EXHIBIT 10.3


NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS  EVIDENCED BY A LEGAL  OPINION OF COUNSEL TO THE  TRANSFEROR
REASONABLY  ACCEPTABLE  TO THE COMPANY TO SUCH  EFFECT,  THE  SUBSTANCE OF WHICH
SHALL  BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.  THESE  SECURITIES  AND  THE
SECURITIES  ISSUABLE  UPON  EXERCISE  OF  THESE  SECURITIES  MAY BE  PLEDGED  IN
CONNECTION  WITH A BONA  FIDE  MARGIN  ACCOUNT  OR OTHER  LOAN  SECURED  BY SUCH
SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                               Cubic Energy, Inc.

         THIS COMMON STOCK PURCHASE WARRANT (the "Warrant")  certifies that, for
value received,  _____________ (the "Holder"),  is entitled,  upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial  Exercise Date") and on or
prior to the close of  business  on the five  year  anniversary  of the  Initial
Exercise Date (the "Termination Date") but not thereafter,  to subscribe for and
purchase from Cubic Energy,  Inc., a Texas  corporation (the  "Company"),  up to
______ shares (the "Warrant Shares") of Common Stock, par value $0.05 per share,
of the Company (the "Common  Stock").  The purchase price of one share of Common
Stock (the  "Exercise  Price")  under this  Warrant  shall be $1.00,  subject to
adjustment hereunder.

         Section  1.  Definitions.  Capitalized  terms  used  and not  otherwise
defined  herein shall have the  meanings  set forth in that  certain  Securities
Purchase Agreement (the "Purchase  Agreement"),  dated September 30, 2004, among
the Company and the purchasers signatory thereto.

         Section 2. Exercise.

                  a)  Exercise  of  Warrant.  Exercise  of the  purchase  rights
         represented  by this  Warrant  may be made at any  time or  times on or
         after the Initial  Exercise Date and on or before the Termination  Date
         by  delivery to the Company of a duly  executed  facsimile  copy of the
         Notice of Exercise Form annexed  hereto (or such other office or agency
         of  the  Company  as it may  designate  by  notice  in  writing  to the
         registered  Holder at the address of such Holder appearing on the books
         of the Company);  provided,  however, within 5 Trading Days of the date




                              Exhibit 10.3 - Page 1

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         said Notice of Exercise is delivered  to the Company,  the Holder shall
         have surrendered this Warrant to the Company and the Company shall have
         received payment of the aggregate  Exercise Price of the shares thereby
         purchased by wire transfer or cashier's  check drawn on a United States
         bank.

         Notwithstanding  the  foregoing,  the exercise of the  purchase  rights
         represented  by this  Warrant  shall  be  required  if,  following  the
         Effectiveness Date of the initial Registration Statement filed pursuant
         to the Registration Rights Agreement,  the closing price for any period
         of 30  consecutive  Trading  Days is equal to or in  excess  of  $2.00;
         provided that the average  daily  trading  volume during such period is
         not less than 50,000 shares.  The Company shall provide  written notice
         to the  Holders  of such  occurrence,  or  issue a press  release  with
         respect  thereto,  notifying  Holders  that they shall have 30 calendar
         days to exercise the Warrant as provided herein.  If the Warrant is not
         exercised  within such 30-day period,  any unexercised  purchase rights
         represented by this Warrant shall expire.

                  b) Exercise Price.  The Exercise Price of each share of Common
         Stock  under  this  Warrant  shall  be  $1.00,  subject  to  adjustment
         hereunder.

                  c) Cashless  Exercise.  If at any time after one year from the
         date of issuance of this  Warrant  there is no  effective  Registration
         Statement  registering  the resale of the Warrant Shares by the Holder,
         and the Company  has not  complied  with the terms of the  Registration
         Rights  Agreement with respect  thereto,  then this Warrant may also be
         exercised  at such time by means of a "cashless  exercise" in which the
         Holder  shall be  entitled to receive a  certificate  for the number of
         Warrant Shares equal to the quotient  obtained by dividing  [(A-B) (X)]
         by (A), where:

                  (A) =    the  Average  Price on the  Trading  Day  immediately
                           preceding the date of such election;

                  (B) =    the Exercise  Price of this  Warrant,  as adjusted;
                           and

                  (X) =    the number of Warrant Shares issuable upon exercise
                           of this Warrant in accordance  with the terms of this
                           Warrant  by means of a cash  exercise  rather  than a
                           cashless exercise.

