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EXHIBIT 10.3


March 12, 1997

Territorial Resources Inc.
Suite 1345
734 - 7th Avenue S.W.
Calgary, Alberta T2P 3P8

Attention:  Dan Mercier

RE:  LETTER OF ENGAGEMENT FOR PUBLIC OFFERING

     McDermid St. Lawrence Securities Ltd. ("McDermid") understands that
Territorial Resource, Inc. (the "Corporation") is contemplating a public
offering of its securities.  McDermid further understands that the Corporation
will issue 1,500,000 unites (the "Units") at $1.00 per Unit, each Unit to be
comprise of one common share ("Share") of the Corporation and one warrant
("Warrant"), each whole Warrant will entitle the holder thereof to purchase one
Share for $1.50 until one year from the closing, pursuant to a prospectus in
accordance with the terms in Appendix A (the "Financing").  It is also
understood that the Corporation wishes to retain McDermid as exclusive agent for
the Financing.

     This letter sets out the terms and conditions of the engagement (the
"Engagement Letter") between the Corporation and McDermid in respect of the
Financing.

1.  SERVICES

     On the terms and conditions set forth in this Engagement Letter.

       a) EXCLUSIVE AGENT:  McDermid is appointed as exclusive agent for the
          Corporation from the date hereof to the completion of the Financing to
          solicit subscriptions for the sale of the Units on a reasonable best
          efforts basis;

       b) SHARE ISSUANCES:  Except as contemplated pursuant to this Engagement
          Letter, the Corporation will not issue nor announce the issuance of
          any shares or other securities of the Corporation (excepting stock
          options or Shares issued upon the exercise of stock options issued
          under a Stock Option Plan in accordance with the rules of the
          applicable stock exchange) prior to the closing of the Financing, or
          for a period of six months following the completion of the Financing,
          without the prior written consent of McDermid;
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       c) SELLING GROUP:  McDermid reserves the right to form a selling group
          of securities dealers to assist in the sale of the Units on a
          reasonable best efforts basis;

       d) AGENCY AGREEMENT:  The Corporation and McDermid will enter into a
          formal agency agreement as soon as practicable and in any event not
          later than the date of the filing of the (final) prospectus (the
          "Agency Agreement").  The Agency Agreement shall be the customary form
          of Agency Agreement for an equity issue of this nature and shall
          contain the usual representations and warranties, conditions,
          indemnity clauses and "market out" clauses;

       e) PRIORITY OF AGENCY AGREEMENT:  The provisions of this Engagement
          Letter, with respect to the Financing, shall be superseded in its
          entirety by the execution of the Agency Agreement;

       f) CLEARANCE BY PROSPECTUS:  The Units and the Shares and Warrants
          comprising the Units to be issued and delivered pursuant to the
          Financing will be qualified by way of a prospectus to be filed by the
          Corporation in the Province of Alberta;

       g) CLOSING:  Closing of the Financing shall take place as soon as
          possible but in any event, no later than April 30th, 1997, unless
          specifically extended in writing by the parties hereto;

       h) LISTING:  The Shares and Warrants comprising the Units and the
          Agent's Option (as defined below) shall be listed for trading on The
          Alberta Stock Exchange.

2.  COMPENSATION

     At the closing of the Financing, in consideration for the services provided
by McDermid, the Corporation agrees to pay (or issue) to McDermid:

       a) MARKETING COMMISSION:  a marketing commission at the rate of 8% of
          the gross proceeds of the Financing;

       b) AGENT'S OPTION:  an agent's option to be qualified by way of
          prospectus (the "Agent's Option") for the purchase of that number of
          Units equal to (10%) of the Units subscribed for under the Financing,
          exercisable at $1.00 per Unit, for a period of twenty-four (24) months
          from the closing of the Financing; and

       c) EXPENSES:  all reasonable expenses, of or incidental to the issue of
          Units, incurred by McDermid, including the legal fees and
          disbursements of counsel, travel expenses, and all other third party

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          expenses plus goods and services tax (the "Expenses").  The
          Corporation shall provide a retainer in the amount of $10,000.00
          towards the Expenses at the time of execution of this Engagement
          Letter and the Corporation shall pay the balance of all outstanding
          Expenses in excess of the retainer at the closing of the Financing.
          The provisions of this Section 2(c) shall survive the completion of
          professional services rendered under this Engagement Letter or any
          termination of this Engagement Letter.

3.  DUE DILIGENCE AND TERMINATION

      a)  DUE DILIGENCE:  McDermid's obligation to complete the Financing will
          be subject to the satisfactory completion of its due diligence of the
          Corporation, and the Corporation agrees to provide McDermid with
          access to such information and persons as McDermid may reasonably
          request in order to complete its due diligence;

      b)  TERMINATION:  McDermid may at any time prior to the closing of the
          Financing, by Notice in writing to the Corporation, withdraw from the
          Financing if;

      i)  the financial statements of the Corporation to be included in the
          preliminary prospectus or prospectus reveal a material adverse change
          in the financial condition of the Corporation from that as is
          understanding as at the date hereof;

      ii) a material adverse change occurs or is likely to occur in the
          business, affairs or capital of the Corporation;

     iii) there is a material change in the share ownership of the
          Corporation;

      iv) the state of financial markets becomes such that, in the opinion of
          McDermid it would be impractical or not profitable to offer or to
          continue to offer the Units for sale to the public; or

      v)  all regulatory approvals are not obtained on a timely basis or any
          securities commission has issued or proposes to issue an order to
          prevent or restrict trading in the Units, Shares or Warrants;

      c)  TERMINATION:  The Corporation may at any time prior to the closing of
          the Financing, by notice in writing to McDermid terminate the
          Financing by reimbursing McDermid for out of pocket legal expenses
          incurred plus a termination fee of $25,000.

