<PAGE>

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                            KELLEY OIL & GAS CORPORATION,
                                       COMPANY


                                VARIOUS SUBSIDIARIES,
                                      GUARANTORS


                                         AND


                              THE CHASE MANHATTAN BANK,
                                       TRUSTEE



                            ------------------------------



                                 FIRST SUPPLEMENT TO
                                      INDENTURE



                             DATED AS OF OCTOBER 28, 1996


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                             13 1/2% SENIOR NOTES DUE 1999


<PAGE>

                            TABLE OF CONTENTS


                                                                 Page
                                                                 ----
    ARTICLE 1
    INCORPORATION OF INDENTURE; DEFINITIONS. . . . . . . . . .   2
    1.1  INCORPORATION OF INDENTURE. . . . . . . . . . . . . .   2
    1.2  DEFINITIONS . . . . . . . . . . . . . . . . . . . . .   2

    ARTICLE 2
    AMENDING AND MODIFYING PROVISIONS. . . . . . . . . . . . .   2
    
    2.1  EFFECTIVENESS OF AMENDMENTS TO THE INDENTURE. . . . .   2
    2.2  AMENDMENTS TO DEFINITIONS . . . . . . . . . . . . . .   2
    2.3  AMENDMENTS AND MODIFICATIONS TO ARTICLE 4 . . . . . .   6
    2.4  AMENDMENTS AND MODIFICATIONS TO ARTICLE SIX . . . . .   7
    2.5  AMENDMENTS TO CERTAIN CROSS-REFERENCES. . . . . . . .   8
    2.6  AMENDMENTS TO EXHIBIT A:  FORM OF SECURITY. . . . . .   9

    ARTICLE 3
    MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .  10
    3.1  FULL FORCE AND EFFECT . . . . . . . . . . . . . . . .  10
    3.2  MULTIPLE COUNTERPARTS . . . . . . . . . . . . . . . .  10
    3.3  HEADINGS FOR CONVENIENCE ONLY . . . . . . . . . . . .  10
    3.4  GOVERNING LAW . . . . . . . . . . . . . . . . . . . .  10
    3.5  The Trustee . . . . . . . . . . . . . . . . . . . . .  10


EXHIBIT A     Form of Security . . . . . . . . . . . . . . . . A-1


                                       -i-


<PAGE>

                            FIRST SUPPLEMENT TO INDENTURE


    This First Supplement to Indenture (this "First Supplement") is dated and,
subject to the terms hereof, effective as of October 28, 1996, and is by and
between KELLEY OIL & GAS CORPORATION, a Delaware corporation (hereinafter
referred to as the "Corporation", which term includes any successor corporation
permitted under the Indenture), the GUARANTORS listed as  signatories hereto and
THE CHASE MANHATTAN BANK, a New York banking corporation (formerly known as
Chemical Bank) ("Chase"), as trustee (in such capacity, and together with any
successor to the trust granted under the Indenture, herein referred to as the
"Trustee").

                                W I T N E S S E T H:

    WHEREAS, the Company and the Guarantors have heretofore entered into an
Indenture dated as of June 15, 1995, with the Trustee (hereinafter called the
"Indenture"), under which there was issued $100,000,000 principal amount of the
Company's 13 % Senior Notes Due 1999 (hereinafter called the "Notes");

    WHEREAS, Notes in the aggregate principal amount of $100,000,000 are
outstanding as of the date of execution hereof;

    WHEREAS, the Company, pursuant to an Offer to Purchase and Consent
Solicitation dated September 24, 1996, as amended (the "Offer/Solicitation"),
offered to purchase for cash (the "Tender Offer"), upon the terms and subject to
the conditions set forth in the Offer/Solicitation, any and all of the Notes at
a cash price equal to $1,110 per $1,000 principal amount, plus accrued and
unpaid interest through the payment date (the "Tender Offer Consideration"), and
solicited consents from Holders of the Notes to certain proposed amendments (the
"Proposed Amendments") to the Indenture and offered to pay to each Holder of
Notes validly consenting to the Proposed Amendments prior to 5:00 p.m., New York
City time on October 9, 1996, $30 for each $1,000 principal amount of Notes so
validly consenting (the "Consent Payments");

    WHEREAS, it is the desire of the Company and the Holders of not less than a
majority in aggregate principal amount of the Notes to make certain changes in
the provisions of the Indenture by amending the Indenture to reflect the
Proposed Amendments, which changes have been approved by a resolution of the
respective board of directors of the Company and of Kelley Oil Corporation and
by the written consent, filed with the Trustee, of the Holders of not less than
a majority in aggregate principal amount of the Notes outstanding;

    WHEREAS, there has been filed with the Trustee the certificate and opinion
of counsel required by section 9.05 of the Indenture; and

    WHEREAS, all the requirements of law and the by-laws and Certificates of
Incorporation of the Company have been fully complied with and all other acts
and things necessary to make this Supplemental Indenture a valid, binding and
legal instrument for the benefit of the Holders of the Notes have been done and
performed;


<PAGE>

    NOW, THEREFORE, in consideration of the premises herein contained, and for
other valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the Corporation, the Guarantors and the Trustee have joined in the
execution and delivery of this First Supplement.


