8.0% NON-NEGOTIABLE CONVERTIBLE SUBORDINATED PROMISSORY NOTE


January 27, 2000                                            US$750,000.00

FOR VALUE RECEIVED, CHAPARRAL RESOURCES, INC., a Delaware corporation
("Maker"), promises to pay to the order of Allen & Company Incorporated, a
corporation organized under the laws of New York ("Payee"), in lawful money
of the United States of America, the principal amount (the "Principal
Amount") of SEVEN HUNDRED FIFTY THOUSAND DOLLARS (US$750,000.00), together
with interest in arrears on the unpaid principal balance at an annual rate
equal to eight percent per annum (8.0%), in the manner and subject to
adjustment as provided below. Interest shall be calculated on the basis of
a year of 365 or 366 days, as applicable, and charged for the actual number
of days elapsed.

     The following additional terms shall govern this Note:

1.   PRINCIPAL AND INTEREST

     The entire Principal Amount of this Note together with accrued and
unpaid interest thereon shall be due and payable in the manner provided in
Paragraph 2.

2.   MANNER OF PAYMENT

(a)  Except as provided in Paragraph 2.2(b), the Principal Amount and
accrued and unpaid interest thereon shall be made in shares of the Maker's
common stock, $0.0001 par value ("Common Stock"), not later than the tenth
(10th) business day following the approval by the shareholders of the
Maker, at a general meeting or special meeting called in whole or in part
for such purpose, of the terms of this Paragraph 2.2(a).  The number of
shares of Maker Common Stock to be issued pursuant to this Paragraph 2.2(b)
shall be equal to the product of the Principal Amount together with accrued
and unpaid interest thereon divided by $1.86 (the "Conversion Price").
Payment shall be made by delivering such shares to Payee at 711 Fifth
Avenue, New York, NY  10022, or at such other place as Payee shall
designate to Maker in writing.  Delivery of such stock certificates shall
be made by registered mail, return receipt requested, or by a recognized
overnight delivery service.

(b)  In the event that a majority of the shareholders of the Maker fail to
approve the manner of payment provided in Paragraph 1.2(a), (i) the
interest rate of this Note shall automatically, without any action required
to be taken by Maker or Payee, be increased to the lesser of twenty five
percent (25%) per annum or the maximum note allowed by the laws of the
State of Texas and (ii) the Principal Amount, together with all accrued and
unpaid interest shall be due and payable on October 31, 2001.

3.   REPRESENTATIONS OF MAKER

     The Maker hereby represents and warrants to the Payee as follows:

(a)  The Maker is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all corporate
power and authority to own and lease its properties and to conduct its
business as presently conducted.

(b)  This Note has been duly authorized by all necessary corporate action
on the part of the Maker.  This Note has been duly executed and delivered
by Maker and constitutes the valid and binding agreement of Maker,
enforceable against Maker in accordance with its terms, except as the
enforceability hereof may be subject to applicable bankruptcy, insolvency,
reorganization, or other similar laws affecting creditors' rights generally
and to general principles of equity.

(c)  When approved by a majority of the shareholders of Maker, the issuance
of the Maker's shares as provided in Paragraph 2(a) will have been duly
authorized and, upon the issuance thereof will be validly issued, fully
paid and non-assessable.

(d)  The execution and delivery of this Note will not (i) except for
filings that may be made under the securities laws and with NASDAQ, as
contemplated by this Note or where the absence would not have a material
adverse effect on the Maker, require consent, approval, waiver or
authorization from or registration or filing with any party, including but
not limited to any party to any material agreement to which the Maker is a
party or by which it is bound or by any regulatory or governmental agency,
body or entity or (ii) violate any statute, law, rule, regulation or
ordinance, or any judgment, decree, order, regulation or rule of any court,
tribunal, administrative or governmental agency, body or entity to which
the Maker or its properties are subject.

4.   REPRESENTATIONS OF PAYEE

(a)  Payee is an "accredited investor" as that term is defined in Rule 501
of Regulation D promulgated by the SEC under the Securities Act of 1933 as
amended (the "Act").  Payee further represents that Payee considers itself
to be a sophisticated investor in companies similarly situated to the
Maker, and Payee has substantial knowledge and experience in financial and
business matters (including knowledge of finance, securities and
investments, generally, and experience and skill in investments based on
actual participation) such that Payee is capable of evaluating the merits
and risks of this Note.