                  d) Exercise  Limitations.  The Holder shall not have the right
         to exercise  any portion of this  Warrant,  pursuant to Section 2(c) or
         otherwise,  to the extent  that after  giving  effect to such  issuance
         after exercise, the Holder (together with the Holder's affiliates),  as
         set forth on the applicable Notice of Exercise,  would beneficially own
         in  excess  of  4.99% of the  number  of  shares  of the  Common  Stock
         outstanding  immediately  after  giving  effect to such  issuance.  For
         purposes  of the  foregoing  sentence,  the  number of shares of Common
         Stock beneficially owned by the Holder and its affiliates shall include
         the number of shares of Common  Stock  issuable  upon  exercise of this
         Warrant with  respect to which the  determination  of such  sentence is
         being  made,  but shall  exclude  the number of shares of Common  Stock
         which  would  be  issuable   upon  (A)   exercise  of  the   remaining,
         nonexercised  portion of this Warrant  beneficially owned by the Holder
         or any  of  its  affiliates  and  (B)  exercise  or  conversion  of the
         unexercised  or  nonconverted  portion of any other  securities  of the




                              Exhibit 10.3 - Page 2

<PAGE>

         Company  (including,   without  limitation,  any  other  Debentures  or
         Warrants)  subject to a limitation on conversion or exercise  analogous
         to the limitation  contained herein beneficially owned by the Holder or
         any of its affiliates.  Except as set forth in the preceding  sentence,
         for  purposes  of this  Section  2(d),  beneficial  ownership  shall be
         calculated  in  accordance  with Section  13(d) of the Exchange Act, it
         being  acknowledged  by Holder that the Company is not  representing to
         Holder that such calculation is in compliance with Section 13(d) of the
         Exchange  Act and  Holder  is  solely  responsible  for  any  schedules
         required to be filed in  accordance  therewith.  To the extent that the
         limitation contained in this Section 2(d) applies, the determination of
         whether this Warrant is  exercisable  (in relation to other  securities
         owned  by the  Holder)  and of  which  a  portion  of this  Warrant  is
         exercisable  shall be in the sole  discretion  of such Holder,  and the
         submission of a Notice of Exercise  shall be deemed to be such Holder's
         determination  of whether this Warrant is  exercisable  (in relation to
         other  securities  owned by such  Holder) and of which  portion of this
         Warrant  is  exercisable,  in  each  case  subject  to  such  aggregate
         percentage  limitation,  and the Company  shall have no  obligation  to
         verify or confirm the accuracy of such  determination.  For purposes of
         this Section 2(d), in determining  the number of outstanding  shares of
         Common Stock,  the Holder may rely on the number of outstanding  shares
         of Common  Stock as  reflected  in (x) the  Company's  most recent Form
         10-QSB or Form  10-KSB,  as the case may be, (y) a more  recent  public
         announcement  by the Company or (z) any other  notice by the Company or
         the  Company's  Transfer  Agent  setting  forth the number of shares of
         Common  Stock  outstanding.  Upon the  written  or oral  request of the
         Holder, the Company shall within two Trading Days confirm orally and in
         writing  to the  Holder  the  number of shares  of  Common  Stock  then
         outstanding.  In any case, the number of  outstanding  shares of Common
         Stock shall be  determined  after giving  effect to the  conversion  or
         exercise of securities of the Company,  including this Warrant,  by the
         Holder  or its  affiliates  since the date as of which  such  number of
         outstanding shares of Common Stock was reported.

                  e) Mechanics of Exercise.

                           i.  Authorization  of  Warrant  Shares.  The  Company
                  covenants that all Warrant Shares which may be issued upon the
                  exercise of the purchase  rights  represented  by this Warrant
                  will, upon exercise of the purchase rights represented by this
                  Warrant,  be duly authorized,  validly issued,  fully paid and
                  nonassessable  and free from all taxes,  liens and  charges in
                  respect of the issue  thereof  (other than taxes in respect of
                  any transfer occurring contemporaneously with such issue). The
                  Company  covenants  that  during  the  period  the  Warrant is
                  outstanding,  it will reserve from its authorized and unissued
                  Common Stock a sufficient  number of shares to provide for the
                  issuance  of the  Warrant  Shares  upon  the  exercise  of any
                  purchase  rights  under  this  Warrant.  The  Company  further
                  covenants  that its issuance of this Warrant shall  constitute
                  full  authority  to its officers who are charged with the duty
                  of  executing  stock  certificates  to  execute  and issue the
                  necessary   certificates  for  the  Warrant  Shares  upon  the




                              Exhibit 10.3 - Page 3

<PAGE>

                  exercise  of the  purchase  rights  under  this  Warrant.  The
                  Company  will  take  all  such  reasonable  action  as  may be
                  necessary to assure that such Warrant  Shares may be issued as
                  provided  herein  without  violation of any  applicable law or
                  regulation,  or of any requirements of the Trading Market upon
                  which the Common Stock may be listed.