                                   ARTICLE 1
                   INCORPORATION OF INDENTURE; DEFINITIONS
                                           
    1.1  INCORPORATION OF INDENTURE.  This First Supplement constitutes a 
supplement to the Indenture, and the Indenture and this First Supplement 
shall be read together and shall have effect so far as practicable as though 
all of the provisions thereof and hereof are contained in one instrument.

    1.2  DEFINITIONS.  All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings assigned to such terms in the
Indenture.


                                    ARTICLE 2
                       AMENDING AND MODIFYING PROVISIONS

    2.1  EFFECTIVENESS OF AMENDMENTS TO THE INDENTURE.  Notwithstanding anything
contained herein to the contrary, the amendments and modifications to the
Indenture contained in Sections 2.2, 2.3 and 2.4 hereof shall not become
operative until the delivery to the Trustee of an Officer's Certificate of the
Company certifying as to the Company's payment of, or deposit with the
Depositary under the Offer/Solicitation of an amount of money sufficient to pay,
the Tender Offer Consideration and the Consent Payments.

    2.2  AMENDMENTS TO DEFINITIONS.  (a)  Section 1.01 of the Indenture is
amended by deleting in their entirety the following definitions:  "Attributable
Indebtedness", "Change of Control", "Dollar Equivalent", "ESOP Preferred Stock",
"Net Cash Proceeds", "Oil and Gas Liens", "Permitted Convertible Exchangeable
Preferred Stock Dividends" and "Senior Indebtedness"

    (b)  The definitions of each of "Bank Credit Facilities",  "Capital Lease
Obligation", "Lien", "Permitted Indebtedness" and "Permitted Investment"
contained in Section 1.01 of the Indenture are amended and restated in their
entirety to read as follows:

         "    "BANK CREDIT FACILITIES" means, with respect to any Person, one
         or more revolving or term debt facilities or commercial paper
         facilities with banks or other institutional lenders, whether or not
         in effect on the date of this Indenture, providing for revolving
         credit loans, term loans, receivables financing (including through the
         sale of receivables to the lenders or to special purpose entities

                                       -2-


<PAGE>

         formed to borrow from the lenders against those receivables) or
         letters of credit."

         "    "CAPITAL LEASE OBLIGATION" of any Person means the obligation to
         pay rent or other payment amounts under a lease of (or other
         arrangement conveying the right to use) real or personal property that
         is required to be classified and accounted for as a capitalized lease
         or a liability on the face of a balance sheet of such Person in
         accordance with GAAP, to the extent required pursuant to GAAP."

         "    "LIEN" means, with respect to any Property, any mortgage or deed
         of trust, pledge, hypothecation, assignment, deposit arrangement,
         security interest, lien (statutory or other), charge, easement,
         encumbrance, preference, priority or other security or similar
         agreement or preferential arrangement of any kind or nature whatsoever
         on or with respect to such Property (including, without limitation,
         any conditional sale or other title retention agreement having
         substantially the same economic effect as any of the foregoing)."

         "    "PERMITTED INDEBTEDNESS" means any and all of the following:
         (a) Indebtedness Incurred if, after giving pro forma effect to the
         Incurrence of such Indebtedness and the receipt and application of the
         proceeds thereof, (i) the Consolidated Interest Coverage Ratio would
         not be less than 2.5 to 1.0 and (ii) the ratio of CNTA to Indebtedness
         would not be less than 1.50 to 1.00; (b) Indebtedness under Bank
         Credit Facilities but only to the extent that the aggregate principal
         amount thereof equals or is less than the greater of (i) $30 million
         and (ii) 12.5% of CNTA; (c) Capital Expenditure Indebtedness but only
         to the extent that (A) commencing January 1, 1996, such Capital
         Expenditure Indebtedness is Incurred during a calendar year in which
         the aggregate amount of estimated proved reserves of the Company and
         its Subsidiaries as reflected in the most recent reserve report dated
         not earlier than December 31 of the immediately preceding calendar
         year, together with the aggregate amount of estimated proved reserves
         of the Company and its Subsidiaries that were the subject of one or
         more Asset Sales after the date of this Indenture (in each case,
         determined on the basis of audited reserve reports), exceeds the
         aggregate amount of estimated proved reserves of the Company and its
         Subsidiaries as of January 1, 1995, and (B) the aggregate principal
         amount of all Capital Expenditure Indebtedness incurred under this
         clause (c) during 1995 or any calendar year thereafter does not exceed

