CENTURION ENERGY INTERNATIONAL INC.

                                CONVERTIBLE NOTE
                                ----------------
                                    (ALBERTA)

THE  NOTES  AND  THE  COMMON  SHARES  ISSUABLE  UPON CONVERSION OF THE NOTES ARE
SUBJECT  TO  A  "HOLD PERIOD" AND THE NOTES ARE NOT TRANSFERABLE UNTIL SEPTEMBER
27,  1999  EXCEPT  PURSUANT  TO  AN  EXEMPTION  FROM THE PROSPECTUS REQUIREMENTS
CONTAINED  IN  THE  APPLICABLE  CANADIAN  PROVINCIAL  SECURITIES  LEGISLATION.

THE SECURITIES REPRESENTED BY THIS NOTE ARE NOT LISTED ON ANY STOCK EXCHANGE AND
DO NOT TRADE OVER ANY OVER-THE-COUNTER MARKET.  THE COMMON  SHARES ISSUABLE UPON
CONVERSION  OF  THE NOTES ARE LISTED ON THE TORONTO STOCK EXCHANGE; HOWEVER, THE
NOTES  AND  THE  COMMON SHARES ISSUABLE UPON CONVERSION OF THE NOTES WILL NOT BE
TRANSFERABLE  UNTIL EXPIRY OF THE "HOLD PERIOD", EXCEPT PURSUANT TO AN EXEMPTION
FROM THE PROSPECTUS REQUIREMENTS CONTAINED IN THE APPLICABLE CANADIAN PROVINCIAL
SECURITIES  LEGISLATION.

THE  NOTES  AND  THE  COMMON SHARES ISSUABLE UPON EXERCISE OF THE NOTES HAVE NOT
BEEN  REGISTERED  UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR
ANY  STATES  SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR  TO  U.S.  PERSONS  UNLESS  REGISTERED  UNDER  THE SECURITIES ACT OF 1933 AND
APPLICABLE  STATE  SECURITIES  LAWS  OR  AN  EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.

                       CENTURION ENERGY INTERNATIONAL INC.


No.  7                                                                  $300,000
                                                                        --------

                        U.S. $300,000 8% CONVERTIBLE NOTE
                               DUE March 26, 2000


          Centurion  Energy  International  Inc. (hereinafter referred to as the
"Corporation")  for  value  received  hereby acknowledges itself indebted to the
registered  holder and promises to pay to or to the order of SANE HOLDINGS LTD.,
951  LAKE  PLACID  DRIVE  S.E., CALGARY, ALBERTA, T2J 4Z9, the registered holder
hereof,  on  or  before  March 26, 2000 or on such earlier date as the principal
amount hereof may become due in accordance with the terms and conditions annexed
hereto  as Appendix 1 (hereinafter referred to as the "Terms and Conditions") of
this  Convertible  Note (hereinafter referred to as the "Note"), on presentation
and surrender of this Note, the sum of THREE HUNDRED THOUSAND ($300,000) DOLLARS
in  lawful  money  of  the  United States of America, together with such further
amount,  if  any, as may be payable in accordance with the Terms and Conditions.

          This  Note  is  one of the 8% Convertible Notes (herein referred to as
the "Notes") issued by the Corporation in the maximum aggregate principal amount
of  U.S.  seven  million  dollars (U.S. $7,000,000) pursuant to an offering that
closed  on  March  26,  1998.

          Interest  shall  be  payable  by  the  Corporation  on the outstanding
balance  of  the  principal  amount  of  this  Note at the rate of 8% per annum,
calculated annually and paid semi-annually on March 31 and September  30 in each
year  during  the  term of this Note, from and including March 26, 1998 with the
first  payment  to  be  made  on September 31, 1998, such interest to be payable
after  as  well  as  before  default,  judgment  and  maturity.


<PAGE>
                                      -2-


          This  Note  is  subject  to the Terms and Conditions and the holder of
this  Note  is entitled to the benefits of the Terms and Conditions, which shall
form  an  integral  part  hereof.

          This  Note  may  be converted into Common Shares of the Corporation at
the  option  of  the  Holder,  as  specified  in  the  Terms  and  Conditions.

          This  Note  may only be transferred upon compliance with the Terms and
Conditions,  on  the  registers  to  be  kept  at  the  executive  office of the
Corporation in the City of Calgary and at such other place or places, if any, as
the  Corporation may designate, by the registered holder hereof or its executors
or  administrators  or other legal representatives or its or their attorney duly
appointed  by an instrument in writing in form and execution satisfactory to the
Corporation,  and  upon  compliance  with  such  reasonable  requirements as the
Corporation  may  prescribe.

          The  Corporation hereby waives presentment for payment, demand, notice
of  non-payment,  protest and notice of non-payment and waive any defences based
upon  indulgences  which  may  be  granted  by  the  registered  holder  to  the
Corporation.

          IN WITNESS WHEREOF the Corporation has caused its corporate seal to be
hereunto affixed and this Note to be signed by its proper officer in that behalf
as  of  March  26,  1998.



                             CENTURION  ENERGY  INTERNATIONAL  INC.



                             Per:  /s/  Barry Swan
                                 ---------------------------------------------
                                 Barry Swan, Vice-President, Finance     (c/s)


<PAGE>
                                      -3-


                       CENTURION ENERGY INTERNATIONAL INC.
                        U.S. $300,000 8% CONVERTIBLE NOTE

                                 CONVERSION FORM

TO:       Centurion  Energy  International  Inc.