                           ii.   Delivery   of   Certificates   Upon   Exercise.
                  Certificates for shares purchased hereunder shall be delivered
                  to the Holder  within 3 Trading  Days from the delivery to the
                  Company  of the  Notice of  Exercise  Form and the  receipt of
                  payment of the Exercise  Price,  surrender of this Warrant and
                  payment of the  aggregate  Exercise  Price as set forth  above
                  ("Warrant Share Delivery Date").  This Warrant shall be deemed
                  to have been  exercised on the date the last of the  foregoing
                  events occurs. The Warrant Shares shall be deemed to have been
                  issued,  and Holder or any other  person so  designated  to be
                  named  therein  shall be  deemed  to have  become a holder  of
                  record of such  shares  for all  purposes,  as of the date the
                  Warrant has been  exercised and all taxes  required to be paid
                  by the Holder,  if any, pursuant to Section 2(e)(vii) prior to
                  the issuance of such shares, have been paid.

                           iii. Delivery of New Warrants Upon Exercise.  If this
                  Warrant shall have been  exercised in part, the Company shall,
                  at the time of delivery  of the  certificate  or  certificates
                  representing  Warrant Shares,  deliver to Holder a new Warrant
                  evidencing  the rights of Holder to purchase  the  unpurchased
                  Warrant  Shares called for by this Warrant,  which new Warrant
                  shall in all other respects be identical with this Warrant.

                           iv.  Rescission  Rights.  If  the  Company  fails  to
                  deliver  to  the   Holder  a   certificate   or   certificates
                  representing  the Warrant Shares pursuant to this Section 2(e)
                  by the Warrant Share Delivery Date,  then the Holder will have
                  the right to rescind such exercise

                           v.  Buy-In  Compensation.  In  addition  to any other
                  rights  available  to the  Holder,  if the  Company  fails  to
                  deliver  to  the   Holder  a   certificate   or   certificates
                  representing  the Warrant Shares pursuant to an exercise on or
                  before the Warrant Share Delivery Date, and if after such date
                  the Holder is required  by its broker to purchase  (in an open
                  market  transaction  or  otherwise)  shares of Common Stock to
                  deliver in satisfaction of a sale by the Holder of the Warrant
                  Shares  which  the  Holder  anticipated  receiving  upon  such
                  exercise (a "Buy-In"),  then the Company shall (1) pay in cash
                  to the  Holder  the  amount  by which (x) the  Holder's  total
                  purchase price (including brokerage  commissions,  if any) for
                  the shares of Common Stock required to be so purchased exceeds
                  (y) the  amount  obtained  by  multiplying  (A) the  number of
                  Warrant Shares that the Company was required to deliver to the
                  Holder in connection  with the exercise at issue times (B) the
                  price per Share at which the sell  order  giving  rise to such
                  purchase obligation was executed, and (2) at the option of the
                  Holder,  either  reinstate  the  portion  of the  Warrant  and
                  equivalent  number of Warrant  Shares for which such  exercise




                              Exhibit 10.3 - Page 4

<PAGE>

                  was not  honored or deliver to the Holder the number of shares
                  of Common  Stock that would have been  issued had the  Company
                  timely  complied  with its exercise  and delivery  obligations
                  hereunder.  For example,  if the Holder purchases Common Stock
                  having a total  purchase  price of  $11,000  to cover a Buy-In
                  with  respect  to an  attempted  exercise  of shares of Common
                  Stock  with  an  aggregate  sale  price  giving  rise  to such
                  purchase  obligation  of  $10,000,  under  clause  (1)  of the
                  immediately  preceding  sentence the Company shall be required
                  to pay the Holder $1,000. The Holder shall provide the Company
                  written notice indicating the amounts payable to the Holder in
                  respect of the Buy-In, together with applicable  confirmations
                  and  other  evidence  reasonably  requested  by  the  Company.
                  Nothing  herein  shall  limit a  Holder's  right to pursue any
                  other remedies available to it hereunder,  at law or in equity
                  including,   without   limitation,   a  decree   of   specific
                  performance  and/or  injunctive  relief  with  respect  to the
                  Company's failure to timely deliver certificates  representing
                  shares  of  Common  Stock  upon  exercise  of the  Warrant  as
                  required pursuant to the terms hereof.

                           vi. No  Fractional  Shares or  Scrip.  No  fractional
                  shares or scrip representing fractional shares shall be issued
                  upon the  exercise of this  Warrant.  As to any  fraction of a
                  share which  Holder  would  otherwise  be entitled to purchase
                  upon such exercise, the Company shall pay a cash adjustment in
                  respect  of such  final  fraction  in an amount  equal to such
                  fraction multiplied by the Exercise Price.