                                        -3-


<PAGE>

         $5 million plus, with respect to calendar years subsequent to 1995,
         the aggregate amount of all Capital Expenditure Indebtedness that
         would have constituted Capital Expenditure Indebtedness permitted
         under this clause (c) during any prior calendar year beginning in 1995
         but that was not Incurred during such prior calendar year or any
         subsequent calendar year preceding the calendar year in which the
         determination is being made; (d) Indebtedness outstanding on the date
         of this Indenture; (e) Indebtedness of (i) the Company evidenced by
         the Securities and (ii) the Guarantors evidenced by the Subsidiary
         Guarantees; (f) Indebtedness in connection with one or more standby
         letters of credit, Guarantees or performance bonds issued in the
         ordinary course of business and not in connection with the borrowing
         of money or the obtaining of advances or credit (other than advances
         or credit on open account, includable in current liabilities, for
         goods and services in the ordinary course of business and on terms and
         conditions which are customary in the Oil and Gas Business and other
         than the extension of credit represented by such letter of credit,
         Guarantee or performance bond itself), PROVIDED that the aggregate
         face amount of all such standby letters of credit and performance
         bonds, together with the aggregate principal amount of all
         Indebtedness covered by such Guarantees, at any time outstanding shall
         not exceed $2.5 million; (g) Indebtedness under (i) Interest Rate
         Protection Agreements, PROVIDED that the obligations under such
         agreements are related to payment obligations on Indebtedness
         otherwise permitted by the terms of this covenant, and (ii) Oil and
         Gas Purchase and Sales Contracts; (h) Indebtedness of the Company owed
         to any of its Wholly Owned Subsidiaries and Indebtedness of any
         Subsidiary of the Company owed to the Company or a Wholly Owned
         Subsidiary of the Company; (i) Indebtedness Incurred in exchange for,
         or the proceeds of which are used to refinance, Indebtedness referred
         to in the immediately preceding clauses (a) through (h) or
         Indebtedness previously Incurred pursuant to this clause (i), PROVIDED
         that the Indebtedness so Incurred (i) is in an aggregate principal
         amount not in excess of the aggregate principal amount then
         outstanding of the Indebtedness being exchanged or refinanced (or, if
         such Indebtedness being refinanced provides for an amount less than
         the principal amount thereof to be due and payable upon a declaration
         of acceleration thereof, such lesser amount as of the date of
         determination), plus the amount of expenses reasonably incurred by the
         Company in connection with such refinancing, (ii) has a Stated
         Maturity no earlier than the 

                                        -4-


<PAGE>

         Stated Maturity of the Indebtedness being exchanged or refinanced, 
         (iii) has an Average Life at the time it is Incurred that is equal 
         to or greater than the Average Life of the Indebtedness being 
         exchanged or refinanced and (iv) is subordinated in right of 
         payment to the Securities to at least the same extent, if any, as 
         the Indebtedness being exchanged or refinanced; and (j) accounts 
         payable or other obligations of the Company or any of its 
         Subsidiaries to trade creditors created or assumed by such Persons 
         in the ordinary course of business in connection with the 
         obtaining of goods or services.  The Company may Incur 
         Indebtedness under a single debt facility or instrument in 
         reliance on two or more clauses within the definition of Permitted 
         Indebtedness."
         
         "    "PERMITTED INVESTMENT" means (a) Permitted Short-Term 
         Investments, (b) Investments in property, plant, equipment and 
         other assets used in the ordinary course of the Oil and Gas 
         Business and Permitted Business Investments, (c) negotiable 
         instruments held for collection, outstanding travel, moving and 
         other like advances to officers, employees and consultants, lease, 
         utility and other similar deposits, or stock, obligations or 
         securities received in settlement of debts owing to the Company as 
         a result of the foreclosure, perfection or enforcement of any Lien 
         or Indebtedness, in each of the forgoing cases in the ordinary 
         course of business of the Company, (d) the acquisition of Capital 
         Stock and Redeemable Stock of either of the Programs from the 
         holders thereof (other than the Company or any of its 
         Subsidiaries), (e) Investments in the form of securities received 
         from Asset Sales, (f) Incurring or advancing Permitted 
         Indebtedness and (g) Investments by the Company in the form of one 
         or more promissory notes issued to the Company by the Plan for the 
         purpose of financing purchases of common Capital Stock of the 
         Company otherwise issued in accordance with the terms of this 
         Indenture, PROVIDED that the aggregate outstanding principal 
         amount of all such promissory notes may not at any time exceed 
         $7.5 million." 

                                       -5-

<PAGE>

    (c)  Section 1.02 of the Indenture is amended and restated in its 
entirety to read as follows:

    "SECTION 1.02.  OTHER DEFINITIONS.