4.  TERM

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     Unless otherwise terminated by McDermid, this Engagement Letter shall
continue in force for a period from the date of execution of this Engagement
Letter until APRIL 30, 1997, unless specifically extended in writing by the
parties hereto.

5.  INDEMNITY

     It is hereby agreed that the Corporation will indemnify and hold harmless
McDermid and its directors, officers, employees and sub-agents (each being
"Indemnified Parties") from and against any and all losses, costs, claims,
damages and expenses or liabilities to which such Indemnified Parties become
subject or which such Indemnified parties suffer to the extent related to,
caused by or arising out of performance by the Indemnified parties of the
services contemplated by this Engagement Letter, including without limitation,
any expenses incurred in connection with the investigation of, preparation for
or defence of any pending or threatened claim or any action or proceeding
arising therefrom.  Notwithstanding the foregoing, the Indemnified parties shall
not be indemnified hereunder to the extend that any liability results from the
gross negligence of, or wilful misconduct of any Indemnified Parties.  The
Forgoing provisions shall survive the completion of professional services
rendered under the Engagement Letter or any termination of this Engagement
Letter.

6.  MATERIAL CHANGE

     In the event of a material change in the business affairs of the
Corporation, McDermid agrees to renegotiate the terms of the warrant exercise.

7.  FUTURE FINANCINGS

     The Corporation grants to McDermid a right of first refusal to act as agent
or underwriter in those jurisdictions in which McDermid is authorized to act on
future financings (Public or Private) for a period of twelve (12) months from
the date of closing of this issue.  On notification of such future financing,
McDermid shall indicate the willingness to exercise this right of first refusal
within ten (10) business days.  In the event that McDermid does not elect to
accept any agency or underwriter relationship for that financing, the
Corporation is free to negotiate with any other securities firm or agent for
that issue.  This right of first refusal does not apply to private placement
financings whereby the placees are relying on the applicable close friends or
business associates for the promoter exemption.

8.  GOVERNING LAW

     The agreement confirmed by this Engagement Letter is to be governed by and
construed in accordance with the laws of the Province of Alberta.

     This offer to act as agent in respect of the Financing is open for
acceptance by the Company until 4:00 p.m. (Calgary, time), March 12, 1997,
unless otherwise withdrawn or extended by McDermid.

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If the foregoing is acceptable, please indicate the agreement of the Corporation
to the above terms and conditions by signing both copies of this Engagement
Letter in the space provided below and returning one fully executed copy to us.

                                     Sincerely yours,

                                     MCDERMID ST. LAWRENCE SECURITIES LTD.

                                     Per:  /s/ Ian S. Brown
                                           Ian S. Brown

ACCEPTED AND AGREED TO this
12 day of March, 1997.

TERRITORIAL RESOURCES INC.

Per:  /s/ Dan Mercier
     Dan Mercier

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                            APPENDIX A - TERM SHEET
                         $1,500,000 Public Offering of
                           TERRITORIAL RESOURCES INC.
                                        
March 12, 1997

ISSUER:               Territorial Resources Inc. (the "Corporation")

ISSUE:                Units issued from treasury, each unit to be comprised of
                      one common share and one warrant, each whole warrant will
                      entitle the holder thereof to purchase one Share for $1.50
                      until one year from the closing.

Gross Proceeds:       $1,500,000.

Size:                 1,500,000 units.

Price to Public:      $1.00 per unit

Exclusive Agent:      McDermid St. Lawrence Securities Ltd.  ("McDermid")

Agent's Commission:   8% on the gross proceeds of the Financing.

Agent's Option:       The Agent shall be granted at closing a non-transferable
                      agent's option entitling McDermid to acquire that number
                      of Units equal to 10% of the Units sold pursuant to the
                      Financing, at an exercise price $1.00 exercisable for up
                      to twenty-four (24) months from the closing date.

Type of Transaction:  Reasonable "best efforts" agency basis, subject to a
                      formal agency agreement.

Jurisdiction:         Offered in Canada to residents of Alberta.

Expenses:             The Corporation will pay all out-of-pocket expenses
                      including agent's legal counsel fees and disbursements
                      plus goods and services tax.

Right of First Refusal:  McDermid shall have the right of first refusal to act
                      as agent or underwriter for twelve (12) months from the
                      close of the issue with respect to all types or forms of
                      financings, except for private placements, whereby the
                      placees are relying on the applicable close friends or
                      using associates of the promoter exemption.

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