DEED OF TRUST, MORTGAGE,
                 ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING
                             AND FINANCING STATEMENT
                                      FROM


                            GARWOOD PETROSEARCH, INC.
                         (Taxpayer I.D. No. 20-5807922)

                                       TO


                             A. FRANK KLAM, TRUSTEE


                                       AND
                       LAURUS MASTER FUND, LTD., MORTGAGEE
                         (Taxpayer I.D. No. 98-0337673)


                             Dated November 1, 2006

A  CARBON,  PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
SUFFICIENT  AS  A  FINANCING  STATEMENT.

THIS  INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE  ADVANCES,  AND  COVERS  PROCEEDS  OF  COLLATERAL.

THIS INSTRUMENT COVERS, AMONG OTHER THINGS, (A) GOODS WHICH ARE OR ARE TO BECOME
FIXTURES  RELATED  TO  THE  REAL PROPERTY DESCRIBED HEREIN, AND (B) AS-EXTRACTED
COLLATERAL  RELATED  TO  THE  REAL  PROPERTY DESCRIBED HEREIN (INCLUDING WITHOUT
LIMITATION  OIL,  GAS, OTHER MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH AND ACCOUNTS ARISING OUT OF THE SALE AT THE WELLHEAD OR
MINEHEAD  THEREOF).  THIS  INSTRUMENT  IS  TO  BE  FILED FOR RECORD, AMONG OTHER
PLACES,  IN  THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES REFERENCED IN
EXHIBIT A HERETO AND SUCH FILING SHALL SERVE, AMONG OTHER PURPOSES, AS A FIXTURE
FILING  AND  AS  A  FINANCING  STATEMENT  COVERING AS-EXTRACTED COLLATERAL.  THE
MORTGAGOR


<PAGE>
HAS  AN  INTEREST  OF  RECORD  IN  THE  REAL ESTATE CONCERNED, WHICH INTEREST IS
DESCRIBED  IN  SECTION  1.1  OF  THIS  INSTRUMENT.


A  POWER  OF  SALE HAS BEEN GRANTED IN THIS MORTGAGE.  A POWER OF SALE MAY ALLOW
MORTGAGEE  (AS  HEREINAFTER  DEFINED) OR THE TRUSTEE (AS HEREINAFTER DEFINED) TO
TAKE  THE  MORTGAGED  PROPERTIES  AND  SELL  THEM  WITHOUT  GOING  TO COURT IN A
FORECLOSURE  ACTION UPON DEFAULT BY THE MORTGAGOR (AS HEREINAFTER DEFINED) UNDER
THIS  MORTGAGE.

<TABLE>
<CAPTION>
--------------------------------------------------------
WHEN RECORDED OR FILED       THIS DOCUMENT PREPARED BY:
RETURN TO:
---------------------------  ---------------------------
<S>                          <C>
---------------------------  ---------------------------
Thompson & Knight, LLP       Ryan J. Mathews
333 Clay Street, Suite 3300  Thompson & Knight, LLP
Houston, Texas 77002         333 Clay Street, Suite 3300
Attention:  Ryan J. Mathews  Houston, Texas 77002

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


                                     - 2 -
<PAGE>
                            DEED OF TRUST, MORTGAGE,
                 ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING
                             AND FINANCING STATEMENT
                                (this "Mortgage")

                                   ARTICLE I.

                     Granting Clauses; Secured Indebtedness
                     --------------------------------------

     Section  1.1     Grant  and  Mortgage.  GARWOOD  PETROSEARCH, INC., a Texas
                      --------------------
corporation  (herein called "Mortgagor"), for and in consideration of the sum of
Ten  Dollars  ($10.00)  to  Mortgagor  in  hand paid, and in order to secure the
payment  of the secured indebtedness hereinafter referred to and the performance
of  the  obligations,  covenants,  agreements,  warranties  and  undertakings of
Mortgagor  hereinafter  described,  does  hereby  GRANT,  BARGAIN, SELL, CONVEY,
TRANSFER,  ASSIGN  AND  SET  OVER to A. FRANK KLAM, Trustee (the "Trustee"), and
grant to Trustee a POWER OF SALE (pursuant to this Mortgage and applicable law),
with  respect  to, the following described properties, rights and interests (the
"Mortgaged  Properties"):

          A.     The  oil,  gas  and/or  other  mineral  properties  which  are
     described  in  Exhibit  A  attached  hereto  and  made  a  part  hereof;

          B.     Without limitation of the foregoing, all other right, title and
     interest  of  Mortgagor  of  whatever  kind or character (whether now owned
     or  hereafter  acquired by operation of law or otherwise) in and to (i) the
     oil,  gas  and/or mineral leases or other agreements described in Exhibit A
     hereto,  (ii) the lands described or referred to in Exhibit A (or described
     in  any  of the instruments described or referred to in Exhibit A), without
     regard  to  any  limitations as to specific interests, lands or depths that
     may  be  set  forth  in  Exhibit  A hereto or in any of the leases or other
     agreements  described  in  Exhibit  A  hereto  and  (iii)  any  other lands
     (including  submerged  lands)  located  anywhere  in  the  United States of
     America  or  located  offshore  the United States of America but within the
     offshore  area over which the United States of America or any State thereof
     asserts  jurisdiction;

          C.     All  of  Mortgagor's  interest  (whether now owned or hereafter
     acquired  by  operation  of  law  or  otherwise)  in  and  to all presently
     existing and hereafter created oil, gas and/or mineral unitization, pooling
     and/or  communitization  agreements, declarations and/or orders, and in and
     to  the  properties,  rights  and  interests  covered and the units created
     thereby  (including,  without limitation, units formed under orders, rules,
     regulations or other official acts of any federal, state or other authority
     having  jurisdiction),  which  cover,  affect  or  otherwise  relate to the
     properties,  rights  and  interests  described  in  clause  A  or  B above;

          D.     All  of  Mortgagor's  interest in and rights under (whether now
     owned  or  hereafter  acquired  by  operation  of  law  or  otherwise)  all
     presently  existing  and  hereafter created operating agreements, equipment
     leases,  production  sales contracts, processing agreements, transportation
     agreements,  gas  balancing  agreements,  farmout


                                        1
<PAGE>
     and/or  farm-in  agreements,  salt  water  disposal  agreements,  area  of
     mutual  interest  agreements,  and  other contracts and/or agreements which
     cover,  affect, or otherwise relate to the properties, rights and interests
     described in clause A, B or C above or to the operation of such properties,
     rights  and  interests  or  to the treating, handling, storing, processing,
     transporting  or  marketing  of  oil,  gas,  other  hydrocarbons,  or other
     minerals  produced  from  (or  allocated  to)  such  properties, rights and
     interests (including, but not limited to, those contracts listed in Exhibit
     A  hereto),  as  same may be amended or supplemented from time to time; and

          E.     All  of  Mortgagor's  interest  (whether now owned or hereafter
     acquired  by  operation  of  law  or otherwise) in and to all improvements,
     fixtures,  movable  or  immovable  property  and other real and/or personal
     property (including, without limitation, all wells, pumping units, wellhead
     equipment,  tanks,  pipelines,  flow  lines,  gathering lines, compressors,
     dehydration  units,  separators,  meters,  buildings, injection facilities,
     salt  water disposal facilities, and power, telephone and telegraph lines),
     and  all  easements,  servitudes,  rights-of-way, surface leases, licenses,
     permits  and other surface rights, which are now or hereafter used, or held
     for  use, in connection with the properties, rights and interests described
     in  clause  A,  B  or  C above, or in connection with the operation of such
     properties,  rights  and  interests,  or  in  connection with the treating,
     handling, storing, processing, transporting or marketing of oil, gas, other
     hydrocarbons,  or  other  minerals  produced  from  (or  allocated to) such
     properties,  rights  and  interests;  and

          F.     All  rights,  estates, powers and privileges appurtenant to the
     foregoing  rights,  interests  and  properties.

     TO  HAVE  AND  TO  HOLD  the Mortgaged Properties unto the Trustee, and its
successors  or  substitutes  in  this  trust, and to its or their successors and
assigns, in trust, however, upon the terms, provisions and conditions herein set
forth.

     Section 1.2     Grant of Security Interest.  In order to further secure the
                     --------------------------
payment  of the secured indebtedness hereinafter referred to and the performance
of  the  obligations,  covenants,  agreements,  warranties,  and undertakings of
Mortgagor hereinafter described, Mortgagor hereby grants to Mortgagee a security
interest  in  the  entire  interest of Mortgagor (whether now owned or hereafter
acquired  by  operation of law or otherwise) in and to the Mortgaged Properties,
to  the  extent  a  security  interest  may  be  created therein, and in and to:

     (a)     all  oil, gas, other hydrocarbons, and other minerals produced from
or allocated to the Mortgaged Properties, and any products processed or obtained
therefrom  (herein  collectively  called  the  "Production"),  together with all
proceeds  of Production (regardless of whether Production to which such proceeds
relate  occurred on or before or after the date hereof), together with all other
as-extracted  collateral  related to the Mortgaged Properties, and together with
all  liens  and  security  interests  securing  payment  of  the proceeds of the
Production,  including,  but  not limited to, those liens and security interests
provided  for  under  (i)  statutes  enacted  in  the jurisdictions in which the
Mortgaged  Properties  are  located,  or  (ii)


                                        2
<PAGE>
statutes  made applicable to the Mortgaged Properties under federal law (or some
combination  of  federal  and  state  law);

     (b)     without limitation of any other provisions of this Section 1.2, all
payments  received  in  lieu  of Production (regardless of whether such payments
accrued,  and/or  the  events  which  gave rise to such payments occurred, on or
before  or  after the date hereof), including, without limitation, "take or pay"
payments and similar payments, payments received in settlement of or pursuant to
a  judgment rendered with respect to take or pay or similar obligations or other
obligations  under  a  production sales contract, payments received in buyout or
buydown  or  other  settlement  of  a  production  sales  contract, and payments
received  under a gas balancing or similar agreement as a result of (or received
otherwise  in  settlement  of  or pursuant to judgment rendered with respect to)
rights  held  by  Mortgagor as a result of Mortgagor (and/or its predecessors in
title)  taking  or  having  taken  less  gas  from  lands covered by a Mortgaged
Property  (or  lands  pooled or unitized therewith) than their ownership of such
Mortgaged Property would entitle them to receive (the payments described in this
subsection  (b)  being  herein  called  "Payments  in  Lieu  of  Production");

     (c)     all equipment, inventory, improvements, fixtures, accessions, goods
and  other  personal  property  or  movable  property  of whatever nature now or
hereafter  located  on  or used or held for use in connection with the Mortgaged
Properties  (or  in  connection  with  the  operation  thereof  or the treating,
handling,  storing,  processing,  transporting, or marketing of Production), and
all  licenses  and  permits of whatever nature now or hereafter used or held for
use  in  connection  with  the  Mortgaged  Properties (or in connection with the
operation  thereof or the treating, handling, storing, processing, transporting,
or  marketing  of Production), and all renewals or replacements of the foregoing
or  substitutions  for  the  foregoing;

     (d)     all accounts, receivables, contract rights, choses in action (i.e.,
rights  to  enforce  contracts  or  to bring claims thereunder), commercial tort
claims,  and other general intangibles of whatever nature (regardless of whether
the  same  arose,  and/or the events which gave rise to the same occurred, on or
before  or  after  the  date  hereof)  related  to the Mortgaged Properties, the
operation  thereof  (whether  Mortgagor  is  operator  or  non-operator), or the
treating,  handling,  separation,  stabilization,  storing,  processing,
transporting,  gathering,  or  marketing  of  Production  (including,  without
limitation,  any of the same relating to payment of proceeds of Production or to
payment  of  amounts  which  could  constitute  Payments in Lieu of Production);

     (e)     Without  limitation  of the generality of the foregoing, any rights
and interests of Mortgagor under any present or future hedge or swap agreements,
cap, floor, collar, exchange, forward or other hedge or protection agreements or
transactions  relating  to  crude oil, natural gas or other hydrocarbons, or any
option  with  respect  to  any  such  agreement  or  transaction now existing or
hereafter  entered  into  by  or  on  behalf  of  Mortgagor;

     (f)     all geological, geophysical, engineering, accounting, title, legal,
and  other  technical  or business data concerning the Mortgaged Properties, the
Production  or any other item of Property (as hereinafter defined) which are now
or  hereafter in the possession of Mortgagor or in which Mortgagor can otherwise
grant  a  security  interest,  and  all  books,  files,


                                        3
<PAGE>
records,  magnetic  media,  software  and  other forms of recording or obtaining
access  to  such  data;

     (g)     all money, documents, instruments, chattel paper (including without
limitation,  electronic  chattel  paper  and  tangible  chattel paper), right to
payment  evidenced  by chattel paper, securities, accounts, payment intangibles,
general  intangibles,  letters  of  credit,  letter-of-credit rights, supporting
obligations  and  rights  to  payment of money, arising from or by virtue of any
transaction  (regardless  of  whether  such transaction occurred on or before or
after  the  date  hereof) related to the Mortgaged Properties, the Production or
any  other  item  of  Property;

