<PAGE>
 
EXHIBIT 10.6

                            ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of May 30, 1997, among SOCO EXPLORATION (THAILAND) COMPANY LIMITED, a
juristic person organized and existing under the laws of Thailand ("SOCO
Exploration"), SOCO THAITEX, INC., a Delaware corporation ("SOCO Thaitex"),
TERRITORIAL RESOURCES (DELAWARE), INC., a Delaware corporation ("Territorial
Delaware"); and JIMMY M. MCCARROLL, a resident of Harris County, Texas
("McCarroll").  SOCO Exploration and SOCO Thaitex are sometimes together
referred to herein as "SOCO."

                                    RECITALS
                                        
A.  SOCO Exploration owns a 100% working interest in the Gulf of Thailand
Exploration Block No. B8/38 pursuant a Petroleum Concession No. 3/2539/50
awarded by the Ministry of Industry of the Government of Thailand (the "Block
B8/38 Concession"), subject to an obligation to assign to Malaysia Mining
Corporation Berhad, a corporation organized under the laws of Malaysia ("MMC"),
a 50% undivided working interest in the Block B8/38 Concession under certain
conditions pursuant to a Farmout Agreement, dated 6 December 1996 (the "MMC
Farmout Agreement"), by and among SOCO Exploration, SOCO Thaitex and MMC.  SOCO
Thaitex owns a 100% working interest the Gulf of Thailand Exploration Block No.
B4/32 pursuant to a Petroleum Concession No. 7/2534/42 awarded by the Ministry
of Industry of the Government of Thailand (the "Block B4/32 Concession"),
subject to an obligation to assign to MMC a 50% undivided working interest in
the Block B4/32 Concession under certain conditions pursuant to the MMC Farmout
Agreement.  The Block B8/38 Concession and the Block B4/32 Concession are
collectively referred to as the "Concessions."

B.  As a result of the performance of certain obligations and the conversion of
certain rights, McCarroll is entitled to receive certain rights and interests
(the "McCarroll Interests") in and to the Concessions including a 2.5% undivided
working interest in  each of the Block B8/38 Concession (the "McCarroll Block
B8/38 Interest") and the Block B4/32 Concession (the "McCarroll Block B4/32
Interest").  The assignment of the McCarroll Interests to McCarroll has not been
evidenced in writing, nor has such assignment been approved by the Ministry of
Industry of the Government of Thailand (the "Ministry of Industry").

C.  McCarroll desires to sell, assign, transfer and convey to Territorial
Delaware his rights to receive the McCarroll Interests, and Territorial Delaware
desires to purchase the McCarroll Interests from McCarroll, on the terms and
conditions set out in this Agreement.

D.  SOCO has consented to the sale, assignment, transfer and conveyance from
McCarroll to Territorial of the right to receive the McCarroll Interests.  The
parties hereto desire to cause the assignment of the McCarroll Interests to be
made directly from the current record owner thereof (either SOCO Exploration or
SOCO Thaitex, as applicable) to Territorial Delaware in order to ease the
administrative burden of the required transfers and for other business purposes.
In addition, the parties hereto desire to enter into certain additional
agreements.
<PAGE>
 
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                                   ARTICLE I
                            ASSET PURCHASE AND SALE

     On the terms and subject to the conditions of this Agreement:

     1.1  MCCARROLL/TERRITORIAL DELAWARE TRANSACTIONS.  At the Closing (as
defined below), McCarroll shall sell, assign, transfer and deliver to
Territorial Delaware all of his right, title and interest in and to the
McCarroll Interests, and Territorial Delaware shall purchase from McCarroll all
of such McCarroll Interests.  In exchange therefore, at the Closing, and subject
to the provisions of the Escrow Agreement (as defined below):

     (a) Cash Portion of the Purchase Price.  Territorial Delaware shall pay or
cause to be paid to or on behalf of McCarroll an aggregate amount of cash equal
to (US)$210,000 (the "Cash Portion of the Purchase Price");

     (b) Territorial Shares. Territorial Delaware shall cause to be issued in
the name of McCarroll 550,000 shares (the "Territorial Shares") of common stock,
no par value per share, of Territorial Resources, Inc., a Delaware corporation
("Territorial Resources"); and

     (c) Assumed Liabilities.  Territorial Delaware shall pay, perform or cause
to be paid or performed all obligations and liabilities arising with respect to
periods immediately after the Closing under the Concession Agreement with
respect to the McCarroll Interests.  Except as provided in the preceding
sentence, Territorial Delaware shall not assume or be deemed to have assumed and
shall not be responsible for any obligation or liability of McCarroll or any
other party, direct or indirect, known or unknown, choate or inchoate, absolute
or contingent, including without limitation any and all obligations regarding
any foreign, Federal, state or local income, sales, use, franchise or other tax
liabilities, and McCarroll shall indemnify and hold Territorial Delaware
harmless from all such liabilities and costs incurred by Territorial Delaware
and arising out of or attributable to any such liabilities, all in accordance
with Article VI hereof.

