<PAGE>


                              3DX TECHNOLOGIES INC.







                       COMMON STOCK SUBSCRIPTION AGREEMENT






















                                 August 21, 1998


<PAGE>



                                TABLE OF CONTENTS

                                                                            PAGE

SECTION 1 AUTHORIZATION AND SALE OF COMMON STOCK.............................1

  1.1 AUTHORIZATION..........................................................1
  1.2 SALE OF SHARES.........................................................1
  1.3 PENALTY SHARES.........................................................1

SECTION 2 CLOSING DATE: PAYMENT AND DELIVERY.................................1

  2.1 CLOSING DATE...........................................................1
  2.2 PAYMENT AND DELIVERY...................................................2

SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................2

  3.1 ORGANIZATION...........................................................2
  3.2 CAPITALIZATION.........................................................2
  3.3 AUTHORIZATION..........................................................3
  3.4 NO CONFLICT............................................................3
  3.5 ACCURACY OF REPORTS....................................................3
  3.6 REGISTRATION RIGHTS....................................................3
  3.7 GOVERNMENTAL CONSENTS. ETCY............................................4
  3.8 LITIGATION.............................................................4
  3.9 INVESTMENT COMPANY.....................................................4
  3.10  FINANCIAL STATEMENTS.................................................4
  3.11  EMPLOYEE BENEFITS....................................................4
  3.12  ENVIRONMENTAL CONDITION..............................................6
    (a) Permits. Etc.........................................................6
    (b) Certain Liabilities..................................................6
    (c) Certain Actions......................................................7
  3.13  BUSINESS.............................................................7
  3.14  GAS CONTRACTS........................................................7
  3.15  PATENTS TRADEMARKS AND OTHER INTANGIBLE ASSETS.......................7
  3.16  TITLE TO PROPERTIES: LIENS AND ENCUMBRANCES..........................8
  3.17  TAXES................................................................9
  3.18  INTERESTED PARTY TRANSACTIONS........................................9
  3.19  RESERVE REPORT......................................................10

SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...................10

  4.1 INVESTMENT............................................................10
  4.2 ACCREDITED INVESTOR...................................................11
  4.3 AUTHORITY.............................................................11
  4.4 GOVERNMENT CONSENTS. ETC..............................................11
  4.5 INVESTIGATION.........................................................11
  4.6 SHORT SELLING.........................................................11
  4.7 AFFILIATE STATUS......................................................11

SECTION 5 CONDITIONS TO OBLIGATIONS OF THE PURCHASER........................12

  5.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER:...........................12
    (a) Representations and Warranties Correct..............................12
    (b) Covenants...........................................................12
    (c) No Legal Order Pendint..............................................12
    (d) No Law Prohibiting or Restricting Such Sal..........................12
    (e) Opinion of Company's Counsel........................................12

SECTION 6 CONDITIONS TO OBLIGATIONS OF COMPANY..............................12

  6.1 CONDITIONS TO OBLIGATIONS OF COMPANY.:................................12
    (a) Representations and Warranties Correct..............................12
    (b) Covenant............................................................13
    (c) No Legal Order Pending..............................................13
    (d) No Law Prohibiting or Restricting Such Sale.........................13

SECTION 7 DEFINITIONS.......................................................13

  7.1 CERTAIN DEFINITIONS...................................................13
    (a) Affiliate...........................................................13
    (b) Business Day........................................................13
    (c) Holders.............................................................13
    (d) Person..............................................................13
    (e) The terms register, registered and registration.....................13
    (f) Registrable Securities..............................................13
    (g) Registration Expenses...............................................14
    (h) Registration Statement..............................................14
    (i) Registration Period.................................................14
    (j) Selling Expenses....................................................14

SECTION 8 COVENANTS.........................................................14

  8.1 REGISTRATION RIGHTS...................................................14
    (a) Registration........................................................14
    (b) Expenses of Registration............................................15
    (c) Registration Procedures:............................................15
    (d) Indemnification.....................................................16
    (e) Covenants of Holders................................................18
    (f) Rule 144 Reporting:.................................................20
    (g) Transfer of Registration Right......................................21
    (h) Waivers and Amendments..............................................21
  8.2 DISPOSITION...........................................................21
  8.3 OTHER REGISTRATION RIGHTS.............................................22

SECTION 9 MISCELLANEOUS.....................................................22

  9.1 TERMINATION OF AGREEMENT..............................................22
  9.2 GOVERNING LAW.........................................................22
  9.3 SURVIVAL: RELIANCE....................................................22
  9.4 SUCCESSORS AND ASSIGNS................................................22
  9.5 NOTICES AND DATES:....................................................23
  9.6 SPECIFIC PERFORMANCE..................................................23
  9.7 FURTHER ASSURANCES....................................................23
  9.8 COUNTERPART...........................................................24
  9.9 SEVERABILITY..........................................................24
  9.10  CAPTIONS............................................................24
  9.11  PUBLIC STATEMENTS...................................................24
  9.12  BROKERS.............................................................24
  9.13  COSTS AND EXPENSES..................................................24
  9.14  NO THIRD-PARTY RIGHTS...............................................24
  9.15  ENTIRE AGREEMENT: AMENDMENT.........................................24



<PAGE>





                                    Exhibits


Exhibit  A  Schedule of Exceptions
Exhibit  B  Additional Information
Exhibit  C  Projects


<PAGE>




                       COMMON STOCK SUBSCRIPTION AGREEMENT


      THIS COMMON STOCK  SUBSCRIPTION  AGREEMENT (the "Agreement") is made as of
August 21, 1998, by and among 3DX TECHNOLOGIES INC., a Delaware corporation (the
"Company"),   and  Santa  Fe  Energy  Resources,  Inc.  a  Delaware  corporation
("Purchaser").

                                   SECTION 1

                     AUTHORIZATION AND SALE OF COMMON STOCK

     1.1  AUTHORIZATION.  The Company has authorized the sale and issuance of up
to 3,333,334  shares of its Common Stock,  $.01 par value per share (the "Common
Stock") in  accordance  with the  provisions  of Sections  1.2 and 1.9,  and has
authorized the potential issuances under Section 1.3.

     1.2 SALE OF SHARES. Subject to the terms and conditions hereof, the Company
will  issue  and  sell to the  Purchaser  and the  Purchaser  will  buy from the
Company:  240,000  shares of Common Stock (the  "Shares") at a purchase price of
$1.25 per share,  or an  aggregate  purchase  price of  $300,000.00

     1.3 PENALTY SHARES. The  Company  grants  to  the  Purchaser  the right to
receive  additional  shares of Common  Stock as set forth in this  Section  (the
"Penalty  Rights").  If the Company is unable to cause a registration  statement
described in Section 8 to be filed with the Securities  and Exchange  Commission
(the "SEC") and to be declared  effective  within 120 days following  August 10,
1998, at the  expiration of such 120-day  period,  then each Penalty Right shall
without further action on behalf of any party, be  automatically  converted into
the right to receive  from the Company,  and the Company will issue,  additional
shares of Common Stock (the "Penalty Shares") to each Purchaser as a holder of a
Penalty  Right  equal  to (i) the  total  aggregate  consideration  paid by such
Purchaser pursuant to Section 1.2 divided by $1.00 less (ii) the total number of
shares issued to such Purchaser  pursuant to Section 1.2. The Penalty Rights are
not transferable apart from the Shares to which they relate.

                                   SECTION 2

                       CLOSING DATE; PAYMENT AND DELIVERY


     2.1 CLOSING DATE.  The  closing  under  this  Agreement with respect to the
sale of the Shares  pursuant to Section 1.2 hereof  (the  "Closing")  shall take
place in Houston,  Texas at 9:00 a.m.  (Houston time) on October 28, 1998 at the
offices of counsel to the Company or at such other times,  dates and places upon
which the  Company  and the  Purchaser  shall  mutually  agree  (the date of the
Closing is hereinafter referred to as the "Closing Date".

     2.2 PAYMENT AND DELIVERY. Payment for the shares by Purchaser shall be made
in  accordance  with that  certain  Agreement  by and  between  the  Company and
Purchaser  dated August 17, 1998. At the Closing the Company will deliver to the
Purchasers  certificates  representing  the Shares.  The certificates for Shares
shall be subject to a legend  restricting  transfer  under the Securities Act of
1933,  as amended (the  "Securities  Act"),  and  referring to  restrictions  on
transfer herein, such legend to be substantially as follows:


            THE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE BEEN ACQUIRED FOR
     INVESTMENT AND HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933,
     AS AMENDED.  SUCH SHARES MAY NOT BE SOLD OR  TRANSFERRED  IN THE ABSENCE OF
     SUCH  REGISTRATION OR AN OPINION OF COUNSEL  SATISFACTORY TO THE COMPANY AS
     TO  THE   AVAILABILITY  OF  AN  EXEMPTION  FROM   REGISTRATION   THAT  SUCH
     REGISTRATION IS NOT REQUIRED AND THAT ANY PROSPECTUS DELIVERY  REQUIREMENTS
     ARE NOT APPLICABLE.

The Shares may also include any legend  required  under the laws of any state or
other jurisdiction.

                                   SECTION 3

                REPRESENTATIONS AND WARRANTIES OF THE COMPANY


      Except as set  forth on the  Schedule  of  Exceptions  attached  hereto as
EXHIBIT A, the  Company  hereby  represents  and  warrants to the  Purchaser  as
follows:

     3.1  ORGANIZATION.  The Company  is  a  corporation  duly  incorporated and
validly existing under the laws of the State of Delaware and is in good standing
under such laws. The Company has all requisite  corporate power and authority to
own, lease and operate its  properties and assets,  and to carry on its business
as presently conducted and as proposed to be conducted. The Company is qualified
to do  business  as a  foreign  corporation  in each  jurisdiction  in which the
ownership  of  its  property  or  the  nature  of  its  business  requires  such
qualification,  except  where  failure to so  qualify  would not have a material
adverse  effect on the  Company.  The  Company has no  subsidiaries  and owns no
equity interests, or rights convertible into equity interests in any entity.

     3.2  CAPITALIZATION.  The authorized capital stock of the Company  consists
of  20,000,000  shares of Common  Stock,  $.01 par  value  per  share,  of which
8,913,909  shares are issued and outstanding as of the date hereof (prior to the
stock issuances  contemplated  hereby) and 1,000,000  shares of Preferred Stock,
$.0l par value per share,  no shares of which are issued and  outstanding  as of
the date  hereof.  All such issued and  outstanding  shares of Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable and
were issued in compliance with all applicable Federal and state securities laws.
As of the date hereof, the Company has 2,004,937 shares of Common Stock reserved
for issuance under its 1994 Stock Option Plan and options to purchase  1,231,707
shares of Common Stock thereunder have been granted and are outstanding.  Except
as described in this Agreement, and that certain Common Stock Agreement dated as
of June 3, 1998 by and among the Company and the parties named therein (the June
Subscription  Agreement)  there  are  no  other  options,  warrants,  conversion
privileges or other  contractual  rights  presently  outstanding  to purchase or
otherwise  acquire any authorized but unissued  shares of the Company's  capital
stock or other securities.

     3.3  AUTHORIZATION.  The  Company  has  all  corporate  right,  power   and
authority  to enter  into this  Agreement  and to  consummate  the  transactions
contemplated  hereby.  All  corporate  action  on the part of the  Company,  its
directors and stockholders necessary for the authorization,  execution, delivery
and  performance  of this  Agreement by the Company,  the  authorization,  sale,
issuance  and  delivery  of the  Shares  and the  performance  of the  Company's
obligations  hereunder has been taken. This Agreement has been duly executed and
delivered by the Company and constitutes a legal,  valid and binding  obligation
of the Company,  enforceable  against the Company in accordance  with its terms,
subject to laws of general  application  relating to bankruptcy,  insolvency and
the  relief  of  debtors  and  rules  of  law  governing  specific  performance,
injunctive  relief or other  equitable  remedies,  and to  limitations of public
policy.  Upon the issuance and  delivery of the Shares as  contemplated  by this
Agreement, the Shares will be validly issued, fully paid and nonassessable.  The
issuance  and sale of the Shares  contemplated  hereby will not give rise to any
preemptive  rights or rights of first  refusal on behalf of any  person.

     3.4 NO CONFLICT.  The execution and delivery of  this Agreement  does  not,
and the consummation of the transactions  contemplated hereby will not result in
any violation of, or default (with or without notice or lapse of time, or both),
or give rise to a right of  termination,  cancellation  or  acceleration  of any
obligation  or to a loss of a benefit,  under,  any  provision of the  Company's
Certificate of Incorporation,  as amended, or Bylaws of the Company, as amended,
or any mortgage,  indenture,  lease or other  agreement or instrument,  license,
judgment,  order, decree, statute, law, ordinance, rule or regulation applicable
to the  Company,  its  properties  or assets,  the effect of which  would have a
material  adverse  effect on the Company,  its financial  condition,  results of
operation  or  prospects,  or  impair  or  restrict  its  power to  perform  its
obligations  as  contemplated  hereby.

     3.5  ACCURACY  OF  REPORTS. All reports required to be filed by the Company
under the Exchange Act, have been duly filed with the SEC,  complied at the time
of filing,  in all material  respects with the  requirements of the Exchange Act
and their respective  forms  (collectively,  the "Reports"),  and, except to the
extent updated or superseded by any subsequently filed report, were complete and
correct in all material  respects as of the dates at which the  information  was
furnished,  and contained  (as of such dates) no untrue  statement of a material
fact or  omitted  to  state a  material  fact  necessary  in  order  to make the
statements  contained  therein,  in light of the circumstances  under which they
were made, not misleading.

     3.6 REGISTRATION RIGHTS. Except as set forth in this Agreement, the Company
is not  under  any  obligation  to  register  any of its  presently  outstanding
securities  or any of its  securities  which may  hereafter be issued other than
under (i) the June  Subscription  Agreement,  (ii) the Series C Preferred  Stock
Purchase  Agreement among the Company and certain of its security  holders dated
as of July 26, 1995 and (iii) the Stock Purchase Agreement among the Company and
certain of its security  holders dated as of November 9, 1993.

     3.7  GOVERNMENTAL CONSENTS, ETC.  No consent, approval or authorization of
or  designation,  declaration or filing with any  governmental  authority on the
part of the Company is required in connection with the execution and delivery of
this Agreement,  the offer,  sale or issuance of the Shares, or the consummation
of any other  transaction  contemplated  hereby,  except such  filings as may be
required  to be made with the SEC and the  Nasdaq  and with any state or foreign
blue sky or securities regulatory authority.

     3.8 LITIGATION. There  is  no  pending  or,  to  the best  of the Company's
knowledge,  threatened lawsuit,  administrative proceeding,  arbitration,  labor
dispute or governmental  investigation  ("Litigation") to which the Company is a
party or by which any portion of its assets  taken as a whole may be bound,  and
which Litigation if adversely determined would have a material adverse effect on
the Company.