     (h)     without  limitation  of  or  by  any  of the foregoing, all rights,
titles and interests now owned or hereafter acquired by Mortgagor in any and all
goods,  inventory,  equipment,  as-extracted  collateral,  documents,  money,
instruments,  intellectual  property,  certificated  securities,  uncertificated
securities,  investment  property,  letters  of  credit,  rights  to proceeds of
written  letters  of  credit  and other letter-of-credit rights, commercial tort
claims,  deposit  accounts,  payment  intangibles, general intangibles, contract
rights,  chattel  paper (including, without limitation, electronic chattel paper
and  tangible  chattel  paper),  rights  to  payment evidenced by chattel paper,
software,  supporting obligations and accounts, wherever located, and all rights
and privileges with respect thereto (all of the properties, rights and interests
described  in  subsections  (a), (b), (c), (d), (e), (f), and (g) above and this
subsection  (h)  being  herein  sometimes  collectively called the "Collateral")

     (i)     all  proceeds  of the Collateral, whether such proceeds or payments
are  goods,  money, documents, instruments, chattel paper, securities, accounts,
general  intangibles,  fixtures,  real/immovable  property,  personal/movable
property  or  other  assets  (the  Mortgaged  Properties, the Collateral and the
proceeds  of  the  Collateral  being  herein  sometimes  collectively called the
"Property");  and

     (j)     except  as otherwise expressly provided in this Mortgage, all terms
in  this  Mortgage  relating  to  the  Collateral and the grant of the foregoing
security  interest  which  are defined in the applicable Uniform Commercial Code
(the  "UCC")  shall  have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the UCC, as those meanings may
be  amended,  revised  or  replaced  from  time  to  time.  Notwithstanding  the
foregoing,  the  parties  intend that the terms used herein which are defined in
the  UCC  have, at all times, the broadest and most inclusive meanings possible.
Accordingly,  if  the  UCC  shall in the future be amended or held by a court to
define  any  term used herein more broadly or inclusively than the UCC in effect
on  the  date  of  this Mortgage, then such term, as used herein, shall be given
such  broadened meaning.  If the UCC shall in the future be amended or held by a
court  to  define  any term used herein more narrowly, or less inclusively, than
the  UCC in effect on the date of this Mortgage, such amendment or holding shall
be  disregarded  in  defining  terms  used  in  this  Mortgage.

     Section  1.3     Note, Loan Documents, Other Obligations.  This Mortgage is
                      ---------------------------------------
made  to  secure  and  enforce  the  payment  and  performance  of the following
promissory  notes,  obligations,  indebtedness  and  liabilities:


                                        4
<PAGE>
     (a)     All indebtedness and other obligations now or hereafter incurred or
arising pursuant to the provisions of that certain Securities Purchase Agreement
of  even  date  herewith  by  and  between  Mortgagor  and  Mortgagee,  and  all
supplements  thereto and amendments or modifications thereof, and all agreements
given  in substitution therefor or in restatement, renewal or extension thereof,
in  whole  or  in  part (such Securities Purchase Agreement as the same may from
time  to  time  be  supplemented,  amended or modified, and all other agreements
given  in substitution therefor or in restatement, renewal or extension thereof,
in  whole  or in part, being herein called the "Securities Purchase Agreement");

     (b)     All  indebtedness and other obligations now or hereinafter incurred
or  arising  pursuant to the provisions of the Related Agreements (as defined in
the  Securities  Purchase  Agreement)  and  all agreements given in substitution
therefor  or  in  restatement, renewal or extension thereof, in whole or in part
(such  Related  Agreements  as  the  same may from time to time be supplemented,
amended  or modified, and all other agreements given in substitution therefor or
in  restatement, renewal or extension thereof, in whole or in part, being herein
called  the  "Related  Agreements");

     (c)     One  certain  secured  term  note  of  even  date  herewith, in the
principal  amount  of  $8,300,000  made by Mortgagor and payable to the order of
Mortgagee  on  or before November 1, 2009, bearing interest as therein provided,
and  containing a provision for the payment of a reasonable additional amount as
attorneys'  fees,  as the same may from time to time be supplemented, amended or
modified, and all other notes given in substitution therefor or in modification,
renewal  or  extension  thereof, in whole or in part (such note, as from time to
time  supplemented,  amended,  or  modified  and  all  other  notes  given  in
substitution  therefor,  or  in  modification,  renewal or extension thereof, in
whole  or  in  part,  being  herein  called  the  "Note");

     (d)     All indebtedness and other obligations now or hereafter incurred or
arising  pursuant  to  or permitted by the provisions of the Securities Purchase
Agreement,  the  Related  Agreements,  the  Note,  this  Mortgage  or  any other
instrument  now or hereafter evidencing, governing, guaranteeing or securing the
"secured indebtedness" (as hereinafter defined) or any part thereof or otherwise
executed  in  connection  with  any advance or loan evidenced or governed by the
Securities  Purchase  Agreement,  the  Related  Agreements,  or  the  Note  (the
Securities  Purchase  Agreement, the Related Agreements, the Note, this Mortgage
and  such other instruments being herein sometimes collectively called the "Loan
Documents");

     (e)     Payment  of  and  performance  of  any  and  all  present or future
obligations  of  Mortgagor  according  to  the  terms  of  any present or future
interest  or  currency  rate  swap,  rate cap, rate floor, rate collar, exchange
transaction,  forward  rate  agreement,  or  other  exchange  or rate protection
agreements  or  any  option with respect to any such transaction now existing or
hereafter  entered  into  between  Mortgagor  and  Mortgagee (or any one or more
affiliates  of  any  Mortgagee);

     (f)     Payment  of  and  performance  of  any  and  all  present or future
obligations  of  Mortgagor  according to the terms of any present or future swap
agreements, cap, floor, collar, exchange transaction, forward agreement or other
exchange  or  protection  agreements  relating


                                        5
<PAGE>
to  crude  oil, natural gas or other hydrocarbons, or any option with respect to
any  such  transaction  now existing or hereafter entered into between Mortgagor
and  Mortgagee  (or  any  one  or more affiliates of Mortgagee) or any "Approved
Hedge Counterparty" from time to time a party to an Intercreditor and Collateral
Agency  Agreement  among  Mortgagor,  Mortgagee  and  the  "Approved  Hedge
Counterparties"  from  time  to  time  a  party  thereto;

     (g)     All  other loans and future advances made by Mortgagee to Mortgagor
and  all other debts, obligations and liabilities of Mortgagor of every kind and
character  now  or  hereafter  existing in favor of Mortgagee, whether direct or
indirect,  primary  or  secondary,  joint  or  several, fixed or contingent, and
whether  originally  payable  to  a  third  party  and  subsequently acquired by
Mortgagee;  and

     (h)     Without limiting the generality of the foregoing, all post-petition
interest,  expenses,  and  other  duties  and  liabilities  with  respect  to
indebtedness  or  other  obligations  described above in this Section 1.3, which
would  be owed but for the fact that they are unenforceable or not allowable due
to  the  existence  of  a  bankruptcy,  reorganization,  or  similar proceeding.

     Section  1.4     Secured  Indebtedness.  The  indebtedness  referred  to in
                      ---------------------
Section  1.3,  and  all  renewals, extensions and modifications thereof, and all
substitutions therefor, in whole or in part, are herein sometimes referred to as
the  "secured  indebtedness"  or  the  "indebtedness  secured  hereby".

                                   ARTICLE II.

                    Representations, Warranties and Covenants
                    -----------------------------------------

     Section  2.1     Mortgagor  represents, warrants, and covenants as follows:

     (a)     Title  and  Permitted  Encumbrances.  Mortgagor  has, and Mortgagor
             -----------------------------------
covenants to maintain, good and defensible title to the Property, free and clear
of all liens, security interests, and encumbrances except for (i) the contracts,
agreements,  burdens,  encumbrances  and  other  matters  set  forth  in  the
descriptions  of  certain  of the Mortgaged Properties on Exhibit A hereto, (ii)
the  liens  and  security  interests evidenced by this Mortgage, (iii) statutory
liens  for  taxes  which  are  not  yet  delinquent,  (iv) liens under operating
agreements,  pooling  orders  and  unitization  agreements,  and  mechanics' and
materialmen's  liens, with respect to obligations which are not yet due, and (v)
other  liens  and security interests (if any) in favor of Mortgagee (the matters
described  in the foregoing clauses (i), (ii), (iii), (iv), and (v) being herein
called the "Permitted Encumbrances"); Mortgagor will warrant and defend title to
the  Property,  subject  as  aforesaid,  against  the  claims and demands of all
persons claiming or to claim the same or any part thereof.  With respect to each
Mortgaged  Property,  the ownership of Mortgagor in such Mortgaged Property does
and  will,  (i) with respect to each tract of land described in Exhibit A hereto
(whether  described  directly  in  such  Exhibit  A or described by reference to
another  instrument)  in  connection  with  such Mortgaged Property, (A) entitle
Mortgagor  to  receive  (subject to the terms and provisions of this Mortgage) a
decimal  or  percentage  share  of  the oil, gas and other hydrocarbons produced
from,  or


                                        6
<PAGE>
allocated  to, such tract equal to not less than the decimal or percentage share
set  forth  in  Exhibit  A in connection with such tract opposite the words "NET
REVENUE  INTEREST"  (or  words  of  similar  import),  (B) cause Mortgagor to be
obligated  to  bear  a  decimal  or percentage share of the cost of exploration,
development  and operation of such tract of land not greater than the decimal or
percentage  share  set forth in Exhibit A in connection with such tract opposite
the  words  "WORKING  INTEREST"  (or  words  of similar import) and (ii) if such
Mortgaged  Property is shown on Exhibit A to be subject to a unit or units, with
respect  to  each  such  unit,  (A) entitle Mortgagor to receive (subject to the
terms  and  provisions  of  this  Mortgage) a decimal or percentage share of all
substances  covered  by such unit which are produced from, or allocated to, such
unit equal to not less than the decimal or percentage share set forth in Exhibit
A  in  connection  with  such  Mortgaged  Property  opposite the words "UNIT NET
REVENUE  INTEREST" or words of similar import (and if such Mortgaged Property is
subject  to more than one unit, words identifying such interest with such unit),
and  (B) obligate Mortgagor to bear a decimal or percentage share of the cost of
exploration, development and operation of such unit not greater than the decimal
or  percentage  share  set  forth in Exhibit A in connection with such Mortgaged
Property  opposite  the words "UNIT WORKING INTEREST" or words of similar import
(and  if  such  Mortgaged  Property  is  subject  to  more  than one unit, words
identifying  such  interest  with  such  unit).  With  respect  to each Property
described  in  Exhibit  A  hereto which is subject to a voluntary or involuntary
pooling,  unitization or communitization agreement and/or order, the term "tract
of  land"  as  used  in  this  Section 2.1(a) shall mean the pooled, unitized or
communitized  area  as  an  entirety  and  shall  not  be deemed to refer to any
individual  tract  committed to said pooled, unitized or communitized area.  The
above-described  shares of production which Mortgagor is entitled to receive and
shares  of expenses which Mortgagor is obligated to bear are not and will not be
subject  to  change  (other  than  changes  which  arise pursuant to non-consent
provisions  of  operating  agreements  described in Exhibit A in connection with
operations  hereafter  proposed),  except,  and  only  to  the extent that, such
changes  are reflected in Exhibit A.  There is not and will not be any unexpired
financing  statement  covering  any  part  of the Property on file in any public
office  naming any party other than Mortgagee as secured party.  Upon request by
Mortgagee,  Mortgagor  will  deliver  to Mortgagee schedules of all internal and
third  party  information  identifying  the  Mortgaged  Properties (such as, for
example,  lease  names  and numbers assigned by Mortgagor or the operator of any
Mortgaged  Property, well and/or unit and/or property names and numbers assigned
by  purchasers of Production, and internal identification names and numbers used
by  Mortgagor in accounting for revenues, costs, and joint interest transactions
attributable  to  the  Mortgaged  Properties).