(b)  Payee has been advised and acknowledges that any shares issued by the
Maker pursuant to the Note have not been registered under the Act, in
reliance upon the exemption(s) from registration promulgated thereunder.
Payee also acknowledges that the issuance of any shares have not be
registered under the securities laws of any state.  Consequently, Payee
agrees that pursuant to this Note, such shares cannot be resold, unless
they are registered under the Act and applicable state securities laws, or
unless an exemption from such registration requirements is available.

(c)  Any shares acquired by Payee pursuant to this Note are solely for
Payee's own account and not as nominee for, representative of, or otherwise
on behalf of, any other person.  Payee is acquiring any such shares with
the intention of holding such shares for investment, with no present
intention of participating, directly or indirectly, in a subsequent public
distribution of the shares, unless registered under the Act and applicable
state securities laws, or unless an exemption from such registration
requirements is available.  Payee shall not make any sale, transfer or
other disposition of any of the shares in violation of any state or federal
law.

(d)  Payee has been advised and agrees that there will be placed on any
certificates representing any shares issued pursuant to this Note, a legend
stating in substance the following (and including any restrictions or
conditions that may be required by any applicable state law), and Payee has
been advised and further agrees that the Maker will refuse to permit the
transfer of the shares out of Payee's name in the absence of compliance
with the terms of such legend:

          "The securities represented by this certificate have
          not been registered under the Securities Act of 1933,
          as amended, or under any state securities laws and may
          not be sold, pledged, transferred, assigned or
          otherwise disposed of except in accordance with such
          Act and the rules and regulations thereunder and in
          accordance with applicable state securities laws.  The
          Maker will transfer such securities only upon receipt
          of evidence satisfactory to the Maker, which may
          include an opinion of counsel, that the registration
          provisions of such Act have been compiled with or that
          such registration is not required and that such
          transfer will not violate any applicable state
          securities laws."

5.   REGISTRATION RIGHTS

(a)  DEFINITIONS.   For purposes of this Paragraph 5, the following terms
shall have the respective meanings set forth below:

     (i)    "Commission" shall mean the Securities and Exchange Commission
     or any other Federal agency at the time administering the Act.

     (ii)   The term "holder or holders of Registrable Stock" shall mean
     the holder of any shares issued pursuant to this Note.

     (iii)  The terms ``register", "registered" and "registration" refer to
     a registration effected by preparing and filing a registration
     statement or similar document in compliance with the Act, and the
     declaration or ordering of effectiveness of such registration
     statement or document by the Commission.

     (iv)   The term "Registrable Stock" means (a) the shares issued
     pursuant to this Note; provided, however, that shares of Registrable
     Stock will cease to be Registrable Stock if they are sold or
     transferred pursuant to a registered public offering or other
     transaction which does not result in restrictions on resale being
     imposed on the public transfer by virtue of federal or state
     securities laws; and provided further that Registrable Stock will
     cease to be Registrable Stock if the holder could sell or transfer all
     such Shares held by him/her pursuant to Rule 144 promulgated under the
     Act.

(b)  DEMAND REGISTRATION.

     (i)    Upon the written request of any holder or holders ("Initiating
     Holders") of at least 30% of the shares of Registrable Stock, which
     request shall state the intended method of disposition by such
     Initiating Holders and shall request that the Maker effect the
     registration of all or part of the Registrable Stock under the
     Securities Act, the Maker shall promptly give written notice of such
     requested registration to all other holders, if any, of Registrable
     Stock. If, after the expiration of 30 days from the giving of such
     notice to the holders of Registrable Stock, the Maker shall have
     received written requests to register at least 50% of the shares of
     Registrable Stock, which requests shall state the intended method of
     disposition of such securities by such holders, the Maker shall use
     all reasonable efforts to prepare and file with the Commission a
     registration statement and such other documents, including a
     prospectus, as may be necessary to permit a public offering and sale
     of such Registrable Stock in the United States in compliance with the
     provisions of the Securities Act, all to the extent required to permit
     the disposition (in accordance with the intended methods thereof as
     aforesaid) by the holders of the Registrable Stock so to be registered
     (the "Participating Holders").  If such sale of Registrable Stock is
     to be pursuant to an underwritten offering, the underwriter shall be
     selected by the Initiating Holders and shall be reasonably acceptable
     to the Maker. If the underwriter selected determines that the number
     of shares so to be included is required to be limited due to market
     conditions or otherwise, the holders of Registrable Stock proposing to
     sell their shares in such underwritten registration shall share pro
     rata (according to the number of shares requested to be registered) in
     the number of shares being underwritten (as determined by such
     underwriter) and registered for their account. The Maker shall only be
     required to effect two registrations pursuant to this Paragraph 5(b).