          The  undersigned  registered  holder  of  the  within  Note  hereby
irrevocably  elects  to  convert  said  Note (or $____________________ principal
amount  thereof*) into common shares of Centurion Energy International Inc. (the
"Corporation"),  on  the  basis of the conversion price of U.S. $0.47 per common
share  if  exercised on or after the date of issuance to and including 4:30 p.m.
(Calgary  time)  on March 26, 1999 or if exercised thereafter until on or before
4:30  p.m.  (Calgary time) on March 26, 2000 at a conversion price of U.S. $0.52
per  common  share,  in accordance with the Terms and Conditions (as hereinafter
defined  and as set out in Appendix 1 hereto) and directs that the common shares
issuable  and  deliverable  upon  the  conversion be issued and delivered to the
person  indicated  below.  (If  common  shares are to be issued in the name of a
person  other  than  the registered holder, all requisite transfer taxes must be
tendered  by  the  undersigned.)

     *     If  less  than  the full principal amount of the within Note is to be
converted,  indicate in the space provided the principal amount to be converted.

Dated: __________________


----------------------------------------  --------------------------------------
(SIGNATURE  OF  REGISTERED  HOLDER)       Guaranteed  By:
If  shares  are  to be issued in the
name of a person other than the holder,
the signature must be guaranteed by
a bank, trust company, member firm
of a Canadian Stock  Exchange  or
otherwise  Medallion  guaranteed
to the satisfaction of the Corporation.


Name:
      ----------------------------------


      ----------------------------------
      (Address)

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

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


(Print  name  in  which  common  shares  issued  on conversion are to be issued,
delivered  and  registered)

CONVERSION  INSTRUCTIONS:  The registered holder wishing to convert its Note, in
whole  or  in  part,  must  return  the completed conversion form along with the
certificate  representing  the Note to the Corporation at the following address:

                       Centurion Energy International Inc.
                        Suite 800, 205 - 5th Avenue S.W.
                                Calgary, Alberta
                                     T2P 2V7
                       Attention: Vice-President, Finance

If  registered holders convert their Notes into Common Shares prior to March 27,
1999,  the  Common  Shares issuable will be subject to a hold period and will be
issued  with  a  legend  reflecting  such  hold  period.


<PAGE>
                                      -4-


                       CENTURION ENERGY INTERNATIONAL INC.
                        U.S. $300,000 8% CONVERTIBLE NOTE

                                  TRANSFER FORM

FOR  VALUE  RECEIVED,  the  undersigned  hereby  sells, assigns and transfers to
(name)  _________________________  (address)  __________________________________
__________________________________________________  US$  ___________________  8%
Convertible Note (or $ ___________________ principal amount thereof if less than
the  full  principal  amount  of  the  within  Note is to be transferred) in the
principal  amount  of  Centurion  Energy  International Inc. (the "Corporation")
registered  in  the  name  of  the undersigned on the records of the Corporation
represented  by  the  attached  convertible  note  (the  "Note") and irrevocably
appoints  ___________________________the attorney of the undersigned to transfer
the  said  securities  on the books or register with full power of substitution.

The  Note  which  is  being  transferred  (please  check  one):

(a)               should  be  sent by first class mail to the following address:
    -----------
                  --------------------------------------------------------------

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

                                       OR

(b)               should  be  held for pick up at the office of the Corporation.
    -----------

If  less  than  all  the  principal  amount  represented  by  the  Note is being
transferred,  the  Note  representing  that  portion of the principal amount not
transferred will be registered in the name appearing on the face of the Note and
such  Note  (please  check  one):

(a)               should  be  sent by first class mail to the following address:
    -----------
                  --------------------------------------------------------------

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

                                       OR

(b)               should  be  held for pick up at the office of the Corporation.
    -----------

               DATED  the      day  of               ,  19     .
                          ----         --------------      ----

---------------------  ---------------------------------------------------------
Signature  Guaranteed  (Signature  of  Note  holder)

                       ---------------------------------------------------------
                       Print  full  name

                       ---------------------------------------------------------
                       Print  full  name

Instructions:

1.     The  signature  of  the  holder  of the Note must be the signature of the
                                                    ----
       person  appearing  on  the  face  of  this  Note.

1.     If  this  Transfer  Form is signed by a trustee, executor, administrator,
       curator,  guardian, attorney, officer of a corporation or any person
       acting in a fiduciary  or representative  capacity,  the certificate must
                                                                            ----
       be accompanied by evidence  of  authority  to  sign  satisfactory  to the
       Corporation.
2.     The  signature  on this Transfer Form must be guaranteed by an authorized
                                             ----
       officer  of  a  bank, trust company, an investment dealer who is a member
       of a recognized  stock exchange or otherwise Medallion guaranteed to  the
       satisfaction of  the  Corporation.
3.     Note  shall  only  be  transferrable  in accordance with applicable laws.