     (b)     Sale  of  Production.  No  Mortgaged  Property  is  or  will become
             --------------------
subject  to  any  contractual  or  other  arrangement  (i)  whereby  payment for
production  is  or  can  be deferred for a substantial period after the month in
which  such  production is delivered (i.e., in the case of oil, not in excess of
60  days,  and  in  the  case  of gas, not in excess of 90 days) or (ii) whereby
payments  are  made  to  Mortgagor  other  than by checks, drafts, wire transfer
advises  or  other  similar  writings,  instruments  or  communications  for the
immediate  payment  of money.  Except for production sales contracts, processing
agreements  or  transportation  agreements  (or other agreements relating to the
marketing  of  Production) listed on Exhibit A (in connection with the Mortgaged
Properties  to  where  they relate), (i) no Mortgaged Property is or will become
subject  to  any  contractual  or  other arrangement for the sale, processing or


                                        7
<PAGE>
transportation  of  Production  (or  otherwise  related  to  the  marketing  of
Production)  which cannot be cancelled on 90 days' (or less) notice and (ii) all
contractual  or other arrangements for the sale, processing or transportation of
Production  (or  otherwise related to the marketing of Production) shall be bona
fide  arm's length transactions with third parties not affiliated with Mortgagor
and  shall  be  at  the best price (and on the best terms) available (such price
shall,  in  the case of Production sales which are subject to price controls, be
determined  giving  consideration  to such fact).  Neither Mortgagor, nor any of
its  predecessors in title, has received prepayments (including, but not limited
to,  payments  for  gas  not  taken  pursuant  to "take or pay" or other similar
arrangements)  for any oil, gas or other hydrocarbons produced or to be produced
from  the  Mortgaged  Properties  after  the  date  hereof, and Mortgagor hereby
covenants  not to enter into any such advance or prepayment arrangements whereby
it  accepts  consideration  for oil, gas or other hydrocarbons not yet produced.
No  Mortgaged  Property  is or will become subject to any "take or pay" or other
similar  arrangement  (i)  which  can  be  satisfied  in whole or in part by the
production or transportation of gas from other properties or (ii) as a result of
which  production  from the Mortgaged Properties may be required to be delivered
to  one or more third parties without payment (or without full payment) therefor
as  a  result  of  payments  made, or other actions taken, with respect to other
properties.  There  is no Mortgaged Property with respect to which Mortgagor, or
its  predecessors  in  title,  has,  prior  to  the  date  hereof,  taken  more
("overproduced"),  or less ("underproduced"), gas from the lands covered thereby
(or  pooled or unitized therewith) than its ownership interest in such Mortgaged
Property  would  entitle  it  to take.  Mortgagor will not after the date hereof
become  "overproduced"  (as  above  defined)  with  respect  to  any well on the
Mortgaged  Properties  (or  on  any  unit  in  which  the  Mortgaged  Properties
participate),  in  an amount in excess of Mortgagor's share of gas produced from
such well during the preceding four calendar months. No Mortgaged Property is or
will become subject to a gas balancing arrangement under which one or more third
parties  may  take  a  portion  of the production attributable to such Mortgaged
Property  without  payment  (or  without  full  payment) therefor as a result of
production  having been taken from, or as a result of other actions or inactions
with  respect  to,  other  properties.  No  Mortgaged Property is subject at the
present time to any regulatory refund obligation and, to the best of Mortgagor's
knowledge,  no  facts  exist  which  might  cause  the  same  to  be  imposed.

     (c)     Condition  of  Personal  or  Movable  Property.  The  equipment,
             ----------------------------------------------
inventory,  improvements,  fixtures,  goods  and other tangible personal/movable
property  forming  a part of the Property are and will remain in good repair and
condition  and are and will be adequate for the normal operation of the Property
in accordance with prudent industry standards; all of such Property is, and will
remain,  located  on  the  Mortgaged Properties, except for that portion thereof
which  is  or  shall be located elsewhere (including that usually located on the
Mortgaged  Properties  but  temporarily  located elsewhere) in the course of the
normal  operation  of  the  Property.

     (d)     Operation  of  Mortgaged Properties.  The Mortgaged Properties (and
             -----------------------------------
properties  unitized  therewith)  are  being  (and, to the extent the same could
adversely  affect  the  ownership or operation of the Mortgaged Properties after
the  date  hereof,  have  in  the past been), and hereafter will be, maintained,
operated  and  developed  in  a  good and workmanlike manner, in accordance with
prudent  industry  standards  and in conformity with all applicable laws and all


                                        8
<PAGE>
rules,  regulations  and  orders  of  all  duly  constituted  authorities having
jurisdiction and in conformity with all oil, gas and/or other mineral leases and
other  contracts and agreements forming a part of the Property and in conformity
with  the  Permitted  Encumbrances;  specifically  in  this  connection,  (i) no
Mortgaged  Property  is  subject  to  having allowable production after the date
hereof  reduced  below  the  full  and  regular allowable (including the maximum
permissible  tolerance)  because  of any overproduction (whether or not the same
was permissible at the time) prior to the date hereof and (ii) none of the wells
located  on  the  Mortgaged Properties (or properties unitized therewith) are or
will be deviated from the vertical more than the maximum permitted by applicable
laws,  regulations,  rules  and  orders,  and  such  wells are, and will remain,
bottomed  under  and  producing  from,  with  the  well bores wholly within, the
Mortgaged  Properties  (or,  in the case of wells located on properties unitized
therewith,  such  unitized  properties).  There  are  no  wells  being  drilled,
deepened,  plugged back or reworked, and no other operations are being conducted
for which consent is required under the applicable operating agreement (or which
are  other than normal operation of existing wells on the Mortgaged Properties);
there  are  no  proposals currently outstanding (whether made by Mortgagor or by
any other party) to drill, deepen, plug back, or rework wells, or to conduct any
such  other operations, or to abandon any wells on the Mortgaged Properties (nor
are there any such proposals which have been approved either by Mortgagor or any
other  party, with respect to which the operations covered thereby have not been
commenced).  There are no dry holes, or otherwise inactive wells, located on the
Mortgaged  Properties  or  on  lands  pooled  or  unitized therewith (including,
without  limitation,  any  wells  which  would,  if  located  in  Texas, require
compliance  with  Railroad Commission Rule 14(b)(2)), except for wells that have
been  properly  plugged  and  abandoned.  Mortgagor  has,  and  will have in the
future,  all  governmental  licenses and permits necessary or appropriate to own
and operate the Property; Mortgagor has not received notice of any violations in
respect  of  any  such  licenses  or  permits.

     (e)     Sale  or  Disposal.  Mortgagor  will not, without the prior written
             ------------------
consent  of  Mortgagee, sell, exchange, lease, transfer, or otherwise dispose of
any  part  of,  or interest in, the Property other than (i) sales, transfers and
other  dispositions  of  machinery,  equipment  and  other personal property and
fixtures  made  in connection with a release, surrender or abandonment (to which
Mortgagee has given its prior written consent) of a lease, (ii) sales, transfers
and  other  dispositions of machinery, equipment and other personal property and
fixtures  in  connection  with the abandonment (to which Mortgagee has given its
prior  written consent) of a well, (iii) sales, transfers and other dispositions
of  machinery,  equipment and other personal property and fixtures which are (A)
obsolete  for  their  intended purpose and disposed of in the ordinary course of
business  or  (B)  replaced  by articles of at least equal suitability and value
owned  by  Mortgagor  free  and  clear of all liens except this Mortgage and the
Permitted  Encumbrances,  and  (iv)  sales  of  Production which are made in the
ordinary  course  of  business  and  in  compliance  with Section 2.1(b) hereof;
provided  that nothing in clause (iv) shall be construed as limiting Mortgagee's
rights  under  Article  III of this Mortgage.  Mortgagor shall account fully and
faithfully  for  and, if Mortgagee so elects, shall promptly pay or turn over to
Mortgagee  the proceeds in whatever form received from disposition in any manner
of  any of the Property.  Mortgagor shall at all times keep the Property and its
proceeds  separate  and distinct from other property of Mortgagor and shall keep
accurate  and  complete  records  of  the  Property  and  its  proceeds.


                                        9
<PAGE>
     (f)     Ad Valorem and Severance Taxes.  Mortgagor has paid and discharged,
             ------------------------------
and  will  continue  to pay and discharge, all ad valorem taxes assessed against
the  Property  or any part thereof and all production, severance and other taxes
assessed  against,  or measured by, the Production or the value, or proceeds, of
the  Production.

     (g)     Suits  and  Claims.  There  are  no  suits,  actions,  claims,
             ------------------
investigations,  inquiries,  proceedings  or demands pending or threatened which
affect  the  Property  (including,  without  limitation,  any which challenge or
otherwise  pertain  to  Mortgagor's  title  to  the Property) and no judicial or
administrative  actions,  suits  or  proceedings  pending  or threatened against
Mortgagor.

     (h)     Environmental.
             -------------

          (i)     Current  Status.  The  Property  and  Mortgagor  are  not  in
                  ---------------
     violation  of  Applicable  Environmental  Laws  (below defined), or subject
     to any existing, pending or, to the best knowledge of Mortgagor, threatened
     investigation  or inquiry by any governmental authority or any other person
     under  or  with respect to Applicable Environmental Laws, or subject to any
     remedial  obligations  under  Applicable  Environmental  Laws,  and  are in
     compliance  with  all  permits  and  licenses  required  under  Applicable
     Environmental  Laws,  and  this representation will continue to be true and
     correct  following disclosure to the applicable governmental authorities of
     all relevant facts, conditions and circumstances, if any, pertaining to the
     Property  and  Mortgagor.  "Applicable  Environmental  Laws" shall mean any
     applicable laws, orders, rules, or regulations pertaining to safety, health
     or the environment, as such laws, orders, rules or regulations now exist or
     are  hereafter  enacted  and/or  amended  (including without limitation the
     Comprehensive  Environmental  Response,  Compensation, and Liability Act of
     1980,  as  amended  by  the Superfund Amendments and Reauthorization Act of
     1986  (as  amended, hereinafter called "CERCLA"), the Resource Conservation
     and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980,
     the  Solid  Waste  Disposal  Act  Amendments of 1980, and the Hazardous and
     Solid  Waste Amendments of 1984 (as amended, hereinafter called "RCRA") and
     applicable  state  and  local  law).  Mortgagor  undertook,  at the time of
     acquisition  of  the  Property,  all  appropriate inquiry into the previous
     ownership  and  uses  of  the  Property  consistent with good commercial or
     customary  practice.  Mortgagor  has taken all steps necessary to determine
     and  has  determined that no hazardous substances or solid wastes have been
     disposed of or otherwise released at, into, upon or under the Property. The
     use  which  Mortgagor  makes  and  intends to make of the Property will not
     result  in  the use, treatment, storage or disposal or other release of any
     hazardous  substance  or  solid waste at, into, upon or under the Property,
     except such usage, and temporary storage in anticipation of usage, as is in
     the  ordinary  course  of  business  and  in  compliance  with  Applicable
     Environmental  Laws.  The terms "hazardous substance" and "release" as used
     in this Mortgage shall have the meanings specified in CERCLA, and the terms
     "solid  waste"  and  "disposal"  (or  "disposed")  shall  have the meanings
     specified  in RCRA; provided, in the event either CERCLA or RCRA is amended
     so  as  to  broaden  the  meaning of any term defined thereby, such broader
     meaning  shall  apply  subsequent  to  the  effective  date  of  such


                                       10
<PAGE>
     amendment  and  provided  further,  to  the  extent  that  the  laws of the
     states  in  which  the Mortgaged Properties are located establish a meaning
     for "hazardous substance," "release," "solid waste," or "disposal" which is
     broader  than that specified in either CERCLA or RCRA, such broader meaning
     shall  apply.  The  "Associated  Property"  (as  such  term  is hereinafter
     defined) is not in violation of any Applicable Environmental Laws for which
     Mortgagor  or  its  predecessors  in the Property would be responsible. The
     term  "Associated Property" as used in this Mortgage shall mean any and all
     interests in and to (and or carved out of) the lands which are described or
     referred to in Exhibit A hereto, or which are otherwise described in any of
     the  oil,  gas  and/or  mineral leases or other instruments described in or
     referred  to  in such Exhibit A, whether or not such property interests are
     owned  by  Mortgagor.

          (ii)     Future  Performance.  Mortgagor  will not cause or permit the
                   -------------------
     Property  or  the  Associated  Property  or  Mortgagor  to  be in violation
     of,  or  do  anything  or permit anything to be done which will subject the
     Property  or  the Associated Property to any remedial obligations under, or
     result  in  noncompliance  with  applicable permits and licenses under, any
     Applicable  Environmental  Laws,  assuming  disclosure  to  the  applicable
     governmental  authorities  of  all  relevant  facts,  conditions  and
     circumstances,  if  any,  pertaining  to  the  Property  or  the Associated
     Property  and  Mortgagor  will  promptly notify Mortgagee in writing of any
     existing,  pending  or,  to  the  best  knowledge  of Mortgagor, threatened
     investigation,  claim, suit or inquiry by any governmental authority or any
     person in connection with any Applicable Environmental Laws. Mortgagor will
     take all steps necessary to determine that no hazardous substances or solid
     wastes have been disposed of or otherwise released on or to the Property or
     the Associated Property. Mortgagor will not cause or permit the disposal or
     other  release  of any hazardous substance or solid waste at, into, upon or
     under  the  Property or the Associated Property and covenants and agrees to
     keep  or  cause the Property and/or the Associated Property to be kept free
     of  any  hazardous substance or solid waste (except such use, and temporary
     storage  in  anticipation  of use, as is required in the ordinary course of
     business,  all while in compliance with Applicable Environmental Laws), and
     to  remove  the  same (or if removal is prohibited by law, to take whatever
     action  is  required  by  law) promptly upon discovery at its sole expense.
     Upon  Mortgagee's  reasonable  request,  at  any time and from time to time
     during  the  existence  of  this  Mortgage,  Mortgagor  will  provide  at
     Mortgagor's  sole  expense  an  inspection or audit of the Property and the
     Associated  Property  from  an  engineering  or consulting firm approved by
     Mortgagee,  indicating  the presence or absence of hazardous substances and
     solid  waste  on the Property and/or the Associated Property and compliance
     with  Applicable  Environmental  Laws.