                                                                         Defined
                                                                           in
Term                                                                     Section
----                                                                     -------
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . .   6.01   
"covenant defeasance option" . . . . . . . . . . . . . . . . . . . . .   8.01(b)
"Custodian". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6.01   
"DTC". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2.03   
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . .   6.01   
"legal defeasance option". . . . . . . . . . . . . . . . . . . . . . .   8.01(b)
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2.03   
"Registrar". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2.03   
"Surviving Entity" . . . . . . . . . . . . . . . . . . . . . . . . . .   5.01"  

    2.3  AMENDMENTS AND MODIFICATIONS TO ARTICLE 4.  Article 4 of the 
Indenture is amended and restated in its entirety to read as follows:
                                       
                                  "ARTICLE 4
                                   COVENANTS

         SECTION 4.01.  PAYMENT OF SECURITIES.  The Company shall promptly pay
    the principal of and interest on the Securities on the dates and in the
    manner provided in the Securities and in this Indenture.  Principal and
    interest shall be considered paid on the date due if on such date the
    Trustee or the Paying Agent holds in accordance with this Indenture money
    sufficient to pay all principal and interest then due and the Trustee or
    the Paying Agent, as the case may be, is not prohibited from paying such
    money to the Securityholders on that date pursuant to the terms of this
    Indenture.

         The Company shall pay interest on overdue principal at the rate
    specified therefor in the Securities, and it shall pay interest on overdue
    installments of interest at the same rate to the extent lawful.

         SECTION 4.02.  SEC REPORTS.  The Company shall file with the Trustee
    and provide Securityholders, within 30 days after it files them with the
    SEC, copies of its annual report and the information, documents and other
    reports which the Company is required to file with the SEC pursuant to
    Section 13 or 15(d) of the Exchange Act.  Notwithstanding that the Company
    may not be required to remain subject to the reporting requirements of
    Section 13 or 15(d) of the

                                     -6-

<PAGE>

    Exchange Act, the Company shall continue to file with the SEC and provide
    the Trustee and Securityholders with the annual reports and the information,
    documents and other reports which are specified in Sections 13 and 15(d)
    of the Exchange Act.  The Company also shall comply with the other
    provisions of TIA Section 314(a).

         SECTION 4.03.  COMPLIANCE CERTIFICATE.  The Company shall deliver to
    the Trustee within 120 days after the end of each fiscal year of the
    Company an Officers' Certificate stating that in the course of the
    performance by the signers of their duties as Officers of the Company they
    would normally have knowledge of any Default and whether or not the signers
    know of any Default that occurred during such period.  If they do, the
    certificate shall describe the Default, its status and what action the
    Company is taking or proposes to take with respect thereto.  The Company
    also shall comply with TIA Section 314(a)(4).

         SECTION 4.04.  FURTHER INSTRUMENTS AND ACTS.  Upon request of the
    Trustee, the Company will execute and deliver such further instruments and
    do such further acts as may be reasonably necessary or proper to carry out
    more effectively the purpose of this Indenture.

         SECTION 4.05.  LIMITATION ON CONDUCT OF BUSINESS.  The Company and its
    Subsidiaries will be operated in a manner such that their business
    activities will be the Oil and Gas Business."

    2.4  AMENDMENTS AND MODIFICATIONS TO ARTICLE SIX.  Section 6.01 of the
Indenture is amended and restated in its entirety to read as follows:

         "SECTION 6.01.  EVENTS OF DEFAULT.  An "Event of Default" occurs if:

              (a)  the Company fails to make any payment of interest on any
         Security when the same becomes due and payable and such failure
         continues for a period of 30 days;

              (b)  the Company (i) fails to make any payment of the principal
         of (or premium, if any, on) any Security when the same becomes due and
         payable at its Stated Maturity, upon redemption, upon declaration or
         otherwise, or (ii) fails to redeem Securities when required pursuant
         to this Indenture or the Securities;

             (c)   the Company or any of its Subsidiaries pursuant to or within
         the meaning of any Bankruptcy Law:

                                     -7-

<PAGE>

                    (i) commences a voluntary case;

                   (ii) consents to the entry of an order for relief against it
             in an involuntary case;

                  (iii) consents to the appointment of a Custodian of it or
             for any substantial part of its property; or

                   (iv) makes a general assignment for the benefit of its
             creditors;

         or takes any comparable action under any foreign laws relating to
         insolvency; or

             (d)  a court of competent jurisdiction enters an order or decree
         under any Bankruptcy Law that:

                    (i) is for relief against the Company or any of its
             Subsidiaries in an involuntary case;

                   (ii) appoints a Custodian of the Company or any of its
             Subsidiaries or for any substantial part of its property; or

                  (iii) orders the winding up or liquidation of the Company or
             any Guarantor;

    or any similar relief is granted under any foreign laws and the order or
    decree remains unstayed and in effect for 60 days.

