Exhibit 10.25.2

                     THIRD AMENDMENT TO AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT
     THIS THIRD  AMENDMENT TO AMENDED AND RESTATED  LOAN AND SECURITY  AGREEMENT
(this  "Amendment")  is made and entered into as of December ----,  2000, by and
among:  PANACO,  INC.,  a Delaware  corporation  ("Borrower")  which is the sole
surviving  corporation  of the  merger by  Panaco  Production  Company,  a Texas
corporation ("PPC") and Goldking Acquisition Corporation, a Delaware corporation
("GAC"),  with and into Panaco, Inc. and is the  successor-by-merger  to PPC and
GAC thereunder;  the financial institutions listed on the signature pages hereof
(such  financial  institutions,  together with their  respective  successors and
assigns,  are  referred  to  hereinafter  each  individually  as a "Lender"  and
collectively as the "Lenders");  and FOOTHILL CAPITAL CORPORATION,  a California
corporation, as agent for the Lenders ("Agent").

                                    RECITALS

     A. Borrower,  Panaco Production  Company (prior to its merger with and into
Borrower), Agent and Lenders have entered into that certain Amended and Restated
Loan and Security Agreement,  dated as of September 30, 1999, as amended by that
certain  First  Amendment to Amended and Restated  Loan and Security  Agreement,
dated  November 30,  1999,  and as amended by that certain  Second  Amendment to
Amended and Restated Loan and Security  Agreement,  dated September 29, 2000 (as
so amended, the "Loan Agreement").

     B. Capitalized terms used in this Amendment are used as defined in the Loan
Agreement, as amended hereby, unless otherwise stated.

     C.  Borrower  desires  to  sell   (hereinafter,   the  "Identified   Assets
Disposition") the Oil and Gas Properties  described on Exhibit A attached hereto
which have an aggregate PV-10 Value of  approximately  $2,100,000  (hereinafter,
the  "Identified  Assets")  for at least  $800,000  and has  requested  that the
Lenders consent to the Identified Assets  Disposition and that the Lenders waive
certain  provisions  of the  Loan  Agreement  which  would  be  violated  by the
Identified Assets Disposition.

     D.  Borrower,  Agent and  Lenders  desire to amend  the Loan  Agreement  as
hereinafter  set  forth  and waive  the  Event of  Default  attributable  to the
Identified Assets Disposition.

     NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:


                                    AGREEMENT

                                    ARTICLE I
                          Amendments to Loan Agreement

     1.01  Amendment to Section 7.4 of the Loan  Agreement.  Effective as of the
date  hereof,  Subclause  (d) of  Section 7.4  of the Loan  Agreement  is hereby
amended by deleting  therefrom the words "which does not exceed in the aggregate
$2,000,000 in the aggregate  during the term of this Agreement" and substituting
in their place the words "which does not exceed in the  aggregate  $3,000,000 in
the aggregate during the term of this Agreement."

<PAGE>

     1.02 Amendment to Section 6.2(h) of the Loan Agreement. Effective as of the
date hereof, Section 6.2(h) of the Loan Agreement is hereby amended and restated
to read in its entirety as follows:

          "(h) (i)  Promptly,  but no later than five (5) Business  Days,  after
     Borrower  becomes  aware of any physical  impairment  or damage to any well
     that could  reduce the PV-10  Value of such the  Proved  Reserves  relating
     thereto by  $500,000  or more,  a  detailed  report of such  impairment  or
     damage,  the cause of such impairment or damage and the amount of potential
     reduction in PV-10 Value for such Proved Reserves, and (ii) upon request by
     Agent from time to time,  copies of Borrower's lease files,  well files and
     contract  files  (including  production  reports  on each  well,  marketing
     contracts,  and information regarding locations of and equipment located on
     each well); and"

                                   ARTICLE II
                              Conditions Precedent

     2.01 Conditions to  Effectiveness.  The  effectiveness of this Amendment is
subject to the  satisfaction of the following  conditions  precedent in a manner
satisfactory to Agent, unless specifically waived in writing by Agent:

     (a) Agent shall have received this Amendment, duly executed by Borrower.

     (b) Agent shall have received the  Amendment Fee described in  Section 5.11
of this Amendment.

     (c) The  representations  and warranties  contained  herein and in the Loan
Agreement and the other Loan Documents, as each is amended hereby, shall be true
and correct as of the date hereof, as if made on the date hereof.