     (i)     Not  Abandon Wells; Participate in Operations.  Mortgagor will not,
             ---------------------------------------------
without  prior  written  consent  of  Mortgagee,  abandon,  or  consent  to  the
abandonment  of, any well producing from the Mortgaged Properties (or properties
unitized therewith) so long as such well is capable (or is subject to being made
capable  through  drilling,  reworking  or  other  operations  which it would be
commercially  feasible  to conduct) of producing oil, gas, or other hydrocarbons
or  other  minerals  in commercial quantities (as determined without considering
the effect of this Mortgage).  Mortgagor will not, without prior written consent
of  Mortgagee,


                                       11
<PAGE>
elect  not  to  participate  in a proposed operation on the Mortgaged Properties
where  the  effect  of  such election would be the forfeiture either temporarily
(i.e. until a certain sum of money is received out of the forfeited interest) or
permanently  of  any  interest  in  the  Mortgaged  Properties.

     (j)     Defense  of Mortgage.  If the validity or priority of this Mortgage
             --------------------
or  of  any  rights,  titles,  liens  or security interests created or evidenced
hereby  with  respect  to  the  Property  or  any  part  thereof or the title of
Mortgagor to the Property shall be endangered or questioned or shall be attacked
directly  or  indirectly  or  if  any  legal  proceedings are instituted against
Mortgagor  with  respect  thereto,  Mortgagor  will  give  prompt written notice
thereof  to  Mortgagee  and  at Mortgagor's own cost and expense will diligently
endeavor  to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal proceedings, including,
but  not  limited  to,  the employment of counsel, the prosecution or defense of
litigation  and  the release or discharge of all adverse claims, and Trustee and
Mortgagee,  or  either  of  them  (whether  or  not  named  as  parties to legal
proceedings  with  respect thereto), are hereby authorized and empowered to take
such  additional  steps  as in their judgment and discretion may be necessary or
proper  for  the  defense of any such legal proceedings or the protection of the
validity or priority of this Mortgage and the rights, titles, liens and security
interests  created  or  evidenced  hereby,  including  but  not  limited  to the
employment of independent counsel, the prosecution or defense of litigation, the
compromise or discharge of any adverse claims made with respect to the Property,
the  purchase  of  any  tax  title  and  the  removal of prior liens or security
interests,  and  all expenditures so made of every kind and character shall be a
demand  obligation (which obligation Mortgagor hereby expressly promises to pay)
owing  by  Mortgagor to Mortgagee or Trustee (as the case may be) and shall bear
interest  from the date expended until paid at the rate described in Section 2.3
hereof,  and the party incurring such expenses shall be subrogated to all rights
of  the  person  receiving  such  payment.

     (k)     Fees and Expenses; Indemnity.  Mortgagor will reimburse Trustee and
             ----------------------------
Mortgagee  (for  purposes of this paragraph, the terms "Trustee" and "Mortgagee"
shall include the directors, officers, partners, employees and agents of Trustee
or  Mortgagee,  respectively, and any persons or entities owned or controlled by
or  affiliated  with  Trustee  or Mortgagee, respectively) for all expenditures,
including  reasonable  attorneys'  fees  and  expenses,  incurred or expended in
connection  with  (i)  the  breach  by  Mortgagor  of any covenant, agreement or
condition  contained  herein or in any other Loan Document, (ii) the exercise of
any  rights  and  remedies hereunder or under any other Loan Document, and (iii)
the  protection  of  the  Property  and/or liens and security interests therein.
Mortgagor  will  indemnify  and  hold  harmless  Trustee  and Mortgagee from and
against  (and  will  reimburse  Trustee  and Mortgagee for) all claims, demands,
liabilities,  losses,  damages  (including  without  limitation  consequential
damages),  causes of action, judgments, penalties, costs and expenses (including
without limitation reasonable attorneys' fees and expenses) which may be imposed
upon,  asserted  against or incurred or paid by either of them on account of, in
connection  with,  or  arising  out of (A) any bodily injury or death or natural
resource,  human health or property damage occurring in, at, into, under or upon
or  in  the  vicinity  of the Property through any cause whatsoever, (B) any act
performed  or  omitted  to  be  performed  hereunder  or  the  breach  of  any
representation  or  warranty herein, (C) the exercise of any rights and remedies


                                       12
<PAGE>
hereunder  or under any other Loan Document, (D) any transaction, act, omission,
event  or  circumstance arising out of or in any way connected with the Property
or  with this Mortgage or any other Loan Document, (E) any violation on or prior
to  the  Release  Date  (as hereinafter defined) of any Applicable Environmental
Law,  (F)  any  act, omission, event or circumstance existing or occurring on or
prior to the Release Date (including without limitation the presence on or under
the Property or the Associated Property or release at, into, upon, under or from
or  under  the  Property  or  the Associated Property of hazardous substances or
solid  wastes disposed of or otherwise released) resulting from or in connection
with  the  ownership, construction, occupancy, operation, use and/or maintenance
of  the  Property  or  the  Associated  Property, regardless of whether the act,
omission,  event  or  circumstance  constituted  a  violation  of any Applicable
Environmental  Law  at  the time of its existence or occurrence, and (G) any and
all  claims  or  proceedings  (whether  brought by private party or governmental
agencies)  for  human  health,  bodily  injury,  property  damage,  abatement or
remediation,  environmental  damage,  cleanup,  mitigation,  removal,  natural
resource  damage  or  impairment or any other injury or damage resulting from or
relating  to  any  hazardous  or  toxic  substance,  solid waste or contaminated
material  located  upon  or  migrating into, from or through the Property or the
Associated  Property (whether or not the release of such materials was caused by
Mortgagor,  a tenant or subtenant or a prior owner or tenant or subtenant on the
Property  or the Associated Property and whether or not the alleged liability is
attributable  to  the  use,  treatment,  handling,  storage,  generation,
transportation,  removal or disposal of such substance, waste or material or the
mere  presence  of such substance, waste or material on or under the Property or
the  Associated  Property),  which  the  Mortgagee  and/or  the Trustee may have
liability  with  respect  to due to the making of the loan or loans evidenced by
the  Note,  the  granting of this Mortgage, the exercise of any rights under the
Loan  Documents, or otherwise.  Mortgagee shall have the right to compromise and
adjust  any such claims, actions and judgments, and in addition to be the rights
to  indemnified as herein provided, all amounts paid in compromise, satisfaction
or  discharge  of  any  such  claim,  action  or  judgment, and all court costs,
attorneys'  fees  and  other  expenses  of every character expended by Mortgagee
pursuant  to  the provisions of this section shall be a demand obligation (which
obligation  Mortgagor  hereby  expressly  promises to pay) owing by Mortgagor to
Mortgagee.  The  "Release  Date"  as  used  herein shall mean the earlier of the
following  two  dates:  (i)  the  date on which the indebtedness and obligations
secured  hereby  have been paid and performed in full and this Mortgage has been
released  of  record,  or  (ii)  the  date on which the lien of this Mortgage is
foreclosed  or  a  deed  in  lieu  of  such  foreclosure  is fully effective and
recorded.  WITHOUT  LIMITATION,  IT  IS THE INTENTION OF MORTGAGOR AND MORTGAGOR
AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH
RESPECT  TO  CLAIMS,  DEMANDS,  LIABILITIES,  LOSSES, DAMAGES, CAUSES OF ACTION,
JUDGMENTS,  PENALTIES,  COSTS  AND  EXPENSES  (INCLUDING  WITHOUT  LIMITATION
REASONABLE ATTORNEYS' FEES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF  THE  NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY.  However, such
indemnities shall not apply to any particular indemnified party (but shall apply
to  the  other  indemnified  parties)  to  the  extent  the  subject  of  the
indemnification  is  caused  by or arises out of the gross negligence or willful
misconduct  of  such  particular  indemnified  party.  The foregoing indemnities
shall  not  terminate  upon the Release Date or upon the release, foreclosure or
other


                                       13
<PAGE>
termination  of  this Mortgage but will survive the Release Date, foreclosure of
this  Mortgage  or  conveyance  in lieu of foreclosure, and the repayment of the
secured  indebtedness  and  the  discharge  and release of this Mortgage and the
other documents evidencing and/or securing the secured indebtedness.  Any amount
to  be paid hereunder by Mortgagor to Mortgagee and/or Trustee shall be a demand
obligation  owing  by Mortgagor to Mortgagee and/or Trustee and shall be subject
to  and  covered  by  the  provisions  of  Section  2.3  hereof.

     (l)     Further  Assurances.  Mortgagor  will, on request of Mortgagee, (i)
             -------------------
promptly  correct  any  defect, error or omission which may be discovered in the
contents of this Mortgage, or in any other Loan Document, or in the execution or
acknowledgment  of  this  Mortgage  or  any  other  Loan Document; (ii) execute,
acknowledge, deliver and record and/or file such further instruments (including,
without  limitation,  further  deeds  of  trust, mortgages, security agreements,
financing  statements,  continuation  statements, and assignments of production,
accounts, funds, contract rights, general intangibles, and proceeds) and do such
further  acts  as  may  be  necessary,  desirable  or  proper  to carry out more
effectively  the  purposes  of this Mortgage and the other Loan Documents and to
more  fully  identify and subject to the liens and security interests hereof any
property  intended  to  be  covered  hereby, including specifically, but without
limitation,  any  renewals,  additions,  substitutions,  replacements,  or
appurtenances to the Property; and (iii) execute, acknowledge, deliver, and file
and/or  record  any document or instrument (including specifically any financing
statement)  desired  by  Mortgagee  to protect the lien or the security interest
hereunder against the rights or interests of third persons.  Mortgagor shall pay
all  costs  connected  with  any  of  the  foregoing.

     (m)     Not  a  Foreign Person.  Mortgagor is not a "foreign person" within
             ----------------------
the  meaning  of  the  Internal  Revenue  Code of 1986, as amended, (hereinafter
called the "Code"), Sections 1445 and 7701 (i.e. Mortgagor is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or foreign estate
as  those  terms  are  defined  in  the  Code  and  any  regulations promulgated
thereunder).

     Section  2.2     Compliance  by  Operator.  As to any part of the Mortgaged
                      ------------------------
Properties  which  is  not a working interest, Mortgagor agrees to take all such
action  and to exercise all rights and remedies as are available to Mortgagor to
cause  the  owner or owners of the working interest in such properties to comply
with  the  covenants  and agreements contained herein; and as to any part of the
Mortgaged  Properties  which  is  a  working interest but which is operated by a
party  other  than  Mortgagor,  Mortgagor  agrees to take all such action and to
exercise  all  rights and remedies as are available to Mortgagor (including, but
not limited to, all rights under any operating agreement) to cause the party who
is  the  operator  of  such property to comply with the covenants and agreements
contained  herein.

     Section  2.3     Performance on Mortgagor's Behalf.  Mortgagor agrees that,
                      ---------------------------------
if  Mortgagor  fails  to  perform  any act or to take any action which hereunder
Mortgagor  is  required  to perform or take, or to pay any money which hereunder
Mortgagor  is  required  to pay, Mortgagee, in Mortgagor's name or its own name,
may, but shall not be obligated to, perform or cause to be performed such act or
take  such  action  or pay such money, and any expenses so incurred by Mortgagee
and  any  money  so  paid  by  Mortgagee  shall  be a demand obligation owing by
Mortgagor  to  Mortgagee  (which  obligation  Mortgagor  hereby  expressly


                                       14
<PAGE>
promises to pay) and Mortgagee, upon making such payment, shall be subrogated to
all  of  the  rights  of  the person, corporation or body politic receiving such
payment.  Each  amount  due  and  owing by Mortgagor to Trustee and/or Mortgagee
pursuant  to  this  Mortgage shall bear interest each day, from the date of such
expenditure  or payment until paid, at a rate equal to rate as provided for past
due principal under the Note (provided that, should applicable law provide for a
maximum  permissible  rate  of  interest on such amounts, such rate shall not be
greater  than  such  maximum  permissible rate); all such amounts, together with
such  interest thereon, shall be a part of the secured indebtedness and shall be
secured  by  this  Mortgage.

                                  ARTICLE III.

                Assignment of Production, Accounts, and Proceeds
                ------------------------------------------------

     Section 3.1     Assignment of Production.  Mortgagor does hereby absolutely
                     ------------------------
and  unconditionally  assign,  transfer and set over to Mortgagee all Production
which  accrues to Mortgagor's interest in the Mortgaged Properties, all proceeds
of  such  Production and all Payments in Lieu of Production (herein collectively
referred  to  as  the  "Production  Proceeds"),  together with the immediate and
continuing  right  to  collect  and receive such Production Proceeds.  Mortgagor
directs  and  instructs  any  and  all  purchasers  of  any Production to pay to
Mortgagee  all of the Production Proceeds accruing to Mortgagor's interest until
such  time as such purchasers have been furnished with evidence that all secured
indebtedness  has been paid and that this Mortgage has been released.  Mortgagor
agrees  that  no  purchasers of the Production shall have any responsibility for
the  application  of  any  funds  paid  to  Mortgagee.