     1.2  SOCO/MCCARROLL TRANSACTIONS.  At the Closing, SOCO Exploration shall
sell, assign, transfer and deliver to Territorial Delaware, as the assignee of
McCarroll,  the McCarroll Block B8/38 Interest, and SOCO Thaitex shall sell,
assign, transfer and deliver to Territorial Delaware, as the assignee of
McCarroll, the McCarroll Block B4/32 Interest.  Each of SOCO Exploration and
SOCO Thaitex agree and confirm that the consideration to be received by it in
exchange for the sale, assignment, transfer and delivery of the respective
McCarroll Interest by such party pursuant to this Agreement has been received in
full on or before the date hereof.

     1.3  NATURE OF THE MCCARROLL INTERESTS. Among other things, the working
interests to be received by Territorial Delaware are subject to the following:
(a) with respect to the 

                                       2
<PAGE>
 
2.5% working interest in the Block B8/38 Concession, such working interest shall
be a carried interest to the casing point on the first well on Block B8/38
(provided, however, that as the owner of such working interest, Territorial
Delaware shall be required to fund 2.5% of the aggregate expenditures in excess
of (US)$3,000,000 incurred to the casing point with respect to such well), and
such working interest shall require Territorial Delaware, as the owner thereof,
to fund 2.5% of all expenditures incurred at and after the casing point,
including the costs of running and cementing casing and completing the well; and
(b) as the owner of either of the 2.5% working interests so to be conveyed to
Territorial Delaware pursuant to this Agreement, Territorial Delaware shall have
no obligation to pay any portion of the $250,000 signing bonus (the "Signing
Bonus") paid to the Thailand Department of Mineral Resources under the Block
B8/38 Concession.

                                   ARTICLE II
                                  THE CLOSING

     2.1  CLOSING DATE, TIME AND PLACE.  The closing ("Closing") of the
transactions contemplated by Article I hereof shall take place on June 16, 1997,
or at such other date not later than June 30, 1997, that is mutually agreed by
the parties hereto (the "Closing Date").  Such Closing shall take place at 10:00
a.m., at the offices of Theodore J. Lee, Attorney at Law, counsel to Territorial
Delaware, 3104 Edloe Street, Suite 204, Houston, Texas 77027, or such other
location is mutually agreed by the parties hereto.

     2.2  CLOSING TRANSACTIONS.  At the Closing:

     (a) McCarroll Assignments.  McCarroll shall execute and deliver to
Territorial Delaware two Assignments, in form and substance satisfactory to
McCarroll and Territorial Delaware (together, the "McCarroll Assignments"),
pursuant to which, among other things, he shall have assigned to Territorial
Delaware his right, title and interest in and to the McCarroll Interests;

     (b) SOCO Exploration Assignment.  SOCO Exploration and Territorial Delaware
shall execute and deliver to each other an Assignment, substantially in the form
of Exhibit A-1 (the "SOCO Exploration Assignment") attached hereto and made a
part hereof, pursuant to which, among other things, SOCO Exploration shall have
assigned to Territorial Delaware the McCarroll Block B8/38 Interest;

     (c) SOCO Thaitex Assignment.  SOCO Thaitex and Territorial Delaware shall
execute and deliver to each other an Assignment, substantially in  the form of
Exhibit A-2 (the "SOCO Thaitex Assignment;" together with the SOCO Exploration
Assignment, the "SOCO Assignments") pursuant to which, among other things, SOCO
Thaitex shall have assigned to Territorial Delaware the McCarroll Block B4/32
Interest;

     (d) Escrow Agreement.  McCarroll, Territorial Delaware and an escrow agent
(the "Escrow Agent") acceptable to them shall execute and deliver to each other
an Escrow Agreement in form and substance satisfactory to McCarroll and
Territorial Delaware (the "Escrow Agreement"); and

                                       3
<PAGE>
 
     (e)  Payment of the Purchase Price.

     (i) Cash Portion of the Purchase Price.  Territorial Delaware shall pay or
cause to be paid in cash to McCarroll the Cash Portion of the Purchase Price
((US)$210,000) by wire transfer to such account as McCarroll shall have
indicated pursuant to written wire transfer instructions delivered to
Territorial Delaware not less than two (2) business days prior to the Closing
Date.