                       CENTURION ENERGY INTERNATIONAL INC.
                           800, 205 - 5th Avenue S.W.
                            Calgary, Alberta  T2P 2V7
                           Telephone:  (403) 263-6002


<PAGE>
                                      -5-


                       CENTURION ENERGY INTERNATIONAL INC.
                        U.S. $300,000 8% CONVERTIBLE NOTE

               APPENDIX 1 TO CONVERTIBLE NOTE DATED MARCH 26, 1998

                  TERMS AND CONDITIONS OF THE CONVERTIBLE NOTE

                                    ARTICLE I
                                   DEFINITIONS
                                   -----------


1.1          For  the  purposes of the Note and the terms and conditions thereof
             -------------------------------------------------------------------
("Terms  and  Conditions")  as  hereinafter  set  out:
------------------------------------------------------

"business  day"  means a day other than a Saturday, Sunday or any other day that
--------------
is  a  statutory  or  civic  holiday  in  the  City of Calgary, Alberta, Canada;

"Common  Shares"  means  the common shares in the capital of the Corporation, as
---------------
such  shares  exist  on the issue date of the Notes (as defined in Section 2.1),
provided  that  in  the event of any adjustment of conversion rights pursuant to
Article  VII  hereof,  "Common Shares" shall thereafter mean the shares or other
securities  or  property  resulting  from  such adjustment and any shares of any
other  class  of the shares in the capital of the Corporation resulting from the
reclassification  or  change  of  such  Common  Shares;

"Commencement  Date"  means,  in respect of the accrual of interest on the Note,
-------------------
March  26,  1998;

"Conversion  Basis"  means one Common Share for each U.S. $0.47 principal amount
------------------
of  the Note if the Note is converted after the date of issue until on or before
4:30  p.m.  (Calgary  time) on March 26, 1999, or one Common Share for each U.S.
$0.52  principal amount of the Note if the Note is converted thereafter until on
or  before  4:30  p.m.  (Calgary  time)  on  March  26,  2000;

"Conversion  Date"  means, as the context may require, 10:00 a.m. (Calgary time)
-----------------
on  the  effective  date  of  conversion  of  the Note as provided in Article VI
hereof;

"Conversion  Price"  means U.S. $0.47 if the Note is converted after the date of
------------------
issuance until on or before 4:30 p.m. (Calgary time) on March 26, 1999 and shall
mean U.S. $0.52 per Common Share if the Note is converted thereafter until on or
before  4:30  p.m.  (Calgary  time)  on  March  26,  2000;

"Corporation"  means  Centurion  Energy International Inc., a corporation formed
------------
upon  the amalgamation of Eagle Energy Corp. and Canadian Leader Energy Inc. and
existing  under  the  laws  of  the  Province  of  Alberta;

"holder"  or "registered holder" means the persons for the time being entered in
-------       -----------------
the  register  of  the  Corporation  as  the  holder  of  Note;

"Holder's  Conversion  Commencement  Date" means the business day next following
-----------------------------------------
the  date  hereof;

"Interest  Rate"  means  8%  per  annum  calculated  annually;
---------------

"Issue  Date"  means  March  26,  1998;
------------

"Maturity  Date"  means  10:00  a.m.  (Calgary  time)  on  March  26,  2000;
---------------

1.2       Currency:
          --------

          All  references  to  currency  shall  be to lawful money of the United
States  of  America,  unless  specified  otherwise.

1.3       Non-Business  Days:
          ------------------

          In  any  case where the date of maturity or the payment of interest or
principal on the Note or any other action is required, permitted or contemplated
to  be taken hereunder on a day that is not a business day, then payment of such
interest or principal of the Note or such other action shall be made or taken on
the  next  succeeding  day  that  is  a  business  day.

1.4       Governing  Law:
          --------------

          The  Note  shall  be  construed  in  accordance  with  the laws of the
Province  of Alberta and the laws of Canada applicable therein.  The Corporation
and  the  holder hereby irrevocably submit to the exclusive  jurisdiction of the
courts  of  the  Province  of  Alberta  for  any  dispute  arising  out of or in
connection  with  the  Note.

1.5       General:
          -------

          The  holding  of  the  Note  shall  not constitute the holder hereof a
shareholder  of the Corporation nor entitle such holder to any right or interest
in  respect  thereof  except  as  herein  expressly  provided.

                                   ARTICLE II
                                      NOTES
                                      -----

2.1       Issue:
          -----

          The  Note  is  one  of  an issue of 8% Convertible Notes due March 26,
2000, (herein collectively called "Notes" and individually called "Note") issued
in  the  aggregate  principal  amount  of  up  to  $7,000,000.

2.2       Form  and  Terms:
          ----------------

     (a)  The Note is dated as of the issue date,  matures on the Maturity Date,
          bears  interest  from and including  the  Commencement  Date at a rate
          equal to eight (8%) percent per annum calculated  annually and payable
          on a semi-annual  basis on March 31 and September 30 in each year, net
          of any applicable withholding taxes prescribed by Canadian law or by a
          tax treaty  between  Canada and the  jurisdiction  of residence of the
          registered  holder;  and bears  interest  at such annual rate after as
          well as before  maturity  and after as well as  before  default,  with
          interest  on  overdue  interest  at the same  rate.  The Note shall be
          convertible in accordance with Article VI hereof.

     (b)  The Note is in fully registered form.

     (c)  The principal amount of the Note, the interest payable thereon and all
          sums which may at any time become payable  thereon shall be payable in
          lawful money of the United States of America at the  principal  office
          of the Corporation in Calgary.

2.3       Signature  of  Note:
          -------------------

          The  Note may (but is not required to be) signed under the seal of the
Corporation  and  shall be signed (either manually or by facsimile signature) by
any  one  officer  of  the  Corporation.

