the term of this
Agreement  shall  nonetheless remain bound by the obligations of confidentiality
and  any  disputes  shall  be  resolved  in  accordance  with  Article  XVIII.

15.3     Proprietary  Technology


<PAGE>
Nothing  in  this  Agreement  shall  require  a  Party  to  divulge  proprietary
technology  to the other Parties; provided that where the cost of development of
proprietary  technology  has been charged to the Joint Account, such proprietary
technology  shall be disclosed to all Parties bearing a portion of such cost and
may  be  used  by  such  Party,  or  its  Affiliates,  in  other  operations.

15.4     Trades

Notwithstanding  the  foregoing  provisions  of this Article, Operator may, with
approval  of  the  Operating Committee, make well trades and data trades for the
benefit of the Parties, with any data, the cost of which has been charged to the
Joint  Account,  so  obtained  to  be  furnished to all Parties.  In such event,
Operator  must  enter  into an undertaking with any third party to such trade to
keep  such  information  confidential.

                                   ARTICLE XVI
                                  FORCE MAJEURE

16.1     Obligations

If as a result of Force Majeure any Party is rendered unable, wholly or in part,
to  carry out its obligations under this Agreement, other than the obligation to
pay  any  amounts  due or to furnish security, then the obligations of the Party
giving  such  notice,  so  far  as  and  to  the extent that the obligations are
affected by such Force Majeure, shall be suspended during the continuance of any
inability so caused, but for no longer period.  The Party claiming Force Majeure
shall  notify  the  other  Parties  of  the  Force  Majeure  situation  within a
reasonable  time  after the occurrence of the facts relied on and shall keep all
Parties  informed  of  all  significant  developments.  Such  notice  shall give
reasonably  full particulars of said Force Majeure, and also estimate the period
of time which said Party will probably require to remedy the Force Majeure.  The
affected  Party  shall  use  all  reasonable diligence to remove or overcome the
Force  Majeure situation as quickly as possible in an economic manner, but shall
not  be  obligated  to settle any labor dispute except on terms acceptable to it
and  all  such  disputes  shall  be  handled  within  the sole discretion of the
affected  Party.

16.2     Definition  of  Force  Majeure

Check  one  Alternative.

[X]     ALTERNATIVE  NO.  1

For  the  purposes  of  this Agreement, "Force Majeure" shall mean circumstances
which were irresistible or beyond the reasonable control of the Party concerned.

[ ]     ALTERNATIVE  NO.  2

For  the purposes of this Agreement, "Force Majeure" shall have the same meaning
as  is  set  out  in  the  Contract.

<PAGE>
                                  ARTICLE XVII
                                     NOTICES

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 registered mail or by courier
service  or by any electronic means of transmitting written communications which
provides confirmation of complete transmission, and addressed to such Parties as
designated  below.  The  originating  notice  given  under any provision of this
Agreement shall be deemed delivered only when received by the Party to whom such
notice  is  directed,  and  the  time  for  such  Party to deliver any notice in
response  to  such  originating  notice  shall run from the date the originating
notice  is  received.  The  second  or  any  responsive  notice  shall be deemed
delivered  when  received.  "Received" for purposes of this Article with respect
to  written notice delivered pursuant to this Agreement shall be actual delivery
of the notice to the address of the Party to be notified specified in accordance
with this Article.  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.


<PAGE>




Attention:
Telecopy:
Telex:
Answerback  Code:






Attention:
Telecopy:
Telex:
Answerback  Code:


<PAGE>




Attention:
Telecopy:
Telex:
Answerback  Code:






Attention:
Telecopy:
Telex:
Answerback  Code:


<PAGE>

                                  ARTICLE XVIII
                      APPLICABLE LAW AND DISPUTE RESOLUTION

18.1     Applicable  Law


<PAGE>
This  Agreement  shall  be  governed  by,  construed, interpreted and applied in
accordance  with  the  laws  of England, excluding any choice of law rules which
would  refer  the  matter  to  the  laws  of  another  jurisdiction.

18.2     Dispute  Resolution

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1  -  Courts

     Each Party submit to the  exclusive  jurisdiction  of the courts of England
     (or if  jurisdiction  is not granted by such court by another  court having
     jurisdiction) for the purpose of finally resolving any dispute, controversy
     or claim  arising  out of or in  relation  to or in  connection  with  this
     Agreement or the  operations  carried out under this  Agreement,  including
     without  limitation  any  dispute  as  to  the  validity,   interpretation,
     enforceability  or  breach  of  this  Agreement.   Each  Party  irrevocably
     designates,  appoints and empowers the agent  specified below to receive on
     its behalf service of any and all process in any legal action or proceeding
     which may be  instituted  in the courts of  ___________,  _____________  in
     connection with any such dispute, controversy or claim:





     A Party's  submission  to the  jurisdiction  of the courts of  ___________,
     _____________ in accordance with the foregoing shall not limit the right of
     such Party to institute any legal action or proceeding for the  enforcement
     of any  order  or  judgment  of  such  courts  in any  other  court  having
     jurisdiction.