     (ii) Territorial Shares.  Territorial Delaware shall cause to be issued in
the name of McCarroll four (4) certificates (the "Certificates") representing in
the aggregate the 550,000 Territorial Shares, three (3) of which Certificates
(the "Escrowed Certificates") shall each represent 100,000 Territorial Shares,
all of which Escrowed Certificates shall be delivered at the Closing to the
Escrow Agent, pursuant to the terms and provisions of the Escrow Agreement.  The
remaining Certificate shall represent the remaining 250,000 Territorial Shares
and shall be delivered to McCarroll at the Closing.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     3.1  TERRITORIAL DELAWARE'S REPRESENTATIONS AND WARRANTIES.  Territorial
Delaware represents and warrants to McCarroll and to SOCO Exploration that:

     (a) Territorial Delaware is duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly authorized and
qualified under such laws to conduct its business as currently conducted by it.
Territorial Delaware has all licenses, permits and authorizations necessary to
carry on its current business and conduct its current operations.  Territorial
Delaware has full power and authority to execute and deliver this Agreement and
to perform its obligations hereunder.  This Agreement has been duly executed and
delivered by Territorial Delaware and constitutes the valid and legally binding
obligation of Territorial Delaware, enforceable against it in accordance with
its terms.  Upon the execution and delivery thereof at the Closing, the Escrow
Agreement and each of the SOCO Assignments will be duly executed and delivered
by it, and will constitute the valid and legally binding obligation of
Territorial Delaware, enforceable against it in accordance with its respective
terms.

     (b) No other notices to, filings with, or authorizations, consents or
approvals from any other governmental agency or authority or any other party are
required in order to pay the purchase price for the McCarroll Interests
(including without limitation, to issue the Territorial Shares) and otherwise
perform its obligations under the Escrow Agreement or the SOCO Assignments,
other than any of the same that have been received on or before the date hereof.

     (c) Upon the issuance thereof, all of the Territorial Shares will be duly
authorized, fully paid and non-assessable, and will represent in the aggregate
550,000 shares of common stock, no par value per share, of Territorial.

                                       4
<PAGE>
 
     (d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, by Territorial Delaware
will (a) violate any applicable law, rule, regulation, or order to which it is
subject or any provision of its charter or bylaws, nor will such transactions
violate any applicable law, rule, regulation or order to which Territorial
Resources is subject or any provision of its charter or bylaws or (ii) conflict
with, result in a breach of, constitute a default under, create in any party the
right to terminate, modify or change, or require any notice under any agreement,
contract, lease, license, instrument or other agreement to which it or
Territorial Resources is a party, by which either of them is bound or to which
any of their respective assets is subject.

     (e) There are no lawsuits, actions, hearings, investigations, charges,
complaints, demands, claims or administrative or arbitration proceedings
pending, or to the best knowledge of Territorial Delaware, threatened against it
or any of its assets.

     (f) None of the information supplied or to be supplied by Territorial
Delaware, insofar as it relates to Territorial Delaware, the Territorial Shares,
Territorial Resource or the transactions to be consummated at the Closing,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which there are made, not
misleading.

     3.2  SOCO'S REPRESENTATIONS AND WARRANTIES.  Each of SOCO Exploration and
SOCO Thaitex represent and warrant, jointly and severally, to Territorial
Delaware as of the date hereof that:

     (a) SOCO Exploration is duly organized, validly existing and in good
standing under the laws of Thailand, and is duly authorized and qualified under
the laws of Thailand to conduct its business with respect to the B8/38
Concession.  SOCO Thaitex is duly organized, validly existing and in good
standing under the laws of the State of Delaware in the United States of
America, and is duly authorized and qualified under the laws of Thailand to
conduct its business with respect to the B4/32 Concession.  Each of SOCO
Exploration and SOCO Thaitex has all licenses, permits and authorizations
necessary to carry on its current business and conduct its current operations.
Each of SOCO Exploration and SOCO Thaitex has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly executed and delivered by each of SOCO Exploration
and SOCO Thaitex and constitutes the valid and legally binding obligation of
such party, enforceable against it in accordance with its terms.  Upon the
execution and delivery thereof at the Closing, each of the SOCO Assignments will
be duly executed and delivered by the SOCO party executing the same and will
constitute the valid and legally binding obligation of such party, enforceable
against it in accordance with its terms.

     (b) Except for the consent of the Ministry of Industry or other
representative of the Government of Thailand to the SOCO Assignments (the
"Government Consents"), no other notices to, filings with, or authorizations,
consents or approvals from any other governmental agency or authority or any
other party required in order to effectively assign the McCarroll Interests to
Territorial Delaware.

                                       5
<PAGE>
 
     (c) Upon the execution and delivery of the SOCO Assignments and subject to
the receipt of the Government Consent with respect thereto, Territorial Delaware
will own an undivided 2.5% working interest in the Block B8/38 Concession and an
undivided 2.5% working interest in the Block B4/32 Concession, free and clear of
any liens, security interests, liens, claims, burdens, or other encumbrances
("Encumbrances"), other than those created pursuant to the terms of the
respective Concessions and those created by the MMC Farmout Agreement (provided,
however, that neither such 2.5% working interest shall be subject to reduction
as a result of the provisions of the MMC Farmout Agreement).  Without limiting
the generality of the foregoing, such 2.5% working interests are and shall be
free of all burdens, liabilities and obligations, if any, created pursuant to or
referred to in (i) the letter agreement dated September 6, 1994, between SOCO
International, Inc., et. al., and Freeport-McMoran Thaitex Co., et. al. (the
"Freeport-McMoran Letter Agreement", and (ii) the letter agreement date
September 6, 1994, between SOCO International, Inc. and CLK Company (the "CLK
Letter Agreement").

