Cdn. $18,000,000

                           AMENDED AND RESTATED
                             CREDIT AGREEMENT


                                   among


                          Wainoco Oil Corporation
                                as Borrower


                                    and


                            J.P. Morgan Canada
                                 as Agent


                                    and


                          Paribas Bank of Canada
                             as Fronting Bank


                                    and


                          The Banks Listed Herein

                          Dated January 30, 1996



                             TABLE OF CONTENTS

                                                                       Page

ARTICLE 1      DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . .  2
      1.1       Definitions . . . . . . . . . . . . . . . . . . . . .. .  2
      1.2       Accounting Terms and Determinations . . . . . . . . . .. 18
     1.3       Headings and Agreement References . . . . . . . . . . . . 18
     1.4       Number and Gender . . . . . . . . . . . . . . . . . . . . 18
     1.5       Per Annum Calculations; Currency; Time; "Including" . . . 18
     1.6       Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 2      THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . 19
     2.1       Credit Facility . . . . . . . . . . . . . . . . . . . . . 19
     2.2       Method of Borrowing:  Direct Loans. . . . . . . . . . . . 20
     2.3       Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 22
     2.4       Maturity of Loans; Mandatory Prepayments. . . . . . . . . 22
     2.5       Interest Rates. . . . . . . . . . . . . . . . . . . . . . 23
     2.6       Commitment Fee. . . . . . . . . . . . . . . . . . . . . . 24
     2.7       Optional Termination or Reduction of Commitments  . . . . 25
     2.8       Method of Electing Interest Rates . . . . . . . . . . . . 25
     2.9       Optional Prepayments. . . . . . . . . . . . . . . . . . . 26
     2.10      Contingent Prepayments. . . . . . . . . . . . . . . . . . 27
     2.11      General Provisions as to Payments . . . . . . . . . . . . 28
     2.12      Funding Losses. . . . . . . . . . . . . . . . . . . . . . 29
     2.13      General Provisions as to Interest; Overdue Interest;
                 and Fees  . . . . . . . . . . . . . . . . . . . . . . . 29
     2.14      Letters of Credit . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 3      CONDITIONS AND SECURITY . . . . . . . . . . . . . . . . . 33
     3.1       Effectiveness . . . . . . . . . . . . . . . . . . . . . . 33
     3.2       Amendment and Restatement . . . . . . . . . . . . . . . . 34
     3.3       Borrowings. . . . . . . . . . . . . . . . . . . . . . . . 35
     3.4       General Security Provisions . . . . . . . . . . . . . . . 35

ARTICLE 4      REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 36
     4.1       Corporate Existence and Power . . . . . . . . . . . . . . 36
     4.2       Corporate and Governmental Authorization; No
                 No Contravention  . . . . . . . . . . . . . . . . . . . 36
     4.3       Binding Effect. . . . . . . . . . . . . . . . . . . . . . 37
     4.4       Financial Information . . . . . . . . . . . . . . . . . . 37
     4.5       Litigation. . . . . . . . . . . . . . . . . . . . . . . . 37
     4.6       Compliance with ERISA . . . . . . . . . . . . . . . . . . 37
     4.7       Environmental Matters . . . . . . . . . . . . . . . . . . 38
     4.8       Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 38
     4.9       Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 38
     4.10      Regulation. . . . . . . . . . . . . . . . . . . . . . . . 39

                                 - ii -

     4.11      Full Disclosure . . . . . . . . . . . . . . . . . . . . . 39
     4.12      Mortgaged Properties. . . . . . . . . . . . . . . . . . . 39
     4.13      Liens of the Security Documents . . . . . . . . . . . . . 39
     4.14      Reserve Data and Projections. . . . . . . . . . . . . . . 39
     4.15      Production Penalties. . . . . . . . . . . . . . . . . . . 40
     4.16      Conversion. . . . . . . . . . . . . . . . . . . . . . . . 40
     4.17      Operations. . . . . . . . . . . . . . . . . . . . . . . . 40

ARTICLE 5      COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 40
     5.1       Information . . . . . . . . . . . . . . . . . . . . . . . 40
     5.2       Payment of Obligations. . . . . . . . . . . . . . . . . . 42
     5.3       Maintenance and Development of Borrower
                 Engineered Properties and Other Property;
                 Insurance . . . . . . . . . . . . . . . . . . . . . . . 43
     5.4       Conduct of Business and Maintenance of Existence  . . . . 44
     5.5       Compliance with Laws. . . . . . . . . . . . . . . . . . . 44
     5.6       Inspection of Property, Books and Records . . . . . . . . 44
     5.7       Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
     5.8       Restricted Payments . . . . . . . . . . . . . . . . . . . 45
     5.9       Investments . . . . . . . . . . . . . . . . . . . . . . . 45
     5.10      Negative Pledge . . . . . . . . . . . . . . . . . . . . . 45
     5.11      Consolidations, Mergers and Sales of Assets . . . . . . . 45
     5.12      Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 46
     5.13      Value of Mortgaged Properties . . . . . . . . . . . . . . 46
     5.14      Engineer's Reports. . . . . . . . . . . . . . . . . . . . 46
     5.15      Disposition of Borrower Engineered Properties . . . . . . 47
     5.16      Transactions with Affiliates. . . . . . . . . . . . . . . 48
     5.17      Minimum Fixed Charge Coverage . . . . . . . . . . . . . . 48
     5.18      Minimum Consolidated Net Worth. . . . . . . . . . . . . . 49
     5.19      Interest Coverage Ratio . . . . . . . . . . . . . . . . . 49
     5.20      Amendments to Other Agreements. . . . . . . . . . . . . . 50

ARTICLE 6      DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . 50
     6.1       Events of Default . . . . . . . . . . . . . . . . . . . . 50
     6.2       Notice of Default . . . . . . . . . . . . . . . . . . . . 52
     6.3       Conversions to USBR Loans . . . . . . . . . . . . . . . . 53

ARTICLE 7      THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 53
     7.1       Appointment Authorization . . . . . . . . . . . . . . . . 53
     7.2       Agent and Affiliates. . . . . . . . . . . . . . . . . . . 54
     7.3       Action by Agent . . . . . . . . . . . . . . . . . . . . . 54
     7.4       Consultation with Experts . . . . . . . . . . . . . . . . 54
     7.5       Liability of Agent. . . . . . . . . . . . . . . . . . . . 54
     7.6       Indemnification . . . . . . . . . . . . . . . . . . . . . 54
     7.7       Credit Decision . . . . . . . . . . . . . . . . . . . . . 55
     7.8       Successor Agent . . . . . . . . . . . . . . . . . . . . . 55
     7.9       Agent's Fees. . . . . . . . . . . . . . . . . . . . . . . 55

                                 - iii -

ARTICLE 8      CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . 55
     8.1       Basis for Determining Interest Rate Inadequate
                 or Unfair . . . . . . . . . . . . . . . . . . . . . . . 55
     8.2       Illegality. . . . . . . . . . . . . . . . . . . . . . . . 56
     8.3       Increased Cost and Reduced Return . . . . . . . . . . . . 57
     8.4       Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 58
     8.5       USBR Loans Substituted for Affected Euro-Dollar Loans . . 60

ARTICLE 9      MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 61
     9.1       Notices . . . . . . . . . . . . . . . . . . . . . . . . . 61
     9.2       No Waivers. . . . . . . . . . . . . . . . . . . . . . . . 61
     9.3       Expenses; Indemnification . . . . . . . . . . . . . . . . 61
     9.4       Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . 62
     9.5       Amendments and Waivers. . . . . . . . . . . . . . . . . . 63
     9.6       Successors and Assigns. . . . . . . . . . . . . . . . . . 63
     9.7       Collateral. . . . . . . . . . . . . . . . . . . . . . . . 64
     9.8       Further Assurances. . . . . . . . . . . . . . . . . . . . 65
     9.9       Conflicting Provisions. . . . . . . . . . . . . . . . . . 65
     9.10      Section 426 Waiver. . . . . . . . . . . . . . . . . . . . 65
     9.11      Governing Law . . . . . . . . . . . . . . . . . . . . . . 65
     9.12      Submission to Jurisdiction. . . . . . . . . . . . . . . . 65
     9.13      Counterparts; Integration . . . . . . . . . . . . . . . . 65



                           AMENDED AND RESTATED
                             CREDIT AGREEMENT


          THIS AGREEMENT dated January 30, 1996 is effective
December 31, 1995, and amends and restates the Amended and Restated
Credit Agreement dated as of June 29, 1994.

AMONG:

          WAINOCO OIL CORPORATION, a body corporate
          having an office in the City of Houston, in
          the State of Texas (the "Borrower")

                                  - and -

          J.P. MORGAN CANADA, a Canadian chartered bank
          with offices in the City of Toronto, in the
          Province of Ontario (in its own capacity
          referred to as "Morgan" and in its capacity as
          agent referred to as the "Agent")

                                  - and -

          PARIBAS BANK OF CANADA, a Canadian chartered
          bank with offices in the City of Toronto, in
          the Province of Ontario ("Paribas")


WITNESSETH:

          WHEREAS, the Borrower, Morgan (formerly Morgan Bank of
Canada), Paribas, The Bank of Tokyo Canada and the Agent have
heretofore entered into an Amended and Restated Credit Agreement
dated as of June 29, 1994 (as amended to the date hereof, the
"Original Credit Agreement"); and

          WHEREAS, The Bank of Tokyo Canada has assigned its
interest in the Original Credit Agreement to Morgan and Paribas;
and

          WHEREAS, the parties hereto wish to amend and restate the
Original Credit Agreement in its entirety to read as set forth
herein;

          NOW, THEREFORE, the parties hereto agree as follows:


                                 - 2 -

                                 ARTICLE 1
                                DEFINITIONS

1.1       Definitions

          The following terms, as used herein, have the following
meanings:

          "Adjusted London Interbank Offered Rate" has the meaning
          set forth in Section 2.5(c).

          "Administrative Questionnaire" means, with respect to
          each Bank, an administrative questionnaire in the form
          prepared by the Agent and submitted to the Agent (with a
          copy to the Borrower) duly completed by such Bank.

          "Affiliate" means (i) any Person that directly, or
          indirectly through one or more intermediaries, controls
          the Borrower (a "Controlling Person") or (ii) any Person
          which is controlled by or is under common control with a
          Controlling Person.  As used herein, the term "control"
          means possession, directly or indirectly, of the power to
          direct or cause the direction of the management or
          policies of a Person, whether through the ownership of
          voting securities, by contract or otherwise.

          "Agent" means J.P. Morgan Canada in its capacity as agent
          for the Banks under the Financing Documents, and its
          successors in such capacity.

          "Agreement" means the Original Credit Agreement, as
          amended and restated by this Amended Agreement, as the
          same may be further amended from time to time.

          "Amended Agreement" means this Amended and Restated
          Credit Agreement dated January 30, 1996.

          "Applicable Lending Office" means, with respect to any
          Bank and the Fronting Bank, (i) in the case of its
          Domestic Loans, USBR Loans and the issuance of Letters of
          Credit, its Domestic Lending Office and (ii) in the case
          of its Euro-Dollar Loans, its Euro-Dollar Lending Office.

          "Assignee" has the meaning set forth in Section 9.6(c).

          "Bank" means each of Morgan and Paribas, each Assignee
          which becomes a Bank pursuant to Section 9.6(c), and
          their respective successors.

          "Benefit Arrangement" means at any time an employee
          benefit plan within the meaning of Section 3(3) of ERISA
          which is not a Plan or a Multiemployer Plan and which is
          maintained or otherwise contributed to by any member of
          the ERISA Group.

                                 - 3 -

          "Borrower" means Wainoco Oil Corporation, a Wyoming
          corporation, and its successors.

          "Borrowing" means a borrowing hereunder consisting of
          Loans made to the Borrower by the Banks pursuant to
          Section 2.1(a).  A Borrowing is a "Domestic Borrowing" if
          such Loans are Domestic Loans, a  USBR Borrowing  if such
          Loans are USBR Loans, a "Euro-Dollar Borrowing" if such
          Loans are Euro-Dollar Loans and a "LC Borrowing" if such
          Loans consist of Letters of Credit.

          "Borrowing Base" means Cdn. $18,000,000 or the amount
          notified to the Borrower by the Agent pursuant to
          Section 2.1(b) as the amount of the Borrowing Base; less,
          in either case, the Net Sales Proceeds of any of the
          Engineered Properties covered by the then most recent
          Engineer's Report sold, leased or transferred on or after
          the date of such Engineer's Report (unless such sale,
          lease or transfer is otherwise taken into account in the
          determination of the Borrowing Base for such date), but
          only if and to the extent the aggregate amount of such
          Net Sales Proceeds in any calendar year exceeds Cdn.
          $1,000,000.  The Borrower will promptly notify the Agent
          of any sale, lease or other transfer of Engineered
          Properties which requires a reduction in the Borrowing
          Base. 

          A "Borrowing Base Excession" exists at any date if and to
          the extent that the Outstanding Principal at such date
          exceeds the Borrowing Base at such date.

          "Canadian Dollars" and "Cdn. $" means lawful money of
          Canada for the payment of public and private debts.

          "Canadian Equivalent" means, at any time, (i) in relation
          to any amount in U.S. Dollars, the amount obtained by
          converting such amount into Canadian Dollars at the Spot
          Rate and, (ii) in relation to any amount in Canadian
          Dollars, such amount.

          "Capital Costs" means, with respect to any oil and gas
          property, all capital expenditures incurred in connection
          with the conversion or attempted conversion of such
          property from "proved undeveloped" to "proved developed"
          as classified in accordance with the regulations of the
          Securities and Exchange Commission (United States of
          America) as in effect on the date hereof and the
          maintenance of such property as "proved developed" as
          classified in accordance with the regulations of the
          Securities and Exchange Commission (United States of
          America) as in effect on the date hereof.

          "Cash Collateral Account" means an interest-bearing
          account with the Agent and from which the Borrower has no
          withdrawal rights or privileges until repayment in full
          of all Outstandings except in respect of any requirement
          to apply funds to Outstandings hereunder.

                                 - 4 -

          "Commitment" means, with respect to each Bank, (i) its
          obligation hereunder to make Loans to the Borrower by way
          of Borrowings pursuant to Section 2.1(a) up to an amount
          set forth opposite the name of such Bank on the signature
          pages hereof, as such amount may be reduced from time to
          time pursuant to Section 2.7 or subject to change
          pursuant to Sections 8.4 or 9.6, or (ii) the amount set
          forth opposite the name of such Bank on the signature
          pages hereof, as such amount may be reduced from time to
          time pursuant to Section 2.7 or subject to change
          pursuant to Sections 8.4 or 9.6; in each case as the
          context requires.

          "Consent and Waiver" means that certain Consent and
          Waiver dated November 30, 1995 among the Borrower, the
          Agent, Morgan, Paribas and The Bank of Tokyo Canada.

          "Consolidated EBITDA" means, for any fiscal period,
          consolidated net income of the Borrower and its
          Consolidated Subsidiaries for such period plus, to the
          extent deducted in determining such consolidated net
          income for such period, the aggregate amount of
          (i) interest expense, (ii) provision for income taxes and
          (iii) depletion, depreciation, amortization and other
          similar non-cash charges.

          "Consolidated Subsidiary" means at any date any
          Subsidiary or other entity the accounts of which would be
          consolidated with the Borrower in its consolidated
          financial statements if such statements were prepared as
          of such date.

          "Consolidated Tangible Net Worth" means at any date the
          consolidated stockholders' equity of the Borrower and its
          Consolidated Subsidiaries (excluding noncash write-downs
          occurring after December 31, 1995 of oil and gas
          properties to the extent the same have been applied
          against the consolidated stockholders' equity of the
          Borrower and its Consolidated Subsidiaries in the balance
          sheet of the Borrower) less their consolidated Intangible
          Assets, all determined as of such date.  For purposes of
          this definition "Intangible Assets" means the amount (to
          the extent reflected in determining such consolidated
          stockholders' equity) of (i) all write-ups (other than
          write-ups resulting from foreign currency translations
          and write-ups of assets of a going concern business made
          within twelve months after the acquisition of such
          business) subsequent to December 31, 1993 in the book
          value of any asset owned by the Borrower or a
          Consolidated Subsidiary, (ii) all Investments in
          unconsolidated Subsidiaries and all equity investments in
          Persons which are not Subsidiaries and (iii) all
          unamortized debt discount and expense, unamortized
          deferred charges, goodwill, patents, trademarks, service
          marks, trade names, anticipated future benefit of tax
          loss carry-forwards, copyrights, organization or
          developmental expenses and other intangible assets.

          "Convertible Debentures" means the 7 3/4% Convertible
          Subordinated Debentures of the Borrower due 2014.

                                 - 5 -

          "Debt" of any Person means at any date, without
          duplication, (i) all obligations of such Person for
          borrowed money, (ii) all obligations of such Person
          evidenced by bonds, debentures, notes or other similar
          instruments, (iii) all obligations of such Person to pay
          the deferred purchase price of property or services,
          except trade accounts payable arising in the ordinary
          course of business, (iv) all obligations of such Person
          as lessee which are capitalized in accordance with
          generally accepted accounting principles, (v) all
          non-contingent obligations (and, for purposes of
          Section 5.7 and the definitions of Material Debt and
          Material Financial Obligations, all contingent
          obligations) of such Person to reimburse any bank or
          other Person in respect of amounts paid under a letter of
          credit or similar instrument, (vi) all Debt secured by a
          Lien on any asset of such Person, whether or not such
          Debt is otherwise an obligation of such Person, and
          (vii) all Debt of others Guaranteed by such Person.

          "Default" means any condition or event which constitutes
          an Event of Default or which with the giving of notice or
          lapse of time or both would, unless cured or waived,
          become an Event of Default.

          "Derivatives Obligations" of any Person means all
          obligations of such Person in respect of any rate swap
          transaction, basis swap, forward rate transaction,
          commodity swap, commodity option, equity or equity index
          swap, equity or equity index option, bond option,
          interest rate option, foreign exchange transaction, cap
          transaction, floor transaction, collar transaction,
          currency swap transaction, cross-currency rate swap
          transaction, currency option or any other similar
          transaction (including any option with respect to any of
          the foregoing transactions) or any combination of the
          foregoing transactions.

          "Determination Date" means each date on which the Agent
          shall notify the Borrower of the amount of the Borrowing
          Base pursuant to Section 2.1(b).

          "Discounted Present Value of Future Net Revenue" means,
          with respect to any Engineered Property and as of any
          specified date, an amount equal to the present value of
          Future Net Revenue from such Engineered Property,
          determined by discounting the stated amount of such
          Future Net Revenue from the date on which such amount is
          expected to be realized to such specified date at
          (i) prior to the first Determination Date, the applicable
          discount rate used for the purposes of the computations
          contained in the Initial Engineer's Report covering such
          Engineered Property, computed on a simple interest basis
          for years of 365 days (or 366 days in a leap year), and
          (ii) on or after the first Determination Date, the rate
          specified by the Agent pursuant to Section 5.14(b),
          computed on a simple interest basis for years of 365 days
          (or 366 days in a leap year).