     Section  3.2     Effectuating  Payment of Production Proceeds to Mortgagee.
                      ---------------------------------------------------------
Independent  of  the  foregoing  provisions  and  authorities  herein  granted,
Mortgagor  agrees  to  execute and deliver any and all transfer orders, division
orders  and  other instruments that may be requested by Mortgagee or that may be
required  by  any  purchaser  of  any Production for the purpose of effectuating
payment  of  the  Production Proceeds to Mortgagee.  If under any existing sales
agreements,  other  than  division  orders  or  transfer  orders, any Production
Proceeds  are  required  to  be paid by the purchaser to Mortgagor so that under
such  existing  agreements payment cannot be made of such Production Proceeds to
Mortgagee,  Mortgagor's  interest  in  all  Production Proceeds under such sales
agreements and in all other Production Proceeds which for any reason may be paid
to  Mortgagor  shall,  when  received  by  Mortgagor,  constitute trust funds in
Mortgagor's  hands  and  shall  be  immediately paid over to Mortgagee.  Without
limitation  upon any of the foregoing, Mortgagor hereby constitutes and appoints
Mortgagee  as  Mortgagor's  special  attorney-in-fact  (with  full  power  of
substitution,  either generally or for such periods or purposes as Mortgagee may
from time to time prescribe) in the name, place and stead of Mortgagor to do any
and  every act and exercise any and every power that Mortgagor might or could do
or  exercise  personally  with respect to all Production and Production Proceeds
(the same having been assigned by Mortgagor to Mortgagee pursuant to Section 3.1
hereof), expressly inclusive, but not limited to, the right, power and authority
to:

     (a)     Execute  and  deliver in the name of Mortgagor any and all transfer
orders,  division  orders, letters in lieu of transfer orders, indemnifications,
certificates  and  other


                                       15
<PAGE>
instruments  of  every nature that may be requested or required by any purchaser
of  Production  from  any  of  the  Mortgaged  Properties  for  the  purposes of
effectuating  payment of the Production Proceeds to Mortgagee or which Mortgagee
may otherwise deem necessary or appropriate to effect the intent and purposes of
the  assignment  contained  in  Section  3.1;  and

     (b)     If under any product sales agreements other than division orders or
transfer  orders,  any  Production  Proceeds  are  required  to  be  paid by the
purchaser  to Mortgagor so that under such existing agreements payment cannot be
made  of  such Production Proceeds to Mortgagee, to make, execute and enter into
such  sales agreements or other agreements as are necessary to direct Production
Proceeds  to  be  payable  to  Mortgagee;

giving  and  granting  unto said attorney-in-fact full power and authority to do
and perform any and every act and thing whatsoever necessary and requisite to be
done as fully and to all intents and purposes, as Mortgagor might or could do if
personally  present;  and  Mortgagor  shall  be  bound  thereby  as  fully  and
effectively  as if Mortgagor had personally executed, acknowledged and delivered
any  of  the  foregoing  certificates  or documents.  The powers and authorities
herein conferred upon Mortgagee may be exercised by Mortgagee through any person
who, at the time of the execution of the particular instrument, is an officer of
Mortgagee.  The  power  of  attorney  herein  conferred  is granted for valuable
consideration  and  hence is coupled with an interest and is irrevocable so long
as  the  secured  indebtedness,  or  any part thereof, shall remain unpaid.  All
persons  dealing  with  Mortgagee  or any substitute shall be fully protected in
treating the powers and authorities conferred by this paragraph as continuing in
full  force  and  effect  until  advised  by  Mortgagee  that  all  the  secured
indebtedness  is  fully  and  finally  paid.  Mortgagee  may,  but  shall not be
obligated  to,  take such action as it deems appropriate in an effort to collect
the  Production  Proceeds  and  any  reasonable  expenses  (including reasonable
attorney's  fees)  so  incurred  by  Mortgagee  shall  be a demand obligation of
Mortgagor and shall be part of the secured indebtedness, and shall bear interest
each  day,  from the date of such expenditure or payment until paid, at the rate
described  in  Section  2.3  hereof.

     Section  3.3     Change of Purchaser.  To the extent a default has occurred
                      -------------------
hereunder  and  is  continuing, should any person now or hereafter purchasing or
taking  Production  fail to make payment promptly to Mortgagee of the Production
Proceeds,  Mortgagee  shall,  subject to then existing contractual prohibitions,
have  the right to make, or to require Mortgagor to make, a change of purchaser,
and  the  right  to  designate or approve the new purchaser, and Mortgagee shall
have  no liability or responsibility in connection therewith so long as ordinary
care  is  used  in  making  such  designation.

     Section  3.4     Application of Production Proceeds.  So long as no default
                      ----------------------------------
has  occurred  hereunder,  the  Production Proceeds received by Mortgagee during
each  calendar  month  shall  on  the  first business day of the next succeeding
calendar  month (or, at the option of Mortgagee, on any earlier date) be applied
by  Mortgagee  as  follows:

          FIRST,  to  the  payment  of  all  secured  indebtedness  then due and
          -----
     payable,  in  such  manner  and  order  as  Mortgagee  deems  advisable;


                                       16
<PAGE>
          SECOND, to the prepayment of the remainder of the secured indebtedness
          ------
     in  such  manner  and  order  and  to  such  extent  as  Mortgagee  deems
     advisable;  and

          THIRD, the remainder, if any, of the Production Proceeds shall be paid
          -----
     over  to  Mortgagor  or  to  Mortgagor's  order or to such other parties as
     may  be  entitled  thereto  by  law.

After  a  default  hereunder  has occurred, all Production Proceeds from time to
time  in the hands of Mortgagee shall be applied by it toward the payment of all
secured  indebtedness  (principal,  interest, attorneys' fees and other fees and
expenses)  at  such  times  and  in  such manner and order and to such extent as
Mortgagee  deems  advisable.

     Section 3.5     Release From Liability; Indemnification.  Mortgagee and its
                     ---------------------------------------
successors  and  assigns are hereby released and absolved from all liability for
failure  to  enforce  collection  of  the Production Proceeds and from all other
responsibility  in  connection  therewith,  except the responsibility of each to
account  to  Mortgagor for funds actually received by each.  Mortgagor agrees to
indemnify  and hold harmless Mortgagee (for purposes of this paragraph, the term
"Mortgagee"  shall  include  the  directors,  officers,  partners, employees and
agents  of  Mortgagee  and  any  persons  or  entities owned or controlled by or
affiliated  with  Mortgagee)  from and against all claims, demands, liabilities,
losses,  damages (including without limitation consequential damages), causes of
action,  judgments,  penalties, costs and expenses (including without limitation
reasonable  attorneys'  fees  and  expenses)  imposed  upon, asserted against or
incurred  or  paid  by  Mortgagee  by  reason  of  the  assertion that Mortgagee
received,  either  before  or after payment in full of the secured indebtedness,
funds  from  the  production  of  oil, gas, other hydrocarbons or other minerals
claimed by third persons (and/or funds attributable to sales of production which
(i)  were  made at prices in excess of the maximum price permitted by applicable
law  or (ii) were otherwise made in violation of laws, rules, regulations and/or
orders  governing  such  sales),  and  Mortgagee  shall have the right to defend
against  any  such  claims or actions, employing attorneys of its own selection,
and if not furnished with indemnity satisfactory to it, Mortgagee shall have the
right  to  compromise  and adjust any such claims, actions and judgments, and in
addition to the rights to be indemnified as herein provided, all amounts paid by
Mortgagee  in compromise, satisfaction or discharge of any such claim, action or
judgment,  and  all  court  costs,  attorneys'  fees and other expenses of every
character expended by Mortgagee pursuant to the provisions of this section shall
be  a demand obligation (which obligation Mortgagor hereby expressly promises to
pay)  owing  by  Mortgagor  to  Mortgagee and shall bear interest, from the date
expended until paid, at the rate described in Section 2.3 hereof.  The foregoing
indemnities  shall  not  terminate  upon  the  Release Date or upon the release,
foreclosure  or  other termination of this Mortgage but will survive the Release
Date, foreclosure of this Mortgage or conveyance in lieu of foreclosure, and the
repayment  of  the  secured  indebtedness  and the discharge and release of this
Mortgage  and  the  other  documents  evidencing  and/or  securing  the  secured
indebtedness.  WITHOUT  LIMITATION,  IT  IS  THE  INTENTION  OF  MORTGAGOR  AND
MORTGAGOR AGREES THAT THE FOREGOING RELEASES AND INDEMNITIES SHALL APPLY TO EACH
INDEMNIFIED  PARTY  WITH  RESPECT  TO  ALL CLAIMS, DEMANDS, LIABILITIES, LOSSES,
DAMAGES  (INCLUDING WITHOUT LIMITATION CONSEQUENTIAL DAMAGES), CAUSES OF ACTION,


                                       17
<PAGE>
JUDGMENTS,  PENALTIES,  COSTS  AND  EXPENSES  (INCLUDING  WITHOUT  LIMITATION
REASONABLE ATTORNEYS' FEES AND EXPENSES) WHICH IN WHOLE OR IN PART ARE CAUSED BY
OR  ARISE  OUT  OF  THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY.
However,  such  indemnities  shall not apply to any particular indemnified party
(but  shall apply to the other indemnified parties) to the extent the subject of
the  indemnification  is  caused  by  or  arises  out of the gross negligence or
willful  misconduct  of  such  particular  indemnified  party.

     Section  3.6     Mortgagor's  Absolute  Obligation  to  Pay  Note.  Nothing
                      ------------------------------------------------
herein  contained  shall  detract  from or limit the obligations of Mortgagor to
make  prompt payment of the Note, and any and all other secured indebtedness, at
the time and in the manner provided herein and in the Loan Documents, regardless
of whether the Production and Production Proceeds herein assigned are sufficient
to  pay  same,  and the rights under this Article III shall be cumulative of all
other  rights  under  the  Loan  Documents.

                                   ARTICLE IV.

                              Remedies Upon Default
                              ---------------------

     Section 4.1     Default.  The term "default" as used in this Mortgage shall
                     -------
mean  the  occurrence  of  any  of  the  following  events:

     (a)     the  occurrence of an "Event of Default" as defined in the Note; or

     (b)     the  failure  of  Mortgagor to pay over to Mortgagee any Production
Proceeds  which  are  receivable  by Mortgagee under this Mortgage but which are
paid  to  Mortgagor rather than Mortgagee (either as provided for in Section 3.2
hereof  or  otherwise),  except  Production  Proceeds  paid over to Mortgagor by
Mortgagee  under  clause  THIRD  of  Section  3.4.

     Section  4.2     Acceleration  of  Secured  Indebtedness.  The  secured
                      ---------------------------------------
indebtedness  may  be  (and  in  certain  circumstances  shall automatically be)
accelerated  as  provided  in  the  Note.

     Section  4.3     Pre-Foreclosure  Remedies.  Upon  the  occurrence  of  a
                      -------------------------
default,  or  any  event  or  circumstance  which, with the lapse of time or the
giving  of  notice,  or both, would constitute a default hereunder, Mortgagee is
authorized,  prior  or  subsequent  to  the  institution  of  any  foreclosure
proceedings,  to  enter  upon  the  Property,  or  any part thereof, and to take
possession  of  the  Property and all books and records relating thereto, and to
exercise  without interference from Mortgagor any and all rights which Mortgagor
has  with  respect  to  the  management,  possession,  operation,  protection or
preservation  of  the  Property.  If necessary to obtain the possession provided
for  above,  Mortgagee  may invoke any and all remedies to dispossess Mortgagor,
including,  but  not  limited  to,  summary  proceeding  or  restraining  order.
Mortgagor agrees to peacefully surrender possession of the property upon default
if  requested.  All  costs, expenses and liabilities of every character incurred
by  Mortgagee  in managing, operating, maintaining, protecting or preserving the
Property shall constitute a demand obligation (which obligation Mortgagor hereby
expressly  promises  to  pay)  owing  by  Mortgagor  to Mortgagee and shall bear
interest  from  date  of  expenditure  until  paid  at  the  rate


                                       18
<PAGE>
described  in Section 2.3 hereof, all of which shall constitute a portion of the
secured  indebtedness  and  shall  be  secured by this Mortgage and by any other
instrument  securing  the  secured  indebtedness.  In connection with any action
taken  by  Mortgagee pursuant to this Section 4.3, MORTGAGEE SHALL NOT BE LIABLE
FOR  ANY  LOSS  SUSTAINED  BY  MORTGAGOR  RESULTING  FROM ANY ACT OR OMISSION OF
MORTGAGEE (INCLUDING MORTGAGEE'S OWN NEGLIGENCE) IN MANAGING THE PROPERTY UNLESS
SUCH  LOSS  IS  CAUSED BY THE WILLFUL MISCONDUCT AND BAD FAITH OF MORTGAGEE, nor
shall  Mortgagee  be  obligated  to perform or discharge any obligation, duty or
liability  of  Mortgagor  arising  under  any  agreement  forming  a part of the
Property  or  arising  under  any  Permitted  Encumbrance  or otherwise arising.
Mortgagor  hereby  assents  to,  ratifies  and  confirms  any and all actions of
Mortgagee  with  respect  to  the  Property  taken  under  this  Section  4.3.