                           vii.  Charges,   Taxes  and  Expenses.   Issuance  of
                  certificates  for Warrant  Shares shall be made without charge
                  to  the  Holder  for  any  issue  or  transfer  tax  or  other
                  incidental   expense  in  respect  of  the  issuance  of  such
                  certificate,  all of which taxes and expenses shall be paid by
                  the Company, and such certificates shall be issued in the name
                  of the Holder or in such name or names as may be  directed  by
                  the Holder; provided,  however, that in the event certificates
                  for  Warrant  Shares are to be issued in a name other than the
                  name of the Holder, this Warrant when surrendered for exercise
                  shall be accompanied by the  Assignment  Form attached  hereto
                  duly executed by the Holder; and the Company may require, as a
                  condition  thereto,   the  payment  of  a  sum  sufficient  to
                  reimburse it for any transfer tax  incidental  thereto.  viii.
                  Closing of Books.  The Company will not close its  stockholder
                  books or  records  in any  manner  which  prevents  the timely
                  exercise of this Warrant, pursuant to the terms hereof.

         Section 3. Certain Adjustments.

                  a) Stock  Dividends  and Splits.  If the Company,  at any time
         while  this  Warrant  is  outstanding:  (A)  pays a stock  dividend  or
         otherwise makes a distribution or distributions on shares of its Common
         Stock or any other equity or equity  equivalent  securities  payable in
         shares  of Common  Stock  (which,  for  avoidance  of doubt,  shall not
         include any shares of Common  Stock  issued by the Company  pursuant to




                              Exhibit 10.3 - Page 5

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         this Warrant), (B) subdivides outstanding shares of Common Stock into a
         larger  number of shares,  (C)  combines  (including  by way of reverse
         stock split)  outstanding  shares of Common Stock into a smaller number
         of shares,  or (D) issues by  reclassification  of shares of the Common
         Stock any shares of capital stock of the Company, then in each case the
         Exercise Price shall be multiplied by a fraction of which the numerator
         shall be the  number  of shares of  Common  Stock  (excluding  treasury
         shares,  if  any)  outstanding  before  such  event  and of  which  the
         denominator  shall be the number of shares of Common Stock  outstanding
         after such event.  Any  adjustment  made  pursuant to this Section 3(a)
         shall  become  effective  immediately  after  the  record  date for the
         determination  of  stockholders  entitled to receive  such  dividend or
         distribution and shall become effective immediately after the effective
         date in the case of a subdivision, combination or re-classification.

                  b) Pro Rata  Distributions.  If the Company, at any time prior
         to the  Termination  Date,  shall  distribute  to all holders of Common
         Stock  (and  not  to  Holders  of  the   Warrants)   evidences  of  its
         indebtedness  or  assets  or rights or  warrants  to  subscribe  for or
         purchase  any  security  other than the Common  Stock  (which  shall be
         subject to Section  3(b)),  then in each such case the  Exercise  Price
         shall  be  adjusted  by  multiplying   the  Exercise  Price  in  effect
         immediately  prior  to the  record  date  fixed  for  determination  of
         stockholders  entitled to receive  such  distribution  by a fraction of
         which the denominator  shall be the Average Price  determined as of the
         record date mentioned  above,  and of which the numerator shall be such
         Average  Price on such  record date less the then per share fair market
         value at such  record date of the portion of such assets or evidence of
         indebtedness so distributed  applicable to one outstanding share of the
         Common Stock as determined by the Board of Directors in good faith.  In
         either case the adjustments shall be described in a statement  provided
         to the Holders of the portion of assets or evidences of indebtedness so
         distributed  or such  subscription  rights  applicable  to one share of
         Common  Stock.   Such  adjustment  shall  be  made  whenever  any  such
         distribution is made and shall become effective  immediately  after the
         record date mentioned above.

                  c) Calculations.  All calculations  under this Section 3 shall
         be made to the nearest cent or the nearest  1/100th of a share,  as the
         case may be. For  purposes  of this  Section 3, the number of shares of
         Common  Stock  outstanding  as of a given  date shall be the sum of the
         number of shares of Common Stock (excluding  treasury  shares,  if any)
         outstanding.

                  d) Notice to Holders.

                           i.  Adjustment  to  Exercise   Price.   Whenever  the
                  Exercise  Price is adjusted  pursuant  to this  Section 3, the
                  Company shall  promptly  mail to each Holder a notice  setting
                  forth the  Exercise  Price after such  adjustment  and setting
                  forth  a  brief   statement  of  the  facts   requiring   such
                  adjustment.