2.4       Commencement  and  Payment  of  Interest:
          ----------------------------------------

     (a)  Every  Note,   whether   issued   originally,   upon  transfer  or  in
          substitution for another Note, shall be dated the Issue Date and shall
          bear  interest  from  and  including  the  Commencement  Date  payable
          semi-annually, or from the last Interest Date (as hereinafter defined)
          at the Interest  Rate, as  applicable,  and such interest shall be due
          and  payable,  as of the  relevant  time  and  net  of any  applicable
          withholding  taxes  prescribed  by  Canadian  law  or by a tax  treaty
          between  Canada and the  jurisdiction  of residence of the  registered
          holder,  only to the person in whose name such Note is  registered  on
          the Interest Date, as hereinafter  defined,  the Maturity Date and the
          Conversion Date, as applicable.  Notwithstanding  anything else herein
          contained,  for  greater  certainty,  no  interest  will be payable in
          respect of the  Conversion  Date, the Maturity Date or such other date
          upon which all amounts under this Note become due and payable.

     (b)  Interest  for any period of less than six (6) months shall be computed
          on a pro rata basis using a 365 day year,  based on the actual  number
          of days elapsed.

     (c)  The first payment of interest which is due and payable hereunder shall
          be  payable on  September  31,  1998,  and each  payment  of  interest
          thereafter  shall  be  made  on the  last  business  day  of the  next
          semi-annual period (each such date of payment of interest or "Interest
          Date"),  except  the  last  interest  payment  shall  be  made  on the
          Conversion Date (if the entire principal amount is to be converted) or
          the Maturity Date, as the case may be. The Corporation  shall send the
          interest  payment  by post  prepaid to the  address of the  registered
          holder  contained  on the  Corporation's  register  and  the  interest
          payment  must be post  marked no later  than the  Interest  Date.  The
          registered  holder  of the  Note  has the  option  to  provide  wiring
          instructions  to the  Corporation for the payment of interest and such
          interest payments must be wired no later than the Interest Date.


<PAGE>
                                      -6-


2.5       Persons  Deemed  Owners:
          -----------------------

     (a)  The  Corporation  may  treat  the  person  in  whose  name the Note is
          registered  as the owner and  holder  of the Note for the  purpose  of
          making payments on account of the principal of and accrued interest on
          the Note and for all other purposes  whatsoever,  and the  Corporation
          shall not be affected by notice to the contrary  unless the Note shall
          have been transferred in the manner herein provided.

     (b)  As any amount owing on the Note becomes due (except any amount payable
          at maturity which may be paid upon  presentation  and surrender of the
          Note  for  payment)  the  Corporation  shall  forward  or  cause to be
          forwarded by prepaid  post to the  registered  holder,  at the address
          appearing on the register maintained by the Corporation,  a cheque for
          such amount payable to the order of the registered holder.

2.6       Payment  on  Maturity  Date:
          ---------------------------

          This  Note  will  mature  on  the  Maturity  Date,  at  which time the
principal  amount of the Note will be due and payable, together with all accrued
and  unpaid  interest  thereon,  and  all  other  amounts  owing  hereunder. The
Corporation  shall make payment of principal and interest following the Maturity
Date  in  respect  of  the Note upon surrender of the Note upon or following the
Maturity  Date.  Upon surrender, the Corporation shall, within ten (10) business
days,  forward  or  cause to be forwarded, by post prepaid to the address of the
registered  holder  of  the  Note,  as  shown in the register, a cheque for such
amount as is then due and payable.  The receipt of such cheque by the registered
holder  of  the Note shall satisfy and discharge the Corporation's liability for
principal  and  interest  upon  the  Note.

                                   ARTICLE III
                                    REGISTER
                                    --------

3.1       Register:
          ---------

     (a)  The Corporation shall keep at its principal office in Calgary, Alberta
          a register in which shall be entered  the names and  addresses  of the
          holders  of the  Notes  the  particulars  of the  Notes  held  by them
          respectively  and in  which  all  transfers  of  the  Notes  shall  be
          registered.

     (b)  The register  maintained in respect of the Notes, shall be open at all
          times during usual  business  hours to  inspection  by the  registered
          holders of Notes.

     (c)  The Note may only be  transferred  on the register to be maintained by
          the  Corporation at the office  specified in the Transfer Form annexed
          hereto by the registered  holder of Note hereof (the "Current Holder")
          or the Current  Holder's  executors or  administrators  or other legal
          representatives, or the Current Holder's attorney duly appointed by an
          instrument  in  writing  in form  and  execution  satisfactory  to the
          Corporation  by completing  and executing the Transfer Form or form of
          transfer   acceptable  to  the  Corporation,   such  execution  to  be
          guaranteed by bank,  trust company,  member firm of any Canadian Stock
          Exchange or otherwise Medallion  guaranteed to the satisfaction of the
          Corporation,  and upon compliance with such reasonable requirements as
          the  Corporation  may prescribe  including  payment of any  applicable
          transfer taxes or similar taxes.

     (d)  The transfer of the Note to the new  registered  holder of the Note (a
          "New  Holder")  will be  effective  on the date that the  transfer  is
          received by the Corporation (a "Transfer Date"). Any interest accruing
          prior to the Transfer Date will be payable to the Current Holder.  Any
          interest  accruing  after the Transfer Date will be payable to the New
          Holder at the address  indicated on the Transfer  Form  received.  THE
          TRANSFER OF THE NOTES MAY BE RESTRICTED BY APPLICABLE SECURITIES LAWS.
          HOLDERS ARE ADVISED TO CONSULT THEIR LEGAL COUNSEL IN THIS REGARD.

     (e)  The holder may at any time prior to the Maturity Date,  upon surrender
          of the Note to the  Corporation at its head office and upon payment of
          the reasonable charges of the Corporation, exchange the Note for other
          Notes  entitling  the  registered  holder  in the  aggregate  the same
          principal amount as evidenced by the Notes.