[X]     ALTERNATIVE  NO.  2  -  Arbitration

     (A) Any dispute,  controversy  or claim arising out of or in relation to or
     in connection with this Agreement or the operations  carried out under this
     Agreement,  including  without  limitation  any dispute as to the validity,
     interpretation,  enforceability  or  breach  of this  Agreement,  shall  be
     exclusively and finally  settled by  arbitration,  and any Party may submit
     such a dispute, controversy or claim to arbitration.

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1


<PAGE>
     (B) A single  arbitrator  shall be appointed  by  unanimous  consent of the
     Parties. If the Parties,  however,  cannot reach agreement on an arbitrator
     within  ________ (___) Days of the  submission of a notice of  arbitration,
     the appointing  authority for the implementation of such procedure shall be
     the  ______________,  who shall appoint an independent  arbitrator who does
     not have any financial  interest in the dispute,  controversy or claim.  If
     ___________  refuses  or fails to act as the  appointing  authority  within
     ninety  (90) Days  after  being  requested  to do so,  then the  appointing
     authority  shall  be   ____________,   who  shall  appoint  an  independent
     arbitrator  who  does  not  have any  financial  interest  in the  dispute,
     controversy or claim.

[ ]     ALTERNATIVE  NO.  2

     (B) The arbitration  shall be head and determined by three (3) arbitrators.
     Each side shall  appoint an arbitrator of its choice within ____ (___) Days
     of  the  submission  of  a  notice  of  arbitration.   The  Party-appointed
     arbitrators  shall in turn appoint a presiding  arbitrator  of the tribunal
     within _______ (___) Days following the appointment of both Party-appointed
     arbitrators. If the Party-appointed arbitrators cannot reach agreement on a
     presiding  arbitrator  of the tribunal  and/or one Party refuses to appoint
     its  Party-appointed  arbitrator within said _______ (___) Day period,  the
     appointing  authority for the implementation of such procedure shall be the
     INT. ARBIT.  BOARD,  Paris who shall appoint an independent  arbitrator who
     does not have any financial interest in the dispute,  controversy or claim.
     If ___________  refuses or fails to act as the appointing  authority within
     ninety  (90) Days  after  being  requested  to do so,  then the  appointing
     authority  shall be  _______________,  who  shall  appoint  an  independent
     arbitrator  who  does  not  have any  financial  interest  in the  dispute,
     controversy or claim. All decisions and awards by the arbitration  tribunal
     shall be made by majority vote.

     (C) Unless  otherwise  expressly  agreed in  writing by the  Parties to the
     arbitration proceedings:

          (1) The arbitration proceedings shall be held in London, England;

          (2) The  arbitration  proceedings  shall be  conducted  in the English
          language  and  the  arbitrator(s)  shall  be  fluent  in  the  English
          language;

          (3)  The  arbitrator(s)  shall  be  and  remain  at all  times  wholly
          independent and impartial;

          (4) The arbitration  proceedings shall be conducted in accordance with
          the Arbitration Rules of Paris,

Check  one  Alternative.

[ ]     ALTERNATIVE  NO.  1


<PAGE>
in  effect  on  the  Effective  Date.

[X]     ALTERNATIVE  NO.  2

as  amended  from  time  to  time.

          (5) Any  procedural  issues not  determined  under the arbitral  rules
          selected pursuant to Article 18.2(C)(4) shall be determined by the law
          of the place of  arbitration,  other than those laws which would refer
          the matter to another jurisdiction;

          (6) The costs of the  arbitration  proceedings  (including  attorneys'
          fees  and  costs)  shall  be borne  in the  manner  determined  by the
          arbitrator(s);

          (7)  The  decision  of  the  sole  arbitrator  or a  majority  of  the
          arbitrators,  as the case may be,  shall be reduced to writing;  final
          and binding without the right of appeal; the sole and exclusive remedy
          regarding any claims,  counterclaims,  issues or accountings presented
          to the arbitrator;  made and promptly paid in U.S. Dollars free of any
          deduction or offset;  and any costs or fees  incident to enforcing the
          award,  shall to the  maximum  extent  permitted  by law,  be  charged
          against the Party resisting such enforcement;