     (d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, by SOCO Exploration or
SOCO Thaitex will (a) violate any applicable law, rule, regulation, or order to
which such party is subject or any provision of the charter or bylaws of such
party or (ii) conflict with, result in a breach of, constitute a default under,
create in any party the right to terminate, modify or change, or require any
notice under any agreement, contract, lease, license, instrument or other
agreement to which it is a party, by which it is bound or to which any of its
assets is subject.

     (e) SOCO Exploration and/or SOCO Thaitex has provided to Territorial
Delaware (i) a true, complete and correct copy of the written instrument by
which the Block B8/38 Concession was granted (which consists solely of that
certain Petroleum Concession No. 3/2539/50 awarded to SOCO Exploration by the
Ministry of Industry, dated October 24, 1996, and no other amendments,
supplements or modifications thereto) (the "B8/38 Concession Agreement"), and
(ii) a true, complete and correct copy of the written instrument by which the
Block B4/32 Concession was granted (which consists solely of that certain
Petroleum Concession No. 7/2534/42 awarded to THAITEX PETROLEUM COMPANY LIMITED
by the Ministry of Industry, dated September 11, 1991, as the same was amended
and supplemented by that certain Supplementary Petroleum Concession (No. 1) to
Petroleum Concession No. 7/2534/42 dated September 4, 1995 (as so amended and
supplemented, the "B4/32 Concession Agreement"), and no other amendments,
supplements or modifications thereto). The rights granted to the Concessionaire
under each such Concession Agreement have not been further amended,
supplemented, modified, diminished or withdrawn, and to the best knowledge of
SOCO Exploration and SOCO Thaitex, no such diminution or withdrawal, in whole or
in part, has been threatened or is contemplated.

     (f) Each of the Concession Agreements, and the Concession granted
thereunder, is legal, valid, binding and enforceable, and is in full force and
effect; neither party to either such Concession Agreement is in breach or
default thereunder; and no event has occurred that with notice or lapse of time
would constitute a breach or default under, or permit termination or
modification of, such Concession Agreement.  SOCO Exploration owns 100% of the
working interests in the Block B8/38 Concession, free and clear of any
Encumbrance, other 

                                       6
<PAGE>
 
than as provided in the B8/38 Concession Agreement and the MMC Farmout
Agreement. SOCO Thaitex owns 100% of the working interests in the Block B4/32
Concession, free and clear of any Encumbrance, other than as provided in the
B4/32 Concession Agreement, the MMC Farmout Agreement, the Freeport-McMoran
Letter Agreement and the CLK Letter Agreement. The Block B4/32 Concession is in
the last year of the Second Obligation Period, as defined in Clause 4 of the
B4/32 Concession Agreement, and the only remaining work to be done during such
Second Obligation Period is the drilling of one well.

     (g) Each of SOCO Exploration and SOCO Thaitex has complied with all
applicable laws, rules, regulations, and orders of the Government of Thailand
and all agencies and instrumentalities thereof (including without limitation,
any of the same pertaining to protection of the environment, health or safety),
and no action, suit, proceeding, hearing, investigation, charge, complaint,
demand, notice or claim has been filed or commenced against it alleging any
failure to so comply.

     (h) There are no lawsuits, actions, hearings, investigations, charges,
complaints, demands, claims or administrative or arbitration proceedings
pending, or to the best knowledge of SOCO Exploration and SOCO Thaitex,
threatened against either of them or any of their respective assets (including
without limitation the Concessions).

     (i) Subject to the provisions of Section 1.3 of this Agreement, upon the
execution and delivery of the SOCO Exploration Assignment (and subject to the
receipt of the Governmental Consent with respect thereto), and except as
otherwise provided in this Agreement, Territorial Delaware will have such right,
title or interest that (i) entitles it to receive, based on its ownership
interest in the B8/38 Concession, 2.5% of the proceeds from the sale of
production from each well located in Block B8/38 throughout the term of the
Concession granted in the B8/38 Concession Agreement relating to such Block,
together with at least a like interest in all production from any additional
wells drilled in such Block B8/38 after the date hereof and during the term of
such Concession, and (ii) obligates Territorial Delaware to bear a like
percentage of the costs and expenses relating to the operations in or the
maintenance and other costs of each well located in such Block, as such costs
and expenses are set out in the B8/38 Concession Agreement relating to such
Block, in an amount which is not greater than 2.5% for such well or for such
other costs and expenses set out in the B8/38 Concession Agreement, without
increases throughout the term of such Concession unless otherwise agreed to by
Territorial Delaware.  Similarly, subject to the provisions of Section 1.3 of
this Agreement, upon the execution and delivery of the SOCO Thaitex Assignment
(and subject to the receipt of the Governmental Consent with respect thereto)
and except as otherwise provided in this Agreement, Territorial Delaware will
have such right, title or interest that (iii) entitles it to receive, based on
its ownership interest in the B4/32 Concession, 2.5% of the proceeds from the
sale of production from each well located in Block B4/32 throughout the term of
the Concession granted in the B4/32 Concession Agreement relating to such Block,
together with at least a like interest in all production from any additional
wells drilled in such Block B4/32 after the date hereof and during the term of
such Concession, and (iv) obligates Territorial Delaware to bear a like
percentage of the costs and expenses relating to the operations in or the
maintenance and other costs of each well located in such Block, as such costs
and expenses are set out in the B4/32 Concession Agreement relating to such
Block, in an amount which is not greater than 2.5% for such well or for such
other costs and expenses 