          "Domestic Business Day" means any day except a Saturday,
          Sunday or other day on which commercial banks in Toronto,
          Ontario are authorized by law to close. 

                                 - 6 -

          "Domestic Lending Office" means, as to each Bank, its
          office in Canada located at its address set forth in its
          Administrative Questionnaire (or identified in its
          Administrative Questionnaire as its Canadian Domestic
          Lending Office) or such other office in Canada as such
          Bank may hereafter designate as its Domestic Lending
          Office by notice to the Borrower and the Agent. 

          "Domestic Loan" means (i) a Loan which bears interest
          with reference to the Prime Rate or (ii) an overdue
          amount which was a Domestic Loan immediately before it
          became overdue. 

          "Effective Date" means December 31, 1995. 

          "Engineered Properties" means all the Canadian oil and
          gas properties of the Borrower in respect of which proven
          and producing Hydrocarbon reserves have been attributed
          in the then most recent Engineer's Report.

          "Engineer's Report" means (a) the Initial Engineer's
          Report, and (b) each report delivered by the Borrower
          pursuant to Sections 5.14(a) or (c) that (i) is based on
          evaluations by the Independent Petroleum Engineers with
          respect to Engineered Properties having a minimum of 80%
          of the Value of all the Engineered Properties and based
          on evaluations by the Borrower with respect to Engineered
          Properties having a maximum of 20% of the Value of all
          the Engineered Properties, provided that all fields with
          a value in excess of 10% of the Value of all the
          Engineered Properties shall be evaluated by the
          Independent Petroleum Engineers in such report, (ii) is
          certified by the Independent Petroleum Engineers, except
          for the internally evaluated Engineered Properties,
          (iii) is prepared in accordance with established criteria
          generally accepted in the oil and gas industry and
          standards customarily used by such Independent Petroleum
          Engineers in making any determinations or appraisals,
          (iv) is based upon the assumptions determined in
          accordance with Sections 5.14 (a) or (c), as the case may
          be, and such other assumptions, estimates and projections
          as are fully disclosed in such Engineer's Report,
          (v) sets forth the matters specified in Sections 5.14 (a)
          and (vi) is, except to the extent that any of the
          requirements of clauses (i) to (v) hereof would cause its
          form to differ from the form of the Initial Engineer's
          Report, substantially in the form of the Initial
          Engineer's Report.

          "Environmental Laws" means any and all federal,
          provincial, local and foreign statutes, laws, judicial
          decisions, regulations, ordinances, rules, judgments,
          orders, decrees, plans, injunctions, permits,
          concessions, grants, franchises, licenses, agreements and
          other governmental restrictions relating to the
          environment, the effect of the environment on human
          health or to emissions, discharges or releases of
          pollutants, contaminants, Hazardous Substances or wastes
          into the environment including, without limitation,
          ambient air, surface water, ground water, or land, or
          otherwise relating to the manufacture, processing,
          distribution, use, treatment, storage, disposal,
          transport or handling

                                 - 7 -

          of pollutants, contaminants, Hazardous Substances or wastes or
          the clean-up or other remediation thereof.

          "ERISA" means the U.S. Employee Retirement Income
          Security Act of 1974, as amended, or any successor
          statute.

          "ERISA Group" means the Borrower, any Subsidiary and all
          members of a controlled group of corporations and all
          trades or businesses (whether or not incorporated) under
          common control which, together with the Borrower or any
          Subsidiary, are treated as a single employer under
          Section 414 of the U.S. Internal Revenue Code.

          "Euro-Dollar Business Day" means any Domestic Business
          Day on which commercial banks are open for international
          business (including dealings in dollar deposits) in
          London, England and New York, New York.

          "Euro-Dollar Lending Office" means, as to each Bank, its
          office, branch or affiliate located at its address set
          forth in its Administrative Questionnaire (or identified
          in its Administrative Questionnaire as its Euro-Dollar
          Lending Office) or such other office, branch or affiliate
          of such Bank as it may hereafter designate as its
          Euro-Dollar Lending Office by notice to the Borrower and
          the Agent. 

          "Euro-Dollar Loan" means (i) a Loan which bears interest
          at a Euro-Dollar Rate or (ii) an overdue amount which was
          a Euro-Dollar Loan immediately before it became overdue.

          "Euro-Dollar Rate" means a rate of interest determined
          pursuant to Section 2.5(c) on the basis of an Adjusted
          London Interbank Offered Rate.

          "Euro-Dollar Reserve Percentage" has the meaning set
          forth in Section 2.5(c).

          "Event of Default" has the meaning set forth in
          Section 6.1.

          "Existing Security Documents" means (i) a Fixed Charge
          Demand Debenture dated October 2, 1991 by the Borrower,
          as amended by an agreement dated June 30, 1994, deposited
          pursuant to a Deposit Agreement dated October 2, 1991, as
          amended by an agreement dated June 30, 1994, (ii) a
          General Security Agreement dated October 2, 1991 by the
          Borrower, as amended by an agreement dated June 30, 1994,
          (iii) all Assignments under Section 177 (now Section 426)
          of the Bank Act (Canada) previously provided by the
          Borrower or any predecessor and (iv) all Assignments of
          Proceeds previously provided by the Borrower or any
          predecessor.

          "FHI" means Frontier Holdings Inc., a Delaware
          corporation.

                                 - 8 -

          "FHI Credit Agreement" means a bank credit facility
          providing for loan availability and/or letter of credit
          availability, provided that the aggregate outstanding
          principal amount of loans (excluding letters of credit)
          thereunder may at no time exceed U.S. $20,000,000.

          "FHI EBITDA" means, for any fiscal period, consolidated
          net income of FHI and its Consolidated Subsidiaries for
          such period plus, to the extent deducted in determining
          such consolidated net income for such period, the
          aggregate amount of (i) interest expense, (ii) provision
          for income taxes and (iii) depletion, depreciation,
          amortization and other similar non-cash charges.

          "FHI Subsidiary" means any corporation or other entity of
          which securities or other ownership interests having
          ordinary voting power to elect a majority of the board of
          directors or other persons performing similar functions
          are directly or indirectly owned by FHI. 

          "Federal Funds Rate" means, for any day, the rate of
          interest per annum set forth in the weekly statistical
          release designated as H.15(519), or any successor
          publication, published by the Federal Reserve Board
          (including any such successor, the "H.15(519)") for such
          day opposite the caption "Federal Funds (Effective)".  If
          on any relevant day such rate is not yet published in
          H.15(519), the rate for such day will be the rate of
          interest per annum set forth in the daily statistical
          release designated as the Composite 3:30 p.m. Quotations
          for U.S. Government Securities, or any successor
          publication, published by the Federal Reserve Bank of New
          York (including any successor, the "Composite 3:30 p.m.
          Quotations") for such day under the caption "Federal
          Funds Effective Rate".  If on any relevant day the
          appropriate rate per annum for such day is not yet
          published in either H.15(519) or the Composite 3:30 p.m. 
          Quotations, the rate for such day will be the arithmetic
          mean of the rates per annum for the last transaction in
          overnight Federal funds arranged prior to 9:00 a.m. (New
          York time) on that day by each of three major brokers of
          Federal funds transactions in New York City selected by
          the Agent;

          "Financing Documents" means this Agreement, the Notes and
          the Security Documents.

          "Fixed Charges" means, for any fiscal year, the sum of:

          (i)  interest payments required to be made on Debt of
               the Borrower or any Subsidiary during such fiscal
               year, provided that,

               (A)  subject to paragraph (B) immediately below, if
                    the rate of interest applicable to any Debt is
                    at the date of determination an unknown or
                    variable rate, then the rate to be used for
                    the purpose of such determination shall be the
                    rate per annum equal to the weighted

                                 - 9 -

                    average applicable rate of interest paid by such Person
                    on such Debt during the then most recently ended
                    calendar month,

               (B)  with respect to Debt under the FHI Credit
                    Agreement and Debt hereunder, the rate of
                    interest to be used for the purposes of a
                    determination shall be the rate per annum
                    equal to the rate of interest that was in
                    effect for such Debt as at the last day of the
                    fiscal quarter of the Borrower most recently
                    ended on or prior to the date of
                    determination,

               (C)  subject to paragraph (D) immediately below,
                    the principal amount of Debt outstanding
                    during such fiscal year shall be assumed to be
                    the amount outstanding at the last day of the
                    fiscal quarter of the Borrower most recently
                    ended on or prior to the date of
                    determination, reduced as contemplated by
                    clause (iv) below, 

               (D)  with respect to Debt hereunder, (y) for any
                    determination on or prior to the day
                    immediately prior to the last four fiscal
                    quarters (including the quarter containing the
                    Termination Date) of the Revolving Credit
                    Period (the "extension date"), the principal
                    amount of such Debt outstanding during such
                    fiscal year shall be assumed to be the amount
                    outstanding at the last day of the fiscal
                    quarter of the Borrower most recently ended on
                    or prior to the date of determination, (z) for
                    any determination after the extension date,
                    the principal amount of such Debt outstanding
                    during such fiscal year shall be assumed to be
                    the amount outstanding at the last day of the
                    fiscal quarter of the Borrower most recently
                    ended on or prior to the date of
                    determination, reduced as contemplated by
                    clause (iii) below;

          (ii) assumed sinking fund payments by the Borrower on
               account of the Subordinated Debentures of
               U.S. $1,250,000 in each of the Borrower's 1996 and
               1997 fiscal years;

          (iii)     for any determination after the extension
                    date, assumed principal payments hereunder
                    during such fiscal year so as to reduce the
                    Outstanding Principal at the Termination Date
                    in 8 quarterly instalments commencing three
                    months after the Termination Date; and 

          (iv) any other scheduled payments of principal required
               to be made on Debt of the Borrower or any
               Subsidiary during such fiscal year.

          "Fronting Bank" means Paribas Bank of Canada in its
          capacity as the fronting bank for the Banks for the
          purposes of issuing Letters of Credit hereunder, and its
          successors in such capacity.  The Fronting Bank may
          resign at any time by giving notice thereof to the Banks
          and the Borrower, and upon such resignation,

                                 - 10 -

          the Required Banks shall have the right to appoint a
          successor Fronting Bank which is a Bank hereunder.  If no
          successor Fronting Bank shall have been so appointed
          within 30 days after the retiring Fronting Bank gives
          notice of its resignation, then the retiring Fronting
          Bank may, on behalf of the Banks, appoint a successor
          Fronting Bank which shall be a Canadian chartered Bank
          under the Bank Act (Canada).  Upon the acceptance of its
          appointment as Fronting Bank hereunder by a successor
          Fronting Bank, such successor Fronting Bank shall, and
          the Borrower shall cooperate with and do all acts and
          things necessary for the successor Fronting Bank to,
          replace all Letters of Credit then outstanding with
          replacement Letters of Credit issued by the successor
          Fronting Bank, whereupon the retiring Fronting Bank shall
          be discharged from its duties and obligations hereunder.

          "Future Net Revenue" means, with respect to any
          Engineered Property and for any period, the future gross
          revenue from such Engineered Property for such period as
          determined in the then most recent Engineer's Report
          less, without duplication, the sum of (i) any royalties
          payable in connection with such property during such
          period, (ii) any overriding royalties, net profits
          interests and other similar obligations payable in
          connection with such property during such period,
          (iii) all production, ad valorem and severance taxes
          relating to such property and payable during such period
          and (iv) Capital Costs and Production Expenses during
          such period necessary to provide such future gross
          revenue. 

          "Group of Loans" means at any time a group of Direct
          Loans consisting of (i) all Direct Loans which are
          Domestic Loans at such time, (ii) all Direct Loans which
          are USBR Loans at such time or (iii) all Direct Loans
          which are Euro-Dollar Loans having the same Interest
          Period at such time; provided that, if Direct Loans of
          any particular Bank are converted to or made as USBR
          Loans pursuant to Section 8.2 or 8.5, such Direct Loans
          shall be included in the same Group or Groups of Loans
          from time to time as they would have been in if they had
          not been so converted or made.

          "Guarantee" by any Person means any obligation,
          contingent or otherwise, of such Person directly or
          indirectly guaranteeing any Debt or other obligation of
          any other Person and, without limiting the generality of
          the foregoing, any obligation, direct or indirect,
          contingent or otherwise, of such Person, (i) to purchase
          or pay (or advance or supply funds for the purchase or
          payment of) such Debt or other obligation (whether
          arising by virtue of partnership arrangements, by
          agreement to keep-well, to purchase assets, goods,
          securities or services, to take-or-pay, or to maintain
          financial statement conditions or otherwise) or
          (ii) entered into for the purpose of assuring in any
          other manner the obligee of such Debt or other obligation
          of the payment thereof or to protect such obligee against
          loss in respect thereof (in whole or in part); provided
          that the term Guarantee shall not include endorsements
          for collection or deposit in the ordinary course of
          business.  The term "Guarantee" used as a verb has a
          corresponding meaning. 

                                 - 11 -

          "Hazardous Substances" means any toxic, radioactive,
          caustic or otherwise hazardous substance, including
          petroleum, its derivatives, by-products and other
          hydrocarbons, or any substance having any constituent
          elements displaying any of the foregoing characteristics.

          "Hydrocarbons" means oil, gas, casinghead gas, condensate
          and other liquid and gaseous hydrocarbons and all other
          minerals produced in connection therewith. 

          "Indemnitee" has the meaning set forth in Section 9.3(b).

          "Independent Petroleum Engineers" means Ryder Scott
          Company or other petroleum engineers not regularly
          employed by or otherwise affiliated with the Borrower
          selected by the Borrower and approved by the Required
          Banks. 

          "Initial Engineer's Report" means the report of Ryder
          Scott Company dated January 1, 1995 covering the
          Engineered Properties, a copy of which has been delivered
          to each of the Banks.

          "Interest Period" means:  (1) with respect to each
          Euro-Dollar Loan, the period commencing on the date
          specified in the applicable Notice of Borrowing or on the
          date specified in the applicable Notice of Interest Rate
          Election and ending one, two, three or six months
          thereafter, as the Borrower may elect in the applicable
          Notice; provided that:

          (a)  any Interest Period which would otherwise end on a
               day which is not a Euro-Dollar Business Day shall
               be extended to the next succeeding Euro-Dollar
               Business Day unless such Euro-Dollar Business Day
               falls in another calendar month, in which case such
               Interest Period shall end on the next preceding
               Euro-Dollar Business Day;

          (b)  any Interest Period which begins on the last
               Euro-Dollar Business Day of a calendar month (or on
               a day for which there is no numerically
               corresponding day in the calendar month at the end
               of such Interest Period) shall, subject to
               clause (c) below, end on the last Euro-Dollar
               Business Day of a calendar month; and

          (c)  if any Interest Period includes a date on which a
               payment of principal of the Loans is required to be
               made under Section 2.4 but does not end on such
               date, then (i) the principal amount (if any) of
               each Euro-Dollar Loan required to be repaid on such
               date shall have an Interest Period ending on such
               date and (ii) the remainder (if any) of each such
               Euro-Dollar Loan shall have an Interest Period
               determined as set forth above,

          (2) with respect to each Domestic Loan, the period
          commencing on the date specified in the applicable Notice
          of Borrowing or on the date specified in the applicable
          Notice of Interest Rate Election, or commencing on the
          date such

                                 - 12 -

          Domestic Loan is otherwise deemed to have been
          made hereunder, and ending on the last Domestic Business
          Day of each calendar month, and

          (3) with respect to each USBR Loan, the period commencing
          on the date specified in the applicable Notice of
          Borrowing or on the date specified in the applicable
          Notice of Interest Rate Election, or commencing on the
          date such USBR Loan is otherwise deemed to have been made
          hereunder, and ending on the last Domestic Business Day
          of each calendar month.

          "Investment" means any investment in any Person, whether
          by means of share purchase, capital contribution, loan,
          time deposit or otherwise. 

          "Letter of Credit" means a standby letter of credit or
          performance bond in U.S. Dollars or Canadian Dollars
          issued by the Fronting Bank at the request of the
          Borrower pursuant to this Agreement.

          "Lien" means any mortgage, lien, pledge, charge,
          hypothec, assignment by way of security, security
          interest or encumbrance of any kind (whether statutory,
          equitable or at common law) including, without
          limitation, the rights of a vendor, lessor or similar
          party under any conditional sale agreement or other title
          retention agreement or lease substantially equivalent
          thereto, and the rights of the holder of any production
          payment, advance payment or similar interests.

          "Loan" means a Euro-Dollar Loan, USBR Loan, Domestic Loan
          or Letter of Credit outstanding hereunder and made or
          issued pursuant to Section 2.1 or Section 2.8, or, in the
          case of a Domestic Loan or USBR Loan, which is otherwise
          deemed to have been made hereunder; and the term "Direct
          Loan" means any such Euro-Dollar Loan, USBR Loan or a
          Domestic Loan; provided that if any such Euro-Dollar Loan
          or Loans, USBR Loan or Loans, or Domestic Loan or Loans
          (or portions thereof) are combined or subdivided pursuant
          to a Notice of Interest Rate Election, the terms "Loan"
          and "Direct Loan" shall refer to the combined principal
          amount resulting from such combination or to each of the
          separate principal amounts resulting from such
          subdivision, as the case may be.

          "Loan Limit" means,

          (a)  during the Revolving Credit Period, the lesser of
               (i) the aggregate of each Bank's Commitment as
               reduced pursuant to Section 2.7 and (ii) the
               Borrowing Base, and

          (b)  after the Termination Date, the lesser of (i) the
               Outstanding Principal on the Termination Date less
               the Loan Limit reductions pursuant to
               Sections 2.4(a), 2.9(d) and 2.10(b) and (ii) the
               Borrowing Base.

          "London Interbank Offered Rate" has the meaning set forth
          in Section 2.5(c). 

                                 - 13 -

          "Margin" has the meaning set forth in Section 2.5(c).

          "Material Debt" means Debt (other than the Notes) of the
          Borrower and/or one or more of its Subsidiaries, arising
          in one or more related or unrelated transactions, in an
          aggregate principal or face amount (or the U.S.
          Equivalent thereof) exceeding U.S. $500,000. 

          "Material Financial Obligations" means a principal or
          face amount (or the U.S. Equivalent thereof) of Debt
          and/or payment obligations in respect of Derivatives
          Obligations of the Borrower and/or one or more of its
          Subsidiaries, arising in one or more related or unrelated
          transactions, exceeding in the aggregate U.S. $500,000.

          "Material Plan" means at any time a Plan or Plans having
          aggregate Unfunded Liabilities in excess of U.S.
          $500,000.

          "Maturity Date" means the Quarterly Date falling in
          December, 1999.

          "Mortgaged Properties" means all property and assets of
          the Borrower subject or purported to be subject to the
          Lien of the Security Documents.