     Section  4.4     Foreclosure.
                      -----------

     (a)     Upon  the  occurrence  of  a  default,  Trustee  is  authorized and
empowered  and it shall be Trustee's special duty at the request of Mortgagee to
sell the Mortgaged Properties, or any part thereof, as an entirety or in parcels
as  Mortgagee may elect, at such place or places and otherwise in the manner and
upon  such  notice  as  may  be  required  by law or, in the absence of any such
requirement,  as  Trustee  may  deem  appropriate.  If  Trustee shall have given
notice  of  sale  hereunder,  any  successor  or  substitute  Trustee thereafter
appointed  may  complete  the  sale  and the conveyance of the property pursuant
thereto  as if such notice had been given by the successor or substitute Trustee
conducting  the  sale.  Cumulative  of the foregoing and the other provisions of
this  Section  4.4,  such  sales of all or any part of such Mortgaged Properties
shall  be conducted at the courthouse of any county (whether or not the counties
in  which  such Mortgaged Properties are located are contiguous) in the State of
Texas  in  which any part of such Mortgaged Properties is situated or which lies
shoreward  of any Mortgaged Property (i.e., to the extent a particular Mortgaged
Property  lies offshore within the reasonable projected seaward extension of the
relevant  county  boundary),  at  public  venue  to  the highest bidder for cash
between the hours of ten o'clock a.m. and four o'clock p.m. on the first Tuesday
in  any  month or at such other place, time and date as provided by the statutes
of  the State of Texas then in force governing sales of real estate under powers
conferred by deed of trust, after having given notice of such sale in accordance
with  such  statutes.

     A  POWER  OF  SALE  HAS BEEN GRANTED IN THIS MORTGAGE.  A POWER OF SALE MAY
     ---------------------------------------------------------------------------
ALLOW  TRUSTEE  TO  TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO
--------------------------------------------------------------------------------
COURT  IN  A  FORECLOSURE  ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS MORTGAGE.
-------------------------------------------------------------------------------

     (b)     Upon the occurrence of a default, Mortgagee may exercise its rights
of  enforcement  with  respect  to  the  Collateral under the Texas Business and
Commerce  Code,  as  amended,  or under the Uniform Commercial Code or any other
statute  in  force  in  any  state  to  the  extent  the same is applicable law.
Cumulative  of  the  foregoing  and  the  other  provisions of this Section 4.4:


                                       19
<PAGE>
          (i)     Mortgagee may enter upon the Mortgaged Properties or otherwise
     upon  Mortgagor's  premises  to  take  possession  of, assemble and collect
     the  Collateral  or  to  render  it  unusable;  and

          (ii)     Mortgagee  may  require  Mortgagor to assemble the Collateral
     and  make  it  available  at  a  place  Mortgagee  designates  which  is
     mutually convenient to allow Mortgagee to take possession or dispose of the
     Collateral;  and

          (iii)     written  notice  mailed  to  Mortgagor as provided herein at
     least  five  (5)  days  prior  to the date of public sale of the Collateral
     or  prior  to  the  date after which private sale of the Collateral will be
     made  shall  constitute  reasonable  notice;  and

          (iv)     in  the  event  of a foreclosure of the liens and/or security
     interests  evidenced  hereby,  the  Collateral,  or  any  part thereof, and
     the  Mortgaged  Properties,  or  any  part  thereof,  may, at the option of
     Mortgagee,  be  sold,  as  a  whole  or  in  parts,  together or separately
     (including, without limitation, where a portion of the Mortgaged Properties
     is  sold,  the  Collateral  related  thereto  may  be  sold  in  connection
     therewith);  and

          (v)     the  expenses  of sale provided for in clause FIRST of Section
     4.7  shall  include  the  reasonable  expenses  of retaking the Collateral,
     or  any  part  thereof, holding the same and preparing the same for sale or
     other  disposition;  and

          (vi)     should,  under this subsection, the Collateral be disposed of
     other  than  by  sale,  any  proceeds  of such disposition shall be treated
     under  Section  4.7  as  if  the  same  were  sales  proceeds.

     (c)     To  the  extent  permitted by applicable law, the sale hereunder of
less  than the whole of the Property shall not exhaust the powers of sale herein
granted  or  the right to judicial foreclosure, and successive sale or sales may
be  made  until the whole of the Property shall be sold, and, if the proceeds of
such  sale  of  less  than  the  whole  of  the  Property shall be less than the
aggregate  of the indebtedness secured hereby and the expense of conducting such
sale,  this Mortgage and the liens and security interests hereof shall remain in
full force and effect as to the unsold portion of the Property just as though no
sale had been made; provided, however, that Mortgagor shall never have any right
to  require  the  sale of less than the whole of the Property.  In the event any
sale  hereunder  is  not  completed or is defective in the opinion of Mortgagee,
such  sale  shall  not  exhaust  the  powers  of  sale hereunder or the right to
judicial  foreclosure,  and Mortgagee shall have the right to cause a subsequent
sale or sales to be made.  Any sale may be adjourned by announcement at the time
and  place  appointed  for  such  sale  without  further notice except as may be
required  by law.  The Trustee or his successor or substitute, and the Mortgagee
acting  under  power  of  sale, respectively, may appoint or delegate any one or
more  persons  as  agent to perform any act or acts necessary or incident to any
sale  held  by it (including, without limitation, the posting of notices and the
conduct  of sale), and such appointment need not be in writing or recorded.  Any
and all statements of fact or other recitals made in any deed or deeds, or other
instruments of transfer, given in connection with a sale as to nonpayment of the
secured  indebtedness  or  as  to  the


                                       20
<PAGE>
occurrence  of any default, or as to all of the secured indebtedness having been
declared to be due and payable, or as to the request to sell, or as to notice of
time,  place  and  terms  of sale and the properties to be sold having been duly
given,  or,  with  respect  to  any  sale  by  the  Trustee, or any successor or
substitute trustee, as to the refusal, failure or inability to act of Trustee or
any  substitute  or  successor  trustee  or the appointment of any substitute or
successor  trustee, or as to any other act or thing having been duly done, shall
be  taken  as  prima  facie  evidence  of  the  truth of the facts so stated and
recited.  With  respect  to  any  sale  held  in foreclosure of the liens and/or
security  interests  covered  hereby, it shall not be necessary for the Trustee,
Mortgagee,  any  public  officer acting under execution or order of the court or
any  other  party to have physically present or constructively in his/her or its
possession,  either  at  the  time of or prior to such sale, the Property or any
part  thereof.

     Section  4.5     Effective as Mortgage.  This instrument shall be effective
                      ---------------------
as  a  mortgage  as well as a deed of trust and upon the occurrence of a default
may be foreclosed as to the Mortgaged Properties, or any portion thereof, in any
manner  permitted  by applicable law, and any foreclosure suit may be brought by
Trustee  or  by  Mortgagee.  To  the  extent,  if  any,  required  to cause this
instrument  to  be  so  effective  as  a  mortgage  as  well as a deed of trust,
Mortgagor  hereby mortgages the Mortgaged Properties to Mortgagee.  In the event
a  foreclosure  hereunder  as  to the Mortgaged Properties, or any part thereof,
shall  be commenced by Trustee, or his substitute or successor, Mortgagee may at
any  time before the sale of such properties direct Trustee to abandon the sale,
and  may  then  institute  suit  for the foreclosure of this Mortgage as to such
properties.  It  is  agreed  that  if  Mortgagee should institute a suit for the
foreclosure  of  this  Mortgage, Mortgagee may at any time before the entry of a
final  judgment  in  said  suit  dismiss  the  same,  and  require  Trustee, its
substitute  or successor, to sell the Mortgaged Properties, or any part thereof,
in  accordance  with  the  provisions  of  this  Mortgage.

     Section  4.6     Receiver.  In  addition  to  all  other  remedies  herein
                      --------
provided  for,  Mortgagor  agrees  that, upon the occurrence of a default or any
event  or circumstance which, with the lapse of time or the giving of notice, or
both, would constitute a default hereunder, Mortgagee shall as a matter of right
be entitled to the appointment of a receiver or receivers for all or any part of
the  Property,  whether  such  receivership  be  incident to a proposed sale (or
sales)  of  such  property  or otherwise, and without regard to the value of the
Property  or the solvency of any person or persons liable for the payment of the
indebtedness  secured  hereby,  and  Mortgagor  does  hereby  consent  to  the
appointment  of  such receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by Mortgagee, and
agrees  that  such appointment shall in no manner impair, prejudice or otherwise
affect  the  rights  of Mortgagee under Article III hereof.  Mortgagor expressly
waives  notice  of a hearing for appointment of a receiver and the necessity for
bond  or  an  accounting  by the receiver.  Nothing herein is to be construed to
deprive  Mortgagee  of  any  other  right,  remedy  or  privilege  it may now or
hereafter  have  under the law to have a receiver appointed.  Any money advanced
by  Mortgagee  in  connection  with  any  such  receivership  shall  be a demand
obligation  (which  obligation Mortgagor hereby expressly promises to pay) owing
by  Mortgagor to Mortgagee and shall bear interest, from the date of making such
advancement  by  Mortgagee  until  paid,  at  the  rate described in Section 2.3
hereof.


                                       21
<PAGE>
     Section  4.7     Proceeds of Foreclosure.  The proceeds of any sale held in
                      -----------------------
foreclosure  of  the  liens  and/or security interests evidenced hereby shall be
applied:

          FIRST,  to the payment of all necessary costs and expenses incident to
          -----
     such  foreclosure  sale,  including  but  not  limited  to  all court costs
     and  charges  of  every  character  in  the event foreclosed by suit or any
     judicial  proceeding and including, but not limited to, a reasonable fee to
     the  Trustee  if  such  sale  was  made  by  the  Trustee  acting under the
     provisions  of  Section  4.4(a);

          SECOND,  to  the  payment  of  the  secured  indebtedness  (including
          ------
     specifically  without  limitation  the  principal,  interest and attorneys'
     fees  due  and  unpaid  on the Note and the amounts due and unpaid and owed
     under  this  Mortgage) in such manner and order as Mortgagee may elect; and

          THIRD,  the  remainder,  if  any  there  shall  be,  shall  be paid to
          -----
     Mortgagor,  or  to  Mortgagor's  heirs,  devisees,  representatives,
     successors  or assigns, or such other persons as may be entitled thereto by
     law.

     Section  4.8     Mortgagee as Purchaser.  Mortgagee shall have the right to
                      ----------------------
become  the  purchaser  at  any  sale  held  in  foreclosure of the liens and/or
security interests evidenced hereby, and shall have the right to credit upon the
amount  of  the  bid made therefor, to the extent necessary to satisfy such bid,
the  secured  indebtedness  owing  to  Mortgagee.

     Section  4.9     Foreclosure  as to Matured Debt.  Upon the occurrence of a
                      -------------------------------
default, Mortgagee shall have the right to proceed with foreclosure of the liens
and/or  security interests evidenced hereby without declaring the entire secured
indebtedness  due,  and  in  such  event,  any such foreclosure sale may be made
subject  to  the unmatured part of the secured indebtedness and shall not in any
manner  affect  the  unmatured  part of the secured indebtedness, but as to such
unmatured  part,  this  Mortgage  shall  remain in full force and effect just as
though  no  sale  had  been made.  The proceeds of such sale shall be applied as
provided  in Section 4.7 except that the amount paid under clause SECOND thereof
shall  be  only the matured portion of the secured indebtedness and any proceeds
of  such  sale  in  excess  of  those  provided  for in clauses FIRST and SECOND
(modified  as  provided above) shall be applied as provided in clause SECOND AND
THIRD  of  Section  3.4  hereof.  Several  sales  may  be made hereunder without
exhausting the right of sale for any unmatured part of the secured indebtedness.

     Section 4.10     Remedies Cumulative.  All remedies herein provided for are
                      -------------------
cumulative  of each other and of all other remedies existing at law or in equity
and  are cumulative of any and all other remedies provided for in any other Loan
Document, and, in addition to the remedies herein provided, there shall continue
to  be available all such other remedies as may now or hereafter exist at law or
in  equity for the collection of the secured indebtedness and the enforcement of
the  covenants herein and the foreclosure of the liens and/or security interests
evidenced  hereby,  and the resort to any remedy provided for hereunder or under
any  such  other  Loan  Document  or  provided  for by law shall not prevent the
concurrent or subsequent employment of any other appropriate remedy or remedies.


                                       22
<PAGE>
     Section  4.11     Discretion  as  to Security.  Mortgagee may resort to any
                       ---------------------------
security  given  by  this  Mortgage  or  to  any  other security now existing or
hereafter  given  to secure the payment of the secured indebtedness, in whole or
in part, and in such portions and in such order as may seem best to Mortgagee in
its  sole  and uncontrolled discretion, and any such action shall not in any way
be  considered  as  a  waiver  of any of the rights, benefits, liens or security
interests  evidenced  by  this  Mortgage.