                                   ARTICLE IV
                              REPLACEMENT OF NOTES
                              --------------------

4.1       Loss,  Theft,  Destruction:
          ---------------------------

          In  case  the  Note shall become mutilated, stolen, lost or destroyed,
the  Corporation  shall, subject to the provisions of this Article IV, issue and
deliver  a new Note of like tenor and denomination as the one mutilated, stolen,
lost  or  destroyed in substitution for, and in place of, the mutilated, stolen,
lost  or  destroyed  Note  and  shall  cause  such  new Note to be signed by the
Corporation.  All  such new Notes issued pursuant to this section 4.1 shall rank
pari  passu  with  all  other  issued  and  outstanding  Notes.

4.2       In  the  case  of  the  theft, loss or destruction of  the  Note,  the
applicant  for  a  substituted Note shall, as a condition precedent to the issue
thereof, furnish to the Corporation such evidence of ownership and of the theft,
loss  or  destruction  of  the Note as shall be satisfactory to the Corporation,
together  with  an  indemnity  in  an  amount  and  form  satisfactory  to  the
Corporation,  acting reasonably.  In the case of a mutilated Note, the applicant
for  a substituted Note must surrender the mutilated Note to the Corporation for
cancellation.

                                    ARTICLE V
                                     RANKING
                                     -------

5.1       Ranking  of  the  Note:
          ----------------------

          The  Note  shall  rank  pari  passu  with all other Notes and shall be
unsecured.

                                   ARTICLE VI
                                   CONVERSION
                                   ----------

6.1       Holders'  Right  to  Convert
          ----------------------------

     (a)  Subject to Section 6.2 hereof,  the  registered  holder shall have the
          right at any time as and from  the  Holder's  Conversion  Commencement
          Date and on or before the Maturity Date, at such holder's  option,  to
          convert  the  entire  principal  amount  (but not  accrued  but unpaid
          interest) or any portion thereof of the Note into Common Shares on the
          Conversion  Basis and at the Conversion Price in effect at the time of
          such  conversion.  No  fractional  Common  Shares  will be issued upon
          conversion  of  the  Note  or  any  portion  thereof,  nor  shall  any
          compensation be made for such fractional Common Shares, if any. To the
          extent  that the  holder  would  otherwise  be  entitled  to receive a
          fraction of a Common Share, such right may be converted in combination
          with other rights,  if any, which in the aggregate  entitle the holder
          to receive a whole number of Common Shares.


<PAGE>
                                      -7-


6.2       Conversion  Procedure  for  Holders:
          -----------------------------------

     (a)  The Note, or any portion thereof,  may be converted in accordance with
          the  conversion  terms  set out  herein  at any  time as and  from the
          Holder's Conversion Commencement Date by delivering to the Corporation
          at its  principal  office in  Calgary,  or at such other  place as the
          Corporation may agree, the Note with the attached conversion form duly
          completed  and  signed by the holder  thereof  or his duly  authorized
          attorney.

     (b)  The  completion by the holder of the  conversion  form attached to the
          Note and the surrender of the Note to the  Corporation  for conversion
          shall be deemed to create and constitute a contract between the holder
          of the Note and the Corporation whereby:

          (i)  the holder of the Note subscribes for the number of Common Shares
               which he shall be entitled to receive upon such conversion;

          (ii) provided the Common Shares so subscribed  for are issued as fully
               paid and  non-assessable  and are  received  by the  holder,  the
               holder of the Note  releases the  Corporation  from all liability
               for the payment of the principal amount of the portion of Note so
               converted  and the  indebtedness  evidenced by the portion of the
               Note  so  converted   shall  thereupon  be  fully  satisfied  and
               discharged; and

          (iii)the  Corporation  and  the  holder  agree  that  the  release  of
               liability  in respect of the  portion of the Note  converted  and
               surrender  for  conversion   constitutes   full  payment  of  the
               subscription  price  for  the  Common  Shares  issuable  on  such
               conversion  and that,  thereafter,  in the event  that the entire
               amount of the Note is converted, the Note shall not be considered
               outstanding  hereunder  and the holder shall have no right except
               to receive his  certificate  for Common Shares and payment of any
               interest due and payable up to the Conversion Date.

     (c)  On any  conversion of the Note into Common  Shares in accordance  with
          the provisions  hereof,  the certificate  for Common Shares  resulting
          therefrom shall be registered in the name of the registered  holder of
          the Note converted or in such name or names as such registered  holder
          may direct in writing  provided that such registered  holder shall pay
          any applicable  security  transfer taxes in the event that such holder
          directs that the Common  Shares be registered in a name other than the
          name in which the Note converted was registered.  If the Common Shares
          resulting  from  conversion of any Notes are directed to be registered
          otherwise than in the name of the  registered  holder of the Note, the
          election  form  on the  back of  such  Note  shall  be  signed  by the
          registered  holder of the Note or his duly authorized  attorney,  with
          such signature guaranteed in a manner satisfactory to the Corporation.

     (d)  The right of a holder  of the Note to  convert  the same  into  Common
          Shares  shall be  deemed to have been  exercised,  and the  registered
          holder of the Note (or any  person or  persons  in whose name or names
          any  such   registered   holder  of  the  Note  shall  have   directed
          certificates  representing  Common Shares to be registered as provided
          above)  shall be deemed to have become the holder of Common  Shares of
          record for all purposes on the date of receipt by the  Corporation  of
          the Note to be converted with the  conversion  form duly completed and
          signed,  notwithstanding  any delay in the delivery of the certificate
          representing the Common Shares into which the Note has been converted.