         The foregoing will constitute Events of Default whatever the reason
    for any such Event of Default and whether it is voluntary or involuntary or
    is effected by operation of law or pursuant to any judgment, decree or
    order of any court or any order, rule or regulation of any administrative
    or governmental body.

         The term "Bankruptcy Law" means Title 11, UNITED STATES CODE, or any
    similar Federal or state law for the relief of debtors.  The term
    "Custodian" means any receiver, trustee, assignee, liquidator, custodian or
    similar official under any Bankruptcy Law."

    2.5  AMENDMENTS TO CERTAIN CROSS-REFERENCES.  (a)  All cross-references
contained in the Indenture to Section 6.01(f) are hereby amended so that such
cross-references are to Section 6.01(c).

    (b)  All cross-references contained in the Indenture to Section 6.01(g) are
hereby amended so that such cross-references are to Section 6.01(d).

                                     -8-

<PAGE>

    (c)  Section 8.01(b) of the Indenture is hereby amended and restated in its
entirety to read as follows:

         "    (b)  Subject to Sections 8.01(c), 8.02 and 8.06, the Company at
         any time may terminate (i) all its obligations under the Securities
         and this Indenture ("legal defeasance option") or (ii) its obligations
         under Sections 4.04 and 4.05 and clauses (c) and (d) of Section 5.01
         ("covenant defeasance option").  The Company may exercise its legal
         defeasance option notwithstanding its prior exercise of its covenant
         defeasance option.

              Subject to Section 8.06, if the Company exercises its legal
         defeasance option, payment of the Securities may not be accelerated
         because of an Event of Default.  Subject to Section 8.06, if the
         Company exercises its covenant defeasance option, payment of the
         Securities may not be accelerated because of an Event of Default
         specified in Sections 6.01(c) or 6.01(d) (except to the extent
         covenants or agreements referenced in such Sections remain
         applicable).

              Upon satisfaction of the conditions set forth herein and upon
         request of the Company, the Trustee shall acknowledge in writing the
         discharge of those obligations that the Company terminates."

    (d)  Section 10.02(b) is hereby amended and restated in its entirety to
read as follows:

         "    (b)  In the event of a sale or other disposition of all or
         substantially all of the assets of any Guarantor, by way of merger,
         consolidation or otherwise, or a sale or other disposition of all of
         the Capital Stock of such Guarantor, then such Guarantor (in the event
         of a sale or other disposition, by way of such a merger, consolidation
         or otherwise, of all of the Capital Stock of such Guarantor) or the
         Person acquiring the property (in the event of a sale or other
         disposition of all or substantially all of the assets of such
         Guarantor) will be released and relieved of any obligations under its
         Subsidiary Guarantees."

    2.6  AMENDMENTS TO EXHIBIT A:  FORM OF SECURITY.  Exhibit A to the
Indenture, containing the Form of Security is hereby amended and restated in its
entirety as set forth on EXHIBIT A hereto.

                                     -9-

<PAGE>

                                   ARTICLE 3
                                 MISCELLANEOUS
                                           
    3.1  FULL FORCE AND EFFECT.  The Indenture, as supplemented by this First
Supplement, remains in full force and effect and is hereby ratified and
confirmed as the valid and binding obligation of the parties hereto.  Except as
expressly modified herein, all terms, provisions and conditions of the Indenture
will remain unchanged and are and shall remain in full force and effect for the
full term thereof, and this First Supplement shall be interpreted with the
Indenture as one and the same instrument.

    3.2  MULTIPLE COUNTERPARTS.  This First Supplement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.

    3.3  HEADINGS FOR CONVENIENCE ONLY.  The headings of the Sections of this
First Supplement are used for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.

    3.4  GOVERNING LAW.  This First Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to the applicable principles of conflicts of law to the extent
that the application of laws of another jurisdiction would be required thereby.

    3.5  THE TRUSTEE.  The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this First
Supplement or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Company and the Guarantors.


                        (SIGNATURES ON FOLLOWING PAGE)





                                     -10-

<PAGE>

    IN WITNESS WHEREOF, the parties hereto have caused this First Supplement to
be executed and delivered effective as of the date first mentioned hereinabove.



                                              KELLEY OIL & GAS CORPORATION


                                              By /s/ WILLIAM C. RANKIN
                                                 -----------------------------
                                              Name:  William C. Rankin
                                                    --------------------------
                                              Title:  Senior Vice President
                                                     -------------------------



                                              THE CHASE MANHATTAN BANK, as
                                              Trustee


                                              By /s/ ANDREW M. DECK
                                                 -----------------------------
                                                     Authorizing Signatory



                                              GUARANTORS:

                                              KELLEY OPERATING COMPANY, LTD.