                           ii.  Notice  of  Certain  Transactions.  If  (A)  the
                  Company shall  declare a dividend (or any other  distribution)
                  on the Common  Stock;  (B) the Company shall declare a special
                  nonrecurring  cash  dividend on or a redemption  of the Common




                              Exhibit 10.3 - Page 6

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                  Stock;  (C) the Company  shall  authorize  the granting to all
                  holders of the Common  Stock  rights or warrants to  subscribe
                  for or purchase any shares of capital stock of any class or of
                  any  rights;  (D)  the  approval  of any  stockholders  of the
                  Company   shall   be   required   in   connection   with   any
                  reclassification  of the Common Stock,  any  consolidation  or
                  merger to which the  Company is a party,  any sale or transfer
                  of all or substantially  all of the assets of the Company,  of
                  any  compulsory  share  exchange  whereby the Common  Stock is
                  converted  into other  securities,  cash or property;  (E) the
                  Company  shall   authorize   the   voluntary  or   involuntary
                  dissolution,  liquidation  or winding up of the affairs of the
                  Company;  then,  in each case,  the Company  shall cause to be
                  mailed to the Holder at its last  addresses as it shall appear
                  upon the Warrant Register of the Company, at least 20 calendar
                  days  prior  to  the  applicable   record  or  effective  date
                  hereinafter  specified, a notice stating (x) the date on which
                  a record  is to be taken  for the  purpose  of such  dividend,
                  distribution,  redemption,  rights or warrants, or if a record
                  is not to be taken,  the date as of which the  holders  of the
                  Common  Stock  of  record  to be  entitled  to such  dividend,
                  distributions,  redemption,  rights  or  warrants  are  to  be
                  determined  or (y) the  date on which  such  reclassification,
                  consolidation,  merger,  sale,  transfer or share  exchange is
                  expected  to become  effective  or  close,  and the date as of
                  which it is  expected  that  holders  of the  Common  Stock of
                  record  shall be  entitled  to  exchange  their  shares of the
                  Common   Stock  for   securities,   cash  or  other   property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange;  provided,  that the failure
                  to mail such  notice or any defect  therein or in the  mailing
                  thereof shall not affect the validity of the corporate  action
                  required  to be  specified  in  such  notice.  The  Holder  is
                  entitled to exercise  this  Warrant  during the 20-day  period
                  commencing  the date of such notice to the  effective  date of
                  the event triggering such notice

                  e) Fundamental Transaction. If, at any time while this Warrant
         is outstanding,  (A) the Company effects any merger or consolidation of
         the Company with or into another Person,  and as a result,  the Company
         is not the surviving  entity in such transaction or (B) Company effects
         any  reclassification  of the  Common  Stock  or any  compulsory  share
         exchange  pursuant to which the Common Stock is  effectively  converted
         into or exchanged for other  securities,  cash or property (in any such
         case, a "Fundamental  Transaction"),  then upon any subsequent exercise
         of this Warrant,  the Holder shall have the right to receive,  for each
         Warrant Share that would have been  issuable upon such exercise  absent
         such Fundamental  Transaction,  the same kind and amount of securities,
         cash or  property as it would have been  entitled  to receive  upon the
         occurrence of such Fundamental  Transaction if it had been, immediately
         prior to such  Fundamental  Transaction,  the  holder  of one  share of
         Common Stock (the "Alternate Consideration").  For purposes of any such
         exercise,   the   determination   of  the   Exercise   Price  shall  be
         appropriately  adjusted to apply to such Alternate  Consideration based
         on the amount of  Alternate  Consideration  issuable  in respect of one
         share of Common Stock in such Fundamental Transaction,  and the Company
         shall apportion the Exercise Price among the Alternate Consideration in




                              Exhibit 10.3 - Page 7

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         a reasonable  manner  reflecting  the relative  value of any  different
         components of the Alternate  Consideration.  If holders of Common Stock
         are  given any  choice as to the  securities,  cash or  property  to be
         received in a Fundamental  Transaction,  then the Holder shall be given
         the same choice as to the Alternate  Consideration it receives upon any
         exercise of this Warrant following such Fundamental Transaction. To the
         extent necessary to effectuate the foregoing provisions,  any successor
         to the  Company or  surviving  entity in such  Fundamental  Transaction
         shall issue to the Holder a new Warrant  consistent  with the foregoing
         provisions  and  evidencing  the Holder's right to convert such Warrant
         into Alternate  Consideration.  The terms of any agreement  pursuant to
         which  a  Fundamental  Transaction  is  effected  shall  include  terms
         requiring  any such  successor or  surviving  entity to comply with the
         provisions of this paragraph (e) and insuring that this Warrant (or any
         such  replacement   security)  will  be  similarly  adjusted  upon  any
         subsequent transaction analogous to a Fundamental Transaction.

                  f)  Exempt  Issuance.   Notwithstanding   the  foregoing,   no
         adjustments, Alternate Consideration nor notices shall be made, paid or
         issued under this Section 3 in respect of an Exempt Issuance.

                  g)  Voluntary  Adjustment  By Company.  The Company may at any
         time during the term of this Warrant  reduce the then current  Exercise
         Price to any amount and for any period of time  deemed  appropriate  by
         the Board of Directors of the Company.