     (ii)   The Maker shall not be required to effect any registration
     under this Paragraph 5(b) within nine months after the completion of
     any Registered offering of its securities pursuant.

     (iii)  The Maker shall have the right to include in any registration
     statement or post-effective amendment filed pursuant to this Paragraph
     5(b), other securities of the Maker then proposed to be distributed,
     except that, to the extent consistent with the rights of other holders
     of the Maker's securities, if and to the extent that the underwriter
     or underwriters acting with respect of such registered offering
     reasonably determine that the inclusion of such other securities may
     substantially prejudice or hinder the offering of Registrable Stock,
     the number of such other securities shall be reduced or eliminated
     prior to any reduction in the number of shares of Registrable Stock so
     to be registered.

     (iv)   If  the registration under this Paragraph 5(b) is effected on a
     Form S-3 (or any successor form thereto), and the effectiveness of
     such registration statement can be maintained without significant
     additional expense to the Maker, then the Maker agrees to maintain the
     effectiveness of such registration statement for a period of six
     months after its initial effective date.

(c) INCIDENTAL OR PIGGYBACK REGISTRATION.

     (i)    If the Maker at any time or from time to time proposes to file
     with the Commission a registration statement under the Act with
     respect to any proposed distribution of any of its securities (other
     than a registration to be effected on Form S-4, S-8 or other similar
     limited purpose form), whether for sale for its own account or for the
     account of any other person holding registration rights with respect
     to the securities of the Maker, then the Maker shall give written
     notice of such proposed filing to the holders of Registrable Stock at
     least ten days before the anticipated filing date, and such notice
     shall describe in detail the proposed registration and distribution
     (including those jurisdictions where registration or qualification
     under the securities or blue sky laws is intended) and shall offer the
     holders of Registrable Stock the opportunity to register such number
     of shares of Registrable Stock as the holders of Registrable Stock may
     request. Upon receipt by the Maker by the anticipated filing date of
     written requests from Participating Holders for the Maker to register
     their Registrable Stock, the Maker shall permit, or in the event of an
     underwritten offering, shall use its reasonable best efforts to cause
     the managing underwriter or underwriters of such proposed underwritten
     offering to permit, the Participating Holders to include such
     Registrable Stock in such offering on the same terms and conditions as
     any similar securities of the Maker included therein; provided,
     however, that if in the opinion of the managing underwriter or
     underwriters of such offering, the inclusion of the total amount
     Registrable Stock which it or the Maker, and any other persons or
     entities, intend to include in such offering would interfere, hinder,
     delay, reduce or prevent the effectiveness or sale of the Maker's
     securities proposed to be so registered, or would otherwise adversely
     affect the success of such offering, then the amount or kind of
     securities to be offered for the accounts of the Maker and each holder
     of Maker Securities (including without limitation Registrable Stock)
     or securities convertible into or exercisable for Maker securities
     proposed to be registered (other than any persons exercising demand
     registration rights) shall be reduced (or eliminated) in proportion to
     their respective values to the extent necessary to reduce the total
     amount of securities to be included in such offering on behalf of such
     holders of securities to the amount recommended by such managing
     underwriter.  For purposes of this Paragraph, "value" shall mean
     principal amount with respect to debt securities and the proposed
     offering price per share with respect to equity securities.
     Notwithstanding the foregoing, if,  at any time after giving written
     notice of its intention to register securities and prior to the
     effectiveness of the registration statement filed in connection with
     such registration, the Maker determines for any reason either not to
     effect such registration or to delay such registration, the Maker may,
     at its election, by delivery of written notice to the Participating
     Holders, (i) in the case of a determination not to effect
     registration, relieve itself of its obligations to register any
     Registrable Stock in connection with such registration, or (ii) in the
     case of determination to delay the registration, delay the
     registration of such Registrable Stock for the same period as the
     delay in the registration of such other shares of Common Stock or
     other securities convertible into or exercisable for Common Stock.