     3.9 INVESTMENT COMPANY. The  Company  is not an "Investment Company" within
the meaning of such term under the Investment  Company Act of 1940 and the rules
and regulations of the SEC thereunder.

     3.10 FINANCIAL STATEMENTS.  The audited  balance  sheet  of the  Company at
December 31, 1997, and the related audited statements of operations, cash flows,
and stockholders'  equity of the Company for the fiscal year then ended,  copies
of which have been furnished to Purchaser,  and the balance sheet of the Company
at June 30, 1998, and the related  statements of operations and cash flow of the
Company for the six months then ended,  copies of which have been  furnished  to
the Purchaser, fairly present, subject, in the case of the balance sheet at June
30, 1998,  and said  statements  of income and cash flow for the six months then
ended, to year-end audit adjustments,  the financial condition of the Company at
such dates and the  results of the  operations  of the  Company  for the periods
ended on such dates, and such balance sheets and statements of operations,  cash
flows, and  stockholders'  equity were prepared in accordance with United States
generally accepted  accounting  principles  ("GAAP") (and in compliance with the
regulations  promulgated by the SEC). As of July 31, 1998,  the total  Long-Term
debt of the  Company was  $2,000,000  determined  consistently  with the audited
financial  statements  as of December 31,  1997.  Since  December  31, 1997,  no
Material  Adverse  Change has occurred  except as set forth in the Reports or in
this  Agreement  or on the  Exhibits or  Schedules  hereto.  The term  "MATERIAL
ADVERSE  CHANGE"  shall  mean (a) a  material  adverse  change in the  business,
financial  condition,  results of operations or prospects of the Company, or (b)
the  occurrence  and  continuance  of any  event  or  circumstance  which  could
reasonably  be  expected  to have a  material  adverse  effect on the  Company's
ability  to  perform  its  obligations  under  this  Agreement  or any  material
Agreement of the Company.

     3.11  EMPLOYEE  BENEFITS.

          (a) For  purposes  of  this  Section 3.11,  the term  "Employee  Plan"
includes any pension, retirement,  savings, disability, medical, dental, health,
life (including,  without limitation, any individual life insurance policy under
which any persons currently or formerly employed by the Company ("Employees") is
the named insured and as to which the Company makes premium payments, whether or
not the  Company  is the  owner,  beneficiary  or both  of such  policy),  death
benefit, group insurance,  profit-sharing,  deferred compensation, stock option,
bonus,  incentive,  vacation pay, severance pay, or other employee benefit plan,
trust,  arrangement,   agreement,  policy  or  commitment  (including,   without
limitation,  any employee pension benefit plan as defined in Section 3(2) of the
Employee  Retirement Income Security Act of 1974, as amended ("ERISA") ("Pension
Plan"),  and any  employee  welfare  benefit  plan as defined in Section 3(1) of
ERISA  ("Welfare  Plan")),  whether  or not any of the  foregoing  is  funded or
insured  and  whether  written or oral,  which is intended to provide or does in
fact  provide  benefits  to any or all current  Employees,  and (i) to which the
Company is party or by which the Company (or any of the  rights,  properties  or
assets of the Company) is bound, (ii) with respect to which the Company has made
any payments,  contributions or commitments, or may otherwise have any liability
(whether or not the  Company  still  maintains  such plan,  trust,  arrangement,
contract,  agreement,  policy or  commitment)  or (iii)  under which any current
director,  Employee or agent of the Company is a beneficiary  as a result of his
or her employment or affiliation with the Company.

          (b) With  respect  to  any  Employee, the Company has no obligation to
contribute  to (or any other  liability  with respect to) any funded or unfunded
Welfare Plan, whether or not terminated,  which provides medical,  health,  life
insurance  or other  welfare-type  benefits  for  current or future  retirees or
current,  future or former  Employees  (including  their dependents and spouses)
except for limited  continued  medical  benefit  coverage for former  Employees,
their spouses and their other  dependents  as required to be provided  under the
Consolidated  Omnibus Budget  Reconciliation  Act of 1985, as amended ("COBRA"),
and the Company is in  compliance  in all material  respects  with the continued
medical and other welfare benefit  coverage  requirements of COBRA and all other
applicable  laws.

          (c)  With  respect  to any  Employee,  the Company  does not maintain,
contribute  to or have any  material  liability  under (or with  respect to) any
Pension  Plan which is a tax  qualified  "defined  benefit  plan" (as defined in
Section  3(35) of  ERISA) or a  tax-qualified  "defined  contribution  plan" (as
defined in Section 3(34) of ERISA),  or a  non-qualified  deferred  compensation
plan for certain  highly  compensated  or  management  employees  whether or not
terminated. All contributions (including all employer contributions and employee
salary  reduction  contributions)  which are due have been paid to each Employee
Plan or are  reflected  as a  liability  on the  books  of the  Company  and all
contributions  for any period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Plan or accrued in accordance  with
the past custom and practice of the Company.  All premiums or other payments for
all periods  ending on or before the Closing Date have been paid with respect to
each such  Employee  Plan  which is a Welfare  Plan.

          (d) Except as set forth on EXHIBIT A, the Company  has,  with  respect
to all current and former  Employee  Plans (and all  related  trusts,  insurance
contracts and funds),  at all times  complied in all material  respects with the
applicable  requirements of ERISA, the Internal Revenue Code of 1986, as amended
(the "Code") and all other  applicable  statutes,  common law,  regulations  and
regulatory  pronouncements,  or has, in the exercise of its reasonable judgment,
determined that such statutes  (including  ERISA),  common law,  regulations and
regulatory  pronouncements  were  and are not  applicable  to the  Company.  The
Company has not engaged in nor is it bound to enter into, any  transaction  with
respect to any  Employee  Plan which would  subject the Company to any  material
liability due to either a civil penalty  assessed  pursuant to Section 502(1) of
ERISA or the tax or penalty on prohibited  transactions  imposed by Section 4975
of the Code.  No  actions,  suits or claims  with  respect  to the assets of any
Employee Plan (and all related  trusts,  insurance  contracts and funds),  other
than routine claims for benefits,  are pending or threatened  which could result
in a material  adverse effect on the Company.  There are not now, nor have there
been, any tax-qualified  retirement plans sponsored or maintained by the Company
for Employees, nor are there any unfunded obligations with respect thereto. With
respect to any Employee,  the Company has no obligation to contribute to (or any
other  liability with respect to) any  "multi-employer  plan," as defined in the
Multi-employer  Pension  Plan  Amendments  Act of 1980,  and the Company has not
incurred  any current or  potential  withdrawal  or  termination  liability as a
result of a complete or partial withdrawal from any multi-employer  plan. Except
as set forth on EXHIBIT A, each  Employee Plan intended to qualify under Section
401(a) of the Code has been  determined  by the Internal  Revenue  Service to be
qualified  under the  requirements  of Section  401(a) of the Code, the Internal
Revenue  Service  has issued a  determination  letter to that  effect,  and such
letter remains effective and has not been revoked. No unfulfilled  obligation to
contribute  with respect to an Employee Plan exists with respect to any Employee
Plan year ending on or before the  Closing.  There is no  agreement  or promise,
written or oral,  of the Company to the effect that any Employee Plan may not be
terminated at the Company's  discretion at any tune,  subject to applicable law.

     3.12 ENVIRONMENTAL CONDITION.

          (a) PERMITS, ETC.  Except  as  set forth on EXHIBIT A, the Company (i)
has obtained all environmental permits necessary for the ownership and operation
of its properties and the conduct of its  businesses,  except where such failure
to obtain could not reasonably be expected to cause a Material  Adverse  Change;
(ii) is in  compliance  with all  terms  and  conditions  of such  environmental
permits and with all other requirements of applicable environmental laws, except
where  such  failure  to comply  could not  reasonably  be  expected  to cause a
Material  Adverse  Change;  (iii) has not  received  notice of any  violation or
alleged violation of any environmental law or environmental  permit; and (iv) is
not  subject  to any  actual  or  contingent  environmental  claim  which  could
reasonably be expected to cause a Material Adverse Change.

          (b) CERTAIN LIABILITIES. Except  as  set  forth  on  EXHIBIT A, to the
Company's best  knowledge,  none of the present or previously  owned or operated
properties  of the  Company  or of any of its  present  or former  subsidiaries,
wherever  located,  (i) has been  placed  on or  proposed  to be  placed  on the
National Priorities List, the Comprehensive  Environmental Response Compensation
Liability  Information  System list,  or their state or local  analogs;  (ii) is
subject to a lien,  arising under or in connection with any Environmental  Laws,
which could reasonably be expected to cause a Material Adverse Change;  or (iii)
has been the site of any release of hazardous  substances  or  hazardous  wastes
from  present  or  past  operations  which  has  caused  at the  site  or at any
third-party  site any  condition  that has  resulted in or could  reasonably  be
expected to result in the need for  Response  (as  defined in the  Comprehensive
Environmental  Response  Compensation  Liability Act or other environmental law)
that  would  cause a Material  Adverse  Change.

          (c)  CERTAIN  ACTIONS.  Without  limiting  the  foregoing  (i)     all
necessary  notices have been properly  filed,  and no further action is required
under  current  environmental  law as to each Response or other  restoration  or
remedial  project   undertaken  by  the  Company,   or  its  present  or  former
subsidiaries on any of their presently or formerly owned or operated  properties
and (ii) the present and, to the Company's best knowledge, future liability,  if
any, of the Company and its  subsidiaries  which could reasonably be expected to
arise in connection with requirements  under  environmental laws will not result
in a Material  Adverse  Change.

     3.13 BUSINESS.  The Company has all franchises, permits,  licenses, patents
and other rights and  privileges  necessary to permit it to own its property and
conduct its business,  except for those, the  non-obtainment  of which would not
reasonably be expected to cause a Material  Adverse Change.  The Company manages
and operates its business in compliance with all applicable  legal  requirements
and in  accordance  with good industry  practices,  except where such failure to
manage or operate would not  reasonably be expected to cause a Material  Adverse
Change.

     3.14 GAS CONTRACTS.  The  Company  is  not,   as  of  the  date hereof; (a)
obligated in any  material  respect by virtue of any  prepayment  made under any
contract  containing  a  "take-or-pay"  or  "prepayment"  provision or under any
similar agreement to deliver  hydrocarbons  produced from or allocated to any of
the Company's  consolidated  oil and gas  properties at some future date without
receiving  full  payment  therefor  at the  time  of  delivery,  and (b) has not
produced  gas, in any  material  amount,  subject to, and none of the  Company's
consolidated  oil and gas  properties is subject to,  balancing  rights of third
parties or subject to balancing duties under governmental  requirements,  except
as to such  matters  for which the  Company has  established  monetary  reserves
adequate in amount in accordance  with GAAP to satisfy such  obligations and has
segregated  such reserves from its other accounts.

     3.15 PATENTS, TRADEMARKS AND OTHER  INTANGIBLE  ASSETS. (a)  Except  as set
forth on EXHIBIT A or as is not material to the  Company,  the Company (i) uses,
owns or has  the  right  to  use,  free  and  clear  of all  liens,  claims  and
restrictions, all patents, patent applications, trademarks, service marks, trade
names and  copyrights,  and licenses  and rights with respect to the  foregoing,
used  in the  conduct  of  its  business  as now  conducted  or  proposed  to be
conducted, without infringing upon or otherwise acting adversely to the right or
claimed right of any person,  corporation  or other entity under or with respect
to any of the  foregoing  and  (ii) is not  obligated  or  under  any  liability
whatsoever  to make any payments by way of  royalties,  fees or otherwise to any
owner or licensor of, or other claimant to, any patent, trademark, service mark,
trade name, copyright or other intangible asset, with respect to the use thereof
or in  connection  with the  conduct of its  business  or  otherwise  except for
obligations  in  the   normal course of its exploration and production business.

     (b)  Except  as  set  forth  on  EXHIBIT A  or  as is not  material  to the
Company,  the  Company  owns  or has the  unrestricted  right  to use all  trade
secrets,   including  know-how,   inventions,   designs,   processes,  works  of
authorship,  computer programs (with the exception of normal software  purchased
and sold as  such)  and  technical  data and  information  (collectively  herein
"Intellectual Property") required for or incident to the development,  operation
and sale of all services or products  sold or  currently  proposed to be sold by
the Company,  free and clear of and without violating any right,  lien, or claim
of others,  including without limitation,  former Employees and former employers
of its past and present  Employees but excluding  restrictions  as are customary
for exploration and production companies.

     (c)  The Company has taken   security   measures  to  protect  the secrecy,
confidentiality and value of all the Intellectual  Property,  which measures are
reasonable  and  customary  in the  industry in which it  operates.  Each of the
Company's  Employees  and other  persons  who,  either  alone or in concert with
others, developed,  invented,  discovered,  derived,  programmed or designed the
Intellectual  Property,  or who has knowledge of or access to information  about
the Intellectual Property, has entered into a written agreement with the Company
which (i) provides  that the  Intellectual  Property and other  information  are
proprietary  to the  Company  and are not to be  divulged  or  misused  and (ii)
transfers to the Company, without any further consideration being given therefor
by the  Company,  all of such  Employee's  or other  person's  right,  title and
interest in and to such  Intellectual  Property and other information and to all
patents, trademarks, service marks, trade names, copyrights, licenses and rights
with respect to such Intellectual  Property and information.  The Company is not
aware that any of its Employees,  consultants or prospective  Employees who have
signed such  agreements  are in violation  thereof,  nor is it aware or have any
basis to believe,  that any former  employee or consultant has made any claim of
ownership in or rights with respect to any of the  Intellectual  Property.