         Section 4. Transfer of Warrant.

                  a) Transferability.  Subject to compliance with any applicable
         securities  laws and the conditions set forth in Sections 5(a) and 4(d)
         hereof and to the provisions of Section 4.1 of the Purchase  Agreement,
         this Warrant and all rights hereunder are transferable,  in whole or in
         part,  upon  surrender of this Warrant at the  principal  office of the
         Company,   together   with  a  written   assignment   of  this  Warrant
         substantially  in the form attached  hereto duly executed by the Holder
         or its agent or attorney and funds sufficient to pay any transfer taxes
         payable upon the making of such  transfer.  Upon such surrender and, if
         required,  such  payment,  the Company  shall execute and deliver a new
         Warrant or Warrants in the name of the assignee or assignees and in the
         denomination   or   denominations   specified  in  such  instrument  of
         assignment,  and shall issue to the  assignor a new Warrant  evidencing
         the portion of this  Warrant not so assigned,  and this  Warrant  shall
         promptly  be  cancelled.  A  Warrant,  if  properly  assigned,  may  be
         exercised  by a new holder for the purchase of Warrant  Shares  without
         having a new Warrant issued.

                  b) New Warrants.  This Warrant may be divided or combined with
         other Warrants upon presentation  hereof at the aforesaid office of the
         Company,  together  with a  written  notice  specifying  the  names and
         denominations  in which new  Warrants  are to be issued,  signed by the
         Holder or its agent or  attorney.  Subject to  compliance  with Section
         4(a),  as to any  transfer  which may be involved  in such  division or
         combination,  the  Company  shall  execute and deliver a new Warrant or
         Warrants  in  exchange  for the  Warrant or  Warrants  to be divided or
         combined in accordance with such notice.




                              Exhibit 10.3 - Page 8

<PAGE>

                  c) Warrant Register.  The Company shall register this Warrant,
         upon  records to be  maintained  by the Company for that  purpose  (the
         "Warrant Register"),  in the name of the record Holder hereof from time
         to time. The Company may deem and treat the  registered  Holder of this
         Warrant as the  absolute  owner  hereof for the purpose of any exercise
         hereof or any  distribution to the Holder,  and for all other purposes,
         absent actual notice to the contrary.

                  d) Transfer Restrictions.  If, at the time of the surrender of
         this  Warrant in  connection  with any  transfer of this  Warrant,  the
         transfer  of  this  Warrant  shall  not be  registered  pursuant  to an
         effective  registration  statement  under the  Securities Act and under
         applicable  state securities or blue sky laws, the Company may require,
         as a  condition  of  allowing  such  transfer  (i) that the  Holder  or
         transferee of this Warrant,  as the case may be, furnish to the Company
         a written opinion of counsel (which opinion shall be in form, substance
         and scope customary for opinions of counsel in comparable transactions)
         to the effect that such transfer may be made without registration under
         the Securities Act and under  applicable  state  securities or blue sky
         laws,  (ii) that the holder or  transferee  execute  and deliver to the
         Company an investment  letter in form and  substance  acceptable to the
         Company and (iii) that the  transferee be an  "accredited  investor" as
         defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(5), (a)(6), (a)(7), or
         (a)(8)   promulgated   under  the   Securities   Act  or  a   qualified
         institutional  buyer as defined in Rule  144A(a)  under the  Securities
         Act.

         Section 5. Miscellaneous.

                  a) Title to Warrant. Prior to the Termination Date and subject
         to compliance with applicable laws and Section 4 of this Warrant,  this
         Warrant and all rights hereunder are transferable, in whole or in part,
         at the  office or agency of the  Company  by the Holder in person or by
         duly authorized attorney,  upon surrender of this Warrant together with
         the Assignment  Form annexed hereto properly  endorsed.  The transferee
         shall  sign an  investment  letter  in form  and  substance  reasonably
         satisfactory to the Company.

                  b) No Rights as Shareholder Until Exercise.  This Warrant does
         not  entitle  the  Holder to any  voting  rights  or other  rights as a
         shareholder  of the  Company  prior to the  exercise  hereof.  Upon the
         surrender  of this  Warrant and the payment of the  aggregate  Exercise
         Price  (or by means of a  cashless  exercise),  the  Warrant  Shares so
         purchased  shall be and be deemed  to be  issued to such  Holder as the
         record owner of such shares as of the close of business on the later of
         the date of such surrender or payment.

                  c) Loss,  Theft,  Destruction  or Mutilation  of Warrant.  The
         Company  covenants  that  upon  receipt  by  the  Company  of  evidence
         reasonably  satisfactory  to it of  the  loss,  theft,  destruction  or
         mutilation  of this  Warrant or any stock  certificate  relating to the
         Warrant Shares, and in case of loss, theft or destruction, of indemnity
         or security  reasonably  satisfactory to it (which,  in the case of the
         Warrant, shall not include the posting of any bond), and upon surrender
         and  cancellation of such Warrant or stock  certificate,  if mutilated,
         the Company will make and deliver a new Warrant or stock certificate of
         like tenor and dated as of such  cancellation,  in lieu of such Warrant
         or stock certificate.