                                       7
<PAGE>
 
set out in the B4/32 Concession Agreement, without increases throughout the term
of such Concession unless otherwise agreed to by Territorial Delaware.

     (j) There is no currently outstanding obligation, debt or other liability
relating to either of the McCarroll Interests that has not been paid or
performed on or before the date hereof, and all obligations, debts or other
liabilities relating to either of the McCarroll Interests relating to periods on
or prior to the date hereof have been paid or performed in full.  There has not
occurred any event, fact or circumstance, whether or not with the lapse of time
or the giving of notice, would constitute a breach or default by McCarroll with
respect to either of the McCarroll Interests.

     (k) None of the information supplied or to be supplied by either SOCO
Exploration or SOCO Thaitex, insofar as it relates to either such party, the
McCarroll Interests, the Concessions or the transactions to be consummated at
the Closing, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which there are
made, not misleading.

     3.3  MCCARROLL'S REPRESENTATIONS AND WARRANTIES.  McCarroll represents and
warrants to Territorial Delaware as of the date hereof that:

     (a) All of the matters set out in Section 3.2 (c), (e), (i) and (j) hereof
are true, correct and complete as of the date hereof.

     (b) McCarroll has full power and authority to execute and deliver this
Agreement and to perform his obligations hereunder.  This Agreement has been
duly executed and delivered by McCarroll and constitutes his valid and legally
binding obligation, enforceable against him in accordance with its terms.  Upon
the execution and delivery thereof at the Closing, each of the McCarroll
Assignments and the Escrow Agreement will be duly executed and delivered by him
and will constitute his valid and legally binding obligation, enforceable
against him in accordance with its terms.

     (c) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, by McCarroll will (i)
violate any applicable law, rule, regulation, or order to which he is subject or
(ii) conflict with, result in a breach of, constitute a default under, create in
any party the right to terminate, modify or change, or require any notice under
any agreement, contract, lease, license, instrument or other agreement to which
he is a party, by which he is bound or to which any of his assets is subject.

     (d) McCarroll owns all of the right, title and interest in and to the right
to receive the McCarroll Interests, free and clear of any Encumbrance.

     (e) There are no lawsuits, actions, hearings, investigations, charges,
complaints, demands, claims or administrative or arbitration proceedings
pending, or to the best knowledge of McCarroll, threatened against him or any of
his assets.

                                       8
<PAGE>
 
     (f)  The Territorial Shares are being acquired solely for McCarroll and not
for any other person or party, and solely for investment purposes, and not with
a view to resale or redistribute any of the same to any other party or person.
McCarroll acknowledges that the Territorial Shares have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), or under
applicable state securities laws (together with the 1933 Act, "Securities
Laws"), that the right to transfer the Territorial Shares to be received in
connection with the Closing will be restricted by such Securities Laws, and
that, in addition to any other limitations with respect thereto, neither such
shares nor any interest therein shall be sold, transferred or otherwise disposed
of without registration under applicable Securities Laws or an exemption
therefrom.  McCarroll acknowledges that the Territorial Shares to be received in
connection with the Closing are not being registered under the Securities Laws
in reliance upon exemptions from applicable Securities Laws that are predicated,
in part, on the representations, warranties and agreements of such McCarroll
contained herein.  McCarroll must bear the economic risk of an investment in
such Territorial Shares for an indefinite period of time because such
Territorial Shares have not been registered under applicable Securities Laws and
therefore cannot be sold unless they are subsequently registered under such
Securities Laws or an exemption from such registration is available, and that
such shares must be held indefinitely unless the transfer thereof is so
registered or such an exemption exists with respect thereto.  McCarroll is an
"accredited investor," as that term is defined in Regulation D promulgated under
the 1933 Act and is capable of evaluating the merits and risks, and has
evaluated the merits and risks, of the prospective acquisition of Territorial
Shares, and has the capacity to protect his interests in connection with the
such acquisition.  McCarroll acknowledges, that a legend will be placed on the
Certificates evidencing the Territorial Shares substantially to the effect that,
among other things, the shares evidenced thereby have not been registered under
the 1933 Act and may not be sold, transferred, pledged, hypothecated or
otherwise disposed of in the absence of (i) an effective registration statement
for such shares under the 1933 Act or (ii) an opinion of Territorial's counsel
that such registration is not required.  Notwithstanding the foregoing,
McCarroll understands that Territorial will not unreasonably withhold or delay
receipt and review of the opinion of counsel referred to in the preceding
sentence, and in the event its counsel is unable to promptly provide such an
opinion, Territorial will accept such an opinion of another qualified counsel
selected by McCarroll and reasonably satisfactory to Territorial.