     3.16 TITLE TO PROPERTIES;  LIENS AND  ENCUMBRANCES.  Except as set forth on
EXHIBIT A and  pursuant to the Credit  Agreement  by and between the Company and
NationsBank of Texas, N.A. dated December 18, 1997 (the "Credit Agreement"), the
Company has defensible title to all of the properties and assets,  both real and
personal,  tangible  and  intangible,  that it  purports to own,  including  the
properties  and assets  reflected  in the  Reports and  including  the lands and
leases and  associated  net revenue  interests  reflected in the Company's  most
recent  reserve  report,  as of December  31,  1997,  as prepared by Ryder Scott
Company (the "Reserve Report"), other than dispositions or expirations since the
date thereof,  and they are not subject to any mortgage,  pledge, lien, security
interest,  conditional  sale agreement,  encumbrance or charge  ("Liens") except
routine  statutory liens securing  liabilities not yet due and payable and minor
liens, encumbrances,  restrictions,  exceptions,  reservations,  limitations and
other  imperfections  that do not  materially  detract  from  the  value  of the
specific  asset  affected  or the present use of such asset and except (A) Liens
for taxes not yet due and payable or, if payable,  that are being  contested  in
good faith in the ordinary course of business,  (B) statutory  Liens  (including
materialmen's,  mechanic's,  repairmen's,  landlord's,  and other similar liens)
arising in the  ordinary  course of business to secure  payments not yet due and
payable or, if payable,  that are being  contested in good faith in the ordinary
course of business,  (C) such  easements,  restrictions,  reservations  or other
encumbrances, as well as imperfections or irregularities of title, if any, as do
not  create  a  material  adverse  effect,  (D)  obligations  or  duties  to any
municipality or public authority with respect to any franchise,  grant,  license
or  permit  and all  applicable  laws,  rules,  regulations  and  orders  of any
governmental  authority,  (E) all lessors' royalties, overriding royalties,  net
profits  interests,   production  payments,   carried  interests,   reversionary
interests  and other  burdens on or  deductions  from the proceeds of production
that do not operate to (x) reduce the net revenue  interest of the Company below
that purported to be owned by the Company or as set forth in the Reserve Report,
(y)  increase  the  proportionate  share  of costs  and  expenses  of  leasehold
operations attributable to or to be borne by the working interest of the Company
above that purported to be owned by the Company without a proportionate increase
in the net revenue  interest of the Company or (z) increase the working interest
of the  Company  above  that  purported  to be owned by the  Company  without  a
proportionate increase in the net revenue interest of the Company, (F) the terms
and  conditions of joint  operating  agreements and other oil and gas contracts,
(G) all rights to consent by,  required  notices  to, and filings  with or other
actions by  governmental  or tribal  entities,  if any, in  connection  with the
change of ownership or control of an interest in federal, state, tribal or other
domestic  governmental oil and gas leases, if the same are customarily  obtained
subsequent  to such change of  ownership  or control,  but only  insofar as such
consents,  notices,  filings  and  other  actions  relate  to  the  transactions
contemplated  by this  Agreement,  (H) any  preferential  purchase  rights,  (I)
required  third  party  consents  to  assignment,  (J)  conventional  rights  of
reassignment  prior to  abandonment  and (K) the terms and provisions of oil and
gas leases, unit agreements,  pooling agreements,  communication  agreements and
other  documents  creating  interests  comprising  the oil  and gas  properties;
insofar  and only  insofar as such terms and  provisions  do not  operate to (x)
reduce the net revenue  interest of the Company below that purported to be owned
by the Company,  (y) increase the  proportionate  share of costs and expenses of
leasehold  operations  attributable to or to be borne by the working interest of
the  Company  above  that  purported  to be  owned  by  the  Company  without  a
proportionate  increase  in the  net  revenue  interest  of the  Company  or (z)
increase the working interest of the Company above that purported to be owned by
the  Company.  EXHIBIT D lists the current  projects in which the Company has an
interest.

     3.17  TAXES.  Except as set forth in EXHIBIT A, the Company has  accurately
prepared  and timely  filed all  federal  income tax  returns  and all state and
municipal  tax returns that are  required to be filed by it (the "Tax  Returns")
and has paid or made  provision  for the payment of all amounts due  pursuant to
such returns.  The Tax Returns are true and complete in all material   respects.
None of the Tax Returns have been audited by the Internal Revenue Service or any
state  taxing  authority,  as the case may be, the Company has not been  advised
that any of such Tax  Returns  will be so  audited,  and there are no waivers in
effect of the applicable  statute of limitations  for any period.  No deficiency
assessment or proposed  adjustment of federal income taxes or state or municipal
taxes of the Company is pending and the Company has no knowledge of any proposed
liability for any tax to be imposed.

     3.18 INTERESTED PARTY TRANSACTIONS.  Except as otherwise  reflected  in the
Reports,  no  executive  officer,  director  or  stockholder  owning  5% of  the
outstanding  Common Stock of the Company or any  "affiliate" or "associate"  (as
these terms are defined in Rule 405 promulgated under the Securities Act) of any
such  person  or  entity  or the  Company  has or has had,  either  directly  or
indirectly, (a) an interest in any person or entity which (i) furnishes or sells
services or products  that are furnished or sold or are proposed to be furnished
or sold by the  Company,  or (ii)  purchases  from or sells or  furnishes to the
Company any goods or services,  or (b) a beneficial  interest in any contract or
agreement  to  which  the  Company  is a party  or by  which  it may be bound or
affected.  Except as otherwise  reflected in the Reports,  there are no existing
arrangements  or proposed  transactions  between  the Company and any  executive
officer,  director,  or  holder  of more  than 5% of the  capital  stock  of the
Company,  or any affiliate or associate of any such person.

     3.19 RESERVE REPORT. A true and correct copy of the Reserve Report has been
provided to the Purchaser.  All  information  contained in the Reserve Report is
true and correct m all material respects as of the date thereof, except that the
Company  does not warrant  quantity of reserves,  rate of  recovery,  productive
capacity,  future prices,  future operating costs, or other similar matters that
cannot be determined with certainty.

                                   SECTION 4

               REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

      The Purchaser hereby represents and warrants to the Company as follows:

     4.1 INVESTMENT. The Purchaser is acquiring the Shares  for  investment  for
its own  account,  not as a  nominee  or  agent,  and not with a view to, or for
resale in connection with, any distribution thereof.  The Purchaser acknowledges
the Company's  obligation to file a  registration  statement with respect to the
Shares as set forth in Section 8 of this Agreement,  the  effectiveness of which
registration  statement  may be required  for the resale of the Shares.  Without
limiting the generality of the first sentence of this Section, the Purchaser has
not  offered or sold any  portion of the Shares to be  acquired by it and has no
present  intention of  reselling  or otherwise  disposing of any portion of such
Shares,  either currently or after the passage of a fixed or determinable period
of time or upon the occurrence or  nonoccurrence of any  predetermined  event or
circumstance, and in particular the Purchaser has no current intention to resell
the Shares,  under such registration  statement nor would it have such intention
if such  registration  statement were effective as of the date of purchase.  The
Purchaser  understands  that the investment in the Shares,  is subject to a high
degree of risk and that the Shares have not been registered under the Securities
Act, by reason of a specific  exemption from the registration  provisions of the
Securities Act which depends upon,  among other things,  the bona fide nature of
Purchaser's   investment   intent   and   the   accuracy   of  the   Purchaser's
representations as expressed herein. The Purchaser  acknowledges and understands
that it must bear the economic risk of this investment for an indefinite  period
of  time  because  the  Shares  must  be held  indefinitely  until  subsequently
registered  under the Securities Act and applicable  state and other  securities
laws  or  unless  an  exemption  from   registration  is  available.   Purchaser
understands that any transfer agent of the Company will be issued  stop-transfer
instructions  with respect to the Shares,  unless such transfer is  subsequently
registered  under the Securities Act and applicable  state and other  securities
laws or unless an exemption from such  registration is available.  The Purchaser
has  experience in analyzing and investing in entities like the Company,  it can
bear  the  economic  risk of its  investment,  including  the  full  loss of its
investment,  and by  reason  of its  business  or  financial  experience  or the
business or financial  experience of its professional  advisors has the capacity
to evaluate the merits and risks of its  investment and protect its own interest
in  connection  with the purchase of the Shares from the Company at the Closing.
The  Purchaser is a resident of the State of Texas.  Purchaser was not organized
for the purpose of acquiring the Shares.

     4.2 ACCREDITED INVESTOR.  The Purchaser is an "accredited investor" as such
term is defined in SEC Regulation D.

     4.3 AUTHORITY. The Purchaser has all right, power and  authority  to  enter
into this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Purchaser and  constitutes
a legal, valid and binding obligation of the Purchaser,  enforceable against the
Purchaser in accordance with its terms,  subject to laws of general  application
relating to  bankruptcy,  insolvency  and the relief of debtors and rules of law
governing specific  performance,  injunctive relief or other equitable remedies,
and to  limitations  of  public  policy.  The  execution  and  delivery  of this
Agreement do not, and the consummation of the transactions  contemplated  hereby
will not,  conflict with or result in any violation of any obligation  under any
provision of the charter  documents or Bylaws, of the Purchaser or any mortgage,
indenture,  lease or other agreement or instrument,  license,  judgment,  order,
decree, statute, law, ordinance, rule or regulation applicable to the Purchaser.

     4.4  GOVERNMENT CONSENTS, ETC. No consent, approval or authorization  of or
designation,  declaration or filing with any governmental  authority on the part
of the Purchaser is required in connection with the valid execution and delivery
of this Agreement,  the purchase of the Shares or the  consummation of any other
transaction contemplated hereby.

     4.5 INVESTIGATION. The Purchaser has received a copy of the Reports and the
"Risk Factors" and  "Description  of Capital  Stock"  included as EXHIBIT B. The
Purchaser  has had a reasonable  opportunity  to ask  questions  relating to and
otherwise  discuss  the  terms  and  conditions  of the  offering  and the other
information  set  forth in the  Reports  and this  Agreement  and the  Company's
business,  management  and  financial  affairs  with the  Company's  management,
customers  and  other  parties,  and the  Purchaser  has  received  satisfactory
responses to the Purchaser's inquiries. The Purchaser has relied solely upon the
information  provided by the Company in the Reports and this Agreement in making
the decision to invest in the Shares. To the extent necessary, the Purchaser has
retained,  at  the  expense  of  the  Purchaser,  and  relied  upon  appropriate
professional  advice  regarding  the  investment,   tax  and  legal  merits  and
consequences  of this Agreement and its purchase of the Shares,  hereunder.

     4.6 SHORT SELLING. Purchaser has not prior to the date hereof  directly  or
indirectly, through related parties, affiliates or otherwise (a) sold "short" or
"short  against the box" (as those terms are  generally  understood)  any equity
security of the  Company;  or (b)  otherwise  engaged in any  transaction  which
involves  hedging of its position in the securities of the Company,  and it will
not until the date the  Registration  Statement (as defined  herein) is declared
effective  by the SEC  take  any such  actions  described  in (a) or (b) of this
Section 4.6.

     4.7 AFFILIATE STATUS. The Purchaser is not, and has not been within  the 90
days  prior to the  Closing  Date,  an  officer,  director,  employee,  agent or
affiliate of the Company. The Purchaser is not a broker or dealer of securities,
an employee, officer or director of the Company nor prior to the Closing Date of
the transactions contemplated hereby is the Purchaser the beneficial owner of 5%
or more of the Common Stock of the Company.

                                   SECTION 5

                   CONDITIONS TO OBLIGATIONS OF THE PURCHASER

     5.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER.  The Purchaser's obligation
to purchase the Shares at the Closing is, at the option of Purchaser,  which may
waive  any such  conditions  to the  extent  permitted  by law,  subject  to the
fulfillment on or prior to the Closing Date of the following conditions:

          (a) REPRESENTATIONS  AND WARRANTIES  CORRECT.  The representations and
warranties  made by the Company in Section 3 hereof shall be true and correct in
all material  respects when made,  and shall be true and correct in all material
respects on the Closing  Date with the same force and effect as if they had been
made on and as of said date and the  foregoing  shall be certified in writing by
an executive officer of the Company.

          (b)  COVENANTS. All covenants, agreements and conditions  contained in
this Agreement to be performed by the Company on or prior to such purchase shall
have been performed or complied with in all respects and the foregoing  shall be
certified in writing by an executive officer of the Company.

     (c) NO LEGAL ORDER PENDING. There  shall not then be in effect any legal or
other order  enjoining or  restraining  the  transactions  contemplated  by this
Agreement.

          (d) NO  LAW  PROHIBITING OR RESTRICTING  SUCH SALE. There shall not be
in effect any law, rule or regulation  prohibiting or  restricting  such sale or
requiring  any  consent  or  approval  of any person  which  shall not have been
obtained to issue the Shares (except as otherwise  provided in this  Agreement).

          (e) OPINION OF COMPANY'S  COUNSEL.  The Purchasers shall have received
from Baker & Botts,  L.L.P.,  counsel  for the  Company,  an  opinion  dated the
Closing Date, in substantially the form set forth in EXHIBIT D.

                                   SECTION 6

                      CONDITIONS TO OBLIGATIONS OF COMPANY

     6.1 CONDITIONS TO OBLIGATIONS OF COMPANY. The Company's  obligation to sell
and issue the Shares at the Closing is, at the option of the Company,  which may
waive  any such  conditions  to the  extent  permitted  by law,  subject  to the
fulfillment on or prior to the Closing Date, of the following conditions:

          (a) REPRESENTATIONS  AND  WARRANTIES CORRECT.  The representations and
warranties  made by the  Purchaser in Section 4 hereof shall be true and correct
in all  material  respects  when  made,  and  shall be true and  correct  in all
material respects on the Closing Date, with the same force and effect as if they
had been made on and as of said date and the  foregoing  shall be  certified  in
writing by the Purchaser.

          (b) COVENANTS. All  covenants,  agreements  and  conditions  contained
in this  Agreement to be  performed by the  Purchaser on or prior to the Closing
Date, shall have been performed or complied with in all material  respects,  and
the foregoing shall be certified in writing by the Purchaser.

          (c) NO LEGAL ORDER PENDING. There  shall  not  then  be  in effect any
legal or other order enjoining or restraining the  transactions  contemplated by
this Agreement.

          (d) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not be in
effect any law,  rule or  regulation  prohibiting  or  restricting  such sale or
requiring  any  consent  or  approval  of any person  which  shall not have been
obtained to issue the Shares.

                                   SECTION 7

                                   DEFINITIONS

     7.1 CERTAIN  DEFINITIONS. As used in this Agreement,  the  following  terms
shall have the following meanings:

          (a)  "AFFILIATE" shall mean,  with  respect to any  person,  any other
person  controlling,  controlled by or under direct or indirect  common  control
with such person (for the purposes of this definition  "control," when used with
respect to any specified  person,  shall mean the power to direct the management
and policies of such person,  directly or indirectly,  whether through ownership
of voting securities,  by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing).

          (b)  "BUSINESS  DAY" shall mean a day Monday  through  Friday on which
banks are generally  open for business in Texas.

          (c)  "HOLDERS"  shall  mean  the  Purchaser  and  any  person  holding
Registrable   Securities  to  whom  the  rights  under  Section  8.1  have  been
transferred in accordance  with Section  8.1(g) hereof.

          (d) "Person"  shall   mean   any   person,   individual,  corporation,
partnership,  trust or other nongovernmental  entity or any governmental agency,
court,  authority  or other body  (whether  foreign,  federal,  state,  local or
otherwise).

          (e) The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to the
registration  effected  by  preparing  and filing a  registration  statement  in
compliance  with the  Securities  Act,  and the  declaration  or ordering of the
effectiveness of such registration statement.