                              Exhibit 10.3 - Page 9


<PAGE>

                  d) Saturdays, Sundays, Holidays, etc. If the last or appointed
         day for  the  taking  of any  action  or the  expiration  of any  right
         required  or  granted  herein  shall be a  Saturday,  Sunday or a legal
         holiday,  then such action may be taken or such right may be  exercised
         on the next succeeding day not a Saturday, Sunday or legal holiday.

                  e) Authorized Shares.

                           The  Company  covenants  that  during  the period the
                  Warrant is  outstanding,  it will reserve from its  authorized
                  and unissued  Common  Stock a  sufficient  number of shares to
                  provide  for the  issuance  of the  Warrant  Shares  upon  the
                  exercise  of any  purchase  rights  under  this  Warrant.  The
                  Company  further  covenants  that its issuance of this Warrant
                  shall  constitute  full  authority  to its  officers  who  are
                  charged  with  the duty of  executing  stock  certificates  to
                  execute and issue the necessary  certificates  for the Warrant
                  Shares upon the  exercise of the  purchase  rights  under this
                  Warrant.  The Company will take all such reasonable  action as
                  may be  necessary  to assure that such  Warrant  Shares may be
                  issued as provided herein without  violation of any applicable
                  law or  regulation,  or of  any  requirements  of the  Trading
                  Market upon which the Common Stock may be listed.

                           Except and to the extent as waived or consented to by
                  the Holder,  the Company  shall not by any action,  including,
                  without limitation,  amending its certificate of incorporation
                  or   through   any   reorganization,   transfer   of   assets,
                  consolidation,   merger,   dissolution,   issue   or  sale  of
                  securities  or any other  voluntary  action,  avoid or seek to
                  avoid the  observance  or  performance  of any of the terms of
                  this  Warrant,  but will at all times in good faith  assist in
                  the  carrying  out of all such  terms and in the taking of all
                  such actions as may be necessary or appropriate to protect the
                  rights  of  Holder  as  set  forth  in  this  Warrant  against
                  impairment.  Without limiting the generality of the foregoing,
                  the Company will (a) not increase the par value of any Warrant
                  Shares above the amount  payable  therefor  upon such exercise
                  immediately  prior to such increase in par value, (b) take all
                  such action as may be necessary or  appropriate  in order that
                  the  Company  may  validly  and  legally  issue fully paid and
                  nonassessable   Warrant  Shares  upon  the  exercise  of  this
                  Warrant, and (c) use commercially reasonable efforts to obtain
                  all  such  authorizations,  exemptions  or  consents  from any
                  public regulatory body having  jurisdiction  thereof as may be
                  necessary  to enable the  Company to perform  its  obligations
                  under this Warrant.

                           Before  taking any action  which  would  result in an
                  adjustment  in the  number of  Warrant  Shares  for which this
                  Warrant is exercisable or in the Exercise  Price,  the Company
                  shall obtain all such authorizations or exemptions thereof, or
                  consents  thereto,   as  may  be  necessary  from  any  public
                  regulatory body or bodies having jurisdiction thereof.

                  f) Jurisdiction.  All questions  concerning the  construction,
         validity,  enforcement  and  interpretation  of this  Warrant  shall be
         determined in accordance with the provisions of the Purchase Agreement.





                              Exhibit 10.3 - Page 10

<PAGE>

                  g)  Restrictions.  The Holder  acknowledges  that the  Warrant
         Shares  acquired upon the exercise of this Warrant,  if not registered,
         will  have  restrictions  upon  resale  imposed  by state  and  federal
         securities laws.

                  h) Nonwaiver and  Expenses.  No course of dealing or any delay
         or failure to exercise any right  hereunder on the part of Holder shall
         operate  as a waiver  of such  right or  otherwise  prejudice  Holder's
         rights,  powers  or  remedies,  notwithstanding  all  rights  hereunder
         terminate  on the  Termination  Date.  If  the  Company  willfully  and
         knowingly  fails to comply with any  provision of this  Warrant,  which
         results in any material damages to the Holder, the Company shall pay to
         Holder  such  amounts  as shall be  sufficient  to cover  any costs and
         expenses  including,  but not limited to,  reasonable  attorneys' fees,
         including  those  of  appellate  proceedings,  incurred  by  Holder  in
         collecting  any amounts due pursuant  hereto or in otherwise  enforcing
         any of its rights, powers or remedies hereunder.