          "Multiemployer Plan" means at any time an employee
          pension benefit plan within the meaning of
          Section 4001(a)(3) of ERISA to which any member of the
          ERISA Group is then making or accruing an obligation to
          make contributions or has within the preceding five plan
          years made contributions, including for these purposes
          any Person which ceased to be a member of the ERISA Group
          during such five year period.

          "Net Proceeds from Petroleum Operations" means, for any
          calendar quarter, the gross revenues of the Borrower from
          the sale of Hydrocarbons produced and saved from the
          Borrower's Canadian oil, gas, and mineral properties,
          rights or interests less the sum of (i) any Crown or
          lessor royalties paid by the Borrower in connection with
          such properties during such period, (ii) any overriding
          royalties, net profits interests and other similar
          obligations paid by the Borrower in connection with such
          properties during such period, (iii) all production, ad
          valorem and severance taxes relating to such properties
          paid by the Borrower during such period, and (iv) Capital
          Costs and Production Expenses necessary to produce such
          revenues paid by the Borrower during such period. 

          "Net Sales Proceeds" means, in respect of any sale, lease
          or transfer of any Engineered Property, the gross cash
          proceeds of such sale, lease or transfer less expenses
          incurred in connection thereto including any commissions,
          broker's fees and sales taxes. 

                                 - 14 -

          "Notes" means promissory notes of the Borrower,
          substantially in the form of Exhibit A hereto, evidencing
          the obligation of the Borrower to repay the Direct Loans,
          and "Note" means any one of such promissory notes issued
          hereunder. 

          "Notice of Borrowing" means a notice delivered by the
          Borrower to the Agent pursuant to Section 2.4(b) or
          Section 2.14(a) requesting a Borrowing hereunder. 

          "Notice of Interest Rate Election" has the meaning set
          forth in Section 2.8.

          "Original Credit Agreement" has the meaning set forth in
          the recitals hereto.

          "Outstandings" means the aggregate, at any time, of
          (i) the principal amount of all outstanding Direct Loans,
          (ii) the maximum amount available to be drawn under all
          outstanding Letters of Credit, (iii) all accrued and
          unpaid interest, including interest on overdue and unpaid
          interest, payable by the Borrower hereunder, and (iv) all
          fees, indemnities and other amounts payable by the
          Borrower hereunder or under the Notes or the Security
          Documents.

          "Outstanding Principal" means the aggregate, at any time,
          of (i) the aggregate principal amount of all Domestic
          Loans, (ii) the Canadian Equivalent of the aggregate
          principal amount of all Euro-Dollar Loans and USBR Loans,
          (iii) the aggregate face amount of all outstanding
          Letters of Credit in Canadian Dollars, and (iv) the
          Canadian Equivalent of the aggregate face amount of all
          outstanding Letters of Credit in U.S. Dollars.

          "Parent" means, with respect to any Bank, any Person
          controlling such Bank.

          "Participant" has the meaning set forth in
          Section 9.6(b). 

          "PBGC" means the Pension Benefit Guaranty Corporation or
          any entity succeeding to any or all of its functions
          under ERISA.

          "Person" means an individual, a corporation, a
          partnership, an association, a trust or any other entity
          or organization, including a government or political
          subdivision or an agency or instrumentality thereof. 

          "Plan" means at any time an employee pension benefit plan
          (other than a Multiemployer Plan) which is covered by
          Title IV of ERISA or subject to the minimum funding
          standards under Section 412 of the U.S. Internal Revenue
          Code and either (i) is maintained, or contributed to, by
          any member of the ERISA Group for employees of any member
          of the ERISA Group or (ii) has at any time within the
          preceding five years been maintained, or contributed to,
          by any Person which was at such time a member of the
          ERISA Group for employees of any Person which was at such
          time a member of the ERISA Group.

                                 - 15 -

          "Prepaid Gas Contract" means that certain Prepaid Crude
          Petroleum and/or Natural Gas Purchase Agreement dated as
          of December 1, 1995 between the Borrower and Wainoco
          Production Partnership.

          "Prime Rate" means the variable rate of interest
          (expressed as a rate per annum) which the Agent
          establishes from time to time as the reference rate of
          interest which it employs in order to determine the
          interest rate it will charge for loans in Canadian
          Dollars to its customers in Canada and which it
          designates as its Canadian prime rate.

          "Principal Repayment Date" means each Quarterly Date
          falling after the Termination Date and on or prior to the
          Maturity Date. 

          "Production Expenses" means, with respect to any oil and
          gas property, all cash costs and expenses (excluding
          general and administrative expenses) incurred for or
          payable in connection with the lifting, producing,
          gathering, separating, treating, compressing, storing,
          processing, marketing, transporting or otherwise handling
          Hydrocarbons from such property, or developing,
          equipping, operating or maintaining such property.

          "Projected Cash Flow Available for Fixed Charges" means,
          for any fiscal year, the amount determined pursuant to
          Section 5.17(c) as (A) the projected Future Net Revenues
          from Engineered Properties for such fiscal year minus
          (B) general and administrative expenses payable by the
          Borrower or any Subsidiary during such fiscal year (as
          forecast by the Borrower and satisfactory to the Required
          Banks) plus (C) the FHI EBITDA for the period of eight
          consecutive quarters then most recently ended divided by
          two minus (D) U.S. $5,000,000 (representing a notional
          allowance for capital costs of FHI for such fiscal year).

          "Quarterly Date" means the last Euro-Dollar Business Day
          of each March, June, September and December. 

          "Reference Banks" means the principal London offices of
          Morgan Guaranty Trust Company of New York and Banque
          Paribas.

          "Regulation X" means Regulation X of the Board of
          Governors of the U.S. Federal Reserve System, as in
          effect from time to time.

          "Required Banks" means at any time Banks having at least
          66 2/3% of the aggregate amount of all Commitments or, if
          the Commitments shall have been terminated, having an
          interest in at least 66 2/3% of the aggregate amount of
          all outstanding Loans.

          "Restricted Payment" means (i) any dividend or other
          distribution on any shares of the Borrower's capital
          stock (except dividends payable solely in shares of its
          capital stock) or (ii) any payment on account of the
          purchase, redemption,

                                 - 16 -

          retirement or acquisition of (a) any shares of the Borrower's
          capital stock or (b) any option, warrant or other right to
          acquire shares of the Borrower's capital stock.

          "Revolving Credit Period" means the period from and
          including the Effective Date to and including the
          Termination Date. 

          "Security Documents" means the Existing Security
          Documents, the Subsidiary Security Documents and any
          other documents delivered to or for the benefit of the
          Banks and intended to secure or assure payment or
          performance of all or any part of the obligation and
          liabilities of the Borrower under this Agreement,
          including liability for all Outstandings; all as the same
          may be amended, supplemented, replaced, substituted or
          renewed from time to time.

          "Senior Notes" means the 12% Senior Notes of the Borrower
          due 2002.

          "Spot Rate" means, in relation to the conversion of one
          currency into another currency, the noon spot rate of
          exchange for such conversion as quoted by the Bank of
          Canada on the Domestic Business Day immediately preceding
          the date that such conversion is to be made.

          "Subordinated Debentures" means the 10 3/4% Subordinated
          Debentures of the Borrower due 1998. 

          "Subsidiary" means, as to any Person, any corporation or
          other entity of which securities or other ownership
          interests having ordinary voting power to elect a
          majority of the board of directors or other persons
          performing similar functions are at the time directly or
          indirectly owned by such Person; unless otherwise
          specified, "Subsidiary" means a Subsidiary of the
          Borrower.

          "Subsidiary Security Documents" means (i) a Guarantee
          dated as of December 1, 1995 by Wainoco Production
          Partnership, (ii) a General Security Agreement dated as
          of December 1, 1995 by Wainoco Production Partnership,
          (iii) a Guarantee dated December 1, 1995 by 662712
          Alberta Ltd. and (iv) a General Security Agreement dated
          December 1, 1995 by 662712 Alberta Ltd., in each case in
          favour of the Agent for the benefit of the Banks.

          "Temporary Cash Investment" means any Investment in
          (i) direct obligations of the United States of America or
          Canada, or any agency thereof, or obligations guaranteed
          by the United States of America or Canada, or any agency
          thereof, (ii) commercial paper rated at least A-1 by
          Standard & Poor's Corporation and P-1 by Moody's
          Investors Service, Inc., (iii) commercial paper issued by
          Union Commercial Funding Corp. (a subsidiary of Union
          Bank) guaranteed by Union Bank and rated at least A-1 by
          Standard & Poor's Corporation and P-2 by Moody's
          Investors Services, Inc. not in the aggregate at any time
          greater than U.S. $10,000,000, (iv) time deposits
          (including overnight deposits accruing

                                 - 17 -

          interest at rates based on the London Interbank market)
          with, including certificates of deposit issued by, any
          office of any bank or trust company which is organized
          under the laws of the United States of America or any
          state thereof, or under the laws of Canada or any
          province thereof, and has capital, surplus and undivided
          profits aggregating at least U.S. $500,000,000 or
          Cdn. $500,000,000, as the case may be, or (v) repurchase
          agreements with respect to securities described in
          clause (i) above entered into with an office of a bank or
          trust company meeting the criteria specified in
          clause (iii) above, provided in each case that such
          Investment matures within one year from the date of
          acquisition thereof by the Borrower or a Subsidiary. 

          "Termination Date" means the Quarterly Date falling in
          December, 1997.

          "U.S. Base Rate" means, for any day, a rate per annum
          equal to the higher of (i) the variable rate of interest
          (expressed as a rate per annum) which the Agent
          establishes from time to time as the reference rate of
          interest which it employs in order to determine the
          interest rate it will charge for loans in U.S. Dollars to
          its customers in Canada and which it designates as its
          U.S. base rate, and (ii) the sum of 1/2 of 1% plus the
          Federal Funds Rate.

          "USBR Loan" means (i) a Loan which bears interest with
          reference to the U.S. Base Rate or (ii) an overdue amount
          which was a USBR Loan immediately before it became
          overdue.

          "U.S. Dollar" and "U.S. $" mean lawful money of the
          United States of America.

          "U.S. Equivalent" means, at any time, (i) in relation to
          any amount in Canadian Dollars, the amount obtained by
          converting such amount into U.S. Dollars at the Spot Rate
          and, (ii) in relation to any amount in U.S. Dollars, that
          amount.

          "Unfunded Liabilities" means, with respect to any Plan at
          any time, the amount (if any) by which (i) the present
          value of all benefits under such Plan exceeds (ii) the
          fair market value of all Plan assets allocable to such
          benefits (excluding any accrued but unpaid
          contributions), all determined as of the then most recent
          valuation date for such Plan, but only to the extent that
          such excess represents a potential liability of a member
          of the ERISA Group to the PBGC or any other Person under
          Title IV of ERISA.

          "Value" means, with respect to any Engineered Property
          (including, without limitation, a Mortgaged Property),
          the Discounted Present Value of Future Net Revenue from
          such Engineered Property as set forth in the then most
          recent Engineer's Report. 

          "1994 Form 10-K" means the Borrower's annual report on
          Form 10-K for 1994, as filed with the Securities and
          Exchange Commission (United States of America) pursuant
          to the Securities Exchange Act of 1934. 

                                 - 18 -

1.2       Accounting Terms and Determinations

          Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with U.S.
generally accepted accounting principles as in effect from time to
time, applied on a basis consistent (except for changes concurred
in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower
and its Consolidated Subsidiaries delivered to the Banks; provided
that, if the Borrower notifies the Agent that the Borrower wishes
to amend any covenant in Article 5 to eliminate the effect of any
change in generally accepted accounting principles on the operation
of such covenant (or if the Agent notifies the Borrower that the
Required Banks wish to amend Article 5 for such purpose), then the
Borrower's compliance with such covenant shall be determined on the
basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted
accounting principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Banks.

1.3       Headings and Agreement References

     (a)  The division of this Agreement into Articles and
          Sections, the inclusion of a table of contents and the
          insertion of headings is for convenience of reference
          only and shall not affect the construction or
          interpretation of this Agreement.

     (b)  The term "this Agreement", "hereof", "hereunder" and
          similar expressions refer to this Agreement and not to
          any particular Article, Section or other portion hereof
          and includes any amendments or supplements hereto. 
          Unless otherwise stated, references herein to Articles
          and Sections are to Articles and Sections of this
          Agreement.

1.4       Number and Gender

          Words importing the singular number shall include the
plural and vice versa, and words importing gender shall include the
masculine, feminine and neuter genders.

1.5       Per Annum Calculations; Currency; Time; "Including"

     (a)  Unless otherwise stated, interest specified as a rate
          "per annum" shall be calculated using the nominal rate
          method, and not the effective rate method, on the basis
          of a calendar year of 365 days or 366 days, as the case
          may be.

     (b)  Unless otherwise stated, references in this Agreement to
          dollar amounts or $ shall be deemed to be references to
          Canadian Dollars.

     (c)  Unless otherwise stated, references to time shall mean
          local time in Toronto, Ontario.

                                 - 19 -

     (d)  The word "including" shall not be construed to limit or
          restrict the generality of the matter that precedes it.

1.6       Exhibits

          The following are the Exhibits annexed hereto:

          Exhibit A -    Form of Note
          Exhibit B -    Opinion of U.S. counsel for the Borrower
          Exhibit C -    Opinion of Burnet, Duckworth & Palmer,
                         Alberta counsel for the Borrower
          Exhibit D -    Opinion of Macleod Dixon, counsel for the
                         Agent


                                 ARTICLE 2
                                THE CREDITS

2.1       Credit Facility

     (a)  During the Revolving Credit Period each Bank severally
          agrees, on the terms and conditions set forth in this
          Agreement, to continue to make available to the Borrower
          a credit facility not to exceed in the aggregate at any
          one time outstanding the amount of its Commitment, and
          the Borrower may obtain Borrowings in Canadian Dollars by
          way of Domestic Loans and Letters of Credit, and in U.S.
          Dollars by way of Euro-Dollar Loans, USBR Loans and
          Letters of Credit; provided that the Borrower shall not
          be entitled to any Borrowing where (i) the Outstanding
          Principal, after such Borrowing, would exceed the Loan
          Limit, or (ii) in the event the Borrowing is a LC
          Borrowing, the Canadian Equivalent of the aggregate face
          amount of all outstanding Letters of Credit, after such
          LC Borrowing, would exceed Cdn. $1,000,000.  Each
          Borrowing under this subsection (a) shall be made from
          the Banks or apportioned among the Banks severally and
          rateably in proportion to their respective Commitments,
          and:

          (i)  in the case of Domestic Loans, shall be in an
               aggregate principal amount of Cdn. $1,000,000 or
               any larger multiple of Cdn. $100,000;

          (ii) in the case of Euro-Dollar Loans or USBR Loans,
               shall be in an aggregate principal amount of
               U.S. $1,000,000 or any larger multiple of
               U.S. $100,000; and

          (iii)     in the case of Letters of Credit, in any
                    amount.

          Within the foregoing limits, the Borrower may borrow
          under this subsection (a), repay, or to the extent
          permitted by Section 2.9, prepay Loans and reborrow at
          any time during the Revolving Credit Period under this
          subsection (a).  The Commitments shall terminate at the
          close of business on the Termination Date and

                                 - 20 -

          the credit facility of each of the Banks under this
          Section 2.1(a) shall be converted to a non-revolving term
          facility, and the Banks shall thereafter have no
          obligation to extend further Borrowings to the Borrower
          hereunder.

     (b)  On or as promptly as practicable after each date on which
          the Agent shall receive (i) an Engineer's Report pursuant
          to Sections 5.14(a) or (c), (ii) a request by the
          Borrower for a redetermination of the Borrowing Base in
          conjunction with a proposed sale, lease or other transfer
          of Engineered Properties in lieu of a reduction otherwise
          required by the provisions of the definition of Borrowing
          Base or (iii) a request by the Borrower to increase the
          Borrowing Base through the addition of incremental
          Engineered Properties, which request shall be accompanied
          by an Engineer's Report covering the properties proposed
          to be added and such other information relating thereto
          as the Agent or any Bank may reasonably request, the
          Agent shall determine the proposed amount of the
          Borrowing Base and notify the Banks of its determination. 
          If each of the Banks shall approve such determination,
          the Agent shall promptly after receiving such approval
          notify the Borrower of the amount of the Borrowing Base
          so determined whereupon the Borrowing Base shall equal
          the amount so notified.  If any Bank shall object to such
          determination, then the Banks shall consult among
          themselves to determine a mutually acceptable Borrowing
          Base, and the amount so agreed upon by all Banks shall be
          the Borrowing Base and the Agent shall promptly notify
          the Borrower thereof.  In any event, the determination of
          the Borrowing Base in accordance with this Section 2.1(b)
          shall be accomplished within 45 days of the delivery of
          the related Engineer's Report or request for
          redetermination.  The determination of the amount of the
          Borrowing Base shall be based on the information relating
          to the Engineered Properties set forth in the Engineer's
          Report but subject to the customary practices and
          standards of each Bank in determining the maximum amount
          that it is willing to lend to a borrower on the basis of
          the future net revenues of the hydrocarbon producing
          properties of such borrower.  In the determination of the
          Borrowing Base, the Banks will have full discretion to
          determine which (if any) non-producing and undeveloped
          Hydrocarbon reserves will be included.  The Banks may
          also make such adjustment as they deem appropriate for
          the Debt of the Borrower (other than the Debt of the
          Borrower hereunder) and its Subsidiaries, including
          without limitation the Senior Notes.

2.2       Method of Borrowing:  Direct Loans

          With respect to Domestic Borrowings, USBR Borrowings and
Euro-Dollar Borrowings:

     (a)  the Borrower shall give the Agent notice no later than
          12:00 Noon on the date of each Domestic Borrowing and
          USBR Borrowing, and at least three Euro-Dollar Business
          Days before each Euro-Dollar Borrowing, specifying:

                                 - 21 -

          (i)  the date of such Borrowing, which shall be a
               Domestic Business Day in the case of a Domestic
               Borrowing or USBR Borrowing,  or a Euro-Dollar
               Business Day in the case of a Euro-Dollar
               Borrowing,

          (ii) the aggregate amount of such Borrowing,

          (iii)     whether the Loans comprising such Borrowing
                    are to bear interest initially at the Prime
                    Rate as adjusted herein, the U.S. Base Rate as
                    adjusted herein or the Euro-Dollar Rate, and

          (iv) in the case of a Euro-Dollar Borrowing, the
               duration of the initial Interest Period applicable
               thereto, subject to the provisions of the
               definition of Interest Period. 