          (8)  Consequential,  punitive or other  similar  damages  shall not be
          allowed; provided, however, the award may include appropriate punitive
          damages where a Party has engaged in delaying and dilatory actions;

          (9) The award shall  include  interest  from the date of any breach or
          violation of this Agreement,  as determined by the arbitral award, and
          from the date of the award until paid in full, at the Agreed  Interest
          Rate;

          (10)  Judgment  upon the award  may be  entered  in any  court  having
          jurisdiction  over the  person or the  assets  of the Party  owing the
          judgment  or  application  may be made to such  court  for a  judicial
          acceptance of the award and an order of  enforcement,  as the case may
          be; and

          (11) Whenever the Parties are of more than one nationality, the single
          arbitrator or the presiding arbitrator,  as the case may be, shall not
          be of the same  nationality  as any of the  Parties or their  ultimate
          parent entities.

                                   ARTICLE XIX
                       ALLOCATION OF COST RECOVERY RIGHTS

19.1     Allocation  of  Total  Production
 
<PAGE>

For  the  purposes  of  recovery  of  Petroleum  Costs,  the  total  quantity of
Hydrocarbons  which  are  produced  and  saved  from all Exploitation Areas in a
Calendar  Quarter and to which the Parties are entitled under the Contract shall
be  designated  as  either Cost Oil or Profit Oil.  Such Cost Oil and Profit Oil
shall  be  allocated  among  the  Exploitation  Areas  in  proportion  to  each
Exploitation  Area's  total  quantity of Hydrocarbons produced and saved in such
Calendar  Quarter  with  adjustments in quantities to reflect the differences in
value  if  different qualities of Hydrocarbons are produced, segregated and sold
separately.

19.2     Allocation  of  Cost  Oil

Cost  Oil  allocated to each Exploitation Area pursuant to Article 19.1 shall be
allocated  to  the  Parties  in  proportion  to  their  respective Participating
Interests  in  each  such Exploitation Area to the extent required to recover in
the sequence incurred all Petroleum Costs which are specifically attributable to
each  such Exploitation Area and which are recoverable in such Calendar Quarter.

19.3     Allocation  of  Profit  Oil

Profit Oil allocated to each Exploitation Area pursuant to Article 19.1, if any,
shall  be  allocated  among  the  Parties  in  proportion  to  their  respective
Participating  Interests  in  each  such  Exploitation  Area.

19.4     Allocation  of  Excess  Cost  Oil

Subject  to the Contract, to the extent that the value, determined in accordance
with  Article  9.2(H),  of  the  Cost  Oil  allocated  to each Exploitation Area
pursuant  to  Article  19.1  exceeds the Petroleum Costs which were specifically
attributable to each such Exploitation Area and which were recovered pursuant to
Article  19.2,  the  excess  ("Excess  Cost Oil") shall be allocated as follows:

     (A) First, a percentage  (equal to the percentage of Profit Oil, if any, to
     which the Parties would have been entitled during such Calendar  Quarter if
     the Contract  applied  separately  to each such  Exploitation  Area) of the
     Excess Cost Oil shall be allocated among the Parties in proportion to their
     respective Participating Interests in each such Exploitation Area;

     (B) Second,  the Excess Cost Oil that is not allocated  pursuant to Article
     19.4(A)  shall be  allocated  among  the  Parties  in  proportion  to their
     respective Participating Interests as set out in Article 3.1(A) in order to
     recover in the sequence incurred any Petroleum Costs which were incurred in
     the conduct of Joint  Operations and which are recoverable in such Calendar
     Quarter; and


<PAGE>
     (C) Third,  the Excess Cost Oil that is not  allocated  pursuant to Article
     19.4(A)  or  Article  19.4(B)  shall be  allocated  among  the  Parties  in
     proportion to their  respective  Participating  Interests in each Exclusive
     Operation in order to recover in the sequence  incurred any Petroleum Costs
     which were  incurred in the conduct of Exclusive  Operations  and which are
     recoverable in such Calendar Quarter.

                                   ARTICLE XX
                               GENERAL PROVISIONS

20.1     Conflicts  of  Interest

     (A) Each Party  undertakes  that it shall  avoid any  conflict  of interest
     between its own interests  (including the interests of Affiliates)  and the
     interests of the other Parties in dealing with suppliers, customers and all
     other organizations or individuals doing or seeking to do business with the
     Parties in connection with activities contemplated under this Agreement.