          (f) "REGISTRABLE SECURITIES"  shall  mean  (A)  the  Shares, (B)   any
shares of  Common  Stock  issued  as (or  issuable  upon the  conversion  of any
warrant,  right or  other  security  which is  issued  as) a  dividend  or other
distribution  with respect to or in replacement of the Shares,  (C) if permitted
under applicable law and regulation, the Penalty Shares; provided, however, that
securities  shall only be treated as  Registrable  Securities if and only for so
long as they (I) have not been disposed of pursuant to a registration  statement
declared  effective by the SEC, (II) have not been sold in a transaction  exempt
from the registration and prospectus delivery requirements of the Securities Act
so that all transfer  restrictions and restrictive  legends with respect thereto
are  removed  upon the  consummation  of such sale,  (III) may not be  otherwise
transferred without restriction under Rule 144 (or any similar successor rule or
provision  then in force)  provided that the Company shall have  delivered a new
certificate  or other  evidence of ownership for it not bearing any  restrictive
legend and with all stop transfer orders withdrawn, or (IV) are held by a Holder
or a permitted  transferee  pursuant to  subsection  8.1(g).

          (g)  "REGISTRATION EXPENSES" shall  mean  all expenses incurred by the
Company in complying with Section 8.1(a) hereof; including,  without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and  expenses  of counsel  for the  Company  and the  Holders up to $15,000
(aggregated for any other  registration  statement filed pursuant to Section 8.1
other than an additional  registration  required  because the Company  failed to
keep the  Registration  Statement in effect as required  under this  Agreement);
blue sky fees and expenses  (for a reasonable  number of states) and the expense
of any special  audits  incident to or  required by any such  registration.

          (h) "REGISTRATION STATEMENT" shall  have  the meaning ascribed to such
term in  Section  8.1(a).

          (i)  "REGISTRATION  PERIOD"  shall  have the  meaning ascribed to such
term in Section  8.1(c).

          (j)  "SELLING  EXPENSES"  shall  mean  all  underwriting discounts and
selling  commissions  and transfer  taxes  applicable to the sale of Registrable
Securities  and all fees and expenses of legal  counsel for any Holder in excess
of those fees and expenses treated as Registration Expenses.

                                   SECTION 8

                                    COVENANTS

     8.1   REGISTRATION RIGHTS.

          (a) REGISTRATION.  Within one month after August 10, 1998, the Company
will file a registration  statement (the "Registration  Statement') with the SEC
on Form S-3 or any  similar  short  form,  if  available,  or, if such forms are
unavailable,  on  Form  S-1 or any  other  appropriate  form  and  will  use its
reasonable best efforts for such Registration Statement to be declared effective
by the SEC. The Company will use its reasonable  best efforts to promptly effect
the registration,  qualifications or compliances (including, without limitation,
the execution of any required  undertaking  to file  post-effective  amendments,
appropriate  qualifications  under applicable blue sky or other state securities
laws and appropriate compliance with applicable securities laws, requirements or
regulations) as may be so reasonably requested and as would permit or facilitate
the sale and  distribution  of all  Registrable  Securities;  provided  that the
Company  shall not be  obligated  to take any  action to effect  any such  state
registration,  qualification or compliance pursuant to this subsection 8.1(a) in
any particular  jurisdiction in which the Company would be required to execute a
general   consent  to  service  of  process  in  effecting  such   registration,
qualification or compliance  unless the Company is already subject to service or
is required to qualify in such  jurisdiction,  as the case may be, and except as
may be required by the Securities  Act. The Company shall be obligated to effect
only one  registration  pursuant to this Section 8.1 so long as the Registration
Statement  is kept in  effect by the  Company  for the  period of time  required
hereby  (otherwise  the  Company  shall be  obligated  to effect  an  additional
registration).  The Penalty  Shares may, in the sole  discretion  of the Company
(consistent  with  applicable  securities  laws),  either  be  included  in  the
Registration Statement contemplated by this Section or may be included in one or
more separate registration  statements in which case the provisions of Section 8
shall  apply  to such  separate  registration  statements  as if they  were  the
Registration Statement.

          (b) EXPENSES  OF REGISTRATION.  All Registration  Expenses incurred in
connection  with any  registration,  qualification  or  compliance  pursuant  to
subsection  8.1(a) shall be borne by the Company.  All Selling Expenses relating
to the sale of  securities  registered by or on behalf of Holders shall be borne
by such Holders pro rata on the basis of the number of securities so registered.

          (c) REGISTRATION  PROCEDURES.  In  the  case  of  the    registration,
qualification or compliance  effected by the Company pursuant to this Agreement,
the Company will, upon reasonable  request,  inform each Holder as to the status
of such registration,  qualification and compliance.  At its expense the Company
will during such time as the Holder holds  Registrable  Securities:

               (i) use its reasonable  best  efforts to keep such  registration,
and any  qualification  or  compliance  under  state  securities  laws which the
Company  determines  to  obtain,  effective  until the shares  included  in such
registration  statement are sold or are otherwise  freely  transferable  and all
restrictive legends and stop transfer orders have been removed.

               (ii) furnish  such  number  of  prospectuses  and other documents
incident thereto as the Holders from time to time may reasonably request;

               (iii) use its reasonable best efforts to register or qualify such
Registrable  Shares  under  such  other  securities  or  blue  sky  laws of such
jurisdictions  as any Holder  reasonably  requests and do any and all other acts
and things which may be reasonably  necessary or advisable to enable such Holder
to consummate the disposition of the Registrable  Shares owned by such Holder in
such  jurisdictions;  provided,  that the  Company  will not be  required to (A)
qualify  generally  to do  business  in any  jurisdiction  where  it  would  not
otherwise  be required to qualify but for this Section  8.1(c),  or (B)  subject
itself to income taxation in any such  jurisdiction;

               (iv) notify each Holder of such Registrable  Shares,  at any time
when a  prospectus  relating  thereto  is  required  to be  delivered  under the
Securities  Act,  of the  happening  of any  event  as a  result  of  which  the
prospectus included in such registration  statement contains an untrue statement
of a material fact or omits any fact  necessary to make the  statements  therein
not misleading, and, at the request of any such Holder, the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable  Shares,  such prospectus will not contain an
untrue  statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;

               (v)   cause all such  Registrable Shares  to  be listed or quoted
on each  securities  exchange or  automated  quotation  system on which  similar
securities  issued by the  Company  are then  listed or quoted;

               (vi)  appoint a   transfer  agent  and  registrar  for  all  such
Registrable  Shares  not  later  than the  effective  date of such  Registration
Statement;

               (vii) make available for inspection by any Holder of  Registrable
Shares,  any  underwriter  participating  in any  disposition  pursuant  to such
registration statement, and any attorney,  accountant or other agent retained by
any such Holder or  underwriter,  all  financial  and other  records,  pertinent
corporate  documents  and  properties  of the Company,  and cause the  Company's
officers,  employees  and  independent  accountants  to supply  all  information
reasonably requested by any such Holder,  underwriter,  attorney,  accountant or
agent in connection with such  registration  statement,  subject in each case to
appropriate  confidentiality  restrictions;  and

               (viii) use its best efforts  to  cause  the  Registrable   Shares
covered by such registration statement to be registered with or approved by such
other United  States or state  governmental  agencies or  authorities  as may be
necessary to enable the Holders  thereof to consummate  the  disposition of such
Registrable  Shares.  The period of time  during  which the  Company is required
hereunder to keep the Registration  Statement effective is referred to herein as
"the Registration Period."

          (d)  INDEMNIFICATION.

               (i) To the extent permitted by law,  the Company  will  indemnify
each Holder  requesting or joining in a  registration,  each agent,  officer and
director  of  such  Holders,  each  person  controlling  such  Holder  and  each
underwriter  and selling broker of the  securities so registered  (collectively,
"Indemnitees")  against all claims,  losses, damages and liabilities (or actions
in respect  thereof) arising out of or based on any untrue statement (or alleged
untrue  statement)  of a material  fact  contained in any  prospectus,  offering
circular  or other  document  incident  to any  registration,  qualification  or
compliance (or in any related registration statement,  notification or the like)
or any omission (or alleged  omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by the Company of the Securities Act, the Exchange Act or state
securities laws or any rule or regulation  promulgated under the Securities Act,
the  Exchange  Act or a state  securities  law, in each case  applicable  to the
Company,  and will  reimburse  each such  Indemnitee for any legal and any other
fees and  expenses  reasonably  incurred in  connection  with  investigating  or
defending any such claim, loss, damage, liability or action, provided,  however,
that the Company  will not be liable to any  Indemnitee  in any such case to the
extent that any such claim,  loss,  damage or  liability is caused by any untrue
statement  or omission so made in strict  conformity  with  written  information
furnished to the Company by an instrument  duly executed by such  Indemnitee and
stated  to be  specifically  for use  therein  and  except  that  the  foregoing
indemnity  agreement is subject to the condition that,  insofar as it relates to
any such untrue statement (or alleged untrue  statement) or omission (or alleged
omission) made in the  preliminary  prospectus but eliminated or remedied in the
amended  prospectus on file with the SEC at the time the registration  statement
becomes  effective or in the amended  prospectus  filed with the SEC pursuant to
Rule 424(b) (the "Final  Prospectus"),  such indemnity agreement shall not inure
to the benefit of any underwriter, or any Indemnitee if there is no underwriter,
if a copy of the Final  Prospectus  was not  furnished  to the  person or entity
asserting  the  loss,  liability,  claim or  damage at or prior to the time such
furnishing  is required by the  Securities  Act;  provided,  further,  that this
indemnity  shall not be  deemed to  relieve  any  underwriter  of any of its due
diligence obligations; provided, further, that the indemnity agreement contained
in this  subsection  8. l(d)(i) shall not apply to amounts paid in settlement of
any such claim, loss, damage, liability or action if such settlement is effected
without the consent of the  Company,  which  consent  shall not be  unreasonably
withheld.

               (ii) To  the  extent  permitted by law, each Holder requesting or
joining  in a  registration  and each  underwriter  and  selling  broker  of the
securities  so  registered  will  indemnify  the  Company and its  officers  and
directors and each person,  if any, who controls any thereof  within the meaning
of Section 15 of the Securities Act and their respective  successors against all
claims,  losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue  statement  (or  alleged  untrue  statement)  of a
material fact contained in any prospectus,  offering  circular or other document
incident to any  registration,  qualification  or compliance  (or in any related
registration  statement,  notification  or the like) or any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary to make the  statements  therein not misleading and will reimburse the
Company  and each  other  person  indemnified  pursuant  to this  subsection  8.
l(d)(ii)  for any legal and any other fees and expenses  reasonably  incurred in
connection  with  investigating  or  defending  any such  claim,  loss,  damage,
liability or action,  provided,  however, that this subsection 8. l(d)(ii) shall
apply only if (and only to the extent  that) such statement or omission was made
in reliance upon and in strict conformity with written  information  (including,
without  limitation,  written negative responses to inquiries)  furnished to the
Company by an instrument  duly executed by such Holder,  underwriter  or selling
broker  and  stated  to be  specifically  for use in such  prospectus,  offering
circular or other document (or related registration  statement,  notification or
the like) or any amendment or supplement thereto;  and except that the foregoing
indemnity  agreement is subject to the condition that,  insofar as it relates to
any such untrue statement (or alleged untrue  statement) or omission (or alleged
omission) made in the  preliminary  prospectus but eliminated or remedied in the
amended  prospectus on file with the SEC at the time the registration  statement
becomes effective or in the Final Prospectus, such indemnity agreement shall not
inure to the benefit of (i) the Company and (ii) any  underwriter or Holder,  if
there is no underwriter, if a copy of the Final Prospectus was not  furnished to
the person or entity asserting the loss, liability,  claim or damage at or prior
to the time  such  furnishing  is  required  by the  Securities  Act;  provided,
further,  that this indemnity  shall not be deemed to relieve any underwriter of
any of its due  diligence  obligations;  provided,  further,  that the indemnity
agreement  contained in this  subsection 8. l(d)(ii)  shall not apply to amounts
paid in settlement of any such claim, loss, damage,  liability or action if such
settlement is effected without the consent of the Holder or underwriter,  as the
case may be, which consent  shall not be  unreasonably  withheld;  and provided,
further,  that the  obligations  of such  Holders  shall be limited to an amount
equal to the net proceeds  received by such Holder from the sale of  Registrable
Stock in such offering as contemplated herein,  unless such claim, loss, damage,
liability or action resulted from such Holder's fraudulent misconduct.

               (iii)  Each  party  entitled  to indemnification  hereunder  (the
"indemnified  party")  shall  give  notice  to the  party  required  to  provide
indemnification (the "indemnifying party") promptly after such indemnified party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the  indemnifying  party (at its  expense)  to assume the  defense of any
claim or any  litigation  resulting  therefrom,  provided  that  counsel for the
indemnifying  party,  who shall conduct the defense of such claim or litigation,
shall be reasonably  satisfactory to the indemnified  party, and the indemnified
party may  participate  in such  defense at such party's  expense,  and provided
further  that the omission by any  indemnified  party to give notice as provided
herein shall not relieve the  indemnifying  party of its obligations  under this
Section  8.1(d)  except to the extent that the omission  results in a failure of
actual notice to the indemnifying  party and such indemnifying  party is damaged
solely as a result of the failure to give notice. No indemnifying  party, in the
defense of any such claim or litigation,  shall consent, except with the consent
of each indemnified party, to entry of any judgment or enter into any settlement
which  does not  include  as an  unconditional  term  thereof  the giving by the
claimant or plaintiff to such indemnified  party of a release from all liability
in respect to such claim or litigation.

               (iv) The reimbursement required by this Section  8.1(d)  shall be
made by periodic payments during the course of the investigation or defense,  as
and when bills are received or expenses incurred.

               (v) The obligation of the Company under this Section 8.1(d) shall
survive  the  redemption,  if any,  of the Series B  Preferred  and the Series C
Preferred,  and  the  completion  of any  offering  of  Registrable  Stock  in a
registration  statement  under this  Section 8 or  otherwise.

          (e)  COVENANTS OF HOLDERS.

               (i) Each Holder agrees that, upon receipt of any notice from  the
Company of the happening of any event  requiring the preparation of a supplement
or amendment to a prospectus  relating to  Registrable  Securities  so that,  as
thereafter delivered to the Holders,  such prospectus will not contain an untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements therein not misleading,  each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the  registration  statement  contemplated  by  subsection  8.1(a)  until its
receipt of copies of the  supplemented  or amended  prospectus  from the Company
and, if so directed by the Company, each Holder shall deliver to the Company all
copies,  other than permanent file copies then in such Holder's  possession,  of
the  prospectus  covering  such  Registrable  Securities  current at the time of
receipt of such notice.