     (g) None of the information supplied or to be supplied by McCarroll, and to
his knowledge none of the information supplied or to be supplied by either SOCO
Exploration or SOCO Thaitex, insofar as it relates to McCarroll, the McCarroll
Interests, the Concessions or the transactions to be consummated at the Closing,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which there are made, not
misleading.

                                   ARTICLE IV
                                   COVENANTS

     4.1  GOVERNMENTAL APPROVALS.  Following the Closing, SOCO will use its
commercially reasonable efforts (and McCarroll and Territorial Delaware will
assist in 

                                       9
<PAGE>
 
connection therewith) to cause the Government of Thailand or its appropriate
subdivision, ministry or instrumentality to grant a written Government Consent
approving of Territorial Delaware as the owner of the McCarroll Interests. After
the Closing, and until such time as such Government Consent is received with
respect to the working interest being assigned to Territorial Delaware relating
to the Block B8/38 Concession, SOCO Exploration agrees to hold the interest so
conveyed to Territorial Delaware in trust, solely for the benefit of Territorial
Delaware, and to the maximum extent permissible, to cause Territorial Delaware
to receive all of the benefits, rights, privileges and treatment that it would
be entitled to receive as though such Government Consent had been received.
Similarly, after the Closing, and until such time as such Government Consent is
received with respect to the working interest being assigned to Territorial
Delaware relating to the Block B4/32 Concession, SOCO Thaitex agrees to hold the
interest so conveyed to Territorial Delaware in trust, solely for the benefit of
Territorial Delaware, and to the maximum extent permissible, to cause
Territorial Delaware to receive all of the benefits, rights, privileges and
treatment that it would be entitled to receive as though such Government Consent
had been received. Each such SOCO party shall cooperate with Territorial
Delaware at its request to take any other action, and execute any other written
instrument, reasonably requested by Territorial Delaware in connection with the
obligations of such SOCO party set out in this Section.

     4.2  OPERATOR.  As soon as reasonably practicable after the date the
Government Consent referred to in Section 4.1 hereof is received, each of
Territorial Delaware and the applicable SOCO party shall enter into a joint
operating agreement relating to the relevant Concession, in form and substance
mutually agreed to by such parties.

     4.3  INFORMATION.  Subject to the restrictions imposed by any applicable
law, each of SOCO Exploration and SOCO Thaitex agrees to permit representatives
of Territorial Delaware to have full access at all reasonable times to all
premises, properties, personnel, books, records, contracts and documents
pertaining to the Concessions.

     4.4  FURTHER ASSURANCES.  From time to time hereafter and without further
consideration, each of the parties hereto shall execute and deliver such
additional or further instruments of conveyance, assignment, assumption and
transfer, and take such actions, as any other party hereto may reasonably
request in order to more effectively convey and transfer to such other party the
assets, rights or other property to be sold or conveyed to such other party
hereunder or as shall be reasonably necessary or appropriate in connection with
the carrying out of such other party's obligations hereunder or the purposes of
this Agreement.  In connection therewith, among other things, each of SOCO
Exploration, SOCO Thaitex and McCarroll agrees to use such party's best efforts
to cause the McCarroll Interests to be effectively assigned, conveyed,
transferred and delivered to Territorial Delaware.  McCarroll further agrees to
use his best efforts to cause all his business with respect to those contracts
and agreements to which he is a party that relate to the McCarroll Interests (or
through which McCarroll earned such McCarroll Interests) to be conducted in such
a manner so as to preserve and protect the McCarroll Interests for the benefit
of Territorial Delaware.  In the event McCarroll does not conduct his business
as provided in the preceding sentence, McCarroll hereby grants to Territorial
Delaware the right to fulfill any obligation he may not have timely or
completely performed, at the reasonable cost and expense of McCarroll.  In
connection with 

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<PAGE>
 
his obligations under this Section, McCarroll agree to consult with Territorial
Delaware in a timely and complete manner in connection with any matter that may
arise with respect to any such contract and agreement, if such matter may affect
the obligations of McCarroll under this Section.

                                   ARTICLE V
                     CONDITIONS TO THE CLOSING; TERMINATION
                                        
     5.1  CONDITIONS.  It shall be a condition to the obligations of each party
hereto to consummate the transactions contemplated to occur at the Closing that:
(a)  each of the representations and warranties of the other parties hereto
shall be true, complete and correct as of the Closing Date as if such
representations and warranties were made as of such Closing Date, and no fact or
circumstance shall have come to the attention of any party hereto that is not
disclosed in this Agreement that could reasonably be expected to have a material
adverse effect on the rights and benefit to be received by such party as
contemplated by this Agreement; (b) each of the covenants to be fulfilled by any
other party hereto prior to the Closing shall have been fulfilled as of the
Closing, or waived by the party entitled to benefit therefrom; and (c) the
Closing shall have occurred not later than June 30, 1997, unless such date is
extended by the written agreement of all of the parties hereto.