     (d) No Default or Event of Default shall have  occurred and be  continuing,
unless such Default or Event of Default has been otherwise  specifically  waived
in  writing  by Agent and to the  extent  required  by the Loan  Agreement,  the
Lenders.

     (e) All corporate  proceedings  taken in connection  with the  transactions
contemplated  by this Amendment and all documents,  instruments  and other legal
matters incident thereto shall be satisfactory to Agent and its legal counsel.


                                   ARTICLE III
                                 LIMITED WAIVER

     3.01 Limited  Waiver.  By execution of this  Amendment,  the Lenders hereby
consent to the  Identified  Assets  Disposition  and waive the Event of Defaults
arising under Section 7.4 and/or Section 8.2 of the Loan  Agreement  which would
arise  solely  as a  result  of the  Identified  Assets  Disposition;  provided,
however,  this  consent  and waiver by the  Lenders is  conditioned  on Borrower
receiving  at  least  $800,000  in cash  proceeds  from  the  Identified  Assets
Disposition  and  that  all  the  cash  proceeds  from  the  Identified   Assets
Disposition shall  immediately be transmitted,  via wire transfer of immediately
available funds, to the Collection Accounts.  Except as specifically provided in
the preceding  sentence,  nothing contained in this Amendment shall be construed
as a waiver by the Agent or the Lenders of any covenant or provision of the Loan
Agreement, the other Loan Documents, this Amendment, or of any other contract or
instrument between any Loan Party, the Agent and/or the Lenders, or as a consent
by Lenders to any other  disposition  by  Borrower  or of any other  transaction
involving  Borrower  and the  failure of the Agent or the Lenders at any time or

<PAGE>

times hereafter to require strict performance by any Loan Party of any provision
thereof  shall  not  waive,  affect  or  diminish  any right of the Agent or the
Lenders to thereafter  demand  strict  compliance  therewith.  The Agent and the
Lenders hereby reserve all rights  granted under the Loan  Agreement,  the other
Loan Documents,  this Amendment and any other contract or instrument between any
Loan Party, the Agent and/or the Lenders.

                                   ARTICLE IV
                  Ratifications, Representations and Warranties

     4.01  Ratifications.  The terms and  provisions set forth in this Amendment
shall modify and supersede all  inconsistent  terms and  provisions set forth in
the Loan  Agreement  and the other  Loan  Documents,  and,  except as  expressly
modified and superseded by this Amendment,  the terms and provisions of the Loan
Agreement  and the other Loan  Documents  are ratified and  confirmed  and shall
continue in full force and effect.  Borrower,  Agent and Lenders  agree that the
Loan Agreement and the other Loan Documents,  as amended hereby,  shall continue
to be legal, valid,  binding and enforceable in accordance with their respective
terms.

     4.02  Representations  and  Warranties.   Borrower  hereby  represents  and
warrants  to  Agent  and  each  Lender  that  (a) the  execution,  delivery  and
performance  of this  Amendment  and any and all other Loan  Documents  executed
and/or  delivered in connection  herewith have been  authorized by all requisite
corporate  action on the part of Borrower  and will not violate the  Articles of
Incorporation  or Bylaws of Borrower;  (b) attached hereto as Annex A is a true,
correct and complete copy of presently effective resolutions of Borrower's Board
of  Directors  authorizing  the  execution,  delivery  and  performance  of this
Amendment  and any and all other Loan  Documents  executed  and/or  delivered in
connection   herewith,   certified  by  the  Secretary  of  Borrower;   (c)  the
representations  and  warranties  contained  in the Loan  Agreement,  as amended
hereby,  and any other Loan  Document are true and correct on and as of the date
hereof; (d) no Default or Event of Default under the Loan Agreement,  as amended
hereby, has occurred and is continuing,  unless such Default or Event of Default
has been  specifically  waived in writing by Agent and to the extent required by
the Loan  Agreement,  the Lenders;  (e) Borrower is in full  compliance with all
covenants  and  agreements  contained in the Loan  Agreement  and the other Loan
Documents,  as amended hereby;  and (f) Borrower has not amended its Articles of
Incorporation or its Bylaws since the date of the Loan Agreement.