               (ii) Each  Holder  severally  agrees for a period of time (not to
exceed 180 days)  from the  effective  date of any  registration  (other  than a
registration   effected  solely  to  implement  an  employee  benefit  plan)  of
securities  of the Company for any  underwritten  offering  (upon request of the
Company  or of  the  underwriters  managing  any  underwritten  offering  to the
Company's  securities)  not to sell,  make any short  sale of,  loan,  grant any
option for the purchase of, or otherwise  dispose of any Registrable  Securities
or any other  stock of the  Company  held by such  Holder,  other than shares of
Registrable Securities included in such registration,  without the prior written
consent of the Company or such  underwriters,  as the case may be; provided that
this  obligation is subject to the condition  that all officers and directors of
the  Company  and each holder of more than 2% of the  outstanding  Common  Stock
shall  enter  into  similar  agreements;  provided  further  that,  each  Holder
severally  agrees  that if and only if the  Holder  has not,  at the date of the
effectiveness of a subsequently filed registration  statement,  been required to
comply with the preceding  provisions of this Section, for a period of time (not
to exceed 90 days) from the effective date of any subsequent  registration  that
provides  in  whole  or in part  for the  underwritten  sale by the  Company  of
securities of the Company  (upon  request of the Company or of the  underwriters
managing any underwritten  offering of the Company's securities) the Holder will
agree not to sell,  make any short  sale of,  loan,  grant  any  option  for the
purchase of, or otherwise  dispose of any  Registrable  Securities  or any other
stock of the  Company  held by such  Holder,  other than  shares of  Registrable
Securities  included in such registration,  without the prior written consent of
the Company or such underwriters, as the case may be; provided that all officers
and  directors of the Company shall enter into similar  agreements.  Each Holder
agrees to suspend,  upon request of the Company,  any disposition of Registrable
Securities pursuant to the Registration Statement and prospectus contemplated by
subsection  8.1(a)  during  any  period,  not to exceed  one  30-day  period per
circumstance  or development  and not to exceed 60 days in any 12-month  period,
when the Company upon written  advice of counsel  determines  in good faith that
offers and sales  pursuant  thereto should not be made by reason of the presence
of material, undisclosed circumstances or developments with respect to which the
disclosure that would be required in such a prospectus is premature,  would have
an adverse effect on the Company.

               (iii) Each Holder agrees to notify  the Company, at any time when
a prospectus relating to the Registration  Statement  contemplated by subsection
8.1(a) is  required  to be  delivered  by it under the  Securities  Act,  of the
occurrence of any event relating to the Holder which requires the preparation of
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of Registrable  Securities,  such  prospectus will not contain an
untrue  statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements  therein not misleading
relating to the Holder,  and each Holder shall  promptly  make  available to the
Company the  information to enable the Company to prepare any such supplement or
amendment.  Each Holder also agrees that,  upon  delivery of any notice by it to
the  Company of the  happening  of any event of the kind  described  in the next
preceding  sentence of this  subsection,  the Holder will forthwith  discontinue
disposition of Registrable  Securities  pursuant to such Registration  Statement
until its  receipt  of the  copies of the  supplemental  or  amended  prospectus
contemplated by this subsection, which the Company shall promptly make available
to each Holder and, if so directed by the Company,  each Holder shall deliver to
the Company all copies,  other than  permanent file copies then in such Holder's
possession,  of the prospectus  covering such Registrable  Securities current at
the time of receipt of such notice.

               (iv) Each Holder shall furnish to the  Company  such  information
regarding  such  Holder  and the  distribution  proposed  by such  Holder as the
Company may reasonably  request in writing or as shall be required in connection
with any registration,  qualification or compliance  referred to in this Section
8.1.

               (v) Each Holder hereby covenants with the Company (1) not to make
any sale of the Shares  without  effectively  causing  the  prospectus  delivery
requirements  under the Securities  Act to be satisfied,  and (2) if such Shares
are to be sold by any  method or in any  transaction  other  than on a  national
securities  exchange,  in the  over-the-counter  market,  on the NASDAQ National
Market,  in  privately  negotiated  transactions,  or in a  combination  of such
methods,  to notify the Company at least five business days prior to the date on
which the Purchaser first offers to sell any such Shares.

               (vi) Each Holder acknowledges and  agrees  that  the  Registrable
Securities sold pursuant to the Registration Statement described in this Section
are not  transferable  on the books of the Company unless the stock  certificate
submitted to the  transfer  agent  evidencing  such Shares is  accompanied  by a
certificate  reasonably  satisfactory  to the Company to the effect that (A) the
Registrable  Securities  have been  sold in  accordance  with such  registration
statement and (B) the  requirement  of delivering a current  prospectus has been
satisfied.  Each Holder  agrees that it will not effect any  disposition  of the
Registrable  Securities  that would  constitute a sale within the meaning of the
Securities Act except as contemplated in the registration  statement referred to
in this  Section  8.1 or in a  transaction  exempt from  registration  under the
Securities  Act.  Each Holder  agrees not to take any action with respect to any
distribution  deemed to be made  pursuant to such  registration  statement  that
constitutes  a violation  of  Regulation  M under the  Exchange Act or any other
applicable  rule,  regulation  or law.

          (f) RULE 144 REPORTING. With a view to making available to the Holders
the  benefits  of  certain  rules and  regulations  of the SEC which at any time
permit  the  sale  of  the   Registrable   Securities  to  the  public   without
registration, the Company agrees to use its reasonable best efforts to:

               (i) make  and  keep  public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times;

               (ii) file with the SEC in a  timely  manner all reports and other
documents required of the Company under the Exchange Act; and

              (iii) so  long  as  a  Holder  owns  any unregistered  Registrable
Securities,  furnish  to such  Holder  upon any  reasonable  request  a  written
statement by the Company as to its compliance with Rule 144 under the Securities
Act,  and of the  Exchange  Act, a copy of the most recent  annual or  quarterly
report of the Company,  and such other  reports and  documents of the Company as
such Holder may reasonably  request in availing itself of any rule or regulation
of the SEC allowing a Holder to sell any such securities without registration.

          (g) TRANSFER  OF  REGISTRATION RIGHTS. The rights to cause the Company
to register  Registrable  Securities granted to the Holders by the Company under
subsection  8.1(a) may be assigned in full by a Holder to an  Affiliate  of such
Holder or a transferee  of at least  100,000  shares of  Registrable  Securities
provided  that:  (i) such transfer may otherwise be effected in accordance  with
applicable  securities  laws; (ii) such Holder gives prior written notice to the
Company;  and  (iii)  such  transferee  agrees  to  comply  with the  terms  and
provisions of this Agreement including,  without limitation, the restrictions in
Section 4.6 and such  transfer is otherwise in compliance  with this  Agreement.
Except as  specifically  permitted by this paragraph (g), the rights of a Holder
with  respect  to  Registrable  Securities  as  set  out  herein  shall  not  be
transferable to any other Person.

          (h) WAIVERS AND AMENDMENTS. With  the  written  consent of the Company
and the Holders holding at least a majority of the then outstanding  Registrable
Securities, any provision of this Section 8.1 may be waived (either generally or
in a particular instance, either retroactively or prospectively and either for a
specified period of time or  indefinitely) or amended.  Upon the effectuation of
each such waiver or amendment,  the Company shall  promptly give written  notice
thereof to the Holders,  if any, who have not previously received notice thereof
or consented thereto in writing.

     8.2 DISPOSITION. The Purchaser has not and will not make any offer, sale or
other transfer of the Shares by any means which would not comply with applicable
law or this  Agreement  or which  would  otherwise  impose  upon the Company any
obligation  to  satisfy  any  public  filing or  registration  requirement.  The
Purchaser understands and agrees that any disposition of the Shares in violation
of this  Agreement  shall be null and void,  and that no  transfer of the Shares
shall be made by the  Company  or the  transfer  agent for the  Shares  upon the
Company's  stock  transfer  books or  records  unless  and until  there has been
compliance with the terms of this Agreement,  the Securities Act, any applicable
state and foreign securities law and any other laws.  Purchaser will not sell or
transfer the Shares unless:

          (a) there  is  then  in  effect  a  registration  statement  under the
Securities Act covering such proposed  disposition and such  disposition is made
in accordance with such Registration Statement; or

          (b) it shall have notified the Company of the proposed disposition and
shall  have  furnished  the  Company  with  a  statement  of  the  circumstances
surrounding the proposed disposition, and, if requested by the Company, it shall
have furnished the Company with an opinion of counsel,  reasonably  satisfactory
to the Company that such disposition is exempt from  registration of such shares
under the Securities Act or any applicable  state,  foreign or other  securities
laws.

The  Purchaser  will  not  transfer  the  Shares,  other  than  pursuant  to the
Registration  Statement or in a transaction  that complies with Rule 144, unless
the transferee agrees to be bound by the restrictions on transfer (including the
registration  provisions)  contained herein to the same extent as if it were the
original  Purchaser.  The provisions hereof shall apply to the Penalty Rights to
the same extent as the Shares.

     8.3 OTHER REGISTRATION RIGHTS. Each of the Company and the Purchaser agrees
that the  holders  of any  securities  of the  Company  which  are  entitled  to
registration  rights pursuant to (i) the June Subscription  Agreement,  (ii) the
Series C Preferred Stock Purchase Agreement among the Company and certain of its
security holders dated as of July 26, 1995 or (iii) the Stock Purchase Agreement
among the Company and certain of its  security  holders  dated as of November 9,
1993 shall be entitled to  participate  with respect to such  securities  in any
registration  effected  pursuant  to Section  8.1 hereof upon the same terms and
conditions as a Holder of Registrable Securities.

                                    SECTION 9

                                  MISCELLANEOUS

     9.1 TERMINATION  OF  AGREEMENT. The Company may terminate its obligation to
perform or observe any of its covenants and agreements hereunder to Purchaser if
Purchaser  violates  in a material  respect  any of the  material  covenants  or
agreements  of the  Purchaser  under  this  Agreement,  and  the  Purchaser  may
terminate  its  obligations  to  perform  or observe  any of its  covenants  and
agreements  hereunder if the Company violates or fails to perform in any respect
any of the  covenants  or  agreements  of the Company  under this  Agreement  to
Purchaser; provided, however, that neither the Company nor the Purchaser, as the
case may be, may terminate any of its obligations under this Agreement  pursuant
to this sentence  unless it shall have delivered  written notice of such default
to the other  party and such  default  shall not have been cured  within 30 days
after the delivery of such notice.

     9.2 GOVERNING LAW. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS BY THE
LAWS OF THE STATE OF TEXAS AS APPLIED TO CONTRACTS  ENTERED INTO SOLELY  BETWEEN
RESIDENTS OF, AND TO BE PERFORMED  ENTIRELY  WITHIN,  SUCH STATE.

     9.3 SURVIVAL; RELIANCE. The representations and  warranties  in  Sections 3
and 4 of this Agreement shall survive any investigation made by the Purchaser or
the Company for a period of two years after the Closing  Date and all  covenants
and agreements contained herein shall survive the execution and delivery of this
Agreement in accordance with their terms.  Thereafter,  such representations and
warranties  shall expire and be of no further force and effect,  and no cause of
action may be brought with respect to any breach thereof unless a written notice
specifying  the nature and the amount of the claims shall have been delivered by
the Company or the Purchaser,  as the case may be, with respect  thereto,  on or
before  two  years  after the  Closing  Date.  Any  representation  or  warranty
contained herein may be relied upon by counsel to the Company in connection with
any opinion delivered in connection with the transactions  contemplated  hereby.

     9.4 SUCCESSORS AND ASSIGNS. This  Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their  respective  successors and
assigns. Except as otherwise provided in this Agreement,  this Agreement may not
be assigned  by a party  without  the prior  written  consent of the other party
except by operation  of law, in which case the assignee  shall be subject to all
of the provisions of this Agreement.

     9.5 NOTICES AND DATES. Any notice or other communication   given under this
Agreement  shall be sufficient if in writing and will be effective as of (a) the
date of receipt if delivered by hand, by messenger or by courier, or transmitted
by  facsimile,  to a party at its  address  set forth  below  (or at such  other
address  as shall be  designated  for such  purpose  by such  party in a written
notice to the other party hereto) or (b) three days after the date when the same
shall have been posted by registered mail, return receipt requested, in any post
office in the United  States of America,  postage  prepaid and  addressed to the
party at such address:

          (i)           if to the Company:


                        3DX Technologies Inc.
                        12012 Wickchester
                        Suite 250
                        Houston, Texas 77079
                        Attn: Chief Financial Officer
                        (Facsimile) (281) 579-9227


          (ii)          if to Purchaser:

                         Santa Fe Energy Resources, Inc.
                         1616 S. Voss Suite 1000
                         Houston, Texas 77057
                         Attn: General Counsel
                         (Facsimile) (713) 507-5341

     9.6  SPECIFIC PERFORMANCE. The parties hereto acknowledge  and  agree  that
irreparable  damage  would  occur in the  event  any of the  provisions  of this
Agreement  were not  performed in  accordance  with its  specific  terms or were
otherwise  breached  and that  such  damage  would not be  compensable  in money
damages and that it would be extremely difficult or impracticable to measure the
resultant  damages.  It is  accordingly  agreed that any party  hereto  shall be
entitled to an injunction or injunctions  to prevent  breaches of the provisions
of this Agreement and to enforce  specifically the terms and provisions  hereof,
in addition to any other remedy to which it may be entitled at law or in equity,
and such party that is sued for breach of this  Agreement  expressly  waives any
defense  that a remedy in damages  would be adequate  and  expressly  waives any
requirement in an action for specific  performance  for the posting of a bond by
the party bringing such action.

     9.7 FURTHER ASSURANCES. The parties hereto shall do and perform or cause to
be done and  performed  all such further  acts and things and shall  execute and
deliver all such other agreements, certificates, instruments or documents as any
other party may  reasonably  request from time to time in order to carry out the
intent and purposes of this Agreement and the  consummation of the  transactions
contemplated  hereby.

     9.8  COUNTERPARTS. This Agreement may be executed in any number of counter-
parts,  each of which may be executed by fewer than all of the parties,  each of
which  shall  be  enforceable   against  the  parties  actually  executing  such
counterparts,  and all of which together shall  constitute one  instrument.

     9.9 SEVERABILITY.  In   the event that  any  provision  of  this  Agreement
becomes or is  declared  by a court of  competent  jurisdiction  to be  illegal,
unenforceable  or void,  this Agreement  shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially  changes the economic impact of this Agreement on any party.

     9.10 CAPTIONS. Headings of the various sections of this Agreement have been
inserted  for  convenience  of  reference  only and shall not be relied  upon in
construing this Agreement. Use of any gender herein to refer to any person shall
be deemed to  comprehend  masculine,  feminine  and neuter  unless  the  context
clearly requires otherwise.

     9.11 PUBLIC STATEMENTS.  The  Purchaser  agrees  not  to issue any public
statement with respect to it's investment or proposed  investment in the Company
or the terms of any agreement or covenant between it and the Company without the
Company's  prior written  consent,  except such  disclosures  as may be required
under applicable law or under any applicable  order,  rule or regulation.