     (e)  Unless  otherwise agreed between the Corporation and the holder of the
          Note  (or any  person  or  persons  in whose  name or  names  any such
          registered  holder  of  the  Note  shall  have  directed  certificates
          representing  Common Shares to be  registered  as provided  above) the
          receipt  by the  holder of the  certificate  or  certificates  for the
          Common   Shares  issued  upon   conversion   shall   constitute   full
          satisfaction  and discharge of the  liability for principal  upon such
          portion  of the Note  converted.  The  Corporation  shall,  within ten
          business days of receipt of the Note for conversion,  forward or cause
          to be  forwarded,  by post  prepaid to the  address of the  registered
          holder of the Note the  certificate  or  certificates  for the  Common
          Shares issued upon conversion and the certificate or certificates  for
          the  principal  amount  of the Note not  converted,  if any,  with the
          receipt  of  such  certificate  or  certificates  to  constitute  full
          satisfaction  and discharge of the  liability for principal  upon such
          Note.

     (f)  Unless  otherwise agreed between the Corporation and the holder of the
          Note  (or any  person  or  persons  in whose  name or  names  any such
          registered  holder  of  the  Note  shall  have  directed  certificates
          representing  Common Shares to be  registered  as provided  above) any
          accrued but unpaid  interest on the Note on the Conversion  Date shall
          be paid by the  Corporation  to the  holder  of the  Note (or any such
          person or persons in whose name or names any such registered holder of
          the Note shall have directed  certificates  representing Common Shares
          to be  registered  as  provided  above) on the earlier of the 30th day
          following the Conversion  Date or next Interest Date. The  Corporation
          shall send the interest  payment by post prepaid to the address of the
          registered  holder  of the  Note at the time of  conversion,  with the
          receipt of such payment to constitute full  satisfaction and discharge
          of the Corporation for all interest due under the Note.

     (g)  No fractional Common Shares will be issued upon conversion of the Note
          nor shall any compensation be made for such fractional  Common Shares,
          if any.

6.3       Conversion  of  Note:
          --------------------

     (a)  The Note  surrendered or deemed to be surrendered for conversion shall
          be cancelled  and, upon the issue of the Common  Shares  issuable upon
          the  conversion  of the  Note as  herein  provided,  the  indebtedness
          evidenced by the Note if the entire amount of the Note is converted or
          by the portion of the Note converted if less than the entire amount of
          the Note is converted  (but not the  obligation to deliver such Common
          Shares) shall be fully satisfied and discharged and, in the event that
          the entire amount of the Note is converted, no Note shall be issued in
          substitution therefor.

     (b)  All Common Shares  resulting  from  conversion of the Note into Common
          Shares  shall be and  shall  be  deemed  to be  issued  as  fully  and
          non-assessable.

                                   ARTICLE VII
                         ADJUSTMENT OF CONVERSION RIGHTS
                         -------------------------------

7.1       Adjustment  of  Conversion  Rights:
          ----------------------------------

     (a)  In case of any  reclassification  of the  Common  Shares  at any  time
          outstanding  or change of the Common Shares into other  shares,  or in
          case of the consolidation, amalgamation, merger or similar transaction
          of the Corporation  with or into any other  corporation  (other than a
          consolidation,  amalgamation, merger or similar transaction which does
          not result in any reclassification of the outstanding Common Shares or
          a change of the Common  Shares into other  shares),  or in case of any
          transfer  of  the  undertaking  or  assets  of the  Corporation  as an
          entirety or  substantially  as an entirety to another  person,  at any
          time  prior to the  Maturity  Date,  the  holder  of the Note upon the
          conversion thereof shall be entitled to receive,  and shall accept, in
          lieu  of  the  number  of  Common  Shares  to  which  the  holder  was
          theretofore  entitled to receive  upon such  conversion,  the kind and
          amount of shares and other  securities  or property  which such holder
          would   have  been   entitled   to   receive   as  a  result  of  such
          reclassification,   change,  consolidation,  amalgamation,  merger  or
          transfer if, on the effective  date  thereof,  the holder had been the
          registered  holder of the number of Common  Shares to which the holder
          was theretofore entitled upon conversion of the Note by the holder. If
          necessary, appropriate adjustments shall be made in the application of
          the  provisions  set forth in this  Article  VII with  respect  to the
          rights and  interests  thereafter of the holder of the Note to the end
          that the  provisions  set forth in this  Article VII shall  thereafter
          correspondingly  be made  applicable  as nearly as may  reasonably  be
          possible  in relation  to any shares or other  securities  or property
          thereafter   deliverable   upon  the   conversion  of  any  Note.  The
          subdivision  or  consolidation  of  the  Common  Shares  at  any  time
          outstanding  into a greater or lesser number of Common Shares shall be
          deemed not to be a reclassification  of the capital of the Corporation
          for the purpose of this subsection.