      (ii)  The Maker shall not be required to include any of the
     Registrable Stock of a Participating Holder in any registration
     statement or post-effective amendment prepared at its own instance
     unless such Participating Holder shall furnish such information and
     sign such documents as may be required by the Commission or reasonably
     requested by the Maker, in accordance with generally accepted
     practices, in connection with such proposed distribution.

(d)  COVENANTS OF THE MAKER WITH RESPECT TO REGISTRATION.  In connection
with any registration under this Paragraph 5, the Maker will, as
expeditiously as is reasonably practicable:

     (i)    Prepare and file with the Commission a registration statement
     with respect to such Participating Holders and, subject to the last
     sentence of Paragraph 5(c)(i) hereof, use its reasonable best efforts
     to cause such registration statement to become effective.

     (ii)   Prepare and file with the Commission such amendments and
     supplements to such registration statement and prospectus used in
     connection with such registration statement as may be necessary to
     comply with the provisions of the Act with respect to the disposition
     of all securities covered by such registration statement.

     (iii)  Furnish to the Participating Holders such numbers of copies of
     a prospectus, including, if applicable, a preliminary prospectus, in
     conformity with the requirements of the Act, and such other documents
     as the selling shareholders may reasonably request in order to
     facilitate the disposition of Registrable Stock owned by the
     Participating Holders.

     (iv)   Use its best efforts to register and qualify the securities
     covered by such registration statement under such other securities or
     blue sky laws of such jurisdictions within the United States as shall
     be reasonably requested by the Participating Holders; provided,
     however, that the Maker shall not be required in connection therewith
     or as a condition thereto to qualify to do business or to file a
     general consent to service of process in any such states or
     jurisdictions.

     (v)    In the event of any underwritten public offering, enter into
     and perform its obligations under an underwriting agreement, in usual
     and customary form, with the managing underwriter of such offering.
     The Participating Holders shall also enter into and perform their
     obligations under such an agreement.

     (vi)   Notify the Participating Holders, at any time when a prospectus
     relating to Registrable Stock covered by such registration statement
     is required to be delivered under the Act, of the happening of any
     event as a result of which the prospectus included in such
     registration statement, as then in effect, includes an untrue
     statement of a material fact or omits to state a material fact
     required to be stated therein or necessary to make the statements
     therein not misleading in the light of the circumstances then
     existing.

(e)  The Maker shall pay all costs, fees and expenses in connection with
all registration statements filed under this Paragraph 5 including, without
limitation, the Maker's legal and accounting fees, printing expenses and
blue sky fees and expenses, but not including (i) the fees and expenses of
counsel for the Participating Holders in connection with such registration;
and (ii) the underwriting discounts and commissions and underwriters'
expenses allocable to the Registrable Stock being registered or state
transfer taxes.

6.   SALE OF ADDITIONAL SHARES BELOW CONVERSION PRICE

(a)  If at any time or from time to time within a period of three hundred
and sixty-five (365) days after the date of this Note, the Maker issues or
sells Additional Shares of Common Stock (as hereinafter defined), other
than as a dividend or other distribution on any class of stock for an
Effective Price per share (as hereinafter defined) that is less than the
Conversion Price, then and in each such case, the Payee shall be entitled
to an additional number of shares of Common Stock (the "Adjusted Shares")
which when added to the number of shares acquired pursuant to Paragraph
2(a) and divided by the by the Conversion Price shall be equal to the
Effective Price per share.

(b)  For purposes of the foregoing paragraph, the consideration received by
the Maker for any issuance or sale of Common Stock shall (i) to the extent
it consists of cash be computed at the net amount of cash received by the
Maker after deduction of any expenses payable by the Maker and any
underwriting or similar commissions, compensation, or concessions paid or
allowed by the Maker in connection with such issuance or sale, and (ii) to
the extent it consists of property other than cash, be computed at the fair
value of that property as reasonably determined in good faith by the
Maker's Board of Directors.