                                    ARTICLE V
                            Miscellaneous Provisions

     5.01 Survival of Representations  and Warranties.  All  representations and
warranties  made in the Loan  Agreement or any other Loan  Document,  including,
without  limitation,  any document  furnished in connection with this Amendment,
shall survive the  execution  and delivery of this  Amendment and the other Loan
Documents,  and no  investigation  by  Agent or any  closing  shall  affect  the
representations  and  warranties  or the right of Agent and the  Lenders to rely
upon them.

     5.02  Amendment to  References in all Loan  Documents.  Effective as of the
date hereof,  any reference in the Loan Documents to the capitalized terms "Loan
Agreement"  or  "Credit  Agreement"  or to the  Amended  and  Restated  Loan and
Security  Agreement,  dated as of September 30, 1999, by and among the Borrower,
Panaco  Production  Company  (prior to its merger with and into  Borrower),  the
Lenders and the Agent,  shall be deemed a reference  to the Loan  Agreement  (as
defined in this Amendment), as amended hereby.

     5.03  Expenses of Agent and  Lenders.  As  provided in the Loan  Agreement,
Borrower  agrees to pay on demand all costs and  expenses  incurred by Agent and
Lenders in connection with the preparation,  negotiation,  and execution of this
Amendment and the other Loan Documents  executed pursuant hereto and any and all
amendments,   modifications,   and  supplements  thereto,   including,   without
limitation,  the costs and fees of Agent's and Lenders' legal  counsel,  and all

<PAGE>

costs  and  expenses  incurred  by Agent  and  Lenders  in  connection  with the
enforcement or preservation  of any rights under the Loan Agreement,  as amended
hereby, or any other Loan Documents,  including,  without, limitation, the costs
and fees of Agent's and Lenders' legal counsel.

     5.04  Severability.  Any  provision  of this  Amendment  held by a court of
competent  jurisdiction  to be  invalid  or  unenforceable  shall not  impair or
invalidate  the  remainder of this  Amendment  and the effect  thereof  shall be
confined to the provision so held to be invalid or unenforceable.

     5.05 Successors and Assigns. This Amendment is binding upon and shall inure
to the  benefit  of  Agent,  each  Lender  and  Borrower  and  their  respective
successors  and assigns,  except that Borrower may not assign or transfer any of
its rights or obligations hereunder without the prior written consent of Agent.

     5.06  Counterparts.   This  Amendment  may  be  executed  in  one  or  more
counterparts,  each of which when so executed shall be deemed to be an original,
but all of  which  when  taken  together  shall  constitute  one  and  the  same
instrument.

     5.07 Effect of Waiver. No consent or waiver,  express or implied,  by Agent
or any  Lender  to or for any  breach  of or  deviation  from  any  covenant  or
condition by Borrower shall be deemed a consent to or waiver of any other breach
of the same or any other covenant, condition or duty.

     5.08  Headings.  The  headings,  captions,  and  arrangements  used in this
Amendment are for convenience  only and shall not affect the  interpretation  of
this Amendment.

     5.09 Applicable  Law. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS  EXECUTED
PURSUANT  HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE  PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF
NEW YORK.

     5.10 Final Agreement. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH
AS AMENDED HEREBY,  REPRESENT THE ENTIRE  EXPRESSION OF THE PARTIES WITH RESPECT
TO THE SUBJECT  MATTER HEREOF ON THE DATE THIS  AMENDMENT IS EXECUTED.  THE LOAN
AGREEMENT  AND  THE  OTHER  LOAN  DOCUMENTS,  AS  AMENDED  HEREBY,  MAY  NOT  BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.  NO
MODIFICATION,  RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE,  EXCEPT BY A WRITTEN  AGREEMENT SIGNED BY EACH BORROWER
AND AGENT.

     5.11 Amendment Fee. In  consideration  of the execution of this  Amendment,
Borrower  agrees to pay to Agent on the date of this  Amendment an amendment fee
of $25,000, which fee shall be fully earned and non-refundable as of the date of
this Amendment.

      [remainder of page intentionally left blank; signature page follows]

<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first written above.

                                    BORROWER:
                                    --------

                                    PANACO, INC.

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

                                    AGENT:

                                    FOOTHILL CAPITAL CORPORATION,
                                    as Agent for the Lenders

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


                                    LENDERS:

                                    FOOTHILL CAPITAL CORPORATION, as a Lender

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

                                    ABLECO FINANCE LLC, as a Lender

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