<PAGE>
                                      -8-


     (b)  If and whenever prior to the Maturity Date (i) the Common Shares shall
          be  subdivided  or  consolidated  into a greater  or lesser  number of
          shares;   (ii)  a  stock   dividend   shall  be  declared  to  all  or
          substantially  all of the  holders  of  Common  Shares;  or (iii)  the
          Corporation  shall issue rights,  options or warrants  exercisable for
          Common Shares, or any other securities exercisable or convertible into
          Common Shares,  to all or  substantially  all of the holders of Common
          Shares (collectively the "Rights"), the holder of the Note who has not
          converted the Note on or prior to the  effective  date or record date,
          as the case may be, of any such  transaction,  upon the  conversion of
          such right  thereafter,  shall be entitled to receive and shall accept
          in lieu of the number of Common Shares which would otherwise then have
          been subscribed for by the holder at the Conversion  Price  determined
          in  accordance  with Section 7.2, the  aggregate  number of shares and
          Rights that such holder would have  otherwise  then have been entitled
          to receive as a result of such  transaction if, on such record date or
          effective  date,  the  holder  had been the  registered  holder of the
          number of Common Shares to which the holder was  theretofore  entitled
          upon exercise.

7.2       Adjustment  of  Conversion  Price:
          ---------------------------------

     (a)  The  Conversion  Price in  effect  at any date  shall  be  subject  to
          adjustment  from time to time if and whenever at any time prior to the
          Maturity Date, the Corporation effects any of the transactions set out
          in subsection 7.1(b) hereof.

          The Conversion Price shall, on the effective date of such transaction,
          be  adjusted  to that amount  which is in the same  proportion  to the
          Conversion  Price in effect  immediately  prior to such transaction as
          the number of  outstanding  Common  Shares after giving effect to such
          transaction  is to the number of  outstanding  Common  Shares prior to
          such transaction.  Such adjustment shall be made successively whenever
          any event referred to in this subsection shall occur.

     (b)  The  adjustments  provided for in this Section 7.2 are  cumulative and
          shall, in the case of adjustments to the Conversion Price, be computed
          to the  nearest  one-tenth  of  one  cent  and  shall  apply  (without
          duplication)    to    successive    transactions;    provided    that,
          notwithstanding  any other provision of this Section, no adjustment of
          the Conversion  Price shall be required unless such  adjustment  would
          require an increase or decrease of at least 2% in the Conversion Price
          then in  effect  (provided,  however,  that any  adjustments  which by
          reason of this subsection are not required to be made shall be carried
          forward and taken into account in any subsequent adjustment).

7.3       Notice  of  Adjustment  of  Subscription  Rights:
          ------------------------------------------------

     (a)  As soon as  practicable  after  the  effective  date,  or  earlier  if
          determined by the  Corporation to be  appropriate,  of any event which
          requires an adjustment in any of the conversion rights pursuant to any
          of the Notes,  including an adjustment to the Conversion  Price or the
          number of Common  Shares  which are to be received  upon the  exercise
          thereof, the Corporation shall forthwith give notice to the registered
          holders  of Note of the  particulars  of such  event and the  required
          adjustment.

     (b)  In the event of any question  arising with respect to the  adjustments
          provided for herein,  such questions shall be conclusively  determined
          by the Corporation's  auditor or, if they are unwilling to act another
          firm of auditors satisfactory to the Corporation who shall have access
          to all necessary  records of the  Corporation  and such  determination
          shall be binding  upon the  Corporation,  the holders of the Notes and
          all other interested persons.

                                  ARTICLE VIII
                          COVENANTS OF THE CORPORATION
                          ----------------------------

8.1       Covenants  of  the  Corporation:
          --------------------------------

          The  Corporation  shall:

     (a)  so  long  as  the  Notes  are  outstanding,  not  effect  any  special
          distribution of securities,  evidences of indebtedness, or property or
          assets,  other  than a  distribution  of  securities  contemplated  by
          subsection  7.1(b) hereof,  to all or substantially all of the holders
          of Common Shares;

     (b)  so long  as the  Notes  are  outstanding,  maintain  its  status  as a
          reporting  issuer within the meaning of the  Securities Act (Alberta),
          Securities   Act  (Ontario),   Securities   Act  (British   Columbia),
          Securities   Act   (Saskatchewan),   Securities   Act  (Manitoba)  and
          Securities Act (Quebec);

     (c)  so long as the Notes are  outstanding,  use its best  efforts to cause
          the Common Shares,  including the Common Shares to be issued from time
          to time upon  conversion  of the Notes,  to be and  remain  listed and
          posted for trading on The Toronto Stock Exchange;

     (d)  reserve and keep available out of its authorized Common Shares, solely
          for the  purpose of issue upon  conversion  of the Notes  contemplated
          herein,  a  sufficient  number of Common  Shares to be issued upon the
          full conversion of the Notes. All such Common Shares which shall be so
          issuable   shall  be  duly  and  validly  issued  as  fully  paid  and
          non-assessable; and

     (e)  duly and punctually pay to the Holder the principal of and any accrued
          interest on the Note and any other amounts  payable on the Note on the
          date and at the place,  in the currency  and in the manner  prescribed
          herein; and

     (f)  provide written notice to the Holder  forthwith upon becoming aware of
          any Event of  Default on the Note or any event or  circumstance  that,
          with  the  giving  of  notice  or the  lapse  of time  or  both  could
          constitute an Event of Default.