     5.2  TERMINATION. This Agreement may be terminated and the transactions
contemplated hereto may be abandoned at any time prior to the Closing:  (a) by
the written agreement of all of the parties hereto; and (b) by any party hereto
in the event the Closing shall not have occurred on or before June 30, 1997,
unless such date is extended by the written agreement of all of the parties
hereto.   Notice of an election to terminate this Agreement shall be made in
writing and provided to each of the non-terminating parties to this Agreement.

                                   ARTICLE VI
                                INDEMNIFICATION

     6.1  INDEMNIFICATION BY MCCARROLL.  McCarroll agrees to indemnify, defend
and hold harmless Territorial Delaware and its affiliates, officers, directors,
employees, contractors and agents (collectively, Territorial Delaware and such
other parties are being referred to as the "Territorial Delaware-Related
Parties") against and from any and all taxes, penalties, interest, claims,
suits, causes of action (recognized now or at any later time), liabilities,
responsibilities, damages, losses, costs, assessments and expenses, including
without limitation reasonable attorney's fees and other expenses of defending
any actions or claims, amounts of judgments and amounts paid in settlement
(collectively, all of the foregoing being referred to herein as "Costs")
incurred by, asserted against or imposed upon any of the Territorial Delaware-
Related Parties arising out of or attributable to:

     (a) any breach of any representation, warranty, covenant or agreement made
by McCarroll herein or in any schedule, exhibit, certificate, document or
agreement furnished by McCarroll in connection herewith (including without
limitation any of the documents to be executed and delivered at the Closing);

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<PAGE>
 
     (b) any nonfulfillment of any agreement or covenant hereunder or entered
into in connection herewith by McCarroll; or

     (c) any claim, whether known or unknown, arising out of, or by virtue of,
or based upon McCarroll's ownership of the McCarroll Interests (or McCarroll's
failure to fulfill any obligation in connection therewith) prior to the Closing.

     6.2  INDEMNIFICATION BY TERRITORIAL DELAWARE.  Territorial Delaware agrees
to indemnify, defend and hold harmless, McCarroll against and from any and all
Costs incurred by, asserted against or imposed upon McCarroll arising out of or
attributable to:

     (a) any breach of any representation, warranty, covenant or agreement made
by Territorial Delaware herein or in any schedule, exhibit, certificate,
document or agreement furnished by Territorial Delaware in connection herewith
or relating hereto (including without limitation any of the documents to be
executed and delivered at the Closing);

     (b) any nonfulfillment of any agreement hereunder or entered into in
connection herewith by Territorial Delaware; or

     (c) any claim, whether known or unknown, arising out of, or by virtue of,
or based upon Territorial Delaware's ownership of the McCarroll Interests (or
its failure to fulfill any obligation in connection therewith) after the
Closing;

provided, however, that if any such Costs are incurred under clause (b) or (c)
above primarily as a result of McCarroll's failure to fulfill any of his
obligations, then Territorial Delaware not shall have any liability or
obligation under the provisions of this Section with respect thereto.

     6.3  CERTAIN INDEMNIFICATION-RELATED MATTERS.  Any party entitled to
indemnification under the provisions of this Article shall:  (a) give prompt
notice to the indemnifying party of any claim with respect to which such
indemnified party seeks indemnification (provided, however, that the failure to
timely provide such notice shall not affect an indemnified party's rights under
this Article unless such failure shall have prejudiced or adversely affected any
indemnifying party's rights with respect to such claim)  and (b) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim or
such indemnifying party fails or refuses to timely select and engage counsel
reasonably satisfactory to the indemnifying party, permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party.  If such defense is assumed, the indemnifying party
will not be subject to any liability for any settlement made without its consent
(but such consent will not be unreasonably withheld).  An indemnifying party who
is not entitled, or elects not, to assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which case such indemnifying party shall pay the fees
and expenses of a sufficient number of counsel so that such conflicts are
resolved.

                                       12
<PAGE>
 
     6.4  RIGHT OF OFFSET.  Territorial Delaware shall have the right,
exerciseable at any time and from time to time at its option until termination
of such right as provided in this Section, to set off and charge against any or
all "Territorial Resources Securities," as defined below, owned by McCarroll or
in which he has an interest, any and all "McCarroll Obligations," as defined
below, such right exerciseable upon written notice to McCarroll delivered not
less than 30 days prior to the date of such proposed set off.  During such 30-
day period, Territorial agrees to use reasonable efforts to cooperate, at the
request and expense of McCarroll, in connection with any attempt by McCarroll to
cure the unfulfilled obligation(s) of McCarroll relating to such set off.  As
used herein:

     (a) the term, "Territorial Resources Securities" means and includes only
the following:  (i) any of the Territorial Shares or Related Property (as
defined in the Escrow Agreement) then held in the Escrow Agreement and (ii) any
other options, warrants, convertible securities or other rights granting
McCarroll thereof the right to receive shares of capital stock of Territorial
Resources upon the exercise, conversion or exchange thereof; provided, however,
that any of the same held of record by the wife of McCarroll shall not
constitute "Territorial Resources Securities;" and

     (b) the term, "McCarroll Obligations" means and includes any and all
obligations under this Agreement, including without limitation the indemnity
obligations of McCarroll;

provided, however, that any exercise of the set off and charging rights of
Territorial Delaware pursuant to this Section 6.4 shall terminate on the earlier
to occur of (i) completion of drilling and testing of the first well on Block
B8/38 under the B8/38 Concession Agreement or (ii) completion of drilling of a
second well on either Block B8/38 or Block B4/32 under the applicable Concession
Agreement.  The rights and remedies granted to Territorial Delaware in this
Section 6.4 are in addition to any other rights and remedies it may have under
this Agreement, at law or in equity.

                                  ARTICLE VII
                                 MISCELLANEOUS

     7.1  SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  The respective
representations and warranties of the parties hereto shall not be deemed waived
or otherwise affected by any investigation made by any other party hereto.  Each
representation and warranty shall continue for a period of three (3) years after
the Closing Date.  The provisions of this Section shall have no effect upon any
other obligation of the parties, whether to be performed before or after the
Closing.

     7.2  AMENDMENT AND MODIFICATION.  This Agreement may not be amended except
by an instrument in writing signed by all of the parties hereto.

     7.3  NOTICES.  All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with 

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<PAGE>
 
postage prepaid, or sent by telex, telegram or telecopier, as follows (or at
such other address or facsimile number for a party as shall be specified by like
notice):

     if to McCarroll,  at:        If to Buyer, at:
 
     Jimmy M. McCarroll           Territorial Resources (Delaware), Inc.
     McCarroll Energy, Inc.       c/o Territorial Resources, Inc.
     1030 Townplace                   734 7th Avenue S.W., Suite 1345
     Houston, Texas 77057-1942        Canada T2P 3P8
     (Fax No.)  713.785.8245          (Fax No.)  403.233.7354
                                      Attn:  Daniel A. Mercier


     if to SOCO Exploration or SOCO Thaitex, at:  [insert name of party to
receive notice]
                                       c/o   SOCO International, Inc.
                                       777 Main Street, Suite 2500
                                       Fort Worth, Texas  76102
                                       (Fax No.)  817.882.5970
                                       Attn:  Edward T. Story, Jr.
 
     7.4  EXPENSES.  Except as otherwise expressly provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses whether or not the transactions contemplated hereby are
consummated.

     7.5  ENTIRE AGREEMENT; ASSIGNMENT.  This Agreement, including all exhibits
hereto, (a) constitutes the entire agreement among the parties with respect to
its subject matter and supersedes all prior agreements and understandings, both
written and oral, between the parties hereto, their affiliates or any of them
with respect to such subject matter and (b) shall not be assigned by operation
of law or otherwise without the express prior written consent of the other party
hereto.  Notwithstanding the foregoing, this Agreement shall not supersede any
agreement regarding the farmout by the SOCO parties to Territorial Resources or
its affiliates of an additional 5% undivided working interest in each of the
Concessions, nor shall it supersede any agreement between Territorial Resources
or its affiliates and McCarroll regarding any option in favor of McCarroll to
acquire additional Territorial Shares in exchange for certain services to be
performed by him.

     7.6  BINDING EFFECT; BENEFIT. Subject to the provisions of Section 7.5
hereof, this Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns.  Nothing in this Agreement
is intended to confer on any person other than the parties to this Agreement or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

     7.7  HEADINGS.  The descriptive headings of the articles, sections,
subsections, exhibits and schedules of this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.

                                       14
<PAGE>
 
     7.8  COUNTERPARTS; FACSIMILE SIGNATURES.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.  Execution of this
Agreement or any exhibit hereto may be evidenced by a signature delivered by or
on behalf of such party via facsimile, which facsimile signature shall be
confirmed by telephone, and once so confirmed, shall constitute an effective
signature of the party on whose behalf such facsimile signature is provided.

     7.9  GOVERNING LAW.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the laws
that might otherwise govern under principles of conflicts of laws applicable
thereto.

     7.10  SEVERABILITY.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

     IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
duly executed by or on behalf of such party, all as of the date first written
above.

                                     TERRITORIAL RESOURCES (DELAWARE), INC.

                                     By:______________________________________
                                        Name:_________________________________
                                        As Its Authorized:____________________


                                     JIMMY M. MCCARROLL

                                     _________________________________________


                                     SOCO EXPLORATION (THAILAND) COMPANY LIMITED

                                     By:______________________________________
                                        Name:_________________________________
                                        As Its Authorized:____________________


                                     SOCO THAITEX, INC.

                                     By:______________________________________
                                        Name:_________________________________
                                        As Its Authorized:____________________

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