                                              By:  Kelley Oil Corporation
                                                   Managing General Partner


                                              By /s/ WILLIAM C. RANKIN
                                                 -----------------------------
                                              Name:  William C. Rankin
                                                    --------------------------
                                              Title:  Senior Vice President
                                                     -------------------------



                                                 KELLEY OIL CORPORATION


                                                 By /s/ WILLIAM C. RANKIN
                                                    --------------------------
                                                 Name:  William C. Rankin
                                                       -----------------------
                                                 Title:  Senior Vice President
                                                        ----------------------

                                     -11-

<PAGE>

                                                                       EXHIBIT A
                                       
                         [FORM OF FACE OF SECURITY]

    Unless this certificate is presented by an authorized representative of 
The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), 
to the issuer or its agent for registration of transfer, exchange or payment, 
and any certificate issued is registered in the name of Cede & Co. or such 
other name as may be requested by an authorized representative of DTC (and 
any payment is made to Cede & Co. or such other entity as may be requested by 
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE 
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the 
registered owner hereof, Cede & Co., has an interest herein.(1)

                                                           CUSIP NO. 487906 AA 7

No.                                    $

                         13 1/2% Senior Notes Due 1999

    Kelley Oil & Gas Corporation, a Delaware corporation, promises to pay to  
                      , or registered assigns, the principal sum of           
    Dollars on June 15, 1999.

    Interest Payment Dates:  June 15 and December 15.

    Record Dates:  June 1 and December 1.

    Additional provisions of this Security are set forth on the other side of 
this Security.

Dated: 
       ------------------------

                                               KELLEY OIL & GAS CORPORATION


                                               By
                                                  -----------------------------
                                                           President


                                               --------------------------------
                                                           Secretary



---------------------------

(1) This paragraph should be included only if the Security is issued
in global form.

                                      A-1

<PAGE>

TRUSTEE'S CERTIFICATE OF
 AUTHENTICATION

THE CHASE MANHATTAN BANK,
 as Trustee, certifies that this
 is one of the Securities referred
 to in the Indenture.



By 
   -----------------------------
        Authorized Officer





                                      A-2

<PAGE>
                                       
                      [FORM OF REVERSE SIDE OF SECURITY]

                        13 1/2% Senior Notes Due 1999

1.   INTEREST

     Kelley Oil & Gas Corporation, a Delaware corporation (such corporation, 
and its successors and assigns under the Indenture hereinafter referred to, 
being herein called the "Company"), promises to pay interest on the principal 
amount of this Security at the rate per annum shown above.  The Company will 
pay interest semiannually on June 15 and December 15 of each year.  Interest 
on the Securities will accrue from the most recent date to which interest has 
been paid or, if no interest has been paid, from June 19, 1995.  Interest 
will be computed on the basis of a 360-day year of twelve 30-day months.  The 
Company shall pay interest on overdue principal at the rate borne by the 
Securities, and it shall pay interest on overdue installments of interest at 
the same rate to the extent lawful.

2.   METHOD OF PAYMENT

     The Company will pay interest on the Securities (except defaulted 
interest) to the Persons who are registered holders of Securities at the 
close of business on the June 1 or December 1 next preceding the interest 
payment date even if Securities are canceled after the record date and on or 
before the interest payment date.  Holders must surrender Securities to a 
Paying Agent to collect principal payments.  The Company will pay principal 
and interest in money of the United States of America that at the time of 
payment is legal tender for payment of public and private debts.  However, 
the Company may pay principal and interest by check payable in such money.  
It may mail an interest check to a Holder's registered address.

3.   PAYING AGENT AND REGISTRAR

     Initially, the Trustee will act as Paying Agent and Registrar.  The 
Company may appoint and change any Paying Agent or Registrar without notice.  
The Company or any of its domestically incorporated Wholly Owned Subsidiaries 
may act as Paying Agent or Registrar.

4.   INDENTURE

     The Company issued the Securities under an Indenture dated as of June 
15, 1995, as amended by the First Supplement thereto dated October 28, 1996 
(the "Indenture"), among the Company, the Guarantors and the Trustee.  The 
terms of the Securities include those stated in the Indenture and those made 
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 
U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the 
"Act").  Terms defined in the Indenture and not defined herein have the 
meanings ascribed thereto in the Indenture.  The Securities are subject to 
all such terms, and Securityholders are referred to the Indenture and the Act 
for a statement of those terms.

                                      A-3

<PAGE>
                                       
     The Securities are general unsecured obligations of the Company limited 
to $100,000,000 aggregate principal amount (subject to Section 2.07 of the 
Indenture).