     (b)  upon receipt of a Notice of Borrowing, the Agent shall
          promptly notify each Bank of the contents thereof and of
          such Bank's ratable share of such Borrowing and such
          Notice of Borrowing shall not thereafter be revocable by
          the Borrower;

     (c)  not later than 11:00 A.M. on the date of each Euro-Dollar
          Borrowing and not later than 1:00 P.M. on the date of
          each Domestic Borrowing and USBR Borrowing, each Bank
          shall make available its ratable share of such Borrowing,
          in Canadian or U.S. Dollars, as the case may be,
          available in Toronto, Ontario, to the Agent at its
          address specified in or pursuant to Section 9.1.  Unless
          the Agent determines that any applicable condition
          specified in Article 3 has not been satisfied, the Agent
          will make the funds so received from the Banks available
          to the Borrower at the Agent's aforesaid address;

     (d)  unless the Agent shall have received notice from a Bank
          prior to the date of any Domestic Borrowing, USBR
          Borrowing or Euro-Dollar Borrowing that such Bank will
          not make available to the Agent such Bank's share of such
          Borrowing, the Agent may assume that such Bank has made
          such share available to the Agent on the date of such
          Borrowing in accordance with subsection (c) of this
          Section 2.2 and the Agent may, in reliance upon such
          assumption, make available to the Borrower on such date
          a corresponding amount.  If and to the extent that such
          Bank shall not have so made such share available to the
          Agent, such Bank and the Borrower severally agree to
          repay to the Agent forthwith on demand such corresponding
          amount together with interest thereon, for each day from
          the date such amount is made available to the Borrower
          until the date such amount is repaid to the Agent, at a
          rate determined by the Agent (such rate to be conclusive
          and binding on such Bank or the Borrower, as the case may
          be) in accordance with the Agent's usual banking practice
          for advances to financial institutions of like standing
          to such Bank.  If such Bank shall repay to the Agent such
          corresponding amount, such amount so repaid shall
          constitute such Bank's Loan included in such Borrowing
          for purposes of this Agreement.  If the Borrower shall
          repay to the Agent such corresponding amount, nothing in this

                                 - 22 -

          Section 2.2(d) shall limit or affect any rights the
          Borrower may have against such Bank.

2.3       Notes

     (a)  The Direct Loans of each Bank shall be evidenced by a
          single Note payable to the order of such Bank in an
          amount equal to the aggregate unpaid principal amount of
          such Bank s Direct Loans;

     (b)  Each Bank may, by notice to the Borrower and the Agent,
          request that its Domestic Loans, USBR Loans and Euro-
          Dollar Loans be evidenced by separate Notes.  In
          addition, each Bank may, by notice to the Borrower and
          the Agent, request that an additional Note be delivered
          by the Borrower to evidence any Direct Loan not otherwise
          evidenced by an existing Note hereunder.  Each such Note
          shall be in substantially the form of Exhibit A hereto
          with appropriate modifications to reflect the fact that
          it evidences solely Domestic Loans, USBR Loans or Euro-
          Dollar Loans, as the case may be.  Each reference in this
          Agreement to the  Note  of such Bank shall be deemed to
          refer to and include either or all of such Notes, as the
          context may require.

     (c)  Upon receipt of each Bank's Note pursuant to
          Section 3.1(b), the Agent shall forward such Note to such
          Bank.  Each Bank shall record in its records the date,
          amount and type of each Direct Loan made or deemed to
          have been made by it and the date and amount of each
          payment of principal made by the Borrower with respect
          thereto, and may, if such Bank so elects in connection
          with any transfer or enforcement of its Note, endorse on
          the schedule forming a part thereof appropriate notations
          to evidence the foregoing information with respect to
          each such Direct Loan then outstanding; provided that the
          failure of any Bank to make any such recordation or
          endorsement shall not affect the obligations of the
          Borrower hereunder or under the Notes.  Each Bank is
          hereby irrevocably authorized by the Borrower so to
          endorse its Note and to attach to and make a part of its
          Note a continuation of any such schedule as and when
          required. 

2.4       Maturity of Loans; Mandatory Prepayments

     (a)  Upon the expiry of the Revolving Credit Period, the Loan
          Limit shall be immediately reduced to the Outstanding
          Principal on the Termination Date.  Thereafter on each
          Principal Repayment Date the Loan Limit shall be reduced
          by the greater of (a) one-eighth (1/8th) of the
          Outstanding Principal at the end of the Revolving Credit
          Period, and (b) 80% of the Net Proceeds from Petroleum
          Operations for the calendar quarter ended immediately
          prior to the Principal Repayment Date (in determining Net
          Proceeds from Petroleum Operations, all currencies other
          than Canadian Dollars shall be converted into Canadian
          Dollars at a rate of exchange equal to the average Spot
          Rate for such calendar quarter).  The Borrower shall
          repay an aggregate amount of the Loans on each Principal
          Repayment Date such that the Outstanding Principal, after
          such payment, does not

                                 - 23 -

          exceed the Loan Limit on the Principal Repayment Date; provided
          that in any event the outstanding Loans shall be repaid in full
          not later than the Maturity Date.  Each such payment shall be
          applied to such Loans as the Borrower may designate in a notice
          in writing to the Agent (or, failing such designation, as
          determined by the Agent), and shall be applied to repay ratably
          the Loans of the Banks.

     (b)  If, due solely to exchange rate fluctuations, the
          Outstanding Principal is, for a period of five
          consecutive Domestic Business Days, in excess of the Loan
          Limit by an amount which is 5% or more of the Loan Limit,
          the Borrower shall, if requested by the Agent (and
          approved by the Required Banks), forthwith repay on
          demand the Loans to the extent of the amount by which the
          Outstanding Principal is in excess of the Loan Limit
          together with any accrued interest thereon to the date of
          such repayment, such that the Outstanding Principal,
          after such payment, is not in excess of the Loan Limit.

     (c)  Subject to Sections 2.4(b) and 2.10(a), if at any time
          the Outstanding Principal exceeds the Loan Limit, the
          Borrower shall immediately repay Loans to the extent of
          such excess together with accrued interest thereon to the
          date of such repayment, such that the Outstanding
          Principal, after such payment, no longer exceeds the Loan
          Limit.

2.5       Interest Rates

     (a)  Each Domestic Loan shall bear interest on the outstanding
          principal amount thereof, for each day from the date such
          Loan is made or deemed to have been made until it becomes
          due, at a rate per annum equal to the sum of 3/4 of 1%
          plus the Prime Rate for such day.  Such interest shall be
          payable monthly in arrears for each Interest Period on
          the last day thereof and on each date a Domestic Loan is
          converted to a Euro-Dollar Loan or USBR Loan, and shall
          be calculated on the principal amount of each Domestic
          Loan and on the basis of the actual number of days each
          such Domestic Loan is outstanding in a year of 365 or 366
          days, as the case may be.  Changes in the Prime Rate
          shall cause an immediate adjustment of the interest rate
          applicable to each Domestic Loan without necessity of any
          notice to the Borrower.

     (b)  Each USBR Loan shall bear interest on the outstanding
          principal amount thereof, for each day from the date such
          Loan is made or deemed to have been made until it becomes
          due, at a rate per annum equal to the sum of 3/4 of 1%
          plus the U.S. Base Rate for such day.  Such interest
          shall be payable monthly in arrears for each Interest
          Period on the last day thereof and on each date a USBR
          Loan is converted to a Euro-Dollar Loan or Domestic Loan,
          and shall be calculated on the principal amount of each
          USBR Loan and on the basis of the actual number of days
          each such USBR Loan is outstanding in a year of 365 days. 
          Changes in the U.S. Base Rate shall cause an immediate
          adjustment of the interest rate applicable to each USBR
          Loan without necessity of any notice to the Borrower.

                                 - 24 -

     (c)  Each Euro-Dollar Loan shall bear interest on the
          outstanding principal amount thereof, for the Interest
          Period applicable thereto, at a rate per annum equal to
          the sum of 1 3/4% (the "Margin") plus the applicable
          Adjusted London Interbank Offered Rate.  Such interest
          shall accrue on the principal amount of each Euro-Dollar
          Loan and shall be payable in arrears for each Interest
          Period on the last day thereof and, if such Interest
          Period is longer than three months, at intervals of three
          months after the first day thereof, and shall be
          calculated on the principal amount of each Euro-Dollar
          Loan and on the basis of the actual number of days each
          such Euro-Dollar Loan is outstanding in a year of 360
          days.

          The "Adjusted London Interbank Offered Rate" applicable
          to any Interest Period means a rate per annum equal to
          the quotient obtained (rounded upward, if necessary, to
          the next higher 1/100 of 1%) by dividing (i) the
          applicable London Interbank Offered Rate by (ii) 1.00
          minus the Euro-Dollar Reserve Percentage.

          The "London Interbank Offered Rate" applicable to any
          Interest Period means the average (rounded upward, if
          necessary, to the next higher 1/16 of 1%) of the
          respective rates per annum at which deposits in U.S.
          Dollars are offered to each of the Reference Banks in the
          London Interbank market at approximately 11:00 A.M.
          (London time) two Euro-Dollar Business Days before the
          first day of such Interest Period in an amount
          approximately equal to the principal amount of the
          Euro-Dollar Loan to be made by the Bank to which such
          Interest Period is to apply and for a period of time
          comparable to such Interest Period.

          "Euro-Dollar Reserve Percentage" means for any day that
          percentage (expressed as a decimal) which is in effect on
          such day, as prescribed by the applicable regulatory body
          for determining the maximum reserve requirement
          (including any supplemental and emergency reserves)
          applicable to the Banks in respect of Eurocurrency
          funding (currently referred to as "Eurocurrency
          liabilities").  The Adjusted London Interbank Offered
          Rate shall be adjusted automatically on and as of the
          effective date of any change in the Euro-Dollar Reserve
          Percentage.

     (d)  The Agent shall determine each interest rate applicable
          to Direct Loans hereunder.  The Agent shall give prompt
          notice to the Borrower and the Banks of each rate of
          interest so determined, and its determination thereof
          shall be conclusive in the absence of manifest error. 

     (e)  If the Agent does not receive a timely quotation, the
          Agent shall determine the relevant interest rate on the
          basis of the quotation or quotations furnished by the
          remaining Reference Bank or Banks or, if none of such
          quotations is available on a timely basis, the provisions
          of Section 8.1 shall apply. 

2.6       Commitment Fee

     (a)  Commitment Fee.  During the Revolving Credit Period, the
          Borrower shall pay to the Agent for the account of
          the Banks ratably in proportion to their

                                 - 25 -

          Commitments a commitment fee at the rate of 1/2 of 1% per annum
          on the daily average amount by which the aggregate amount of the
          Commitments exceeds the Outstanding Principal.  Such commitment
          fee shall accrue from and including the Effective Date to but
          excluding the Termination Date and shall be calculated on the
          basis of a 360 day year.

     (b)  Payments.  Accrued commitment fees under this Section
          shall be payable quarterly on each Quarterly Date, and
          upon the date of termination of the Commitments in their
          entirety and, if later, the date the Loans shall be
          repaid in their entirety.

2.7       Optional Termination or Reduction of Commitments

          During the Revolving Credit Period, the Borrower may,
upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are
outstanding at such time or (ii) ratably reduce from time to time
by an aggregate amount of Cdn. $3,000,000 or any larger multiple
thereof, the aggregate amount of the Commitments in excess of the
Outstanding Principal. 

2.8       Method of Electing Interest Rates

          With respect to Direct Loans:

     (a)  such Loans shall bear interest initially at the type of
          rate specified by the Borrower in the applicable Notice
          of Borrowing.  Thereafter, the Borrower may from time to
          time elect to change or continue the type of interest
          rate borne by each Group of Loans to another type of
          Direct Loan (subject in each case to the provisions of
          Article 8), provided that:

          (i)  if such Loans are Domestic Loans or USBR Loans, the
               Borrower may elect to convert such Loans to
               Euro-Dollar Loans only as of a Euro-Dollar Business
               Day; or

          (ii) if such Loans are Euro-Dollar Loans, the Borrower
               may only elect to convert such Loans to Domestic
               Loans or USBR Loans, or elect to continue such
               Loans as Euro-Dollar Loans for an additional
               Interest Period, effective on the last day of the
               then current Interest Period applicable to such
               Euro-Dollar Loans;

          and provided further that if the conversion of the whole
          or any part of any type of existing Direct Loan into
          another type of Direct Loan involves a change in
          currency, the principal amount of the new Direct Loan
          shall be the Canadian Equivalent or U.S. Equivalent, as
          the case may be, of the existing Direct Loan or relevant
          part thereof.

                                 - 26 -

          Each such election shall be made by delivering a notice
          (a "Notice of Interest Rate Election") to the Agent at
          least three Euro-Dollar Business Days before the
          conversion or continuation selected in such notice is to
          be effective.  A Notice of Interest Rate Election may, if
          it so specifies, apply to only a portion of the aggregate
          principal amount of the relevant Group of Loans; provided
          that (i) such portion is allocated ratably among the
          Direct Loans comprising such Group, (ii) the portion to
          which such Notice applies is Cdn. or U.S. $1,000,000 or
          any larger multiple of Cdn. or U.S. $500,000, as the case
          may be, and (iii) the remaining portion to which it does
          not apply, is at least Cdn. or U.S. $1,000,000, as the
          case may be;

     (b)  each Notice of Interest Rate Election shall specify:

          (i)  the Group of Loans (or portion thereof) to which
               such notice applies;

          (ii) the date on which the conversion or continuation
               selected in such notice is to be effective, which
               shall comply with the applicable clause of
               subsection (a) above;

          (iii)     if the Direct Loans comprising such Group are
                    to be converted, the new type of Direct Loans
                    and, if such new Direct Loans are Euro-Dollar
                    Loans, the duration of the initial Interest
                    Period applicable thereto; and

          (iv) if Euro-Dollar Loans are to be continued as
               Euro-Dollar Loans for an additional Interest
               Period, the duration of such additional Interest
               Period. 

          Each Interest Period specified in a Notice of Interest
          Rate Election shall comply with the provisions of the
          definition of Interest Period;

     (c)  upon receipt of a Notice of Interest Rate Election from
          the Borrower pursuant to Section 2.8(a), the Agent shall
          promptly notify each Bank of the contents thereof and
          such notice shall not thereafter be revocable by the
          Borrower.  If the Borrower fails to deliver a timely
          Notice of Interest Rate Election to the Agent for any
          Group of Euro-Dollar Loans, such Loans shall be converted
          to a USBR Loan on the last day of the then current
          Interest Period applicable thereto.

2.9       Optional Prepayments

     (a)  The Borrower may, upon at least one Domestic Business
          Day's notice to the Agent, prepay Domestic Loans in whole
          at any time, or from time to time in part in amounts
          aggregating Cdn. $1,000,000 or any larger multiple of
          Cdn. $500,000, by paying the principal amount to be
          prepaid together with accrued interest thereon to the
          date of prepayment.  Each such optional prepayment shall
          be applied to prepay ratably the Domestic Loans of the
          Banks. 

                                 - 27 -

     (b)  The Borrower may, upon at least one Domestic Business
          Day s notice to the Agent, prepay USBR Loans in whole at
          any time, or from time to time in part in amounts
          aggregating U.S. $1,000,000 or any larger multiple of
          U.S. $500,000, by paying the principal amount to be
          prepaid together with accrued interest thereon to the
          date of prepayment.  Each such optional prepayment shall
          be applied to prepay ratably the USBR Loans of the Banks.
     
     (c)  The Borrower may, upon at least three Euro-Dollar
          Business Days' notice to the Agent prepay the Euro-Dollar
          Loans comprising a Group of Euro-Dollar Loans on the last
          day of any Interest Period applicable to such Group, in
          whole at any time, or from time to time in part in
          amounts aggregating U.S. $1,000,000 or any larger
          multiple of U.S. $500,000, by paying the principal amount
          to be prepaid together with accrued interest thereon to
          the date of prepayment.  Each such optional prepayment
          shall be applied to prepay ratably the Euro-Dollar Loans
          of the several Banks included in such Group.

     (d)  Upon receipt of a notice of prepayment pursuant to this
          Section, the Agent shall promptly notify each Bank of the
          contents thereof and of such Bank's ratable share of such
          prepayment and such notice shall not thereafter be
          revocable by the Borrower, and the Loan Limit shall be
          reduced by an amount equal to the principal amount of
          each such prepayment (or the Canadian Equivalent thereof
          as of the date of prepayment) made after the Termination
          Date.

2.10      Contingent Prepayments

     (a)  If at any time a Borrowing Base Excession exists, the
          Borrower shall forthwith notify the Agent and the Banks. 
          On or before the date falling 90 days after the date of
          inception of such Borrowing Base Excession, the Borrower
          shall remedy such Borrowing Base Excession through
          (i) prepaying together with any accrued interest thereon
          to the date of prepayment such amount of the Loans as may
          be necessary to reduce the Outstanding Principal to the
          Borrowing Base at the date of prepayment, (ii) increasing
          the Borrowing Base through the addition of incremental
          Engineered Properties in accordance with
          Section 2.1(b)(iii), or (iii) by a combination of
          clauses (i) and (ii) above.

     (b)  If at any time the Borrower receives insurance proceeds
          in a U.S. Equivalent amount greater than U.S. $500,000
          pursuant to insurance effected in accordance with
          Section 5.3(e), the Borrower shall forthwith notify the
          Agent of such receipt.  If within 15 days after receipt
          the Borrower shall not have expended such proceeds or
          committed to expend an amount equivalent thereto for the
          restoration or replacement of the asset in respect of
          which such payment was made, then the Borrower shall at
          the request of the Agent (with the approval of the
          Required Banks) forthwith prepay together with any
          accrued interest thereon to the date of prepayment an
          aggregate amount of the Loans equal to the amount of such
          proceeds, and the Loan Limit shall be reduced by an
          amount equal to the amount

                                 - 28 -

          of such prepayment (or the Canadian Equivalent thereof as
          of the date of prepayment) made after the Termination
          Date.

2.11      General Provisions as to Payments

     (a)  All payments to be made by the Borrower on account of the
          Loans, interest thereon and of commitment fees and other
          amounts payable hereunder, shall be made by the Borrower
          not later than 1:00 P.M. on the date when due, in U.S.
          Dollars if payable in respect of a Euro-Dollar Loan, USBR
          Loan or a Letter of Credit in U.S. Dollars (or fees on
          account thereof or interest thereon), or in Canadian
          Dollars if payable in respect of all other amounts
          hereunder, to the Agent at its address referred to in
          Section 9.1 (or to the Fronting Bank's address referred
          to in Section 9.1 in respect of fees and other amounts
          payable to the Fronting Bank).  The Agent will promptly
          distribute to each Bank its proper share (if any) of each
          such payment received by the Agent for the account of any
          or all of the Banks.  Whenever any payment of principal
          of, or interest on, the Euro-Dollar Loans shall be due on
          a day which is not a Euro-Dollar Business Day, the date
          for payment thereof shall be extended to the next
          succeeding Euro-Dollar Business Day unless such
          Euro-Dollar Business Day falls in another calendar month,
          in which case the date for payment thereof shall be the
          next preceding Euro-Dollar Business Day.  Whenever any
          payment of any other amount shall be due on a day which
          is not a Domestic Business Day, the date for payment
          thereof shall be extended to the next succeeding Domestic
          Business Day.  If the date for any payment of principal
          is extended by operation of law or otherwise, interest
          thereon shall be payable for such extended time. 