     9.12 BROKERS. Each of the Company and the Purchaser represents and warrants
to the others that it has not engaged,  consented to or  authorized  any broker,
finder or intermediary to act on its behalf directly or indirectly, as a broker,
finder or intermediary in connection with the transactions  contemplated by this
Agreement.  Each of the Company and the Purchaser hereby agrees to indemnify and
hold harmless the other from and against all fees, commissions or other payments
owing to any such person or firm acting on behalf of such Person hereunder.

     9.13 COSTS AND  EXPENSES.  Each  party  hereto  shall pay its own costs and
expenses  incurred in  connection  herewith,  including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated.

     9.14 NO THIRD-PARTY  RIGHTS.  Nothing in this Agreement shall  create or be
deemed  to  create  any  rights  in any  person  or  entity  not a party to this
Agreement except for certain registration rights granted hereunder to Persons in
accordance  with  Section  8.3 hereof.

     9.15 ENTIRE  AGREEMENT;  AMENDMENT.  This Agreement and the other documents
delivered  pursuant  hereto  constitute  the full and entire  understanding  and
agreement  between the parties  with  regard to the  subject  matter  hereof and
supersede all prior agreements and understandings  among the parties relating to
the subject matter  hereof. No party shall be liable or bound to any other party
in  any  manner  by any  warranties,  representations  or  covenants  except  as
specifically set forth herein. Neither this Agreement nor any term hereof may be
amended,  waived,  discharged or terminated  other than by a written  instrument
signed by the party  against whom  enforcement  of any such  amendment,  waiver,
discharge  or  termination  is  sought  except  that  any  matter   relating  to
registration  rights  hereunder may be waived or amended on behalf of all of the
Holders, by the consent of the Company and the Holders holding a majority of the
then  outstanding  Registrable   Securities.

This Common Stock Subscription  Agreement is agreed to and accepted as of August
21, 1998.

                                    3DX TECHNOLOGIES INC.



                                     By:/s/ Russell L. Allen
                                        ----------------------------------------
                                        Russell L. Allen
                                        Vice President Finance and
                                        Chief Financial Officer


                                     SANTA FE ENERGY RESOURCES, INC.



                                      By:/s/ David C. Hicks
                                        ----------------------------------------
                                        David C. Hicks, Vice President
                                        and General Counsel


<PAGE>



                                    EXHIBIT A

                             SCHEDULE OF EXCEPTIONS

     1.   The Company's August 19 press release is  incorporated herein in their
entirety.

     2.   The Company made a Voluntary Request for Consideration, dated February
5, 1998, a copy of which has been provided to the Purchaser,  under the Employee
Plan Closing  Agreement  Program to correct certain  operational  defects in its
former defined  contribution  pension plan,  which was intended to qualify under
section  401(a) of the Internal  Revenue Code of 1986,  as amended.  The Company
believes that it has made adequate provision on its financial statements for any
liability   (including  interest  and  penalties)  that  may  result  from  such
operational defects.

     3.   The Company has not received a determination  letter from the Internal
Revenue Service with regard to its current 401(k) Employee  Savings Plan,  which
plan the Company adopted in January 1998.



<PAGE>



                                    EXHIBIT B

                             ADDITIONAL INFORMATION


<PAGE>



                                    EXHIBIT B


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

            Certain statements in the materials given to the Purchaser including
statements  regarding  anticipated  capital  expenditures,  estimates  of proved
reserves, future rates of production, future growth, future exploration,  future
seismic data (including timing and results),  future reserves,  revenues, future
drilling  (including the timing and results  thereof),  expansion of operations,
generation of additional  prospects and results of current or future  prospects,
future  reserves and future  leases,  and other land  rights,  timing of capital
expenditures  and  regulatory  reform,  and other  statements  contained  herein
regarding matters that are not historical facts, are forward-looking  statements
(as such term is  defined in the  Private  Securities  Litigation  Reform Act of
1995). The words  "budgeted",  "anticipate,"  "project,"  "estimate,"  "expect,"
"may,"  "believe,"  "potential" and similar  statements are intended to be among
the statements  that are  forward-looking  statements.  Because such  statements
include risks and uncertainties, actual results may differ materially from those
expressed  or implied by such  forward-looking  statements.  Factors  that could
cause actual results to differ materially include, but are not limited to, those
discussed under "Risk Factors" and in the Company's filings with the SEC.

                                  RISK FACTORS


LIMITED OPERATING HISTORY AND SIGNIFICANT HISTORICAL OPERATING LOSSES

            The Company  commenced its operations in 1993 and has only a limited
operating  history.  Potential  investors,  therefore,  have limited  historical
financial  and  operating  information  upon which to base an  evaluation of the
Company's  performance and an investment in shares of Common Stock. For example,
many of the producing wells within exploration  projects in which the Company is
participating  have  been  on  production  only  for a  short  period  of  time.
Therefore,  estimations  with respect to the proved reserves and level of future
production  attributable to these wells are difficult to determine and there can
be no assurance as to the volume of  recoverable  reserves that will be realized
from such wells.  The  Company's  prospects  must be  considered in light of the
risks,  expenses and  difficulties  frequently  encountered  by companies in the
early  stages  of their  development.  As a result  of  operating  expenses  and
impairments  of oil and gas  properties,  the Company has  incurred  significant
operating and net losses to date. The development of the Company's  business and
its participation in an increasingly  larger number of projects has required and
will  continue  to  require  substantial  expenditures.   The  Company's  future
financial  results will depend  primarily on its ability to economically  locate
hydrocarbons in commercial  quantities to provide drilling site and target depth
recommendations  resulting  in  profitable  productive  wells and on the  market
prices for oil and gas.  There can be no assurance that the Company will achieve
or sustain profitability or positive cash flows from operating activities in the
future.

VOLATILITY OF OIL AND GAS PRICES

            Although the Company's  primary  efforts are focused on reducing the
hydrocarbon  finding  costs in those  projects  in  which it  participates,  the
Company's revenues,  profitability,  cash flow and future growth are affected by
changes in prevailing  oil and gas prices.  Oil and gas prices have been subject
to wide  fluctuations in recent years in response to relatively minor changes in
the  supply  and demand  for oil and gas,  market  uncertainty  and a variety of
additional  factors  that are  beyond  the  control  of the  Company,  including
economic,  political and  regulatory  developments  and  competition  from other
sources  of  energy.  It is  impossible  to  predict  future  oil and gas  price
movements with any certainty.  Currently, the Company does not engage in hedging
activities.  As a  result,  the  Company  may  be  more  adversely  affected  by
fluctuations  in oil and gas prices  than other  industry  participants  that do
engage in such activities.  No assurances can be given as to the future level of
activity  in the  oil and  gas  exploration  and  development  industry  and its
relationship to the future demand for the expertise  offered by the Company.  An
extended  or  substantial  decline in oil and gas  prices  could have a material
adverse  effect on the Company's  financial  position and results of operations,
the volume of oil and gas that may be  economically  produced by  operations  of
projects in which the Company participates and the Company's access to capital.

RELIANCE ON SIGNIFICANT PARTNERS

              The  Company  has in the past and  expects  in the  future to rely
extensively upon its existing and future partners to offer opportunities for the
Company to participate in exploration projects. All of the Company's oil and gas
revenues  have been  derived  from its  participation  in  projects  involving a
limited number of partners.  The Company's  inability to secure future  business
opportunities  generated by these or other  partners  could limit the  Company's
ability to fully  implement its business plan and could have a material  adverse
effect on the Company's business, financial condition and results of operations.

NON-OPERATOR STATUS

            The Company focuses  exclusively on providing 3-D imaging and relies
upon other project partners to provide and complete all other project operations
and responsibilities including land acquisition, drilling, marketing and project
administration.  As a result, the Company has only a limited ability to exercise
control over a significant  number of a project's  operations or the  associated
costs of such operations. The success of a project is dependent upon a number of
factors  which are  outside  of the  Company's  area of  expertise  and  project
responsibilities.  Such factors include: (i) the availability of favorable lease
terms and required  permitting  for projects,  (ii) the  availability  of future
capital  resources by the Company and the other  participants for the purchasing
of leases and the drilling of wells, (iii) the approval of other participants to
the  purchasing  of leases and the drilling of wells on the  projects,  (iv) the
economic  conditions  at the time of  drilling,  including  the  prevailing  and
anticipated  prices  for oil and gas and  (v) the  ability  of the  operator  to
successfully and adequately  perform its tasks. The Company's  reliance on other
project  partners and its limited  ability to directly  control  certain project
costs could have a material  adverse effect on the realization of expected rates
of return on the Company's investment in projects.

ABILITY TO DISCOVER ADDITIONAL RESERVES

            The  Company's  future  success  is  dependent  upon its  ability to
economically  locate  additional oil and gas reserves in commercial  quantities.
The Company's ability to do so is dependent upon a number of factors,  including
its  participation  in  multiple  exploration  projects  and  its  technological
capability to locate oil and gas in commercial  quantities.  Because the Company
does not generate or develop its own projects  (except in instances  relating to
trend plays),  relying  instead upon other  industry  participants  to do so, no
assurances  can  be  given  that  the  Company  will  have  the  opportunity  to
participate  in projects which  economically  produce  commercial  quantities of
hydrocarbons in amounts necessary to meet its business plan or that the projects
in which it elects to participate will be successful.  Except to the extent that
the  Company   successfully   locates  commercial   quantities  of  economically
recoverable oil and gas, the Company's  proved reserves will decline as reserves
are  produced.  There  can be no  assurance  that  the  Company  will be able to
discover additional  commercial  quantities of oil and gas or that the Company's
project  partners  will have success  drilling  productive  wells and  acquiring
properties at low finding costs.

SUBSTANTIAL CAPITAL REQUIREMENTS AND LIQUIDITY

              To date,  net  cash  provided  by  operating  activities  has been
limited  and the  Company  has  funded  its oil and gas  exploration  activities
principally  through  cash  provided  by the  sale  of  equity  securities.  The
Company's  business requires  substantial oil and gas capital  expenditures.  To
achieve its near-term  goals,  the Company has been and will be required to make
oil and gas capital  expenditures  substantially  in excess of its net cash flow
from operations in order to acquire, explore and develop oil and gas properties.
The level of  capital  spending  in 1998 will be  dependent  upon the  Company's
ability to obtain additional sources of funding.

            As of March 31, 1998,  the Company had a deficit in working  capital
of  approximately  $3.8 million.  On December 18, 1997,  the Company  executed a
credit agreement with a commercial bank, the borrowing capacity of which was set
at $2.0  million  in April  1998.  There  were no  borrowings  under the  credit
agreement during the quarter ended March 31, 1998. Subsequent to March 31, 1998,
the Company borrowed $2.0 million under the credit agreement. Such amount is the
maximum amount currently available for borrowing under the credit facility.  The
borrowing  capacity is a function of the value of the  Company's  proved oil and
gas reserves,  and is redetermined on a quarterly  basis.  The bank is currently
conducting  a scheduled  redetermination.  Although  the Company  increased  its
proved reserves as a result of successful drilling operations during the quarter
ended March 31, 1998,  the bank has not  concluded  whether it will increase the
borrowing   capacity  at  this  time.   The  credit   agreement  is  secured  by
substantially  all  of  the  Company's  oil  and  gas  properties  and  contains
restrictions on dividends and additional liens and indebtedness and requires the
maintenance  of a minimum  current  ratio and net worth,  each as defined in the
credit  agreement.  As of March 31, 1998, the Company was not in compliance with
certain covenants of the credit agreement  pertaining to minimum working capital
and aging of accounts  payable.  The bank has agreed to waive these instances of
non-compliance  through June 30, 1998. In the absence of an  improvement  in the
Company's  working capital and accounts  payable aging,  future waivers from the
bank will be necessary.

            As a result of the Company's  periodic review of each of its oil and
gas  exploration  and  development  properties  and its available  capital,  the
Company has occasionally sold partial interests in specific oil and gas projects
to other investors to reduce its total  investment  commitment to such projects.
No gain or loss has  been  recognized  on these  transactions.  The  Company  is
currently  reviewing  its  portfolio  to identify  properties  to be marketed to
industry partners for cash consideration, reversionary working interests or some
combination  thereof.  Such  interests may consist of both  producing  wells and
future drilling locations. There can be no assurance,  however, that the Company
will be able to sell any such  interests,  or that the  terms of such  potential
sales would be acceptable to the Company.

            The Company  will  require  additional  sources of financing to fund
drilling  expenditures  on properties  currently  owned by the Company and, to a
lesser extent,  to fund leasehold costs and geological and geophysical  costs on
its active  exploration  projects.  The Company generally has the right, but not
the obligation, to participate for its percentage interest in drilling wells and
can decline to participate if it does not have sufficient  capital  resources at
the time such drilling operations are proposed. The Company can also potentially
transfer  its right to  participate  in drilling  wells in exchange  for cash, a
reversionary interest, or some combination thereof. To recover its investment in
unevaluated properties, it is necessary for the Company to either participate in
drilling which finds commercial oil and gas production and produce such reserves
or receive sufficient value through the sale or transfer of its interests.

              The Company  expects that its projected  cash flows from currently
producing   properties   will  be  sufficient  to  fund  its  cash  general  and
administrative costs for the remainder of 1998, including technical employee and
related costs which are capitalized under full-cost accounting,  however,  these
cash flows are not  projected to be  sufficient  to fund the current  deficit in
working  capital.  The  Company's  projections  of  cash  flows  from  currently
producing  properties  could be  adversely  affected  by declines in oil and gas
prices below  current  levels or  anticipated  seasonal  lows and  unanticipated
declines in oil and gas production from existing properties.

              The Company  intends to seek  additional  financing to satisfy its
capital requirements. The Company is currently evaluating alternatives to obtain
additional equity  financing,  which include sales of common or preferred stock.
In the absence of additional financing,  the Company anticipates that it will be
required to modify the  implementation and timing of its oil and gas exploration
and  development  capital  spending for 1998,  which  modification  could have a
material  adverse  effect on the  Company.  No  assurance  can be given that the
Company  will be able to obtain  additional  financing  on terms  which would be
acceptable  to the  Company,  if at  all.  The  Company's  inability  to  obtain
additional  financing would have a material  adverse effect on the Company.  The
lack of firm  commitments for equity  financing at this time,  combined with the
deficit in working capital,  raises uncertainty about the ability of the Company
to  continue  as a going  concern.  In the absence of  additional  funding,  the
Company may be required to reduce its planned level of capital  expenditures  or
pursue other financial alternatives, which could include a sale or merger of the
Company.