     Section  4.12     Mortgagor's Waiver of Certain Rights.  To the full extent
                       ------------------------------------
Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time insist
upon,  plead, claim or take the benefit or advantage of any law now or hereafter
in  force  providing  for  any  appraisement,  valuation,  stay,  extension  or
redemption,  and  Mortgagor,  for  Mortgagor,  Mortgagor's  heirs,  devisees,
representatives,  successors  and  assigns,  and  for  any  and all persons ever
claiming  any  interest  in  the Property, to the extent permitted by applicable
law,  hereby  waives and releases all rights of appraisement, valuation, stay of
execution, redemption, notice of intention to mature or declare due the whole of
the  secured indebtedness, notice of election to mature or declare due the whole
of  the  secured  indebtedness  and  all  rights  to  a  marshaling of assets of
Mortgagor,  including  the Property, or to a sale in inverse order of alienation
in  the  event  of  foreclosure  of  the  liens and/or security interests hereby
created.  Mortgagor shall not have or assert any right under any statute or rule
of  law  pertaining  to  the  marshaling  of  assets,  sale  in inverse order of
alienation,  the  exemption  of  homestead,  the  administration  of  estates of
decedents, or other matters whatever to defeat, reduce or affect the right under
the  terms  of this Mortgage to a sale of the Property for the collection of the
secured  indebtedness  without  any prior or different resort for collection, or
the  right  under  the  terms  of  this  Mortgage  to the payment of the secured
indebtedness  out of the proceeds of sale of the Property in preference to every
other  claimant  whatever.  In  particular,  but  without  limitation  of  the
foregoing,  to the fullest extent that Mortgagor may do so, Mortgagor waives (i)
the  benefit  of all laws now existing or that hereafter may be enacted limiting
the  amount  of  indebtedness  that  can  be  collected,  either before or after
foreclosure,  by  court  action or by power of sale, in relation to the value of
the  property  described  herein;  and  (ii) the benefit of all laws that may be
hereafter enacted in any way limiting the time for commencement of an action for
deficiency  judgment  or  any other action for the collection of indebtedness by
reference  to  the  time  of  exercise  of the power of sale or any other remedy
available  hereunder,  or  extending  the  time  for enforcing collection of the
indebtedness  or creating or extending a period of redemption from any sale made
in  collecting  the  indebtedness.  Mortgagor  acknowledges  and agrees that the
property  described  herein  may  be part of collateral located in more than one
state,  and therefor Mortgagor waives and relinquishes any and all rights it may
have,  whether  at law or equity, to require the Trustee and Mortgagee, and each
of  them, to proceed to enforce or exercise any rights, powers and remedies they
may  have  under  the Loan Documents in any particular manner, in any particular
order,  or  in  any  particular  state or other jurisdiction.  Mortgagor further
agrees  that any particular proceeding, including without limitation foreclosure
through  court  action  (in  a  state or federal court) or power of sale, may be
brought  and  prosecuted  in any one or more states as to all or any part of the
collateral,  wherever  located,  without regard to the fact that any one or more
prior  or contemporaneous proceedings have been commenced elsewhere with respect
to the same or any other part of the collateral.  If any law referred to in this
section  and  now  in  force, of which Mortgagor or Mortgagor's heirs, devisees,
representatives,


                                       23
<PAGE>
successors  or  assigns  or  any  other  persons  claiming  any  interest in the
Mortgaged  Properties  or  the  Collateral  might  take  advantage  despite this
section, shall hereafter be repealed or cease to be in force, such law shall not
thereafter  be  deemed  to  preclude  the  application  of  this  section.

     Section  4.13     Mortgagor as Tenant Post-Foreclosure.  In the event there
                       ------------------------------------
is  a  foreclosure  sale  hereunder  and  at  the time of such sale Mortgagor or
Mortgagor's heirs, devisees, representatives, successors or assigns or any other
persons claiming any interest in the Property by, through or under Mortgagor are
occupying  or  using  the  Property,  or  any  part  thereof, each and all shall
immediately become the tenant of the purchaser at such sale, which tenancy shall
be  a  tenancy  from  day  to  day, terminable at the will of either landlord or
tenant,  at  a  reasonable  rental  per day based upon the value of the property
occupied, such rental to be due daily to the purchaser.  To the extent permitted
by  applicable  law,  the  purchaser  at  such  sale  shall, notwithstanding any
language  herein  apparently  to  the  contrary,  have the sole option to demand
immediate  possession following the sale or to permit the occupants to remain as
tenants  at will.  In the event the tenant fails to surrender possession of said
property  upon demand, the purchaser shall be entitled to institute and maintain
a  summary action for possession of the property (such as an action for forcible
entry  and  detainer)  in  any  court  having  jurisdiction.

                                   ARTICLE V.

                                  Miscellaneous
                                  -------------

     Section  5.1     Scope  of  Mortgage.  This Mortgage is a deed of trust and
                      -------------------
mortgage  of  both real and personal property, a security agreement, a financing
statement  and  an  assignment,  and  also  covers proceeds and fixtures and all
rights  as  set  out  herein.

     Section  5.2     Effective  as a Financing Statement.  This Mortgage covers
                      -----------------------------------
goods which are or are to become fixtures on the real property described herein,
and this Mortgage shall be effective as a financing statement filed as a fixture
filing with respect to all fixtures included within the Property.  This Mortgage
shall  also  be  effective  as a financing statement, filed as a fixture filing,
covering  minerals and other substances of value which may be extracted from the
earth  (including without limitation oil and gas), and accounts related thereto,
which will be financed at the wellhead or minehead of the wells or mines located
on  the  Mortgaged  Properties.  This  Mortgage is to be filed for record in the
real/immovable  property  records of each county where any part of the Mortgaged
Properties  is situated or which lies shoreward of any Mortgaged Property (i.e.,
to  the  extent  a Mortgaged Property lies offshore within the projected seaward
extension  of  the  relevant  county  boundaries),  and may also be filed in the
offices  of  the Bureau of Land Management or the Minerals Management Service or
any relevant state agency (or any successor agencies).  This Mortgage shall also
be  effective  as  a  financing statement covering any other Property and may be
filed  in any other appropriate filing or recording office.  The mailing address
of  Mortgagor  is the address of Mortgagor set forth at the end of this Mortgage
and  the  address  of  Mortgagee  from which information concerning the security
interests hereunder may be obtained is the address of Mortgagee set forth at the
end  of  this  Mortgage.


                                       24
<PAGE>
     Section 5.3     Reproduction of Mortgage as Financing Statement.  A carbon,
                     -----------------------------------------------
photographic,  facsimile  or  other  reproduction  of  this  Mortgage  or of any
financing statement relating to this Mortgage shall be sufficient as a financing
statement  for any of the purposes referred to in Section 5.2.  Without limiting
any other provision herein, Mortgagor hereby authorizes Mortgagee to file one or
more  financing  statements,  or  renewal  or  continuation  statements thereof,
describing  the  Collateral.

     Section  5.4     Notice  to  Account  Debtors.  In addition to, but without
                      ----------------------------
limitation  of,  the rights granted in Article III hereof, Mortgagee may, at any
time after a default has occurred that is continuing, notify the account debtors
or  obligors  of  any  accounts,  chattel paper, negotiable instruments or other
evidences  of indebtedness included in the Collateral to pay Mortgagee directly.

     Section  5.5     Waivers.  Mortgagee  may at any time and from time to time
                      -------
in  writing  waive  compliance  by  Mortgagor  with  any covenant herein made by
Mortgagor  to the extent and in the manner specified in such writing, or consent
to Mortgagor's doing any act which hereunder Mortgagor is prohibited from doing,
or to Mortgagor's failing to do any act which hereunder Mortgagor is required to
do,  to  the  extent and in the manner specified in such writing, or release any
part of the Property or any interest therein or any Production Proceeds from the
lien  and  security  interest  of this Mortgage, without the joinder of Trustee.
Any party liable, either directly or indirectly, for the secured indebtedness or
for  any  covenant herein or in any other Loan Document may be released from all
or  any part of such obligations without impairing or releasing the liability of
any  other  party.  No  such  act  shall  in any way impair any rights or powers
hereunder  except  to  the  extent  specifically  agreed  to  in  such  writing.

     Section 5.6     No Impairment of Security.  The lien, security interest and
                     -------------------------
other  security  rights  hereunder  shall  not  be  impaired  by any indulgence,
moratorium  or  release  which may be granted including, but not limited to, any
renewal,  extension  or  modification  which  may be granted with respect to any
secured indebtedness, or any surrender, compromise, release, renewal, extension,
exchange  or  substitution  which  may  be  granted  in  respect of the Property
(including  without  limitation Production Proceeds), or any part thereof or any
interest  therein,  or  any  release  or  indulgence  granted  to  any endorser,
guarantor  or  surety  of  any  secured  indebtedness.

     Section  5.7     Acts  Not  Constituting Waiver.  Any default may be waived
                      ------------------------------
without  waiving  any  other  prior  or  subsequent default.  Any default may be
remedied without waiving the default remedied.  Neither failure to exercise, nor
delay  in  exercising,  any  right,  power  or  remedy upon any default shall be
construed  as  a  waiver of such default or as a waiver of the right to exercise
any  such right, power or remedy at a later date.  No single or partial exercise
of any right, power or remedy hereunder shall exhaust the same or shall preclude
any  other  or  further  exercise thereof, and every such right, power or remedy
hereunder  may  be exercised at any time and from time to time.  No modification
or  waiver  of  any  provision  hereof nor consent to any departure by Mortgagor
therefrom  shall  in  any event be effective unless the same shall be in writing
and  signed by Mortgagee and then such waiver or consent shall be effective only
in  the  specific  instances,  for the purpose for which given and to the extent
therein  specified.  No  notice  to nor demand on Mortgagor in any case shall of
itself  entitle


                                       25
<PAGE>
Mortgagor  to  any  other  or  further  notice  or  demand  in  similar or other
circumstances.  Acceptance of any payment in an amount less than the amount then
due  on  any  secured indebtedness shall be deemed an acceptance on account only
and  shall  not  in  any  way  excuse  the  existence  of  a  default hereunder.

     Section  5.8     Mortgagor's Successors.  In the event the ownership of the
                      ----------------------
Property  or  any  part thereof becomes vested in a person other than Mortgagor,
then,  without notice to Mortgagor, such successor or successors in interest may
be  dealt  with, with reference to this Mortgage and to the indebtedness secured
hereby,  in  the  same manner as with Mortgagor, without in any way vitiating or
discharging  Mortgagor's  liability  hereunder  or  for  the  payment  of  the
indebtedness  or  performance of the obligations secured hereby.  No transfer of
the  Property,  no  forbearance, and no extension of the time for the payment of
the  indebtedness  secured  hereby, shall operate to release, discharge, modify,
change  or  affect, in whole or in part, the liability of Mortgagor hereunder or
for  the  payment  of the indebtedness or performance of the obligations secured
hereby  or the liability of any other person hereunder or for the payment of the
indebtedness  secured  hereby.

     Section  5.9     Place  of  Payment.  All secured indebtedness which may be
                      ------------------
owing  hereunder  at  any  time  by  Mortgagor  shall  be  payable  at the place
designated  in  the  Note  (or if no such designation is made, at the address of
Mortgagee  indicated  at  the  end  of this Mortgage), or at such other place as
Mortgagee  may  designate  in  writing.

     Section  5.10     Subrogation  to  Existing  Liens.  To  the  extent  that
                       --------------------------------
proceeds  of  the  Note  are used to pay indebtedness secured by any outstanding
lien,  security interest, charge or prior encumbrance against the Property, such
proceeds  have  been  advanced  at Mortgagor's request, and the party or parties
advancing the same shall be subrogated to any and all rights, security interests
and  liens  owned  by  any  owner  or holder of such outstanding liens, security
interests, charges or encumbrances, irrespective of whether said liens, security
interests,  charges or encumbrances are released, and it is expressly understood
that,  in  consideration  of  the payment of such indebtedness, Mortgagor hereby
waives  and  releases  all demands and causes of action for offsets and payments
to,  upon  and  in  connection  with  the  said  indebtedness.

     Section  5.11     Application  of Payments to Certain Indebtedness.  If any
                       ------------------------------------------------
part  of the secured indebtedness cannot be lawfully secured by this Mortgage or
if  any part of the Property cannot be lawfully subject to the lien and security
interest  hereof to the full extent of such indebtedness, then all payments made
shall be applied on said indebtedness first in discharge of that portion thereof
which  is  not  secured  by  this  Mortgage.

     Section  5.12     Compliance  With  Usury  Laws.  It  is  the  intent  of
                       -----------------------------
Mortgagor,  Mortgagee and all other parties to the Loan Documents to contract in
strict  compliance  with  applicable  usury law from time to time in effect.  In
furtherance  thereof,  it  is  stipulated  and agreed that none of the terms and
provisions  contained  herein  or  in  the  other  Loan  Documents shall ever be
construed  to create a contract to pay, for the use, forbearance or detention of
money,  interest  in  excess  of  the maximum amount of interest permitted to be
charged  by  applicable  law  from  time  to  time  in  effect.