5.   OPTIONAL REDEMPTION

     In the event the Company consummates one or more Equity Offerings before 
June 15, 1997, the Company may, at its option, prior to June 15, 1997, redeem 
up to $25 million of the aggregate principal amount of the Securities with 
all or a portion of the aggregate net proceeds to the Company from such 
Equity Offerings at a redemption price of 112% of the aggregate principal 
amount of the Securities so redeemed, plus accrued and unpaid interest due 
thereon to the date of redemption; PROVIDED, HOWEVER, that following any such 
redemption, at least $75 million in aggregate principal amount of the 
Securities remains outstanding.

6.   NOTICE OF REDEMPTION

     Notice of redemption will be mailed at least 30 days but not more than 
60 days before the redemption date to each Holder of Securities to be 
redeemed at his registered address.  Securities in denominations larger than 
$1,000 may be redeemed in part but only in whole multiples of $1,000.  If 
money sufficient to pay the redemption price of and accrued interest on all 
Securities (or portions thereof) to be redeemed on the redemption date is 
deposited with the Paying Agent on or before the redemption date and certain 
other conditions are satisfied, on and after such date interest ceases to 
accrue on such Securities (or such portions thereof) called for redemption.

7.   RANKING AND GUARANTEES.

     The Securities are general senior unsecured obligations of the Company. 
The Company's obligation to pay principal, premium, if any, and interest with 
respect to the Securities is unconditionally guaranteed on a senior basis, 
jointly and severally, by the Guarantors pursuant to Article 10 of the 
Indenture.  Certain limitations to the obligations of the Guarantors are set 
forth in further detail in the Indenture.

8.   DENOMINATIONS; TRANSFER; EXCHANGE

     The Securities are in registered form without coupons in denominations 
of $1,000 and whole multiples of $1,000.  A Holder may register the transfer 
of or exchange Securities in accordance with the Indenture.  The Registrar 
may require a Holder, among other things, to furnish appropriate endorsements 
or transfer documents and to pay any taxes and fees required by law or 
permitted by the Indenture.  The Registrar need not register the transfer of 
or exchange any Securities selected for redemption (except, in the case of a 
Security to be redeemed in part, the portion of the Security not to be 
redeemed) or any Securities for a period of 15 days before a selection of 
Securities to be redeemed or 15 days before an interest payment date.

                                      A-4

<PAGE>
                                       
9.   PERSONS DEEMED OWNERS

     The registered Holder of this Security may be treated as the owner of it 
for all purposes.

10.  UNCLAIMED MONEY

     If money for the payment of principal or interest remains unclaimed for 
two years, the Trustee or Paying Agent shall pay the money back to the 
Company at its request unless an abandoned property law designates another 
Person.  After any such payment, Holders entitled to the money must look only 
to the Company and not to the Trustee for payment.

11.  DISCHARGE AND DEFEASANCE

     Subject to certain conditions, the Company at any time may terminate 
some or all of its obligations under the Securities and the Indenture if the 
Company deposits with the Trustee money or U.S. Government Obligations for 
the payment of principal and interest on the Securities to redemption or 
maturity, as the case may be.

12.  AMENDMENT, WAIVER

     Subject to certain exceptions set forth in the Indenture, (i) the 
Indenture or the Securities may be amended with the written consent of the 
Holders of at least a majority in principal amount outstanding of the 
Securities and (ii) any default or noncompliance with any provision may be 
waived with the written consent of the Holders of a majority in principal 
amount outstanding of the Securities.  Subject to certain exceptions set 
forth in the Indenture, without the consent of any Securityholder, the 
Company and the Trustee may amend the Indenture or the Securities to cure any 
ambiguity, omission, defect or inconsistency, or to comply with Article 5 of 
the Indenture, or to provide for uncertificated Securities in addition to or 
in place of certificated Securities, or to add guarantees with respect to the 
Securities or release any guaranty to the extent permitted in the Indenture, 
or to secure the Securities, or to add additional covenants or surrender 
rights and powers conferred on the Company, or to comply with any request of 
the SEC in connection with qualifying the Indenture under the Act, or to make 
certain changes in the subordination provisions, or to make any change that 
does not adversely affect the rights of any Securityholder.

13.  DEFAULTS AND REMEDIES

     Under the Indenture, Events of Default include (i) default for 30 days 
in payment of interest on the Securities; (ii) default in payment of 
principal on the Securities at maturity, upon redemption pursuant to 
paragraph 5 of the Securities, upon acceleration or otherwise, or failure by 
the Company to redeem Securities when required; and (iii) certain events of 
bankruptcy or insolvency with respect to the Company and any Subsidiary.  If 
an Event of Default occurs and is continuing, the Trustee or the Holders of 
at least 25% in principal amount of

                                      A-5

<PAGE>
                                       
the Securities may declare all the Securities to be due and payable. Certain 
events of bankruptcy or insolvency are Events of Default which will result in 
the Securities being due and payable immediately upon the occurrence of such 
Events of Default.