            The Company expects to seek to obtain  additional funds, in addition
to the proceeds of this  offering,  through  equity or debt  financing,  or from
other  sources.  If additional  funds are raised by issuing  equity  securities,
dilution to  stockholders  may occur.  The Board of  Directors of the Company is
empowered, without stockholder approval, to issue series of preferred stock with
dividend, liquidation,  conversion, voting and other rights that could adversely
affect the voting power or other rights of the holders of the common stock.  Any
such  preferred  stock or common stock may be offered at or near the time of the
securities offered pursuant to this transaction and may be on terms more or less
favorable than those offered  pursuant to this  transaction.  If debt securities
are issued,  a portion of the  Company's  cash flow will have to be dedicated to
payment of principal  and interest on such  indebtedness  and the Company may be
subject to certain  restrictive  financial  and  operating  restrictions  in the
agreements and instruments relating to such indebtedness.

UNCERTAINTY OF ESTIMATES OF OIL AND GAS RESERVES

            There are numerous  uncertainties inherent in estimating oil and gas
reserves and in projecting future rates of production.  Petroleum engineering is
a subjective process of estimating underground accumulations of oil and gas that
cannot be measured in an exact manner. Estimates of economically recoverable oil
and gas  reserves  and of future net cash flows depend upon a number of variable
factors and  assumptions,  such as historical  production from the area compared
with production from other producing  areas,  the assumed effects of regulations
by governmental  agencies, and assumptions concerning future oil and gas prices,
future  operating  cost,  severance  and  excise  taxes,  development  costs and
workover and remedial costs, all which may in fact vary considerably from actual
results. For these reasons, estimates of the economically recoverable quantities
of  oil  and  gas   attributable   to  any   particular   group  of  properties,
classifications  of such reserves based on risk of recovery and estimates of the
future net cash flows expected therefrom  prepared by different  engineers or by
the same engineers at different times may vary substantially. Actual production,
revenues and  expenditures  with respect to the  Company's  reserves will likely
vary from estimates, and such variances may be material.

DEPENDENCE ON EXPLORATORY DRILLING ACTIVITIES

            The success of the Company  will be  materially  dependent  upon the
continued  success of its exploratory  drilling  program.  Exploratory  drilling
involves numerous risks, including the risk that no commercially  productive oil
or natural gas reservoirs will be encountered. The cost of drilling,  completing
and  operating  wells  is  often  uncertain,  and  drilling  operations  may  be
curtailed,  delayed or cancelled as a result of a variety of factors,  including
unexpected  drilling  conditions,  pressure  or  irregularities  in  formations,
equipment  failures or accidents,  adverse weather  conditions,  compliance with
governmental  requirements  and  shortages  or  delays  in the  availability  of
drilling  rigs or delivery  crews and the  delivery of  equipment.  Although the
Company believes that its use of 3-D seismic data and other advanced  technology
should  increase the  probability  of success of its  exploratory  wells through
elimination of prospects that might  otherwise be drilled solely on the basis of
2-D seismic data and other traditional  methods,  exploratory drilling remains a
speculative  activity.  Even when fully utilized and properly  interpreted,  3-D
seismic data and advanced  techniques only assist  geoscientists  in identifying
subsurface  structures and do not allow the  interpreter to know if hydrocarbons
will in fact be present in such structures if they are drilled. In addition, the
use of 3-D  seismic data and such  technologies  requires  greater  pre-drilling
expenditures  than traditional  drilling  strategies and the Company could incur
losses  as  a  result  of  such  expenditures.  The  Company's  future  drilling
activities may not be successful and. if unsuccessful, such failure will have an
adverse  effect on the  Company's  future  results of  operations  and financial
condition. There can be no assurance that the Company's overall drilling success
rate or its drilling success rate for activity within a particular  project area
will not decline.  The Company may choose not to acquire option and lease rights
prior to acquiring  seismic data and, in many cases,  the Company may identify a
prospect or  drilling  location  before  seeking  option or lease  rights in the
prospect or location and in which  prospects the Company may not have any option
or lease  rights.  Although the Company has  identified or budgeted for numerous
drilling prospects, there can be no assurance that such prospects will be leased
or drilled  (or drilled  within the  scheduled  or budgeted  time frame) or that
natural gas or oil will be produced  from any such  identified  prospects or any
other  prospects. [Prospects  may  initially be  identified  through a number of
methods,  some of which do not include  interpretation  of 3-D or other  seismic
data. Wells that are currently  included in the Company's  capital budget may be
based upon statistical results of drilling activities in other 3-D project areas
that the Company believes are geologically  similar,  rather than on analysis of
seismic or other data.  Actual drilling and results are likely to vary from such
statistical results and such variance may be material.] Similarly, the Company's
drilling schedule may vary from its capital budget.

COMPETITION

            The  exploration  for and  production  of oil  and  gas  are  highly
competitive.  Many  companies  and  individuals  are engaged in the  business of
acquiring  interests  in and  developing  onshore  and near  onshore oil and gas
properties  in the United  States.  The industry is not  dominated by any single
competitor or a small number of competitors.  The Company  competes with a large
number  of  independent,  technology-driven  service  companies  and  major  and
independent  oil and gas companies for the  acquisition of desirable oil and gas
properties,  as well as for the equipment and expertise  required to operate and
develop such  properties.  Many of these  competitors  have  financial and other
resources  substantially  in  excess of those  available  to the  Company.  Such
competitive  disadvantages  could  adversely  affect  the  Company's  ability to
participate in projects with favorable rates of return.

TECHNOLOGICAL CHANGES

            The oil and gas industry is  characterized  by rapid and significant
technological  advancements  and  introductions  of new  products  and  services
utilizing new  technologies.  As new  technologies  develop,  the Company may be
placed at a competitive  disadvantage,  and competitive  pressures may force the
Company to implement such new  technologies  at  substantial  cost. In addition,
other oil and gas finding  companies may implement new  technologies  before the
Company,  and  consequently  such  companies  may be  able to  provide  enhanced
capabilities  and superior  quality compared with that which the Company is able
to provide.  There can be no assurance  that the Company will be able to respond
to such competitive  pressures and implement such technologies on a timely basis
or at an acceptable cost. One or more of the technologies  currently utilized by
the Company or implemented in the future may become obsolete.  In such case, the
Company's  business,  financial  condition  and results of  operations  could be
materially  adversely  affected.  If the  Company is unable to utilize  the most
advanced commercially  available technology,  the Company's business,  financial
condition and results of operations could be materially and adversely affected.

OPERATING RISKS OF OIL AND NATURAL GAS OPERATIONS

            The oil and natural gas business  involves certain operating hazards
such as well  blowouts,  craterings,  explosions,  uncontrollable  flows of oil,
natural  gas  or  well  fluids,  fires,   formations  with  abnormal  pressures,
pollution,  releases of toxic gas and other environmental hazards and risks, any
of which  could  result in  substantial  losses  to the  Company.  In  addition,
offshore  projects are subject to the additional  hazards of marine  operations,
such as  capsizing,  collision  and  damage or loss  from  severe  weather.  The
availability  of a ready market for the Company's oil and natural gas production
also  depends on the  proximity  of reserves  to, and the  capacity  of, oil and
natural gas gathering systems, pipelines and trucking or terminal facilities. In
addition, the Company may be liable for environmental damages caused by previous
owners of property purchased and leased by the Company. As a result, substantial
liabilities  to third  parties or  governmental  entities may be  incurred,  the
payment of which could reduce or eliminate the funds available for  exploration,
development or acquisitions  or result in the loss of the Company's  properties.
In accordance with customary industry practices, the Company maintains insurance
against some, but not all, of such risks and losses.  The occurrence of an event
not fully  covered  by  insurance  could have a material  adverse  effect on the
financial condition and results of operations of the Company.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

            Oil and natural gas operations are subject to various federal, state
and local  government  regulations,  which may be  changed  from time to time in
response to economic or  political  conditions.  Matters  subject to  regulation
include  discharge  permits for drilling  operations,  drilling  bonds,  reports
concerning  operations,  the  spacing  of  wells,  unitization  and  pooling  of
properties  and taxation.  From time to time,  regulatory  agencies have imposed
price controls and  limitations on production by restricting the rate of flow of
oil and natural gas wells below actual production  capacity in order to conserve
supplies  of oil and natural  gas. In  addition,  the  development,  production,
handling,  storage,   transportation  and  disposal  of  oil  and  natural  gas,
by-products  thereof  and other  substances  and  materials  produced or used in
connection  with oil and natural gas operations are subject to regulation  under
federal,  state and local laws and regulations  primarily relating to protection
of human health and the environment. The Company is also subject to changing and
extensive tax laws, the effects of which cannot be predicted. The implementation
of new,  or the  modification  of  existing,  laws or  regulations  could have a
material adverse effect on the Company.

VARIABILITY OF OPERATING RESULTS

              The  Company's  operating  results have in the past and may in the
future  fluctuate  significantly  depending  upon a number of factors  including
industry conditions,  prices of oil and gas, rate of drilling success,  rates of
production  from completed  wells and the timing of capital  expenditures.  Such
variability  could have a material  adverse  effect on the  Company's  business,
financial condition and results of operations. In addition, any failure or delay
in the realization of expected cash flows from operating  activities could limit
the  Company's  ability to invest and  participate  in  economically  attractive
projects.

RISKS  ASSOCIATED  WITH  MANAGEMENT  OF GROWTH  AND  IMPLEMENTATION  OF GROWTH
STRATEGY

            The Company's  rapid growth has placed,  and is expected to continue
to  place,  a  significant  strain  on  the  Company's   financial,   technical,
operational and administrative  resources. As the Company increases its services
and  enlarges  the  number  of  projects  it is  evaluating  or in  which  it is
participating,  there will be  additional  demands on the  Company's  financial,
technical and administrative  resources.  The failure to continue to upgrade the
Company's technical, administrative,  operating and financial control systems or
the occurrence of unexpected expansion  difficulties,  including the recruitment
and retention of geoscientists  and   engineers,  could have a material  adverse
effect on the Company's business, financial condition and results of operations.

DEPENDENCE ON KEY PERSONNEL

            The Company has assembled a team of  geologists,  geophysicists  and
engineers  who have  considerable  experience  effectively  applying 3-D imaging
technologies. The Company is dependent upon the knowledge, skills and experience
of these  experts to provide 3-D imaging and assist the Company in reducing  the
risks associated with its participation in oil and gas exploration  projects. In
addition,  the success of the  Company's  business also depends to a significant
extent upon the abilities and continued efforts of its management,  particularly
Ronald Nowak,  the Company's  President and Chief  Executive  Officer,  Peter M.
Duncan,  Vice  President of  Technology,  Douglas C. Nester,  Vice  President of
Exploration  and  Randall D. Keys,  Vice  President  of  Finance.  Mr.  Keys has
announced  his  intention to leave the Company.  The loss of the services of key
management  personnel or the Company's  technical  experts,  or the inability to
attract additional qualified personnel,  could have a material adverse effect on
the Company's business, financial condition, results of operations,  development
efforts and ability to expand.  There can be no assurance  that the Company will
be successful in attracting and retaining  such  executives,  geoscientists  and
engineers.

ANTI-TAKEOVER CONSIDERATIONS

              The  Company's   Restated   Certificate  of   Incorporation   (the
"Certificate of Incorporation")  and Amended and Restated By-laws (the "Bylaws")
include  certain  provisions  that are  intended  to enhance the  likelihood  of
continuity and stability in the composition of the Company's Board of Directors.
These  provisions  may have the effect of delaying,  deterring  or  preventing a
future  takeover  or change in control of the Company  unless  such  takeover or
change in control is approved by the Company's  Board of Directors,  even though
such a transaction may offer the holders of Common Stock the opportunity to sell
their stock at a price above the prevailing  market price.  Such  provisions may
also  render  the  removal  of  directors   and   management   more   difficult.
Specifically,  the Certificate of  Incorporation  and Bylaws provide for certain
advance  notice  requirements  for  stockholder  nominations  of candidates  for
election to the  Company's  Board of  Directors  and certain  other  stockholder
proposals.  Such provisions  could limit the price that certain persons might be
willing  to pay in the future for shares of Common  Stock.  The  Certificate  of
Incorporation  authorizes  the Board of  Directors  of the Company to issue from
time to time,  without any  further  action of  stockholders,  up to one million
shares of  Preferred  Stock (as  defined  herein),  on such  terms and with such
rights, designations, preferences, qualifications,  limitations and restrictions
as the Board of Directors may determine.  The issuance of such Preferred  Stock,
depending   upon  the   rights,   designations,   preferences,   qualifications,
limitations and restrictions thereof, may have the effect of delaying, deterring
or  preventing  a change in control of the  Company or may  otherwise  adversely
affect the interests of holders of Common Stock. Further,  certain provisions of
the Delaware General  Corporation Law (the "DGCL") prevent certain  stockholders
from  engaging in business  combinations  with the  Company,  subject to certain
exceptions.


<PAGE>



                          DESCRIPTION OF CAPITAL STOCK

GENERAL

            The Company's authorized capital stock consists of 20,000,000 shares
of Common Stock, and 1,000,000 shares of Preferred Stock.

            The statements  set forth below are brief  summaries of the material
provisions of the Certificate of Incorporation  and Bylaws both as amended which
are filed as exhibits to the Company's  Form 10-K filed with the SEC relating to
the  Company's  capital  stock and  certain  provisions  of Delaware  law.  Such
summaries do not purport to be complete,  and are subject to, and are  qualified
in their  entirety by reference to, such  documents and to the Delaware  General
Corporation law.

COMMON STOCK

            Holders of shares of Common Stock are entitled to one vote per share
on all matters which the holders of Common Stock are entitled to vote and do not
have any cumulative voting rights.  This means that the holders of more than 50%
of the  shares  voting  for the  election  of  directors  can  elect  all of the
directors if they choose to do so; in such event,  the holders of the  remaining
shares of  Common  Stock  will not be able to elect  any  person to the Board of
Directors.  Subject  to the  rights of the  holders  of shares of any  series of
Preferred  Stock,  holders of Common Stock are entitled to receive  ratably such
dividends  as may from time to time be declared by the Board of Directors of the
Company out of funds legally available therefor;  however,  the Company does not
currently expect to pay dividends and the Company's  credit agreement  restricts
the payment of dividends.  Holders of shares of Common Stock have no preemptive,
conversion,  redemption,  subscription  or  similar  rights.  In the  event of a
liquidation,  dissolution  or winding up of the  Company,  whether  voluntary or
involuntary, holders of shares of Common Stock are entitled to shares ratably in
the assets of the Company that are legally available for  distribution,  if any,
remaining  after the payment or provision for the payment of all debts and other
liabilities  of the Company and the payment and setting aside for payment of any
preferential  amount due to the  holders  of shares of any  series of  Preferred
Stock.  All  outstanding  shares of Common  Stock are,  and all shares of Common
Stock offered hereby when issued will be, upon payment therefor, validly issued,
fully paid and nonassessable.