                                       26
<PAGE>
     Section  5.13     Substitute  Trustee.  The  Trustee  may  resign  by  an
                       -------------------
instrument  in  writing addressed to Mortgagee, or Trustee may be removed at any
time  with  or  without cause by an instrument in writing executed by Mortgagee.
In  case  of the death, resignation, removal, or disqualification of Trustee, or
if  for  any reason Mortgagee shall deem it desirable to appoint a substitute or
successor  trustee  to act instead of the herein named trustee or any substitute
or  successor  trustee,  then  Mortgagee  shall  have  the  right  and is hereby
authorized  and  empowered  to  appoint  a  successor  trustee,  or a substitute
trustee,  without  other  formality  than appointment and designation in writing
executed  by  Mortgagee  and  the authority hereby conferred shall extend to the
appointment  of  other  successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full, or until the Property is sold
hereunder.  If Mortgagee is a corporation or association and such appointment is
executed  in  its  behalf by an officer of such corporation or association, such
appointment  shall  be  conclusively  presumed to be executed with authority and
shall  be  valid  and  sufficient  without  proof  of any action by the board of
directors  or any superior officer of the corporation or association.  Mortgagee
may act through an agent or attorney-in-fact in substituting trustees.  Upon the
making  of  any such appointment and designation, all of the estate and title of
Trustee  in  the  Mortgaged  Properties  shall  vest  in  the named successor or
substitute  Trustee and such successor or substitute shall thereupon succeed to,
and  shall  hold,  possess  and  execute,  all  the  rights, powers, privileges,
immunities  and duties herein conferred upon Trustee; but nevertheless, upon the
written  request  of  Mortgagee  or  of the successor or substitute Trustee, the
Trustee  ceasing  to act shall execute and deliver an instrument transferring to
such  successor  or  substitute  Trustee  all  of  the  estate  and title in the
Mortgaged  Properties  of  the  Trustee so ceasing to act, together with all the
rights,  powers,  privileges,  immunities  and  duties herein conferred upon the
Trustee,  and  shall duly assign, transfer and deliver any of the properties and
moneys  held  by said Trustee hereunder to said successor or substitute Trustee.
All  references herein to Trustee shall be deemed to refer to Trustee (including
any  successor  or  substitute appointed and designated as herein provided) from
time  to  time  acting  hereunder.

     Section 5.14     No Liability for Trustee.  THE TRUSTEE SHALL NOT BE LIABLE
                      ------------------------
FOR  ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE
RESPONSIBLE  OR  ACCOUNTABLE  UNDER  ANY  CIRCUMSTANCES  WHATSOEVER  (INCLUDING,
WITHOUT  LIMITATION,  THE  TRUSTEE'S  NEGLIGENCE),  EXCEPT  FOR  TRUSTEE'S GROSS
NEGLIGENCE  OR  WILLFUL MISCONDUCT.  The Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or  proposed  to  be  taken by the Trustee hereunder, believed by the Trustee in
good  faith  to be genuine.  All moneys received by Trustee shall, until used or
applied  as  herein  provided,  be held in trust for the purposes for which they
were  received,  but  need not be segregated in any manner from any other moneys
(except  to the extent required by law), and Trustee shall be under no liability
for interest on any moneys received by him hereunder.  Mortgagor hereby ratifies
and confirms any and all acts which the herein named Trustee or its successor or
successors,  substitute  or  substitutes,  shall  do  lawfully by virtue hereof.
Mortgagor  will  reimburse  Trustee for, and indemnify and save Trustee harmless
against, any and all liability and expenses (including attorneys fees) which may
be  incurred  by  Trustee  in  the  performance  of  his  duties.  The foregoing
indemnities  shall  not  terminate  upon  the  release,  foreclosure  or  other
termination  of


                                       27
<PAGE>
this  Mortgage  but will survive such release, termination and/or foreclosure of
this  Mortgage,  or  conveyance in lieu of foreclosure, and the repayment of the
secured  indebtedness  and  the  discharge  and release of this Mortgage and the
other documents evidencing and/or securing the secured indebtedness.  Any amount
to  be paid hereunder by Mortgagor to Trustee shall be a demand obligation owing
by Mortgagor to Trustee and shall be subject to and covered by the provisions of
Section  2.3  hereof.

     Section  5.15     Release  of Mortgage.  If all of the secured indebtedness
                       --------------------
be  paid  as  the  same  becomes  due  and  payable  and  all  of the covenants,
warranties,  undertakings  and  agreements  made  in  this Mortgage are kept and
performed  and  no  further  obligation shall exist to provide credit or advance
funds  to  Mortgagor  or the maker of any promissory note (or other obligor with
respect  to  other  indebtedness)  secured hereby, then, at Mortgagor's request,
this  Mortgage  shall be released in due form and at Mortgagor's cost; provided,
however, that, notwithstanding such release, certain indemnifications, and other
rights, which are provided herein to continue following the release hereof shall
continue  in effect unaffected by such release; and provided further that if any
payment  to  Mortgagee is held to constitute a preference or a voidable transfer
under  applicable  state or federal laws or if for any other reason Mortgagee is
required  to  refund  such  payment  to  the  payor thereof or to pay the amount
thereof  to  any third party, this Mortgage shall be reinstated to the extent of
such  payment  or  payments.

     Section  5.16     Notices.  All  notices,  requests,  consents, demands and
                       -------
other  communications  required  or  permitted hereunder or under any other Loan
Document shall be in writing and, unless otherwise specifically provided in such
other  Loan  Document,  shall  be  deemed  sufficiently  given  or  furnished if
delivered  by  personal delivery, by telecopy, by delivery service with proof of
delivery,  or by registered or certified United States mail, postage prepaid, at
the  addresses  specified at the end of this Mortgage (unless changed by similar
notice in writing given by the particular party whose address is to be changed).
Any  such  notice or communication shall be deemed to have been given (a) in the
case of personal delivery or delivery service, as of the date of first attempted
delivery  at  the  address and in the manner provided herein, (b) in the case of
telecopy,  upon  receipt,  and (c) in the case of registered or certified United
States  mail,  three  days  after  deposit  in  the  mail.  Notwithstanding  the
foregoing,  or  anything  else  in  the  Loan  Documents which may appear to the
contrary,  any notice given in connection with a foreclosure of the liens and/or
security  interests  created  hereunder,  or  otherwise  in  connection with the
exercise  by  Mortgagee or Trustee of their respective rights hereunder or under
any  other Loan Document, which is given in a manner permitted by applicable law
shall  constitute  proper  notice;  without  limitation of the foregoing, notice
given in a form required or permitted by statute shall (as to the portion of the
Property  to  which  such  statute  is  applicable)  constitute  proper  notice.

     Section  5.17     Invalidity  of  Certain Provisions.  A determination that
                       ----------------------------------
any  provision of this Mortgage is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination that the
application  of  any provision of this Mortgage to any person or circumstance is
illegal or unenforceable shall not affect the enforceability or validity of such
provision  as  it  may  apply  to  other  persons  or  circumstances.


                                       28
<PAGE>
     Section 5.18     Gender; Titles.  Within this Mortgage, words of any gender
                      --------------
shall  be  held  and  construed  to  include  any other gender, and words in the
singular  number  shall  be held and construed to include the plural, unless the
context  otherwise  requires.  Titles  appearing  at  the  beginning  of  any
subdivisions hereof are for convenience only, do not constitute any part of such
subdivisions,  and  shall be disregarded in construing the language contained in
such  subdivisions.

     Section  5.19     Recording.  Mortgagor  will  cause  this Mortgage and all
                       ---------
amendments  and supplements thereto and substitutions therefor and all financing
statements  and  continuation statements relating thereto to be recorded, filed,
re-recorded  and  refiled  in  such  manner  and  in  such  places as Trustee or
Mortgagee  shall  reasonably  request  and  will pay all such recording, filing,
re-recording  and  refiling  taxes,  fees  and  other  charges.

     Section 5.20     Reporting Compliance.  Mortgagor agrees to comply with any
                      --------------------
and  all  reporting  requirements applicable to the transaction evidenced by the
Note  and  secured  by  this  Mortgage  which are set forth in any law, statute,
ordinance,  rule,  regulation,  order  or  determination  of  any  governmental
authority,  and  further  agrees  upon request of Mortgagee to furnish Mortgagee
with  evidence  of  such  compliance.

     Section  5.21     Certain  Consents.  Except  where  otherwise  expressly
                       -----------------
provided  herein,  in  any instance hereunder where the approval, consent or the
exercise  of  judgment  of Mortgagee is required, the granting or denial of such
approval  or  consent and the exercise of such judgment shall be within the sole
discretion  of  such  party,  and such party shall not, for any reason or to any
extent,  be required to grant such approval or consent or exercise such judgment
in any particular manner, regardless of the reasonableness of either the request
or  the  judgment  of  such  party.

     Section  5.22     Certain  Obligations  of  Mortgagor.  Without  limiting
                       -----------------------------------
Mortgagor's  obligations hereunder, Mortgagor's liability hereunder shall extend
to  and  include  all  post  petition  interest,  expenses, and other duties and
liabilities  with  respect  to  Mortgagor's obligations hereunder which would be
owed but for the fact that the same may be unenforceable due to the existence of
a  bankruptcy,  reorganization  or  similar  proceeding.

     Section  5.23     Counterparts.  This  Mortgage  may be executed in several
                       ------------
counterparts,  all  of  which  are  identical,  except  that,  to  facilitate
recordation,  certain  counterparts  hereof  may  include  only  that portion of
Exhibit A which contains descriptions of the properties located in (or otherwise
subject  to  the  recording  or  filing  requirements  and/or protections of the
recording  or filing acts or regulations of) the recording jurisdiction in which
the  particular  counterpart  is to be recorded, and other portions of Exhibit A
shall  be  included  in  such  counterparts  by  reference  only.  All  of  such
counterparts  together  shall  constitute one and the same instrument.  Complete
copies  of  this  Mortgage  containing  the  entire  Exhibit  A, and being fully
executed  by  Mortgagor  have  been  retained  by  Mortgagor  and  Mortgagee.

     Section 5.24     Successors and Assigns.  The terms, provisions, covenants,
                      ----------------------
representations,  indemnifications  and  conditions hereof shall be binding upon
Mortgagor,  and  the successors and assigns of Mortgagor, and shall inure to the
benefit  of  Mortgagee  and


                                       29
<PAGE>
Trustee  and  their  respective  successors  and  assigns,  and shall constitute
covenants  running  with  the  Mortgaged  Properties.  All  references  in  this
Mortgage  to Mortgagor, Mortgagee or Trustee shall be deemed to include all such
successors  and  assigns.

     Section  5.25     FINAL  AGREEMENT  OF  THE  PARTIES.  THE  WRITTEN  LOAN
                       -------------------------------------------------------
DOCUMENTS  REPRESENT  THE  FINAL  AGREEMENT  BETWEEN  THE PARTIES AND 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.
-------

     Section  5.26     CHOICE OF LAW.  WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
                       ---------------------------------------------------------
OF  LAW,  THIS  MORTGAGE  SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
--------------------------------------------------------------------------------
GOVERNED  BY THE LAWS OF THE STATE OFNEW YORKAPPLICABLE TO CONTRACTS MADE AND TO
--------------------------------------------------------------------------------
BE  PERFORMED  ENTIRELY  WITHIN  SUCH STATE AND THE LAWS OF THE UNITED STATES OF
--------------------------------------------------------------------------------
AMERICA, EXCEPT THAT TO THE EXTENT THAT THE LAW OF A STATE IN WHICH A PORTION OF
--------------------------------------------------------------------------------
THE  PROPERTY  IS  LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A PORTION OF THE
--------------------------------------------------------------------------------
PROPERTY)  NECESSARILY  OR,  IN  THE  SOLE DISCRETION OFMORTGAGEE, APPROPRIATELY
--------------------------------------------------------------------------------
GOVERNS  WITH  RESPECT  TO  PROCEDURAL  AND  SUBSTANTIVE MATTERS RELATING TO THE
--------------------------------------------------------------------------------
CREATION,  PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY INTERESTS AND OTHER
--------------------------------------------------------------------------------
RIGHTS  AND  REMEDIES  OF THE TRUSTEE OR THEMORTGAGEE GRANTED HEREIN, THE LAW OF
--------------------------------------------------------------------------------
SUCH  STATE  SHALL APPLY AS TO THAT PORTION OF THE PROPERTY LOCATED IN (OR WHICH
--------------------------------------------------------------------------------
IS  OTHERWISE  SUBJECT  TO  THE  LAWS  OF)  SUCH  STATE.
-------------------------------------------------------

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                                       30
<PAGE>
IN  WITNESS  WHEREOF,  this  instrument is executed by Mortgagor this 1st day of
November,  2006.

                                        MORTGAGOR:

                                        GARWOOD PETROSEARCH, INC.

                                        By: /s/ Richard D. Dole
                                           -------------------------------------
                                        Name:  Richard D. Dole
                                        Title: Manager

The address of Mortgagee is:

LAURUS MASTER FUND, LTD.
Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
PO Box 309 G.T.
Ugland House, South Church Street, George Town
Grand Cayman, Cayman Islands
Facsimile:  345-949-8080


The address of Mortgagor is:
Garwood Petrosearch, Inc.
675 Bering Drive, Suite 200
Houston, TX 77057
Attention:
          ----------------
Telephone:  713.961.9337
Fax:  713.961.9338

The address of the Trustee is:
[               ]
 ---------------


                                       31
<PAGE>
STATE OF TEXAS          Sec.
                        Sec.
COUNTY OF HARRIS        Sec.

     The  foregoing  instrument  was  acknowledged  before  me  this  1st day of
November,  2006,  by                             , the                        of
                      ---------------------------      ----------------------
GARWOOD  PETROSEARCH,  INC.,  a Texas corporation, on behalf of said corporation

     IN  WITNESS  WHEREOF,  I have hereunto set my hand and official seal in the
City  of Houston, Harris County, Texas, on the day and year first above written.
My  commission  expires:

                              -------------------------------------
                              NOTARY  PUBLIC,  State  of  Texas

----------------
     [SEAL]
                              -------------------------------------
                              (printed  name)


                                       32