     (b)  Unless the Agent shall have received notice from the
          Borrower prior to the date on which any payment is due to
          the Banks hereunder that the Borrower will not make such
          payment in full, the Agent may assume that the Borrower
          has made such payment in full to the Agent on such date
          and the Agent may, in reliance upon such assumption,
          cause to be distributed to each Bank on such due date an
          amount equal to the amount then due such Bank.  If and to
          the extent that the Borrower shall not have so made such
          payment, each Bank shall repay to the Agent forthwith on
          demand such amount distributed to such Bank together with
          interest thereon, for each day from the date such amount
          is distributed to such Bank until the date such Bank
          repays such amount to the Agent, at a rate determined by
          such Bank in accordance with its usual banking practice
          in respect of deposits of amounts comparable to the
          amount of such payment at the time such payment is to be
          made.

     (c)  To the maximum extent permitted by law, the Borrower
          shall make all payments required hereunder, whether by
          way of principal, interest or otherwise, without regard
          to any defense, counterclaim or right of set-off
          available to the Borrower.

     (d)  In the event that the Agent receives any payment from the
          Borrower pursuant hereto (including pursuant to Section
          6.1) which or any part of which cannot be

                                 - 29 -

          forthwith applied to Direct Loans outstanding to the
          Banks, the Agent with the consent of the Required Banks
          shall be entitled to deposit and retain such payment or
          any part thereof in a Cash Collateral Account bearing
          interest for the Borrower's account (at the rates of the
          Agent as may be applicable in respect of similar
          deposits).  Such payment may be maintained in the Cash
          Collateral Account by the Agent for so long as such
          payment may be required to satisfy any contingent or
          unmatured obligations or liabilities of the Borrower
          under the Financing Documents or any of them, and such
          funds may be applied to payment of Outstandings at such
          times and in such manner as the Agent may determine.

2.12      Funding Losses

          If the Borrower makes any payment of principal with
respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a USBR Loan (pursuant to Article 6 or 8 or otherwise)
on any day other than the last day of the Interest Period
applicable thereto, or if the Borrower fails to borrow or prepay
any Euro-Dollar Loans after notice has been given to any Bank in
accordance with Section 2.2(b) or 2.9(d), the Borrower shall
reimburse each Bank within 15 days after demand for any resulting
loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of Margin for the period
after any such payment or failure to borrow, provided that such
Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.

2.13      General Provisions as to Interest; Overdue Interest; and
Fees

     (a)  Whenever interest is to be calculated on the basis of a
          year of 360 or 365 days, the yearly rate of interest to
          which the rate determined pursuant to such calculation is
          equivalent is the rate so determined multiplied by the
          actual number of days in the twelve month period
          commencing on the first day of the period for which such
          calculation is made and divided by 360 or 365, as
          applicable.

     (b)  Notwithstanding any other provision hereof, in the event
          that any amount due hereunder (including, without
          limitation, any interest payment) is not paid when due
          (whether by acceleration or otherwise), the Borrower
          shall and hereby agrees to pay interest on such unpaid
          amount (including, without limitation, interest on
          interest), if and to the fullest extent permitted by law,
          from the date that such amount is due until the date that
          such amount is paid in full (but excluding the date of
          such payment if the payment is made before 1:00 P.M. at
          the place of payment on the date of such payment), and
          such interest shall accrue daily, be calculated and
          compounded on the last Domestic Business Day of each
          calendar month and be payable in the currency of the
          relevant Loan or other amount on demand, after as well as
          before maturity, default and judgment, at a rate per
          annum that is equal to:

                                 - 30 -

          (i)  if such amount relates to a Domestic Loan, the
               interest rate applicable to Domestic Loans from
               time to time;

          (ii) if such amount relates to a USBR Loan, the interest
               applicable to USBR Loans from time to time;

          (iii)     if such amount relates to a Euro-Dollar Loan
                    and the relevant time is,

               (1)  during the Interest Period of the Euro-Dollar
                    Loan, the interest rate applicable to such
                    Euro-Dollar Loan during such Interest Period;
                    and

               (2)  after the Interest Period of the Euro-Dollar
                    Loan, the interest rate applicable to a USBR
                    Loan; and

          (iv) in all other cases, (A) for amounts in Canadian
               Dollars the interest rate applicable to Domestic
               Loans, and (B) for amounts in U.S. Dollars the 
               interest rate applicable to USBR Loans.

     (c)  All interest, fees and other amounts payable by the
          Borrower hereunder shall accrue daily, be computed as
          described herein, and be payable both before and after
          demand, maturity, default and judgement.

     (d)  In no event shall any interest, fees or other amounts
          payable hereunder exceed the maximum rate permitted by
          law.  In the event any such interest, fee or other amount
          exceeds such maximum rate, such interest, fee or other
          amount shall be reduced to the maximum rate recoverable
          under law assuming the parties had agreed to such amount
          by contract.

2.14      Letters of Credit

          With  respect to Letters of Credit:

     (a)  the Borrower may give the Agent notice requesting that a
          Letter of Credit be issued by the Fronting Bank as an LC
          Borrowing hereunder, such notice to be no later than
          12:00 Noon at least three Domestic Business Days before
          the date of issuance of the Letter of Credit, specifying:

          (i)  the date the Letter of Credit is to be issued,
               which shall be a Domestic Business Day,

          (ii) the face amount and currency of the Letter of
               Credit,

          (iii) the expiry date of the Letter of Credit, which
                shall be on or before the Maturity Date, and

                                 - 31 -

          (iv) that the Borrower is contemporaneously delivering
               to the Fronting Bank the completed application,
               indemnity and other documents, together with the
               required fronting fee, referred to in
               Section 2.14(d) of this Agreement;

     (b)  in respect of each Letter of Credit issued by the
          Fronting Bank hereunder, the Borrower shall pay to the
          Fronting Bank a non-refundable fronting fee in the
          currency in which the Letter of Credit is to be issued at
          a rate per annum equal to 1/8 of 1%.  Such fee shall be
          payable in advance of the issue date for such Letter of
          Credit calculated on the basis of the stated maximum
          amount of such Letter of Credit for the period from and
          including its date of issuance to and including the
          expiry date thereof, on the basis of the actual number of
          days in such period on the basis of a year of 365 days;
          provided, however, if such fee would be less then Cdn.
          $500 for a Letter of Credit in Canadian Dollars, or
          U.S. $500 for a Letter of Credit in U.S. Dollars, then
          the fronting fee payable  by the Borrower pursuant to
          this section shall be Cdn. $500 or U.S. $500, as
          applicable.  Such fee shall be in addition to the
          issuance fee receivable by the Fronting Bank in its
          capacity as a Bank under Section 2.14(c);

     (c)  in respect of each Letter of Credit the Borrower shall
          also pay to the Agent for the account of the Banks a non-
          refundable issuance fee in the currency in which the
          Letter of Credit is to be issued, payable in full upon
          the issuance of such Letter of Credit, at a rate per
          annum  equal to 1 3/4% calculated on the basis of the
          stated maximum amount of such Letter of Credit for the
          period from and including its date of issuance to and
          including the expiry date thereof, on the basis of the
          actual number of days in such period on the basis of a
          year of 365 days;

     (d)  the Fronting Bank shall have no obligation to issue a
          Letter of Credit until the Borrower has executed and
          delivered to the Fronting Bank such ancillary documents,
          including applications and indemnities, as the Fronting
          Bank normally stipulates for like transactions, together
          with the fronting fee contemplated by Section 2.14(b). 
          The Fronting Bank shall notify the Agent of the issuance
          of the Letter of Credit forthwith upon such issuance;

     (e)  in the event that the Fronting Bank makes a payment to
          any person pursuant to a Letter of Credit, then unless
          the Borrower fully reimburses the Fronting Bank for such
          payment on or before the date it is made, such payment
          shall be deemed as and from the date of such payment to
          be (i) a Domestic Loan hereunder to the Borrower by the
          Banks rateably in proportion to their respective shares
          of the Letter of Credit on the drawing thereof in the
          amount of such payment if such payment was made in
          Canadian Dollars, or (ii) a USBR Loan hereunder to the
          Borrower by the Banks rateably in proportion to their
          respective shares of the Letter of Credit on the drawing
          thereof if such payment was made in U.S. Dollars, with
          the proceeds of such Loan being applied against the
          Borrower's obligations to reimburse the Fronting Bank for
          the payment made by the Fronting Bank pursuant to the
          Letter of Credit, and Section 2.14(h) shall apply.  The
          Agent shall forthwith notify the other Banks of such
          deemed Loan,

                                 - 32 -

          and the provisions hereof relating to such Loans (including
          interest to be calculated thereon) shall apply thereto;

     (f)  at or before 12:00 Noon at least three Domestic Business
          Days prior to the expiration of a Letter of Credit, the
          Borrower may deliver a notice to the Agent selecting a
          new expiry date for the Letter of Credit or part thereof
          being extended.  Such extension of a Letter of Credit may
          only be effected by the Fronting Bank extending the
          expiry date of an existing Letter of Credit, either by
          the issuance of a new Letter of Credit containing the new
          expiry date or by an amendment to the existing one, and
          with or without a reduction in the amount payable
          thereunder; provided that the issuance of a Letter of
          Credit to a new party, an increase in the amount payable
          under a Letter of Credit or any other change in its terms
          may only be effected by way of a Borrowing by the
          Borrower by delivering a Notice of Borrowing pursuant to
          Section 2.14(a).  Letter of Credit fees shall be payable
          in respect of extended Letters of Credit pursuant to
          Sections 2.14(b) and 2.14(c), computed in respect of the
          period of the extension; provided that the minimum fee
          set forth in Section 2.14(b) shall be Cdn. $100 or U.S.
          $100, as applicable;

     (g)  Letters of Credit shall be issued by the Fronting Bank
          for the full face amount requested in the applicable
          notice and shall be made available to the Borrower at the
          Applicable Lending Office of the Fronting Bank (or as the
          Borrower may direct) at or before 2:00 P.M. on the issue
          date thereof;

     (h)  (i)  if the Fronting Bank makes payment under any Letter
               of Credit and the Borrower does not fully reimburse
               the Fronting Bank on or before the date of payment,
               each Bank shall, on request by the Fronting Bank,
               immediately pay to the Fronting Bank an amount
               equal to such Bank's rateable share of the amount
               paid by the Fronting Bank;

          (ii) each Bank shall immediately on demand indemnify the
               Fronting Bank to the extent of such Bank's rateable
               share of any amount paid or liability incurred by
               the Fronting Bank under each Letter of Credit
               issued by it to the extent that the Borrower does
               not fully reimburse the Fronting Bank therefor; and

          (iii)     for certainty, the obligations in this
                    Section 2.14(h) shall continue as obligations
                    of the persons who were Banks at the time each
                    such Letter of Credit was issued
                    notwithstanding that such Bank may assign its
                    rights and obligations hereunder, unless the
                    Fronting Bank specifically releases such Bank
                    from such obligations in writing;

     (i)  the Borrower hereby indemnifies the Fronting Bank, the
          Agent and each of the Banks and holds them harmless from
          and against all losses, costs, expenses, liabilities,
          claims, causes of action or damages of any and every kind
          incurred by them or any of them in respect of or as a
          consequence of the issuance of a Letter

                                 - 33 -

          of Credit hereunder or any payments made by the Fronting Bank
          pursuant thereto, notwithstanding that such Bank may assign its
          rights and obligations hereunder.


                                 ARTICLE 3
                          CONDITIONS AND SECURITY

3.1       Effectiveness

          This Amended Agreement shall become effective as of the
Effective Date upon the satisfaction of the following conditions:

     (a)  receipt by the Agent of counterparts hereof signed by
          each of the parties hereto (or, in the case of any party
          as to which an executed counterpart shall not have been
          received, receipt by the Agent in form satisfactory to it
          of telegraphic, telex or other written confirmation from
          such party of execution of a counterpart hereof by such
          party);

     (b)  receipt by the Agent for the account of each Bank of a
          duly executed Note dated on or before the Effective Date
          complying with the provisions of Section 2.3;

     (c)  receipt by the Agent of an opinion of U.S. counsel for
          the Borrower, substantially in the form of Exhibit B
          hereto and covering such additional matters relating to
          the transactions contemplated hereby as the Required
          Banks may reasonably request;

     (d)  receipt by the Agent of an opinion of Burnet, Duckworth
          & Palmer, Alberta counsel for the Borrower, substantially
          in the form of Exhibit C hereto and covering such
          additional matters relating to the transactions
          contemplated hereby as the Required Banks may reasonably
          request;

     (e)  receipt by the Agent of an opinion of Macleod Dixon,
          counsel for the Agent, substantially in the form of
          Exhibit D hereto and covering such additional matters
          relating to the transactions contemplated hereby as the
          Required Banks may reasonably request; and

     (f)  receipt by the Agent of all documents or opinions it may
          reasonably request relating to the existence of the
          Borrower, the corporate authority for and the validity of
          the Financing Documents, the Borrower's title to the
          Mortgaged Properties, and any other matters relevant
          hereto, including any amendments to the Existing Security
          Documents, all in form and substance satisfactory to the
          Agent.

          Upon this Amended Agreement becoming effective, the
"Note" delivered to each Bank under the Original Credit Agreement
shall be replaced and the Notes delivered under this Amended
Agreement shall be given in substitution therefor; each Bank shall
deliver to the Agent

                                 - 34 -

the "Note" delivered to it under the Original Credit Agreement, which the
Agent shall mark "Renewed" and shall hold as additional evidence of the
indebtedness of the Borrower hereunder.

3.2       Amendment and Restatement

          On and after the Effective Date:

     (a)  the Original Credit Agreement shall be deemed to be
          amended and restated in the form of this Amended
          Agreement;

     (b)  the parties hereto shall have no further rights or
          obligations to each other under the Original Credit
          Agreement as the same existed immediately prior to the
          said amendment and restatement except to the extent the
          same are continued hereunder;

     (c)  all Loans and other Outstandings (as those terms are
          defined in the Original Credit Agreement) under the
          Original Credit Agreement immediately prior to the
          Effective Date shall continue to be outstanding under
          this Agreement and shall be deemed to be Loans and other
          Outstandings owing by the Borrower to the Banks under
          this Agreement;

     (d)  the Existing Security Documents and the Subsidiary
          Security Documents are and shall continue to be
          outstanding and are and shall continue to constitute
          security for all Outstandings under this Agreement, and
          all references contained therein to the Original Credit
          Agreement shall be deemed to be references to this
          Agreement;

     (e)  the Consent and Waiver shall continue to exist as a
          consent and waiver by the Banks with respect to the
          transactions described therein in the manner and scope
          set forth therein, and the Borrower is and continues to
          be bound by all its covenants and agreements contained in
          the Consent and Waiver; and

     (f)  that certain letter of credit no. PBCTGTY2732 issued by
          Paribas at the request of the Borrower prior to the date
          hereof, in favour of TransCanada Pipe Lines Limited, in
          a face amount of Cdn. $118,484 and expiring October 31,
          1996, shall be deemed to be an LC Borrowing hereunder
          issued by Paribas as the Fronting Bank in the face amount
          of such letter of credit;  Paribas, the Fronting Bank and
          the Banks shall reach a mutually acceptable sharing of
          the issuance fee paid by the Borrower in respect of such
          letter of credit, and the Borrower shall be deemed to
          have complied with its obligations under sections 2.14(b)
          and 2.14(c).

          Notwithstanding the foregoing or any other term hereof,
all of the covenants, representations and warranties on the part of
the Borrower under the Original Credit Agreement and all of the
Banks' claims and causes of action arising in connection therewith,
in respect of all matters, events, circumstances and obligations
arising or existing prior to the Effective Date

                                 - 35 -

shall continue, survive and shall not be merged in the execution of this
document or any other Financing Documents or any Borrowings hereunder.

3.3       Borrowings

          The obligation of any Bank to make a Loan on the occasion
of any Borrowing is subject to the satisfaction of the following
conditions:

     (a)  such Borrowing shall occur during the Revolving Credit
          Period and the Commitments shall not have terminated;

     (b)  receipt by the Agent of a Notice of Borrowing as required
          by Section 2.2(a) or 2.14(a);

     (c)  the fact that, immediately after such Borrowing, the
          Outstanding Principal will not exceed the Loan Limit, and
          in the case of an LC Borrowing, immediately after such
          Borrowing, the Canadian Equivalent of the aggregate face
          amount of all outstanding Letters of Credit will not
          exceed Cdn. $1,000,000;

     (d)  the fact that with respect to each Bank, immediately
          after such Borrowing, the Outstanding Principal owing to
          such Bank will not exceed its Commitment;

     (e)  the fact that, immediately before and after such
          Borrowing, no Default shall have occurred and be
          continuing; and

     (f)  the fact that the representations and warranties of the
          Borrower contained in the Financing Documents shall be
          true on and as of the date of such Borrowing.

          Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such
Borrowing as to the facts specified in clauses (c), (d), (e) and
(f) of this Section.

3.4       General Security Provisions

     (a)  Each of the Security Documents has been or shall be
          registered or perfected in all such jurisdictions as may
          be required, in the reasonable opinion of the Agent or
          its counsel, to preserve and protect the priority of the
          Security Documents.

     (b)  Forthwith upon request of the Agent or any Bank, the
          Borrower shall promptly provide all such documents and
          information and perform all such acts as the Agent or any
          Bank or its counsel may reasonably request in order to
          establish or maintain the validity, perfection or
          priority of the Security Documents including the creation
          of further fixed charge security over any Mortgaged
          Properties hereafter acquired or not specifically
          described in the Security Documents or misdescribed in
          the Security Documents.

                                 - 36 -

     (c)  Each of the Security Documents shall for all purposes be
          treated as a separate and continuing collateral security
          for all Outstandings hereunder and shall be deemed to
          have been given in addition to and not in place of any
          other Security Document or any other Liens now or
          hereafter acquired by the Agent or any Bank.

     (d)  Subject to Article 7, the Agent may grant extensions of
          time or other indulgences, acquire and release the
          Security Documents, accept compromises, grant releases
          and discharges and otherwise deal with the Borrower and
          other Persons and with the Security Documents as the
          Agent may see fit, without prejudice to any other rights
          or recourse the Agent may have under this Agreement or
          any of the Security Documents against the Borrower.

     (e)  The Security Documents shall be effective, and the
          undertakings as to the Security Documents herein or in
          any document hereunder shall be continuing, whether the
          monies hereby or thereby secured or any part thereof
          shall be advanced before or after or at the same time as
          the creation of any such Security Documents or before or
          after or upon the date of execution of any amendments to
          or restatements of this Agreement, and shall not be
          affected by any payments or by any indebtedness
          fluctuating from time to time.


                                 ARTICLE 4
                      REPRESENTATIONS AND WARRANTIES

          The Borrower hereby represents and warrants that:

4.1       Corporate Existence and Power

          The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly registered to carry on business in each
jurisdiction in which it owns property or carries on business, and
the Borrower has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry
on its business as now conducted. 