PREFERRED STOCK

            The Certificate of  Incorporation  authorizes the Board of Directors
of the Company to issue from time to time up to one million  shares of Preferred
Stock in one or more  series and to fix the rights,  designations,  preferences,
qualifications, limitations and restrictions thereof, including dividend rights,
dividend  rates,   conversion  rights,   voting  rights,  terms  of  redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series,  without any further action by the stockholders of the Company.  The
issuance of Preferred  Stock with voting rights could have an adverse  effect on
the  voting  power of  holders  of  Common  Stock by  increasing  the  number of
outstanding shares having voting rights. In addition,  if the Board of Directors
authorizes  Preferred  Stock  with  conversion  rights,  the number of shares of
Common Stock  outstanding  could  potentially  be increased up to the authorized
amount.  The issuance of Preferred  Stock could  decrease the amount of earnings
and assets  available  for  distribution  to holders of Common  Stock.  Any such
issuance  could also have the effect of  delaying,  deterring  or  preventing  a
change in control of the Company and may adversely  affect the rights of holders
of Common Stock.

CERTAIN EFFECTS OF AUTHORIZED AND UNISSUED STOCK

            The unissued and  unreserved  shares of capital  stock may be issued
for a variety of proper corporate  purposes,  including future public or private
offerings to raise  additional  capital or facilitate  acquisitions.  One of the
effects of the existence of such unissued and unreserved shares may be to enable
the Company's  Board of Directors to discourage an attempt to change  control of
the Company (by means of a tender offer, proxy contest or otherwise) and thereby
to protect the continuity of the Company's management.

            The issuance of shares of Preferred Stock, whether or not related to
any attempt to effect a change in control,  may  adversely  affect the rights of
the holders of shares of Common Stock.

CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS

            The  Certificate of  Incorporation  provides that no director of the
Company shall be liable to the Company or its  stockholders for monetary damages
for breach of his fiduciary duty as a director, except for liability (i) for any
breach of the  director's  duty of loyalty to the  Company or its  stockholders,
(ii)  for  acts or  omissions  not in good  faith  or that  involve  intentional
misconduct or a knowing  violation of law, (iii) in respect of certain  unlawful
dividend   payments  or  stock  redemptions  or  repurchases  or  (iv)  for  any
transaction from which the director derived an improper  personal  benefit.  The
effect of these  provisions  is to  eliminate  the rights of the Company and its
stockholders (through  stockholders'  derivative suits on behalf of the Company)
to recover monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from grossly negligent behavior),  except
in the situations described above. These provisions will not limit the liability
of directors under the federal securities laws of the United States.

            The   Bylaws   require   the   Company   to   indemnify   any  legal
representative,  director  or officer of the Company or any person who is or was
serving at the request of the Company as a director,  officer, employee or agent
of  another  corporation  or of a  partnership,  joint  venture,  trust or other
enterprise,  including  service with respect to employee  benefit plans,  to the
fullest extent authorized by the Delaware General  Corporation Law (the "DGCL").
The Company has  purchased  officer's  and  directors'  liability  insurance for
members of its Board of Directors  and  executive  officers.  In addition to the
indemnification  provided in the Certificate of  Incorporation  and Bylaws,  the
Company has entered into agreements to indemnify its directors and officers.

            The Bylaws  include  advance  notice  procedures  with regard to the
nomination,  other  than by or at the direction  of the Board of  Directors,  of
candidates  for election as directors  and with regard to certain  matters to be
brought before an annual  meeting of  stockholders  of the Company.  In general,
notice  must be  received  by the  Company  not less  than 80 days  prior to the
meeting and must contain certain specified information  concerning the person to
be nominated or the matter to be bought  before the meeting and  concerning  the
stockholder submitting the proposal.

OTHER PROVISIONS

            The Bylaws  provide that directors can be removed only for cause and
only by the  affirmative  vote of holders of at least 67% of the voting power of
all then  outstanding  shares of capital  stock of the Company  entitled to vote
generally for the election of directors (the "Voting  Stock") and that a vacancy
on the Company's Board of Directors,  including a vacancy created by an increase
in the authorized  number of directors,  may be filled only by a majority of the
directors  then in office (and not by the  stockholders  unless no directors are
then in office).  Under the DGCL, if at the time of filling any such vacancy the
directors  then in office  constitute  less than a majority of the entire Board,
the Delaware Court of Chancery may order, upon the application of the holders of
at least 10% of the outstanding  shares of capital stock of the Company entitled
to vote for the election of the directors filling such vacancies, that a meeting
of  stockholders  be held for the  purpose of  electing  directors  to fill such
vacancies  or to  replace  directors  filling  such  vacancies  elected  by  the
Company's Board of Directors.

            In addition,  the  Certificate of  Incorporation  and Bylaws provide
that stockholders are not permitted to call a special meeting of stockholders or
to require the  Company's  Board of Directors or officers to call such a special
meeting,  that only a majority of the entire  Board,  certain  committees of the
Company's  Board of  Directors,  certain  directors  or the  president  or chief
executive  officer  will be able to call  such a  meeting  and that  stockholder
action may be taken only at an annual or a special meeting of  stockholders  and
may not be taken by written consent.

            The  Certificate  of  Incorporation  and  Bylaws  provide  that  the
affirmative  vote of the holders of 67% of the Voting  Stock will be required to
amend,  modify or repeal any provisions of the Certificate of  Incorporation  or
any provision of the Bylaws  discussed  above.  The Certificate of Incorporation
provides that the Company's  Board of Directors,  pursuant to (but only pursuant
to) a  resolution  adopted by the  affirmative  vote of a majority of the entire
Board, will be able to amend, modify or repeal the Bylaws.

            Such provisions are intended to enhance the likelihood of continuity
and stability in the  composition  of the  Company's  Board of Directors and may
have the effect of  delaying,  deterring,  or  preventing  a future  takeover or
change in control of the Company  unless  such  takeover or change in control is
approved by the Company's  Board of Directors.  Such  provisions may also render
the removal of the directors and management more difficult.

DELAWARE ANTI-TAKEOVER LAW


                  The Company is subject to Section  203 of the DGCL  because it
is  a  Delaware   corporation.   Section  203  of  the  DGCL  prohibits  certain
transactions  between a Delaware  corporation  and an "interested  stockholder,"
which is defined as a person who,  together with any affiliates or associates of
such  person,  beneficially  owns,  directly or  indirectly,  15% or more of the
outstanding voting shares of a Delaware  corporation.  This provision  prohibits
certain   business   combinations   (defined   broadly   to   include   mergers,
consolidations,  sales or other dispositions of assets having an aggregate value
in excess of 10% of the  consolidated  assets of the  corporation,  and  certain
transactions  that would  increase the  interested  stockholder's  proportionate
share  ownership in the  corporation)  between an interested  stockholder  and a
corporation  for  a  period  of  three  years  after  the  date  the  interested
stockholder becomes an interested stockholder,  unless (i) prior to the date the
interested   stockholder  becomes  an  interested   stockholder,   the  business
combination or the  transaction by which the  stockholder  becomes an interested
stockholder  is  approved  by the  corporation's  board of  directors,  (ii) the
interested  stockholder  acquired  at  least  85% of  the  voting  stock  of the
corporation  (other  than stock held by  directors  who are also  officers or by
certain  employee  stock  plans)  in the  transaction  in  which  it  became  an
interested  stockholder  or (iii) the  business  combination  is  approved  by a
majority of the board of directors and by the affirmative vote of 66 2/3% of the
outstanding voting stock that is not owned by the interested stockholder.

REGISTRATION RIGHTS

                  Certain  holders of Common  Stock  have  certain  rights  with
respect to the registration of such shares under the Securities Act. Pursuant to
the terms of the Series C Preferred Stock Purchase Agreement,  holders of shares
of Common  Stock  acquired  in  connection  with the  Series C  Preferred  Stock
offering may require the Company, subject to certain conditions and limitations,
to effect a  registration  of all or part of the shares of Common  Stock held by
such persons on an unlimited number of occasions. Also, the holders of shares of
Common Stock acquired in connection  with the Series B Preferred  Stock offering
have certain rights to require the Company,  to effect a registration  of all or
part of the shares of Common  Stock held by such  persons on two  occasions.  At
such time as the Company is  qualified to use a  Registration  Statement on Form
S-3 to register  additional  securities,  the number of  occasions  on which the
holders  of shares of Common  Stock  acquired  in  connection  with the Series B
Preferred  Stock may request  registration  of such shares shall be,  subject to
certain  conditions,  unlimited  in  number.  Additionally,  if at any  time the
Company  proposes to register any of its securities  under the  Securities  Act,
either for its own account or for the account of other security holders, holders
of  shares of  Common  Stock  issued  in  connection  with each of the  Series B
Preferred  Stock  offering and the Series C Preferred  Stock  offering,  Messrs.
Ennis and Nester,  Dr. Duncan and certain other key  employees,  are entitled to
written  notice of such  registration  and to include  therein  shares of Common
Stock held by such holder. The registration rights of all parties are subject to
certain  conditions and limitations,  including the right of the underwriters of
any  offering to limit the number of shares  included in the  registration.  The
Company  generally is required to bear all the fees,  costs and expenses of such
registrations  other than underwriting  discounts and commissions.  See also the
registration   rights  granted  by  the  Company  under  the  June  Subscription
Agreement.

TRANSFER AGENT AND REGISTRAR

                  The  transfer  agent and  registrar  for the  Common  Stock is
Continental  Stock  Transfer & Trust Company,  whose address is 2 Broadway,  New
York, New York 10004.

SHARES ELIGIBLE FOR FUTURE SALE

                  Sales of a  substantial  amount of Common  Stock in the public
market, or the perception that such sales may occur,  could adversely affect the
market  price of the  Common  Stock  prevailing  from time to time in the public
market  and could  impair the  Company's  ability  to raise  additional  capital
through the sale of its equity  securities in the future.  The expiration of the
various Rule 144 periods and/or the filing of any resale registration  statement
with respect to restricted  stock or stock held by affiliates could increase the
chance (or perception) that such sales will occur.

                  In general, under Rule 144 as currently in effect, if one year
has elapsed since the later of the date of acquisition of restricted shares from
the Company or any  "affiliate"  of the Company,  the holder is entitled to sell
within any three-month  period  such number of shares of Common  Stock that does
not exceed the grant  of 1% of the then  outstanding  shares of Common  Stock or
the average  weekly  trading  volume of shares of Common  Stock  during the four
calendar weeks  preceding the date on which notice of the sale is filed with the
Commission. Sales under Rule 44  are also subject to certain restrictions on the
manner of sale,  notice  requirements  and the  availability  of current  public
information  about the  Company.  If two years  have  elapsed  since the  holder
acquired the restricted  shares from the Company or from any  "affiliate" of the
Company,  and the holder is deemed not to have been an  affiliate of the Company
at any time during the 90 days preceding a sale, such person will be entitled to
sell such Common Stock in the public market under Rule 144(k)  without regard to
the  volume   limitations,   manner  of  sale  provisions,   public  information
requirements or notice requirements.

                  The  Company  has  filed a  registration  statement  under the
Securities Act to register shares of Common Stock reserved for issuance under or
issued  pursuant to the Stock Option Plan thereby  permitting the resale of such
shares by  non-affiliates  in the public market  without  restriction  under the
Securities Act.

<PAGE>



                                    EXHIBIT C

                                    PROJECTS

<PAGE>





                                    EXHIBIT C
<TABLE>
<CAPTION>


                            Total Approx.
                            Net Leasehold                                                       Project
                            And Option                                                          Participation
PROJECT                     ACREAGE*              COUNTY, STATE                                 INTEREST
-------                     -------               -------------                                 --------
<S>                         <C>                   <C>                                             <C> 

Lafitte                      6,204                Brazoria Co., TX                                50.0%
Wild Cow                     1,528                Matagorda Co., TX                               40.0%
Ram Rod                      7,072                Matagorda Co., TX                               40.0%
Hammer                       1,033                Calhoun Co., TX                                 20.0%
Powderhorn                   1,732                Calhoun Co., TX                                 15.0%
Flintlock                    1,205                Calhoun Co., TX                                 20.0%
Rich Ranch                     411                Liberty Co., TX                                 37.5%
Cow Island                   1,750                Liberty Co., TX                                 87.5%
Geronimo                     1,709                San Patricio Co., TX                            22.0%
Geronimo Ext.                2,115                San Patricio Co., TX                            15.0%
Cove 14                         14                Matagorda Co., TX                                7.425%
Cove                           432                Matagorda Co., TX                               30.0%
Gila Bend                       20                Karnes Co., TX                                   6.25%
Corridor                     1,628                Karnes Co., TX                                  25.00%
Thomaston                    2,482                Victoria, DeWitt Co., TX                        11.25%
Matthews                       840                Lavaca & DeWitt Co., TX                         10.00%
Bright Falcon                   63                Jackson Co., TX                                 17.50%
Midfield                       570                Matagorda Co., TX                               25.00%
Tidehaven                      760                Matagorda Co., TX                               17.9375%
El Maton                     1,193                Matagorda Co., TX                               17.9375%
Blessing                        73                Matagorda Co., TX                               11.25%
Nash Dome                      750                Brazoria/Ft. Bend Co., TX                        5.0% backin
Gillock                      3,150                Galveston Co., TX                               15.0%
Smith Point                   6,208               Chambers Co., TX                                7.5%
High Island                     288               Texas Federal Offshore                          5.0%
Hayes                           400               Calcasieu, Ph., La.                            10.0%
Hollywood                        72               Louisiana Federal Offshore                      5.0%
Four Isle Dome                  500               Terrebonne Ph., LA                              5.0%
Raceland                        500               LaFourche Ph., LA                               5.0%
Santa Fe Offshore             2,629               Louisiana Federal Offshore                     10.0%
(Deep Water)
Lipsmacker                    2,033               Clarke Co., MS & Choctaw Co., AL                25.0%
Sunniland                     1,997               Hendry and Collier Co., FL                       8.0%
CI 24                        19,670               Offshore Cote d'Ivoire                          10.0%
CI 202                       16,284               Offshore Cote d'Ivoire                          10.0%
Double Diamond                   16               Lea Co., NM, Gaines Co., TX                     10.0%
Lanell Farms                     12               Gaines Co., TX                                  15.0%


_________________________
*as of December 31, 1997
</TABLE>


         The preceding list represents the Company's  participation interests in
its significant  oil and gas  exploration and production  projects under various
agreements.  The projects  listed herein  consist of various oil and gas leases,
options or other agreements to acquire oil and gas leases and generally  include
certain  rights to 2-D and 3-D seismic data covering all or part of such project
areas.  The Project  Participation  Interest  represents  the Company's  average
working interest relative to its industry  partners for the properties  acquired
within the areas of mutual  interest  established  by the  agreements  with such
partners governing the projects.