     Securityholders may not enforce the Indenture or the Securities except 
as provided in the Indenture.  The Trustee may refuse to enforce the 
Indenture or the Securities unless it receives reasonable indemnity or 
security.  Subject to certain limitations, Holders of a majority in principal 
amount of the Securities may direct the Trustee in its exercise of any trust 
or power.  The Trustee may withhold from Securityholders notice of any 
continuing Default (except a Default in payment of principal or interest) if 
it determines that withholding notice is in the interest of the Holders.

14.  TRUSTEE DEALINGS WITH THE COMPANY

     Subject to certain limitations imposed by the Act,  the Trustee under 
the Indenture, in its individual or any other capacity, may become the owner 
or pledgee of Securities and may otherwise deal with and collect obligations 
owed to it by the Company or its Affiliates and may otherwise deal with the 
Company or its Affiliates with the same rights it would have if it were not 
Trustee.

15.  NO RECOURSE AGAINST OTHERS

     A director, officer, employee or stockholder, as such, of the Company, a 
Guarantor or the Trustee shall not have any liability for any obligations of 
the Company or the Guarantors under the Securities or the Indenture or for 
any claim based on, in respect of or by reason of such obligations or their 
creation.  By accepting a Security, each Securityholder waives and releases 
all such liability.  The waiver and release are part of the consideration for 
the issue of the Securities.

16.  AUTHENTICATION

     This Security shall not be valid until an authorized officer of the 
Trustee (or an authenticating agent) manually signs the certificate of 
authentication on the other side of this Security.

17.  ABBREVIATIONS

     Customary abbreviations may be used in the name of a Securityholder or 
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the 
entireties), JT TEN (=joint tenants with rights of survivorship and not as 
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors 
Act).

                                      A-6

<PAGE>
                                       
18.  CUSIP NUMBERS

     Pursuant to a recommendation promulgated by the Committee on Uniform 
Security Identification Procedures the Company has caused CUSIP numbers to be 
printed on the Securities and has directed the Trustee to use CUSIP numbers 
in notices of redemption as a convenience to Securityholders.  No 
representation is made as to the accuracy of such numbers either as printed 
on the Securities or as contained in any notice of redemption and reliance 
may be placed only on the other identification numbers placed thereon.

     THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND 
WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT 
THE TEXT OF THIS SECURITY IN LARGER TYPE.  REQUESTS MAY BE MADE TO:

                 Kelley Oil & Gas Corporation
                 601 Jefferson, Suite 1100
                 Houston, TX   77002
                 Attention of Chief Financial Officer





                                      A-7

<PAGE>
                                       
                                ASSIGNMENT FORM


    To assign this Security, fill in the form below:

    I or we assign and transfer this Security to


    (Print or type assignee's name, address and zip code)

    (Insert assignee's soc. sec. or tax I.D. No.)


and irrevocably appoint                           agent to transfer this 
Security on the books of the Company.  The agent may substitute another to 
act for him.


-------------------------------------------------------------------------------

Date:                    Your Signature:
      -----------------                  --------------------------------------

-------------------------------------------------------------------------------


Sign exactly as your name appears on the other side of this Security.





                                      A-8

<PAGE>
                                       
                SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY(2)


     The following exchanges of a part of this Global Security for Definitive 
Securities have been made:


<TABLE>
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
<S>                <C>                  <C>                  <C>                  <C>                  
                                                             Principal Amount
                   Amount of decrease   Amount of increase   of this Global       Signature of
                   in Principal         in Principal         Security following   authorized officer of
                   Amount of this       Amount of this       such decrease        Trustee or Security
Date of Exchange   Global Security      Global Security      (or increase)        Custodian
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</TABLE>





---------------------------
(2) This should be included only if the Security is issued in global form.

                                     A-9

<PAGE>

                                                                     EXHIBIT A-1

                                       
                         FORM OF NOTATION ON SECURITY
                            RELATING TO GUARANTEE


     The Guarantors (as defined in the Indenture), jointly and severally, 
have unconditionally guaranteed the due and punctual payment of the principal 
of, premium, if any, and interest on the Securities, and all other amounts 
due and payable under the Indenture and the Securities by the Company, 
whether at maturity, acceleration, redemption, repurchase or otherwise, 
including, without limitation, the due and punctual payment of interest on 
the overdue principal of, premium, if any, and interest on the Securities, to 
the extent lawful.

     The obligations of the Guarantors pursuant to the Subsidiary Guarantee 
are subject to the terms and limitations set forth in Article 10 of the 
Indenture, and reference is made thereto for the precise terms of the 
Subsidiary Guarantee.

                                               [NAME OF EACH GUARANTOR]



                                               By: 
                                                   ----------------------------
                                               Name:
                                                    ---------------------------
                                               Title: 
                                                      -------------------------





                                     A-10