4.2       Corporate and Governmental Authorization; No
Contravention

          The execution, delivery and performance by the Borrower and its
Subsidiaries of this Agreement, the Security Documents and the Notes to
which each of them is a party are within the Borrower's and its
Subsidiaries' powers (corporate or otherwise), have been duly authorized by
all necessary action (corporate or otherwise), require no action by or in
respect of, or filing with, any governmental body, agency or official
(except such filings as may be necessary to perfect the Liens of the
Security Documents) and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the certificate of
incorporation or by-laws or other constating documents of the Borrower or
any Subsidiary or of any agreement, judgment, injunction, order, decree or
other instrument binding upon it or any

                                 - 37 -

Subsidiary, or result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Subsidiaries (other than
the Liens created by the Security Documents). 

4.3       Binding Effect

          This Agreement, the Security Documents and the Notes
constitute or, when executed and delivered in accordance with this
Agreement will constitute, valid and binding obligations of each of
the Borrower and its Subsidiaries, as applicable, in each case
enforceable against it in accordance with their respective terms
except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally, (ii) as rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability, (iii) that certain of the remedial
provisions of the Security Documents may be limited by applicable
law, although such limitations do not in the opinion of the
Borrower make the remedies provided for therein (taken as a whole)
inadequate for the practical realization of the benefits intended
to be afforded thereby.

4.4       Financial Information

     (a)  The consolidated financial statements of the Borrower and
          its Consolidated Subsidiaries as of December 31, 1994
          which shall include the related consolidated statements
          of income, shareholders' equity and cash flows for the
          fiscal year then ended, reported on by Arthur Andersen &
          Co. and set forth in the Borrower's 1994 Form 10-K, a
          copy of which has been delivered to each of the Banks,
          fairly present, in conformity with generally accepted
          accounting principles, the consolidated financial
          position of the Borrower and its Consolidated
          Subsidiaries as of such date and their consolidated
          results of operations and cash flows for such fiscal
          year. 

     (b)  Since December 31, 1994 there has been no material
          adverse change in the business, financial position,
          results of operations or prospects of the Borrower and
          its Consolidated Subsidiaries, considered as a whole. 

4.5       Litigation

          There is no action, suit or proceeding pending against,
or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, consolidated
financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries or which in any manner
draws into question the validity of any of the Financing Documents. 

4.6       Compliance with ERISA

          Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the
U.S. Internal Revenue Code with respect to each Plan and

                                 - 38 -

is in compliance in all material respects with the presently applicable
provisions of ERISA and the U.S. Internal Revenue Code with respect to each
Plan.  No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the U.S. Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or payment to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has resulted
or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the U.S. Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to
the PBGC for premiums under Section 4007 of ERISA.

4.7       Environmental Matters

          In the ordinary course of its business, the Borrower
conducts an ongoing review of the effect of Environmental Laws on
the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or
closure of properties presently or previously owned, any capital or
operating expenditures required to achieve or maintain compliance
with environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat, any costs or
liabilities in connection with off-site disposal of wastes or
Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and
expenses).   On the basis of this review, the Borrower has
reasonably concluded that such associated liabilities and costs,
including the costs of compliance with Environmental Laws, are
unlikely to have a material adverse effect on the business,
financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole. 

4.8       Taxes

          The Borrower and its Subsidiaries have filed all Canadian
federal and provincial, U.S. federal and state and all other income
tax returns and all other material tax returns which are required
to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower or
any Subsidiary.  The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate. 

4.9       Subsidiaries

          Each of the Borrower's Subsidiaries is a corporation or
other entity duly incorporated or formed, as the case may be,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, and has all corporate
or other powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. 

                                 - 39 -

4.10      Regulation

          The Borrower is not subject to regulation under the U.S.
Public Utility Holding Company Act of 1935, as amended, the U.S.
Investment Company Act of 1940, as amended, or any other federal,
state or provincial law or regulation that limits the incurrence by
the Borrower or any Subsidiary of Debt, including, without
limitation, laws relating to common or contract carriers or the
sale of electricity, gas, steam or other public utility services.

4.11      Full Disclosure

          All information heretofore furnished by the Borrower to
the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agent or any
Bank will be, true and accurate in all material respects on the
date as of which such information is stated or certified.  The
Borrower has disclosed to the Banks in writing any and all facts
which materially and adversely affect or may affect (to the extent
the Borrower can now reasonably foresee), the business, operations
or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower to
perform its obligations under any of the Financing Documents.

4.12      Mortgaged Properties

          The Borrower has good and marketable title to all
Mortgaged Properties subject to no prior or equal Liens except
Liens permitted under Section 5.10. 

4.13      Liens of the Security Documents

          The Security Documents create valid Liens against the
Mortgaged Properties and other property and assets purported to be
subjected thereto securing the payment of the obligations of the
Borrower under the Financing Documents and all other obligations
purported to be secured thereby subject to no prior or equal Liens
except Liens permitted under Section 5.10.

4.14      Reserve Data and Projections

          The statements and conclusions as to oil and gas reserves
and forecast results included in the Initial Engineer's Reports
are, and all such information included in any future Engineer's
Report will be, based upon the best information available to the
Borrower at the time such statements were or are made and take or
will take into consideration all information which, in the
reasonable judgment of the Borrower, was or is believed to be
material at the time (determined in accordance with standards
customarily applicable to professionals in the oil and gas
industry), it being understood that such statements and conclusions
are necessarily based upon professional opinions, estimates and
projections, and the Borrower does not warrant that such opinions,
estimates and projections will ultimately prove to have been
accurate.

                                 - 40 -

4.15      Production Penalties

          Except as considered in the Engineer's Report, none of
the wells on the Engineered Properties are subject to a production
penalty of any nature, and it has received no notice of, and is not
otherwise aware of, any impending change in statutorily imposed or
sanctioned production allowables currently applicable to any of the
wells, and (except as advised by the Borrower with respect to the
Engineer's Report prior to the Banks' determination of the
Borrowing Base with reference thereto and other than pursuant to
the Prepaid Gas Contract) neither it nor any of its Subsidiaries
nor any party acting on their or its behalf is obligated to deliver
petroleum or natural gas allocable to the Engineered Properties to
any party having a value in excess of U.S. $500,000 in aggregate
without in due course thereafter receiving and being entitled to
retain full payment at current market prices therefore.

4.16      Conversion

          Except as considered in the Engineer's Report, none of
the interests of the Borrower in the Engineered Properties are
subject to reduction by virtue of the conversion or other
alteration of any third party interest relating thereto.

4.17      Operations

          The Mortgaged Property has been and will at all times be
operated in accordance with good oil and gas industry practice and
in accordance with all applicable laws and regulations, and in
accordance with the terms and conditions of all material agreements
relating thereto; all wells on the lands which should, in
accordance with good oil and gas industry practice or applicable
laws, have been abandoned, have been properly plugged and abandoned
in accordance with good industry practices and all applicable laws.


                                 ARTICLE 5
                                 COVENANTS

          The Borrower hereby covenants and agrees:

5.1       Information

          The Borrower will deliver to each of the Banks:

     (a)  as soon as available and in any event within 90 days
          after the end of each fiscal year, consolidated financial
          statements of the Borrower and its Consolidated
          Subsidiaries as of the end of such fiscal year prepared
          in accordance with generally accepted accounting
          principles which shall include the related consolidated
          statements of income, shareholders' equity and cash flows
          for such fiscal year, setting forth in each case in
          comparative form the figures for the previous fiscal
          year, such consolidated financial statements of the
          Borrower shall be audited by Arthur Andersen & Co. or
          other independent public accountants of

                                 - 41 -

          nationally recognized standing and such consolidated financial
          statements of the Borrower shall be certified as to fairness of
          presentation, generally accepted accounting principles and
          consistency by the chief financial officer or the chief
          accounting officer of the Borrower;

     (b)  as soon as available and in any event within 45 days
          after the end of each of the first three quarters of each
          fiscal year, consolidated financial statements of the
          Borrower and its Consolidated Subsidiaries as of the end
          of such quarter prepared in accordance with generally
          accepted accounting principles which shall include the
          related consolidated statements of income and cash flows
          for such quarter and for the portion of the fiscal year
          ended at the end of such quarter, setting forth in each
          case in comparative form the figures for the
          corresponding quarter and the corresponding portion of
          the previous fiscal year, all certified (subject to
          normal year-end adjustments) as to fairness of
          presentation, generally accepted accounting principles
          and consistency by the chief financial officer or the
          chief accounting officer of the Borrower;

     (c)  simultaneously with the delivery of each set of financial
          statements referred to in Sections 5.1(a) and (b) above,
          a certificate of the chief financial officer or the chief
          accounting officer of the Borrower (i) setting forth in
          reasonable detail the calculations required to establish
          whether the Borrower was in compliance with the
          requirements of Sections 5.13, 5.17, 5.18 and 5.19 on the
          date of such financial statements, and (ii) stating
          whether any Default exists on the date of such
          certificate and, if any Default then exists, setting
          forth the details thereof and the action which it is
          taking or proposes to take with respect thereto;

     (d)  simultaneously with the delivery of the Borrower's
          financial statements referred to in Section 5.1(a) above,
          a statement of the firm of independent public accountants
          which reported on such statements (i) as to whether
          anything has come to their attention to cause them to
          believe that any Default existed on the date of such
          statements and (ii) confirming the calculations set forth
          in the officer's certificate delivered simultaneously
          therewith pursuant to clause (c) above, except with
          respect to Section 5.17;

     (e)  within five days after any officer of the Borrower
          obtains knowledge of any Default, if such Default is then
          continuing, a certificate of the chief financial officer
          or the chief accounting officer of the Borrower setting
          forth the details thereof and the action which it is
          taking or proposes to take with respect thereto;

     (f)  promptly upon the mailing thereof to the shareholders of
          the Borrower generally, copies of all financial
          statements, reports and proxy statements so mailed;

     (g)  promptly upon filing or receipt thereof, each regular or
          periodic report and any registration statement,
          prospectus or written communication (other than
          transmittal letters) in  respect  thereof filed or
          received  by the Borrower with or from any

                                 - 42 -

          securities exchange or the Securities and Exchange Commission
          (United States of America) or any successor agency;

     (h)  if and when any member of the ERISA Group (i) gives or is
          required to give notice to the PBGC of any "reportable
          event" (as defined in Section 4043 of ERISA) with respect
          to any Plan which might constitute grounds for a
          termination of such Plan under Title IV of ERISA, or
          knows that the plan administrator of any Plan has given
          or is required to give notice of any such reportable
          event, a copy of the notice of such reportable event
          given or required to be given to the PBGC; (ii) receives
          notice of complete or partial withdrawal liability under
          Title IV of ERISA or notice that any Multiemployer Plan
          is in reorganization, is insolvent or has been
          terminated, a copy of such notice; (iii) receives notice
          from the PBGC under Title IV of ERISA of an intent to
          terminate, impose liability (other than for premiums
          under Section 4007 of ERISA) in respect of, or appoint a
          trustee to administer any Plan, a copy of such notice;
          (iv) applies for a waiver of the minimum funding standard
          under Section 412 of the U.S. Internal Revenue Code, a
          copy of such application; (v) gives notice of intent to
          terminate any Plan under Section 4041(c) of ERISA, a copy
          of such notice and other information filed with the PBGC;
          (vi) gives notice of withdrawal from any Plan pursuant to
          Section 4063 of ERISA, a copy of such notice; or
          (vii) fails to make any payment or contribution to any
          Plan or Multiemployer Plan or in respect of any Benefit
          Arrangement or makes any amendment to any Plan or Benefit
          Arrangement which has resulted or could result in the
          imposition of a Lien or the posting of a bond or other
          security, a certificate of the chief financial officer or
          the chief accounting officer of the Borrower setting
          forth details as to such occurrence and action, if any,
          which Borrower or applicable member of the ERISA Group is
          required or proposes to take;

     (i)  simultaneously with each delivery of an Engineer's Report
          pursuant to Section 5.14(a), but no more than once a
          year, a forecast of general and administrative expenses
          and FHI EBITDA and such other information as the Agent
          may require in order to confirm the Borrower's
          calculation of Projected Cash Flow Available for Fixed
          Charges pursuant to Section 5.17(c); and

     (j)  from time to time such additional information regarding
          the financial position or business of the Borrower and
          its Subsidiaries as the Agent, at the request of any
          Bank, may reasonably request. 

5.2       Payment of Obligations

          The Borrower will pay and discharge, and will cause each
Subsidiary to pay and discharge, at or before maturity, all their
respective material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested
in good faith by appropriate proceedings, and will maintain, and
will cause each Subsidiary to maintain, in accordance with
generally accepted accounting principles, appropriate reserves for
the accrual of any of the same. 

                                 - 43 -

5.3       Maintenance and Development of Borrower Engineered
          Properties and Other Property; Insurance

     (a)  The Borrower will, and will cause each Subsidiary to,
          maintain the Engineered Properties operated by such
          Person and related facilities and equipment in good
          repair and condition, and from time to time make all
          necessary and proper repairs, replacements and renewals;
          and operate the same in accordance with good oil field
          practice; and take all necessary and advisable action to
          maintain, protect and defend all the rights, titles and
          interests of the Borrower or such Subsidiary to the
          Engineered Properties. 

     (b)  The Borrower will, and will cause each Subsidiary to,
          take all actions available to such Person with respect to
          any of the Engineered Properties which are operated by
          operators other than the Borrower or any Subsidiary,
          under applicable operating agreements or arrangements or
          otherwise, which are reasonably necessary to cause such
          operators to operate prudently in accordance with good
          oil field practice and to perform any such undertakings
          required to be performed by such operators; and perform
          its obligations (including, without limitation, payment
          of its share of all operating expenses) with respect
          thereto. 

     (c)  The Borrower will keep, and will cause each Subsidiary to
          keep, all property otherwise not subject to
          Section 5.3(a) useful and necessary in its business in
          good working order and condition, ordinary wear and tear
          excepted. 

     (d)  The Borrower will, and will cause each of its
          Subsidiaries to, use all necessary and reasonable efforts
          to cause each Engineered Property to be developed in such
          manner, and will devote such funds to such purpose, as
          would a reasonably prudent Person similarly situated and
          (subject to the foregoing) on a basis consistent with the
          most recent Engineer's Report covering such Engineered
          Property.

     (e)  The Borrower will, and will cause each of its
          Subsidiaries to, maintain (either in the name of the
          Borrower or in such Subsidiary's own name) with
          financially sound and responsible insurance companies,
          insurance on all their respective properties in at least
          such amounts and against at least such risks (and with
          such risk retention) as are usually insured against by
          companies of established repute engaged in the same or a
          similar business in the jurisdiction in which the
          Borrower or any Subsidiary operates, including property
          insurance, public liability insurance for bodily injury
          and property damage, well-control coverage, automobile
          liability insurance, worker's compensation coverage as
          required by law and insurance against loss or damage by
          employee dishonesty, theft, fire, lightning, hail,
          windstorm, explosion, hazards, casualties and other
          contingencies; and will furnish to the Banks, upon
          request from the Agent, information presented in
          reasonable detail as to the insurance so carried. 

                                 - 44 -

5.4       Conduct of Business and Maintenance of Existence

          The Borrower will continue, and will cause each
Subsidiary to continue, to engage in business of the same general
type as now conducted by the Borrower and its Subsidiaries, and
will preserve, renew and keep in full force and effect, and will
cause each Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the
normal conduct of business; provided that nothing in this
Section 5.4 shall prohibit (i) the merger of a Subsidiary with or
into another Person (other than the Borrower) if the corporation
surviving such consolidation or merger is a Subsidiary and if, in
each case, after giving effect thereto, no Default shall have
occurred and be continuing or (ii) the termination of the corporate
existence of any Subsidiary if the Borrower in good faith
determines that such termination is in the best interest of the
Borrower and is not materially disadvantageous to the Banks.

5.5       Compliance with Laws

          The Borrower will comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by
appropriate proceedings. 

5.6       Inspection of Property, Books and Records

          The Borrower will keep, and will cause each Subsidiary to
keep, proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in
relation to its business and activities; and will permit, and will
cause each Subsidiary to permit, representatives of any Bank at
such Bank's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired. 

5.7       Debt

          Neither the Borrower nor any Subsidiary will, after the
date hereof, create, incur or assume any Debt other than (i) under
the Financing Documents, (ii) in the case of FHI and FHI
Subsidiaries, Debt not to exceed U.S. $50,000,000 under the FHI
Credit Agreement, (iii) in the case of the Borrower, loans or
advances by any Person (not being a Subsidiary) to it for working
capital purposes in an aggregate amount (or the U.S. Equivalent
thereof) not exceeding U.S. $2,500,000 at any one time, (iv) loans
or advances by the Borrower to a Subsidiary or by a Subsidiary to
the Borrower, (v) in the case of the Borrower, not to exceed
U.S. $100,000,000 under the Senior Notes, (vi) in the case of the
Borrower, not to exceed U.S. $46,000,000 under the Convertible
Debentures, and (vii) in the case of the Borrower, not to exceed
U.S. $7,500,000 under the Subordinated Debentures.

                                 - 45 -

5.8       Restricted Payments

          Neither the Borrower nor any Subsidiary will declare or
make any Restricted Payment other than, in the case of the
Borrower, any interest or sinking fund payment on or in respect of
the Convertible Debentures. 

5.9       Investments

          Neither the Borrower nor any Consolidated Subsidiary will
make or acquire any Investment in any Person other than:

     (a)  present and future Investments in existing Subsidiaries
          on the date hereof; or

     (b)  Temporary Cash Investments.

5.10      Negative Pledge

          Neither the Borrower nor any Subsidiary will create,
assume or suffer to exist any Lien on the Mortgaged Properties or
any other property and assets now owned or hereafter acquired by
it, except:

     (a)  any Lien arising pursuant to the Security Documents;

     (b)  any Lien on any asset of FHI or any FHI Subsidiary
          securing Debt of FHI or an FHI Subsidiary;

     (c)  Liens for taxes not yet due or the validity of which is
          being contested in good faith by the Borrower; provided
          that if so requested by the Agent with the consent of the
          Required Banks, there shall have been deposited with the
          Agent, a court or the assessing authority security
          satisfactory to the Agent and the Required Banks for the
          payment of such amount;

     (d)  Liens arising in the ordinary course of its business
          which (i) do not secure Debt or Derivatives Obligations,
          (ii) do not secure any payment obligation in an amount
          (or the U.S. Equivalent thereof) exceeding
          U.S. $1,000,000 and (iii) do not in the aggregate
          materially detract from the value of its assets or
          materially impair the use thereof in the operation of its
          business; and

     (e)  Liens on cash and cash equivalents securing Derivatives
          Obligations, provided that the aggregate amount (or the
          U.S. Equivalent thereof) of cash and cash equivalents
          subject to such Liens may at no time exceed U.S. $3,000,000.

                                 - 46 -

5.11      Consolidations, Mergers and Sales of Assets

          The Borrower will not (i) consolidate or merge with or
into any other Person or (ii) sell, lease or otherwise transfer,
directly or indirectly, all or any substantial part of the assets
of the Borrower and its Subsidiaries, taken as a whole, to any
other Person. 