(c)  "Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Maker after the date of this Note other than (i) shares
of Common stock or options or warrants to acquire Common Stock issued to
management, directors or employees of, or consultants to, the Maker or any
Subsidiary, (ii) shares of Common Stock issuable upon exercise of
convertible securities, (iii) shares of Common Stock issued to Allen &
Company, Whittier Trust or any other current holders of any debt of the
Maker, (iv) shares of Common Stock issued pursuant to any rights offering
to current shareholders and (iii) shares of Common Stock or options or
warrants to acquire Common Stock issued in connection with investment
banking, financial advisory or legal services provided to the Maker.

(d)  The "Effective Price" of Additional Shares of Common Stock shall mean
the quotient determined by dividing the total number of Additional Shares
of Common Stock issued or sold, into the aggregate consideration received,
or deemed to have been received by the Maker for the issuance of such
Additional Shares of Common Stock.

7.   EVENTS OF DEFAULT

The occurrence of any one or more of the following events with respect to
Maker shall constitute an event of default hereunder ("Event of Default"):

(a)  If pursuant to, or within the meaning of, the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of
debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary case or
proceeding; (ii) consent to the entry of an order for relief against it in
an involuntary case; (iii) consent to the appointment of a trustee,
receiver, assignee, liquidator or similar official; (iv) make an assignment
for the benefit of its creditors; or (v) admit in writing its inability to
pay its debts as they become due.

(b)  If a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (i) is for relief against Maker in an involuntary
case, (ii) appoints a trustee, receiver, assignee, liquidator or similar
official  for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is
not dismissed within one hundred and twenty (120) days.

(c)  Upon the occurrence of an Event of Default hereunder (unless all
Events of Default have been cured or waived by Payee), Payee may, at its
option, (i) by written notice to Maker, declare the entire unpaid principal
balance of this Note, together with all accrued interest thereon,
immediately due and payable regardless of any prior forbearance, and (ii)
exercise any and all rights and remedies available to it under applicable
law, including, without limitation, the right to collect from Maker all
sums due under this Note. Maker shall pay all reasonable costs and expenses
incurred by or on behalf of Payee in connection with Payee's exercise of
any or all of its rights and remedies under this Note, including, without
limitation, reasonable attorneys' fees.

8.   SUBORDINATION

     Payee agrees to subordinate this Note on such terms and conditions as
may be requested by Shell Capital Service Limited ("Shell") in connection
with the contemplated Loan Agreement among Maker, Shell, Central Asia
Petroleum (Guernsey) Limited, Central Asia Petroleum Inc., Karakuduk-Munay,
Inc. and certain other facilities agents and lenders.  If requested by
Shell, Payee agrees to execute and deliver to Shell a subordination
agreement relating to this Note.

9.   PREPAYMENT

     From and after the date of this Note, the outstanding Principal Amount
may be prepaid by Maker, in whole or in part, on written notice given by
Maker to Payee.  On the prepayment date, Maker shall pay to Payee in the
manner specified in Paragraph 2(b), the Principal Amount to be prepaid plus
accrued interest thereon to and including the date of prepayment and Payee
shall return this Note to the Maker.

10.  MISCELLANEOUS

(a)  If any provision in this Note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will
remain in full force and effect. Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect
to the extent not  held invalid or unenforceable.

(b)  This Note will be governed by the laws of the State of Texas without
regard to conflicts of laws principles.

(c)  This Note shall bind Maker and its successors and assigns. This Note
shall not be assigned or transferred by Payee without the express prior
written consent of Maker.

(d)  The headings of Paragraphs in this Note are provided for convenience
only and will not affect its construction or interpretation. All references
to "Paragraph" or "Paragraphs" refer to the corresponding Paragraph or
Paragraphs of this Note unless otherwise specified.

(e)  All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided,
the words "hereof" and "hereunder" and similar references refer to this
Note in its entirety and not to any specific Paragraph or subParagraph
hereof.


IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.


CHAPARRAL RESOURCES, INC.


By:  /S/ JAMES A. JEFFS
     -------------------------