     (B) The provisions of the preceding paragraph shall not apply to:

          (1) A  Party's  performance  which is in  accordance  with  the  local
          preference laws or policies of the host government; or

          (2) A Party's  acquisition  of products or services from an Affiliate,
          or the sale thereof to an Affiliate, made in accordance with rules and
          procedures established by the Operating Committee.

20.2     Public  Announcements

     (A) Operator shall be responsible  for the  preparation  and release of all
     public  announcements and statements  regarding this Agreement or the Joint
     Operations;  provided that, no public  announcement  or statement  shall be
     issued  or made  unless  prior to its  release  all the  Parties  have been
     furnished with a copy of such statement or announcement and the approval of
     at least two (2)  non-affiliated  Parties  holding fifty percent (50%),  or
     more,  of the  Participating  Interests has been  obtained.  Where a public
     announcement or statement  becomes necessary or desirable because of danger
     to or loss of  life,  damage  to  property  or  pollution  as a  result  of
     activities  arising under this  Agreement,  Operator is authorized to issue
     and make such  announcement  or  statement  without  prior  approval of the
     Parties,  but shall  promptly  furnish all the Parties  with a copy of such
     announcement or statement.


<PAGE>
     (B) If a Party wishes to issue or make any public announcement or statement
     regarding this Agreement or the Joint Operations, it shall not do so unless
     prior to its release,  such Party  furnishes all the Parties with a copy of
     such  announcement  or statement,  and obtains the approval of at least two
     (2)  non-affiliated  Parties  holding  fifty  percent  (50%) or more of the
     Participating  Interests;  provided  that,  notwithstanding  any failure to
     obtain such approval,  no Party shall be prohibited  from issuing or making
     any such public  announcement  or  statement if it is necessary to do so in
     order to comply  with the  applicable  laws,  rules or  regulations  of any
     government,  legal  proceedings or stock exchange having  jurisdiction over
     such Party as set forth in Articles 15.1(A)(3) and (7).

20.3     Successors  and  Assigns

Subject  to the limitations on transfer contained in Article XII, this Agreement
shall  inure to the benefit of and be binding upon the successors and assigns of
the  Parties.

20.4     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.

20.5     Severance  of  Invalid  Provisions

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 only so
far as shall be necessary to give effect to the construction of such invalidity,
and  any  such  invalid  provision  shall  be deemed severed from this Agreement
without  affecting  the  validity  of  the  balance  of  this  Agreement.

20.6     Modifications

Except  as  is  provided in Article 20.5, there shall be no modification of this
Agreement  except  by  written  consent  of  all  Parties.

20.7     Headings

The  topical  headings used in this Agreement are for convenience only and shall
not  be  construed  as having any substantive significance or as indicating that
all of the provisions of this Agreement relating to any topic are to be bound in
any  particular  Article.

20.8     Singular  and  Plural

Reference  to  the  singular  includes a reference to the plural and vice versa.

20.9     Gender

Reference  to  any  gender  includes  a  reference  to  all  other  genders.

20.10     Counterpart  Execution
1.1     
<PAGE>

This  Agreement  may  be  executed  in  any number of 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.  For  purposes of assembling all counterparts into one
document,  Operator  is authorized to detach the signature page from one or more
counterparts  and,  after signature thereof by the respective Party, attach each
signed  signature  page  to  a  counterpart.

20.11     Entirety

This  Agreement  is the entire agreement of the Parties and supersedes all prior
understandings  and negotiations of the Parties. WITH THE EXCEPTION OF AGREEMENT
#  MARCH  8,  1992  AND  AMENDED  ON  FEBRUARY  25/93.
------------------                    ---------------


<PAGE>
IN  WITNESS  of  their  agreement  each  Party  has  caused  its duly authorized
representative  to  sign  this  instrument  on  the  date  indicated  below such
representative's  signature.

YINKA  FOLAWIYO  PETROLEUM  COMPANY  LIMITED
--------------------------------------------
     (Company  Name)


By:     /S/  Tunde  Folawiyo
        --------------------
        T.B.  Folawiyo
        --------------
        (Print or Type name)
Title:  Executive  Director
        -------------------
Date:   March  13,  1992
        ----------------


LIBERTY  TECHNICAL  SERVICES  LIMITED
-------------------------------------
        (Company  Name)

By:     /s/  Wade  Cherwayko
        --------------------
        W.G.  Cherwayko
        ---------------
        (Print or Type name)
Title:  President
        ---------
Date:   March  13,  1992
        ----------------



        (Company  Name)

By:

        (Print or Type name)
Title:
Date:



        (Company  Name)

By:

        (Print or Type name)
Title:
Date:

<PAGE>