5.12      Use of Proceeds

          The proceeds of the Loans made under this Agreement will
be used by the Borrower for its general corporate purposes.  None
of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or
carrying any "margin stock" within the meaning of Regulation X.

5.13      Value of Mortgaged Properties

          If the aggregate Value of the Mortgaged Properties at any
time is less than 80% of the aggregate Value of the Engineered
Properties, the Borrower shall forthwith notify the Agent.  On or
before the date falling 30 days after the date on which the
Borrower receives from the Independent Petroleum Engineers the
Engineer's Report indicating the aggregate Value of the Mortgaged
Properties has fallen below 80% of the aggregate Value of the
Engineered Properties, the Borrower shall execute such further
security, mortgages or charges as are necessary to ensure that the
aggregate Value of the Mortgaged Properties at all times is greater
than or equal to 80% of the aggregate Value of the Engineered
Properties.

5.14      Engineer's Reports

     (a)  Within 60 days after the end of each fiscal year of the
          Borrower, the Borrower shall deliver to the Agent and
          each of the Banks an Engineer's Report for all Engineered
          Properties (separately identifying each Engineered
          Property) prepared by the Independent Petroleum
          Engineers, and setting forth, with respect to each
          property covered, as of the last date of such fiscal
          year:

          (i)  the projected gross and net volumes of Hydrocarbons
               reasonably expected to be produced from such
               Engineered Property, by years, for each succeeding
               year during the expected period of production from
               such Engineered Property,

          (ii) the Future Net Revenue and the Discounted Present
               Value of Future Net Revenue from such Engineered
               Property, by years, for each succeeding year during
               the expected period of production from such
               Engineered Property, and

          (iii) the aggregate amounts covered in items (i) and
                (ii) above for all Engineered Properties,

                                 - 47 -

          in each case showing in reasonable detail all
          computations in connection therewith. 

     (b)  At least 30 days before the end of each fiscal year of
          the Borrower, the Agent will specify to the Borrower the
          assumptions to be made by the Independent Petroleum
          Engineers in preparing the Engineer's Report with respect
          to such fiscal year.  Each such Engineer's Report should
          be based upon (i) such specified assumptions, and
          (ii) such other assumptions, not inconsistent with the
          assumptions specified by the Agent, proposed by the
          Borrower to the Banks within 30 days before the end of
          such fiscal year and not disapproved by the Required
          Banks within 15 days after the end of such fiscal year.

     (c)  As promptly as practicable, and in any event, within 90
          days, after a request therefor by Banks having 45% or
          more of the aggregate amount of all Commitments or (if
          the Commitments shall have terminated) having an interest
          in 45% or more of the aggregate amount of all outstanding
          Loans (which request shall be made not more than twice
          during any fiscal year), the Borrower shall deliver to
          the Agent and each of the Banks a Engineer's Report for
          all Engineered Properties, prepared by the Independent
          Petroleum Engineers, and setting forth, with respect to
          the properties covered, as of the last day preceding such
          request, the information described in items (i) through
          (iii) of Section 5.14(a) above.  At the time of any
          request by the Required Banks under this Section 5.14(c),
          the Agent will specify to the Borrower the assumptions to
          be made by the Independent Petroleum Engineers in
          preparing such Engineer's Report. 

5.15      Disposition of Borrower Engineered Properties

     (a)  The Borrower will not sell, lease or otherwise transfer
          any of the Engineered Properties unless (i) such
          transaction is on an arm's length basis and for fair
          market value, (ii) such transaction is permitted  under
          Section 5.11, (iii) after such transaction, no Default
          shall have occurred and be continuing and (iv) such
          transaction and any resulting reduction in the Borrowing
          Base shall neither cause a Borrowing Base Excession to
          exist nor increase the amount of an existing Borrowing
          Base Excession. 

     (b)  If the Borrower shall deliver to the Agent a certificate
          certifying that any Mortgaged Property has been sold or
          transferred in accordance with Section 5.15(a), the Agent
          shall execute and deliver all instruments reasonably
          requested by the Borrower to effect and record a release
          of such Mortgaged Property; provided that no such release
          shall affect the Lien of any Security Document on any
          other Mortgaged Property or the rights and obligations of
          the parties with respect thereto. 

                                 - 48 -

5.16      Transactions with Affiliates

          The Borrower will not, and will not permit any Subsidiary
to, directly or indirectly, pay any funds to or for the account of,
make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or
participate in, or effect any transaction in connection with any
joint enterprise or other joint arrangement with, any Affiliate;
provided, however, that the foregoing provisions of this Section
shall not prohibit (a) the Borrower from declaring or paying any
lawful dividend so long as, after giving effect thereto, no Default
shall have occurred and be continuing, (b) the Borrower or any
Subsidiary from making sales to or purchases from any Affiliate
and, in connection therewith, extending credit or making payments,
or from making payments for services rendered by any Affiliate, if
such sales or purchases are made or such services are rendered in
the ordinary course of business and on terms and conditions at
least as favourable to the Borrower or such Subsidiary as the terms
and conditions which would apply in a similar transaction with a
Person not an Affiliate, (c) the Borrower or any Subsidiary from
making payments of principal, interest and premium on any Debt of
the Borrower or any Subsidiary held by an Affiliate if the terms of
such Debt are substantially as favourable to the Borrower or such
Subsidiary as the terms which could have been obtained at the time
of the creation of such Debt from a lender which was not an
Affiliate, (d) the Borrower or any Subsidiary from participating
in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the
Borrower or such Subsidiary participates in the ordinary course of
its business and on a basis no less advantageous than the basis on
which such Affiliate participates and (e) any creation, incurrence
of assumption of Debt permitted under subsection (vi) of
Section 5.7.

5.17      Minimum Fixed Charge Coverage

     (a)  As at the end of each fiscal quarter during each fiscal
          year of the Borrower, the Projected Cash Flow Available
          for Fixed Charges for such current fiscal year and the
          next succeeding fiscal year will be greater than 150% of
          the related Fixed Charges for each such fiscal year.

     (b)  Within 15 days after delivery of a notice from the Agent
          pursuant to Section 5.17(c), and simultaneously with the
          delivery of each set of financial statements referred to
          in Section 5.1(b), the Borrower will deliver to each of
          the Banks a certificate of the chief financial officer or
          the chief accounting officer of the Borrower setting
          forth in reasonable detail the calculations required to
          establish whether the Borrower was in compliance with the
          requirements of Section 5.17(a) at the date of delivery
          of such certificate.  Such certificate shall set forth a
          calculation of Fixed Charges for the then current fiscal
          year and the next succeeding fiscal year determined as of
          the last day of the then most recent ended fiscal year of
          the Borrower, in the case of the first such certificate
          delivered during any fiscal year, and as of the then most
          recently ended fiscal quarter, in the case of each
          subsequent certificate delivered during any fiscal year,
          and shall be based upon the Projected Cash Flow Available
          for Fixed

                                 - 49 -

          Charges as determined pursuant to Section 5.17(c), adjusted in
          the case of such subsequently delivered certificates to reflect
          FHI EBITDA for the eight consecutive fiscal quarters then most
          recently ended and, if either the Borrower or the Agent so elects
          by notice to the other, to reflect changes in currency exchange
          rates since the end of the most recently ended fiscal year.

     (c)  On or as promptly as practicable after each date on which
          the Agent shall receive an Engineer's Report pursuant to
          Section 5.14(a) and the information called for by
          Section 5.1(h), the Borrower shall determine the
          Projected Cash Flow Available for Fixed Charges for the
          then current fiscal year and the next succeeding fiscal
          year and notify the Agent and the Banks of its
          determination.  The determination by the Borrower of the
          Projected Cash Flow Available for Fixed Charges for each
          fiscal year shall be based on the information relating to
          the Engineered Properties set forth in the applicable
          Engineer's Report, but subject to the factors referred to
          in Section 2.1(b).

     (d)  In determining Fixed Charges and Projected Cash Flow
          Available for Fixed Charges, all currencies other than
          U.S. Dollars shall be converted into U.S. Dollars at a
          rate of exchange equal to the average Spot Rate for the
          calendar month ending on the date as of which such
          determination is being made.  Therefore, in accordance
          with Section 5.17(b), the applicable currency conversion
          rate for purposes of determining Fixed Charges will be
          recalculated quarterly while the applicable currency
          conversion rate for purposes of determining Projected
          Cash Flow Available for Fixed Charges will be
          recalculated annually and, if the Borrower shall so
          elect, as of any quarter.

5.18      Minimum Consolidated Net Worth

          Consolidated Tangible Net Worth will at no time be less
than U.S. $30,000,000.

5.19      Interest Coverage Ratio

          Consolidated EBITDA shall:

     (a)  for any four fiscal quarters within each period of five
          consecutive fiscal quarters ending on December 31, 1995
          and March 31, 1996, be greater than or equal to 145% of
          the consolidated interest expense of the Borrower and its
          Consolidated Subsidiaries for such four fiscal quarters;
          and

     (b)  for any four fiscal quarters within all periods of five
          consecutive fiscal quarters ending after March 31, 1996,
          be greater than or equal to 150% of the consolidated
          interest expense of the Borrower and its Consolidated
          Subsidiaries for such four fiscal quarters.

                                 - 50 -

5.20      Amendments to Other Agreements

          If the FHI Credit Agreement is proposed to be amended in
any manner that may affect the Banks in relation to this Agreement,
the Borrower will consult with the Banks on the proposed amendment
and negotiate in good faith with the Banks to agree, prior to the
effectiveness of any such proposed amendment, to such amendments to
the Financing Documents as may be requested by the Banks in
consideration of such proposed amendment.


                                 ARTICLE 6
                                 DEFAULTS

6.1       Events of Default

          If one or more of the following events ("Events of
Default") shall have occurred and be continuing:

     (a)  the Borrower shall fail to pay when due all or any part
          of any Loan, or shall fail to pay within five days after
          the due date thereof any interest on any Loan, any fees
          or any other amount payable hereunder;

     (b)  the Borrower shall fail to observe or perform any
          covenant contained in Sections 5.7 to 5.13, inclusive,
          and 5.15 to 5.20, inclusive, or the Borrower shall fail
          to observe or perform any of its covenants and agreements
          contained in the Consent and Waiver;

     (c)  the Borrower or any Subsidiary shall fail to observe or
          perform any covenant or agreement contained (i) in this
          Agreement (other than those covered by clause (a) or (b)
          above) for 30 days after written notice thereof has been
          given to it by the Agent at the request of any Bank, or
          (ii) in any Security Document for 10 days after written
          notice thereof has been given to it by the Agent at the
          request of any Bank;

     (d)  any representation, warranty, certification or statement
          made by the Borrower or any Subsidiary in any Financing
          Document or in any certificate, financial statement or
          other document delivered pursuant to any Financing
          Document shall prove to have been incorrect in any
          material respect when made (or deemed made);

     (e)  the Borrower or any Subsidiary shall fail to make any
          payment in respect of any Material Financial Obligations
          when due or within any applicable grace period;

     (f)  any event or condition shall occur which results in the
          acceleration of the maturity of any Material Debt or
          enables (or, with the giving of notice or lapse of time
          or both, would enable) the holder of such Material Debt
          or any Person acting on such holder's behalf to
          accelerate the maturity thereof;

                                 - 51 -

     (g)  the Borrower or any Subsidiary shall commence a voluntary
          case or other proceeding in any jurisdiction seeking
          liquidation, reorganization or other relief with respect
          to itself or its debts under any bankruptcy, insolvency
          or other similar law in any jurisdiction now or hereafter
          in effect or seeking the appointment of a trustee,
          receiver, liquidator, custodian or other similar official
          of it or any substantial part of its property, or shall
          consent to any such relief or to the appointment of or
          taking possession by any such official in an involuntary
          case or other proceeding commenced against it, or shall
          make a general assignment for the benefit of creditors,
          or shall fail generally to pay its debts as they become
          due, or shall take any corporate action to authorize any
          of the foregoing;

     (h)  an involuntary case or other proceeding shall be
          commenced in any jurisdiction against the Borrower or any
          Subsidiary seeking liquidation, reorganization or other
          relief with respect to it or its debts under any
          bankruptcy, insolvency or other similar law in any
          jurisdiction now or hereafter in effect or seeking the
          appointment of a trustee, receiver, liquidator, custodian
          or other similar official of it or any substantial part
          of its property, and such involuntary case or other
          proceeding shall remain undismissed and unstayed for a
          period of 60 days; or an order for relief shall be
          entered against the Borrower or any Subsidiary under any
          bankruptcy laws as now or hereafter in effect in any
          jurisdiction;

     (i)  any member of the ERISA Group shall fail to pay when due
          an amount or amounts aggregating in excess of
          U.S. $1,000,000 which it shall have become liable to pay
          under Title IV of ERISA; or notice of intent to terminate
          a Material Plan shall be filed under Title IV of ERISA by
          any member of the ERISA Group, any plan administrator or
          any combination of the foregoing; or the PBGC shall
          institute proceedings under Title IV of ERISA to
          terminate, to impose liability (other than for premiums
          under Section 4007 of ERISA) in respect of, or to cause
          a trustee to be appointed to administer any Material
          Plan; or a condition shall exist by reason of which the
          PBGC would be entitled to obtain a decree adjudicating
          that any Material Plan must be terminated; or there shall
          occur a complete or partial withdrawal from, or a
          default, within the meaning of Section 4219(c)(5) of
          ERISA, with respect to, one or more Multiemployer Plans
          which could cause one or more members of the ERISA Group
          to incur a current payment obligation in excess of
          U.S. $5,000,000;

     (j)  the U.S. Equivalent of a judgment or order for the
          payment of money in excess of U.S. $1,000,000 shall be
          rendered against the Borrower or any Subsidiary and such
          judgment or order shall continue unsatisfied and unstayed
          for a period of 10 days;

     (k)  any person or group of persons (within the meaning of
          Section 13 or 14 of the U.S. Securities Exchange Act of
          1934, as amended) shall have acquired beneficial
          ownership (within the meaning of Rule 13d-3 promulgated
          by the Securities and Exchange Commission  (United States 
          of America) under said Act) of  50% or

                                 - 52 -

          more of the outstanding shares of common stock of the Borrower;
          or, during any period of 12 consecutive calendar months,
          individuals who were directors of the borrower on the first day
          of such period shall cease to constitute a majority of the board
          of directors of the Borrower; or

     (l)  any Liens held by the Banks or by the Agent for the
          benefit of the Banks on the Mortgaged Properties or any
          property and assets of any Subsidiary shall at any time
          not constitute valid Liens subject to no prior or equal
          Liens (other than Liens permitted under Section 5.10) for
          any reason whatsoever, including as a result of the non-
          perfection or loss of perfection of the Lien of the
          Security Documents;

then, and in every such event, the Agent shall (a) unless the
Commitments have previously terminated hereunder and if requested
by Banks having 45% or more in aggregate amount of the Commitments,
by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, and (b) if requested by Banks having an
interest in 45% or more of the aggregate amount of all outstanding
Loans, by notice to the Borrower,

          (i)  declare all Direct Loans outstanding hereunder, and
               all accrued interest, fees and other Outstandings
               due under the Financing Documents, to be
               immediately due and payable whereupon such amounts
               shall become immediately due and payable without
               presentment, demand, protest or other notice of any
               kind, all of which are hereby waived by the
               Borrower, and

          (ii) declare an amount sufficient to pay all potential
               indebtedness, liabilities and obligations of the
               Borrower hereunder in respect of unmatured Letters
               of Credit which are outstanding to be immediately
               due and payable, whereupon such amounts shall
               become immediately due and payable without
               presentment, demand, protest or other notice of any
               kind, all of which are hereby waived by the
               Borrower,

whereupon all Security Documents shall become immediately
enforceable and the Banks shall be entitled to all rights and
remedies set forth herein and therein; provided that in the case of
any of the Events of Default specified in clause (g) or (h) above
with respect to the Borrower, without any notice to the Borrower or
any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Loans, interest, fees and other
Outstandings and amounts set forth in paragraphs (i) and (ii) above
shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, and all Security Documents shall
become immediately enforceable and the Banks shall be entitled to
all rights and remedies set forth herein and therein.

6.2       Notice of Default

          The Agent shall give notice to the Borrower under
Section 6.1(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof. 

                                 - 53 -

6.3       Conversions to USBR Loans

          At any time after the occurrence of an Event of Default,
the Agent may with the consent of the Required Banks convert any
amount outstanding hereunder as a Euro-Dollar Loan, together with
any accrued and unpaid interest thereon, to a USBR Loan in respect
of which interest shall accrue and be payable by the Borrower at
the rate herein provided in respect of USBR Loans.


                                 ARTICLE 7
                                 THE AGENT

7.1       Appointment Authorization

          Subject to the following, each Bank irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Financing Documents as are
delegated to the Agent by the terms thereof, together with all such
powers as are reasonably incidental thereto:

     (a)  except as otherwise provided for in this Agreement or in
          paragraph (b) below, where the terms of the Financing
          Documents refer to any action to be taken thereunder
          which is not delegated to the Agent by the terms thereof
          or to any such action that requires the consent,
          approval, satisfaction, agreement or other determination
          of the Banks, the action taken by and the consent,
          approval, satisfaction, agreement or other determination
          given or made by the Required Banks shall constitute the
          action or consent, approval, agreement or other
          determination of all the Banks herein or therein referred
          to; and

     (b)  the following actions and matters shall require the
          approval of all the Banks:

          (i)  any amendment to the Financing Documents or any of
               them;

          (ii) any waiver or extension which relates to the rate
               or dates of payment of interest payable hereunder,
               the amount or dates of payment of fees payable
               hereunder, the dates and amounts of repayment of
               principal required hereunder or the conditions
               precedent contained herein;

          (iii)     except as contemplated in Section 5.15(b), the
                    release, discharge or compromise of any of the
                    Security Documents or the Lien thereof;

          (iv) the taking of any steps in relation to the
               enforcement of, or realization with respect to, the
               Security Documents; and

          (v)  any assignment or transfer by the Borrower of any
               of its rights and obligations under this Agreement.

                                 - 54 -

7.2       Agent and Affiliates

          J.P. Morgan Canada shall have the same rights and powers
under the Financing Documents as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent,
and J.P. Morgan Canada and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with
the Borrower, or any Subsidiary or Affiliate as if it were not the
Agent under the Financing Documents. 

7.3       Action by Agent

          The obligations of the Agent under the Financing
Documents are only those expressly set forth therein.  Without
limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default, except as
expressly provided in the Financing Documents. 

7.4       Consultation with Experts

          The Agent may consult with legal counsel (who may be
counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts. 