                                   ARTICLE IX
                                     NOTICES
                                     -------

9.1       Notice  to  the  Corporation:
          ----------------------------

     (a)  Any  notice  or  other  communication  to the  Corporation  under  the
          provisions  hereof  shall be valid and  effective  if in  writing  and
          delivered by personal  delivery or prepaid courier or if sent by mail,
          postage prepaid, to:


<PAGE>
                                      -9-


          Centurion  Energy  International  Inc.
          Suite  800,  205  -  5th  Avenue  S.W.
          Calgary,  Alberta  T2P  2V7

          Attention:  Barry  Swan,  Vice-President,  Finance
          Telecopier  No:  (403)  263-5998

          Subject as provided in this  Section  9.1,  notice  shall be deemed to
          have been given at the time of delivery or if mailed in Canada, on the
          fifth  business day after  mailing.  Any delivery  made on a day other
          than a business day, or after 3:00 p.m.  (Calgary  time) on a business
          day,  shall be deemed to be  received on the next  following  business
          day. In the case of  disruption  in postal  services,  any notice,  if
          mailed,  shall not be deemed to have been given  until it is  actually
          delivered to the Corporation.

9.2       Notice  to  Note  Holders:
          -------------------------

     (a)  Any notice or other  communication  to the holder under the provisions
          hereof  shall be valid and  effective  if in writing and  delivered by
          personal  delivery  or  prepaid  courier  or if sent by mail,  postage
          prepaid to the  address of such  holder as set out in the  register of
          holders maintained by the Corporation pursuant to section 3.1 hereof.

          Subject as provided in this  Section  9.2,  notice  shall be deemed to
          have been given at the time of  delivery,  or if mailed in Canada,  on
          the fifth business day after mailing. Any delivery made on a day other
          than a business day, or after 3:00 p.m.  (Calgary  time) on a business
          day,  shall be deemed to be  received on the next  following  business
          day. In the case of  disruption  in postal  services,  any notice,  if
          mailed,  shall not be deemed to have been given  until it is  actually
          delivered to the Corporation.

     (b)  All notices to joint holders of the Note may be given to whichever one
          of the holders  thereof is named first in the  registers  hereinbefore
          mentioned,  and any notice so given shall be sufficient  notice to all
          holders of such Note.

9.3  The  Corporation or the Holder may at any time notify the other of a change
     of address  which  thereafter,  until  changed by like notice,  will be the
     address  of the  Corporation  or the  Holder,  as the case may be,  for all
     purposes hereunder.

                                    ARTICLE X
                                     DEFAULT

10.1  Acceleration  of  Maturity
      --------------------------

          Each of the following shall  constitute an event of default ("Event of
          Default") hereunder:

     (a)  if the Corporation  fails to make punctual payment of the principal on
          the Note when the same becomes due and payable;

     (b)  if the Corporation fails to make a punctual payment of interest on the
          Note and any such default continues for a period of fifteen (15) days;

     (c)  if the  Corporation  fails in the  observance or performance of any of
          the terms,  conditions or covenants herein contained on its part to be
          observed or  performed  and after  notice in writing has been given by
          the holder to the  Corporation  specifying  such default and requiring
          the Corporation to put an end to the same, the Corporation  shall fail
          to make good such  default  within a period of thirty (30) days unless
          the holder shall have agreed to a longer period;

     (d)  if the  Corporation  shall  cease,  or threaten to cease,  to carry on
          business  or  shall  make a  general  assignment  for the  benefit  of
          creditors;  or any  proceeding  or filing shall be  instituted or made
          (including  the filing of a notice of  intention to file a proposal or
          the filing of a proposal)  by the  Corporation  seeking  relief on its
          behalf as debtor,  or to  adjudicate  it a bankrupt or  insolvent,  or
          seeking   liquidation,   winding-up,   reorganization,    arrangement,
          adjustment or composition of it or its debts under any law relating to
          bankruptcy,  insolvency  or  relief  of  debtors  (including,  without
          limitation, the Bankruptcy and Insolvency Act (Canada) (the "BIA") and
          the Companies  Creditors  Arrangement  Act (Canada) (the "CCAA")),  or
          seeking appointment of a receiver, trustee,  liquidator,  custodian or
          other  similar  official for it or for any part of its  properties  or
          assets;  or if the  Corporation  shall  take any  corporate  action to
          authorize any of the actions set forth in this subsection;

     (e)  if any  proceeding  or filing shall be  instituted or made against the
          Corporation  seeking to have an order for relief entered against it as
          debtor  or to  adjudicate  it a  bankrupt  or  insolvent,  or  seeking
          liquidation,  winding-up,  reorganization,  arrangement, adjustment or
          composition  of it or its  debts  under  any law now or  hereafter  in
          effect relating to bankruptcy, insolvency, reorganization or relief of
          debtors  (including,  without  limitation,  the BIA and the CCAA),  or
          seeking appointment of a receiver, trustee, custodian or other similar
          official for it or for any part of its properties or assets; or by any
          act or failure to act, the Corporation  shall indicate its consent to,
          approval of, or  acquiescence  in, any such  proceedings for it or any
          part of its property; or

     (f)  if a receiver,  liquidator,  trustee or other  person or officer  with
          like powers  shall be appointed  with  respect to, or an  encumbrancer
          shall take possession of, any part of the property of the Corporation,
          or if distress or execution or similar  process is levied against such
          property and remains unsatisfied or outstanding for a period of thirty
          (30) days.

Upon  the  occurrence of an Event of Default, the registered holder of this Note
may,  by  notice  in  writing  to  the Corporation, declare the principal of and
interest on the Note then outstanding and all other monies outstanding hereunder
to  be  due  and payable and the same shall forthwith become immediately due and
payable  to the registered holder and the Corporation shall forthwith pay to the
registered  holder  such principal and accrued and unpaid interest and all other
monies outstanding hereunder together with interest at the rate set out above on
such  principal,  interest and other monies from the day of the said declaration
until  payment  is  received  by  the  registered  holder.


<PAGE>