                  i) Notices. Any notice,  request or other document required or
         permitted to be given or  delivered to the Holder by the Company  shall
         be delivered in accordance  with the notice  provisions of the Purchase
         Agreement.

                  j)  Limitation  of  Liability.  No  provision  hereof,  in the
         absence of any affirmative action by Holder to exercise this Warrant or
         purchase  Warrant  Shares,  and no enumeration  herein of the rights or
         privileges  of Holder,  shall give rise to any  liability of Holder for
         the  purchase  price of any  Common  Stock or as a  stockholder  of the
         Company,  whether  such  liability  is  asserted  by the  Company or by
         creditors of the Company.

                  k) Remedies. Holder, in addition to being entitled to exercise
         all rights  granted by law,  including  recovery  of  damages,  will be
         entitled to specific  performance of its rights under this Warrant. The
         Company agrees that monetary damages would not be adequate compensation
         for any loss incurred by reason of a breach by it of the  provisions of
         this  Warrant and hereby  agrees to waive the defense in any action for
         specific performance that a remedy at law would be adequate.

                  l) Successors  and Assigns.  Subject to applicable  securities
         laws,  this  Warrant and the rights and  obligations  evidenced  hereby
         shall inure to the benefit of and be binding upon the successors of the
         Company  and the  successors  and  permitted  assigns  of  Holder.  The
         provisions  of this  Warrant are  intended to be for the benefit of all
         Holders from time to time of this Warrant and shall be  enforceable  by
         any such Holder or holder of Warrant Shares.

                  m)  Amendment.  This Warrant may be modified or amended or the
         provisions  hereof  waived with the written  consent of the Company and
         the Holder.

                  n)  Severability.  Wherever  possible,  each provision of this
         Warrant  shall be  interpreted  in such manner as to be  effective  and
         valid under  applicable law, but if any provision of this Warrant shall
         be prohibited by or invalid under  applicable law, such provision shall
         be ineffective to the extent of such prohibition or invalidity, without
         invalidating   the  remainder  of  such  provisions  or  the  remaining
         provisions of this Warrant.




                             Exhibit 10.3 - Page 11

<PAGE>

                  o)  Headings.  The  headings  used in this Warrant are for the
         convenience of reference only and shall not, for any purpose, be deemed
         a part of this Warrant.


                              ********************



























                             Exhibit 10.3 - Page 12

<PAGE>

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.

Dated:  September 30, 2004

                                   CUBIC ENERGY, INC.


                                   By:__________________________________________
                                      Name: Calvin A. Wallen III
                                      Title:  Chief Executive Officer


























                             Exhibit 10.3 - Page 13

<PAGE>

                               NOTICE OF EXERCISE

To:      Cubic Energy, Inc.

         (1) The undersigned  hereby elects to purchase  ________ Warrant Shares
of the Company  pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders  herewith payment of the exercise price in full,  together
with all applicable transfer taxes, if any.

         (2) Payment shall take the form of (check applicable box):

                  [_] in lawful money of the United States; or

                  [_] the  cancellation  of such number of Warrant  Shares as is
                  necessary,  in  accordance  with  the  formula  set  forth  in
                  subsection  2(c), to exercise this Warrant with respect to the
                  maximum number of Warrant Shares  purchasable  pursuant to the
                  cashless exercise procedure set forth in subsection 2(c).

         (3)  Please  issue a  certificate  or  certificates  representing  said
Warrant  Shares  in the  name of the  undersigned  or in such  other  name as is
specified below:

                  ____________________________



The Warrant Shares shall be delivered to the following:

                  ____________________________

                  ____________________________


                  ____________________________



         (4) Accredited Investor. The undersigned is an "accredited investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended.

                                                [PURCHASER]


                                                 By:____________________________
                                                    Name:
                                                   Title:

                                                 Dated:_________________________












                             Exhibit 10.3 - Page 14


<PAGE>

                                 ASSIGNMENT FORM


                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)



         FOR VALUE  RECEIVED,  the  foregoing  Warrant and all rights  evidenced
thereby are hereby assigned to _____________ whose address is _________________.




                                            _________ Dated:______________, 2004


                  Holder's Signature:   ___________________________

                  Holder's Address:     ___________________________

                                        ___________________________





Signature Guaranteed:___________________________________________


NOTE:    The signature to this  Assignment Form must correspond with the name as
         it  appears  on  the  face  of  the  Warrant,   without  alteration  or
         enlargement or any change whatsoever,  and must be guaranteed by a bank
         or trust  company.  Officers  of  corporations  and  those  acting in a
         fiduciary or other representative  capacity should file proper evidence
         of authority to assign the foregoing Warrant.






















                             Exhibit 10.3 - Page 15