7.5       Liability of Agent

          Neither the Agent nor any of its affiliates nor any of
their respective directors, officers, agents or employees shall be
liable for any action taken or not taken by it in connection with
the Financing Documents (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross
negligence or wilful misconduct.  Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with the Financing Documents or
any borrowing hereunder; (ii) the performance or observance of any
of the covenants or agreements of the Borrower; (iii) the
satisfaction of any condition specified in Article 3, except
receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness of the Financing Documents
or any other instrument or writing furnished in connection
therewith.  The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex, telecopy or similar
writing) believed by it to be genuine or to be signed by the proper
party or parties. 

7.6       Indemnification

          Each Bank shall, ratably based on the Commitments of the
Banks or the interests of the Banks in the Loans (if the
Commitments shall have terminated), indemnify the Agent, its
affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the Borrower) against
any cost, expense (including counsel fees and disbursements), 
claim,  demand,  action,  loss or liability  (except such as result 
from such

                                 - 55 -

indemnitee's gross negligence or wilful misconduct) that such
indemnitee may suffer or incur in connection with any of the
Financing Documents or any action taken or omitted by such
indemnitee thereunder. 

7.7       Credit Decision

          Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. 
Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
any action under this Agreement or any other Financing Document. 

7.8       Successor Agent

          The Agent may resign at any time by giving notice thereof
to the Banks and the Borrower.  Upon any such resignation, the
Required Banks shall have the right to appoint a successor Agent. 
If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days
after the retiring Agent gives notice of resignation, then the
retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a Canadian chartered bank under the Bank Act
(Canada) and having a combined capital and surplus of at least
Cdn. $50,000,000.  Upon the acceptance of its appointment as Agent
under the Financing Documents by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the
Financing Documents.  After any retiring Agent's resignation under
the Financing Documents as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent. 

7.9       Agent's Fees

          The Borrower shall pay to the Agent for its own account
arrangement, agency and engineering fees in the amounts and at the
times previously agreed upon between the Borrower and the Agent. 


                                 ARTICLE 8
                         CHANGE IN CIRCUMSTANCES

8.1       Basis for Determining Interest Rate Inadequate or Unfair

          If on or prior to the first day of any Interest Period
for any Euro-Dollar Borrowing:

                                 - 56 -

     (a)  the Agent is advised by the Reference Banks that deposits
          in dollars (in the applicable amounts) are not being
          offered to the Reference Banks in the relevant market for
          such Interest Period, or

     (b)  Banks having 45% or more of the aggregate amount of all
          Commitments or having an interest in 45% or more of the
          aggregate amount of all outstanding Loans (if the
          Commitments shall have terminated) advise the Agent that
          the Adjusted London Interbank Offered Rate as determined
          by the Agent will not adequately and fairly reflect the
          cost to such Banks of funding their Euro-Dollar Loans for
          such Interest Period,

the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make Euro-Dollar Loans or to
convert outstanding Domestic Loans and USBR Loans into Euro-Dollar
Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan
shall be converted into a USBR Loan on the last day of the then
current Interest Period applicable thereto.  Unless the Borrower
notifies the Agent at least two Domestic Business Days before the
date of any Euro-Dollar Borrowing for which a Notice of Borrowing
has previously been given that it elects not to borrow on such
date, such Borrowing shall instead be made as a USBR Borrowing. 

8.2       Illegality

          If on or after the date of this Agreement, the adoption
of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to convert
outstanding Domestic Loans and USBR Loans into Euro-Dollar Loans,
shall be suspended.  Before giving any notice to the Agent pursuant
to this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank.  If such notice is given,
each Euro-Dollar Loan of such Bank then outstanding shall be
converted to a USBR Loan either (a) on the last day of the then
current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan to such
day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan to such day. 

                                 - 57 -

8.3       Increased Cost and Reduced Return

     (a)  If on or after the date hereof, the adoption of any
          applicable law, rule or regulation, or any change in any
          applicable law, rule or regulation, or any change in the
          interpretation or administration thereof by any
          governmental authority, central bank or comparable agency
          charged with the interpretation or administration
          thereof, or compliance by any Bank (or its Applicable
          Lending Office) with any request or directive (whether or
          not having the force of law) of any such authority,
          central bank or comparable agency shall impose, modify or
          deem applicable any reserve, special deposit, insurance
          assessment or similar requirement against assets of,
          deposits with or for the account of, or credit extended
          by, any Bank (or its Applicable Lending Office) or shall
          impose on any Bank (or its Applicable Lending Office) or
          on the London Interbank market any other condition
          affecting its Euro-Dollar Loans, its Note or its
          obligation to make Euro-Dollar Loans and the result of
          any of the foregoing is to increase the cost to such Bank
          (or its Applicable Lending Office) of making or
          maintaining any Euro-Dollar Loan, or to reduce the amount
          of any sum received or receivable by such Bank (or its
          Applicable Lending Office) under this Agreement or under
          its Note with respect thereto, by an amount deemed by
          such Bank to be material, then, within 15 days after
          demand by such Bank (with a copy to the Agent), the
          Borrower shall pay to such Bank such additional amount or
          amounts as will compensate such Bank for such increased
          cost or reduction.
 
     (b)  If any Bank shall have determined that, after the date
          hereof, the adoption of any applicable law, rule or
          regulation regarding capital adequacy, or any change in
          any such law, rule or regulation, or any change in the
          interpretation or administration thereof by any
          governmental authority, central bank or comparable agency
          charged with the interpretation or administration
          thereof, or any request or directive regarding capital
          adequacy (whether or not having the force of law) of any
          such authority, central bank or comparable agency, has or
          would have the effect of reducing the rate of return on
          capital of such Bank (or its Parent) as a consequence of
          such Bank's obligations hereunder to a level below that
          which such Bank (or its Parent) could have achieved but
          for such adoption, change, request or directive (taking
          into consideration its policies with respect to capital
          adequacy) by an amount deemed by such Bank to be
          material, then from time to time, within 15 days after
          demand by such Bank (with a copy to the Agent), the
          Borrower shall pay to such Bank such additional amount or
          amounts as will compensate such Bank (or its Parent) for
          such reduction.
 
     (c)  Each Bank will promptly notify the Borrower and the Agent
          of any event of which it has knowledge, occurring after
          the date hereof, which will entitle such Bank to
          compensation pursuant to this Section and will designate
          a different Applicable Lending Office if such designation
          will avoid the need for, or reduce the amount of, such
          compensation and will not, in the judgment of such Bank,
          be otherwise disadvantageous to such Bank. A certificate
          of any Bank claiming compensation under this Section and
          setting forth the additional amount or

                                 - 58 -

          amounts to be paid to it hereunder shall be conclusive in the
          absence of manifest error.  In determining such amount, such Bank
          may use any reasonable averaging and attribution methods.

8.4       Taxes

     (a)  For purposes of this Section 8.4, the following terms
          have the following meanings:

          "Taxes" means any and all present or future taxes,
          duties, levies, imposts, deductions, charges or
          withholdings with respect to any payment by the Borrower
          pursuant to this Agreement or under any Note, and all
          liabilities with respect thereto, excluding in the case
          of each Bank and the Agent, taxes imposed on its income,
          and franchise or similar taxes (including penalties and
          interest) imposed on it, by a jurisdiction under the laws
          of which such Bank or the Agent (as the case may be) is
          organized or in which its principal executive office is
          located or, in the case of each Bank, in which its
          Applicable Lending Office is located.

          "Other Taxes" means any present or future stamp or
          documentary taxes and any other excise or property taxes,
          or similar charges or levies, which arise from any
          payment made pursuant to this Agreement or under any Note
          or from the execution or delivery of, or otherwise with
          respect to, this Agreement or any Note.  

     (b)  Any and all payments by the Borrower to or for the
          account of any Bank or the Agent hereunder or under any
          Note shall be made without deduction for any Taxes or
          Other Taxes; provided that, if the Borrower shall be
          required by law to deduct any Taxes or Other Taxes from
          any such payments, (i) the sum payable shall be increased
          as necessary so that after making all required deductions
          (including deductions applicable to additional sums
          payable under this Section 8.4) such Bank or the Agent
          (as the case may be) receives an amount equal to the sum
          it would have received had no such deductions been made,
          (ii) the Borrower shall make such deductions, (iii) the
          Borrower shall pay the full amount deducted to the
          relevant taxation authority or other authority in
          accordance with applicable law and (iv) the Borrower
          shall furnish to the Agent, at its address referred to in
          Section 9.1, the original or a certified copy of a
          receipt evidencing payment thereof.

     (c)  The Borrower agrees to indemnify each Bank and the Agent
          for the full amount of Taxes or Other Taxes (including,
          without limitation, any Taxes or Other Taxes imposed or
          asserted by any jurisdiction on amounts payable under
          this Section 8.4) paid by such Bank or the Agent (as the
          case may be) and any liability (including penalties,
          interest and expenses) arising therefrom or with respect
          thereto.  This indemnification shall be paid within 30
          days after such Bank or the Agent (as the case may be)
          makes written demand therefor.  

                                 - 59 -

          If a Bank or the Agent shall become aware that it is
          entitled to receive a refund in respect of Taxes or Other
          Taxes, it shall promptly notify the Borrower of the
          availability of such refund and shall, within 30 days
          thereafter, apply for such refund at the Borrower's
          expense.  If any Bank or the Agent receives a refund in
          respect of any Taxes or Other Taxes for which such Bank
          or the Agent has received payment from the Borrower
          hereunder, it shall promptly notify the Borrower of such
          refund and shall, within 30 days after receipt of such
          refund, repay such refund to the Borrower with interest
          if any interest is received thereon by such Bank or the
          Agent.

     (d)  Each Bank on or prior to the date of its execution and
          delivery of this Agreement in the case of each Bank
          listed on the signature pages hereof and on or prior to
          the date on which it becomes a Bank pursuant to
          Section 9.6 in the case of each other Bank, and from time
          to time thereafter if requested in writing by the
          Borrower (but only so long as such Bank remains lawfully
          able to do so), shall provide the Borrower evidence that
          it is not a non-resident of Canada for the purposes of
          The Income Tax Act (Canada) and provide the Agent with
          U.S. Internal Revenue Service form W-8 or any successor
          form certifying that such Bank is not a U.S. citizen or
          resident.

     (e)  For any period in respect of which a Bank is a non-
          resident of Canada for the purposes of The Income Tax Act
          (Canada) (unless as a result of a change in law or
          regulation occurring subsequent to the date on which
          evidence of residency was provided by such Bank as
          specified by and in accordance with Section 8.4(d)), such
          Bank shall not be entitled to indemnification under
          Section 8.4(b) or (c) with respect to Taxes imposed by
          Canada; provided that if a Bank, which is otherwise
          exempt from or subject to a reduced rate of withholding
          tax, becomes subject to Taxes because of its failure to
          deliver a form required hereunder, the Borrower shall
          take such steps as such Bank shall reasonably request to
          assist such Bank to recover such Taxes.

     (f)  If the Borrower is required to pay additional amounts to
          or for the account of any Bank pursuant to this
          Section 8.4, then such Bank will change the jurisdiction
          of its Applicable Lending Office if, in the judgment of
          such Bank, such change (i) will eliminate or reduce any
          such additional payment which may thereafter accrue and
          (ii) is not otherwise disadvantageous to such Bank.

     (g)  In the event that the Borrower shall be required to pay
          to any Bank material amounts pursuant to this
          Section 8.4, the Borrower may give notice to such Bank
          (with copies to the Agent) that it wishes to seek one or
          more assignees (which may be one or more of the Banks) to
          assume the Commitment of such Bank (if the Commitment of
          such Bank has not terminated) and to purchase its
          outstanding Loans and Note and the Agent will use its
          best efforts to assist the Borrower in obtaining an
          assignee(s).  If an assignee(s) cannot be obtained for
          such affected Bank(s) and provided that no Default shall
          have occurred and be continuing, the Borrower may, with
          the consent of  each  other Bank, prepay  immediately all

                                 - 60 -

          Direct Loans of such affected Bank and terminate such
          affected Bank's entire Commitment hereunder (if such
          Bank s Commitment has not terminated). The other Banks
          shall assume all liability of the affected Bank for any
          outstanding Letters of Credit and the Borrower shall pay
          to the Agent an adjusted fee with respect to each such
          Letter of Credit for the account of such Banks pursuant
          to Section 2.14(c), based on the increased exposure of
          such Banks for the period each such Letter of Credit will
          remain outstanding.  Any Bank selling its Commitment
          and/or its Loans, Note and interest in this Agreement to
          any assignee(s) will do so in accordance with Section 9.6
          for an amount equal to the sum of the aggregate principal
          amount of its Direct Loans plus all other fees and
          amounts (including, without limitation, any compensation
          claimed by such Bank under Section 2.12 or this
          Section 8.4) due such Bank hereunder calculated, in each
          case, to the date such Commitment and/or such Loans, Note
          and interest are purchased, and such assignee(s) shall
          assume such Bank's liability for any outstanding Letters
          of Credit.  Upon such sale or prepayment, said Bank shall
          have no further Commitment and/or other obligation to the
          Borrower hereunder or under any Note.

8.5       USBR Loans Substituted for Affected Euro-Dollar Loans

          If (i) the obligation of any Bank to make or maintain
Euro-Dollar Loans has been suspended pursuant to Section 8.2 or
(ii) any Bank has demanded compensation under Section 8.3(a) or 8.4
with respect to its Euro-Dollar Loans and the Borrower shall, by at
least five Euro-Dollar Business Days prior notice to such Bank
through the Agent, have elected that the provisions of this Section
shall apply to such Bank, then, unless and until such Bank notifies
the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:

     (a)  all Loans which would otherwise be made by such Bank as
          (or continued or converted into) Euro-Dollar Loans shall
          be made instead as USBR Loans (on which interest and
          principal shall be payable contemporaneously with the
          related Euro-Dollar Loans of the other Banks), and

     (b)  after each of its Euro-Dollar Loans has been repaid (or
          converted to a USBR  Loan), all payments of principal
          which would otherwise be applied to repay such
          Euro-Dollar Loans shall be applied to repay its USBR
          Loans instead. 

If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such USBR Loan shall be converted into a Euro-Dollar Loan on the
first day of the next succeeding Interest Period applicable to the
related Euro-Dollar Loans of the other Banks. 

                                 - 61 -

                                 ARTICLE 9
                               MISCELLANEOUS

9.1       Notices

          All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex,
telecopy or similar writing) and shall be given to such party: 
(x) in the case of the Borrower, the Agent or the Fronting Bank at
its address, telex or telecopy number set forth on the signature
pages hereof, (y) in the case of any Bank, at its address, telex or
telecopy number set forth in its Administrative Questionnaire or
(z) in the case of any party, such other address or telex or
telecopy number as such party may hereafter specify for the purpose
by notice to the Agent and the Borrower.  Each such notice, request
or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received, (ii) if
given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and telephonic
confirmation of receipt thereof is received, or (iii) if given by
any other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article 2 or
Article 8 shall not be effective until received. 

9.2       No Waivers

          No failure or delay by the Agent or any Bank in
exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. 
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law. 

9.3       Expenses; Indemnification

     (a)  The Borrower shall pay (i) all reasonable out-of-pocket
          expenses of the Agent, including fees and disbursements
          of special counsel for the Agent, in connection with the
          preparation of the Financing Documents, any waiver or
          consent thereunder or any amendment thereof or any
          Default or alleged Default thereunder or any release
          pursuant to Section 5.15(b) and (ii) if an Event of
          Default occurs, all reasonable out-of-pocket expenses
          incurred by the Agent and each Bank, including fees and
          disbursements of counsel, in connection with such Event
          of Default and collection, bankruptcy, insolvency and
          other enforcement proceedings resulting therefrom. 

     (b)  The Borrower agrees to indemnify the Agent, the Fronting
          Bank and each Bank and their respective affiliates and
          the respective directors, officers, agents and employees
          of the foregoing (each an "Indemnitee") and hold each
          Indemnitee harmless from and against any and all
          liabilities, losses, damages, costs and expenses of any
          kind, including, without limitation, the reasonable fees
          and disbursements of counsel, which may be incurred by
          such Indemnitee in connection with any investigative,
          administrative or judicial proceeding (whether

                                 - 62 -

          or not such Indemnitee shall be designated a party thereto)
          relating to or arising out of (i) any actual or proposed use of
          proceeds of Loans hereunder, (ii) the breach by the Borrower of
          any covenant in this Agreement or the untruth or inaccuracy of
          any representation or warranty made by the Borrower in this
          Agreement or (iii) a transaction which is (or may be) subject to
          the provisions of Section 6.1(k); provided that no Indemnitee
          shall have the right to be indemnified hereunder for its own
          gross negligence or wilful misconduct as determined by a court of
          competent jurisdiction.

     (c)  Any payment made to or for the account of the Agent, the
          Fronting Bank or any Bank in respect of any amount
          payable by the Borrower in a currency (the "Tendered
          Currency") other than the currency in which such payment
          is due (the "Required Currency"), whether pursuant to any
          judgment or order of a court or tribunal or otherwise,
          shall constitute a discharge of the Borrower only to the
          extent of the amount of the Required Currency which may
          be purchased with such Tendered Currency at the time of
          payment at the Spot Rate at such time.  The Borrower
          covenants and agrees to and in favour of the Agent, the
          Fronting Bank and each Bank that it shall, as a separate
          and independent obligation which shall not be merged in
          any such judgment or order, pay or cause to be paid the
          amount not so discharged in accordance with the foregoing
          and indemnify and hold harmless the Agent, the Fronting
          Bank and each Bank against any loss or damage arising as
          a result of any such amount being paid in such Tendered
          Currency.  A certificate of the Agent, the Fronting Bank
          or any Bank, as applicable, as to any such loss or damage
          shall be conclusive evidence of the amount thereof in the
          absence of manifest error.

9.4       Sharing of Set-Offs

          Each Bank agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive a payment on
account of Loans or interest or fees accruing thereon (other than
the fee payable to the Fronting Bank pursuant to Section 2.14(b))
of a proportion which is greater than the proportion received by
any other Bank based on the Commitments of the Banks or the
interests of the Banks in the outstanding Loans (if the Commitments
shall have terminated), the Bank receiving such proportionately
greater payment shall purchase such participations in the Loans or
in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments shall
be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount subject
to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness hereunder and under the Notes.  The
Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Loan
or in a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such
holder of a participation were a direct creditor of the Borrower in
the amount of such participation. 

                                 - 63 -

9.5       Amendments and Waivers

          Any provision of the Financing Documents may be amended
or waived if, but only if, such amendment or waiver is in writing
and is signed by the Borrower and the Agent with the consent of the
Banks or any of them as required pursuant to Section 7.1.

9.6       Successors and Assigns

     (a)  The provisions of this Agreement shall be binding upon
          and inure to the benefit of the parties hereto and their
          respective successors and assigns, except that the
          Borrower may not assign or otherwise transfer any of its
          rights under this Agreement without the prior written
          consent of all Banks. 

     (b)  Any Bank may at any time grant to one or more banks or
          other institutions (each a "Participant") participating
          interests in its Commitment (if such Bank s Commitment
          has not terminated) or any or all of its Loans.  In the
          event of any such grant by a Bank of a participating
          interest to a Participant, whether or not upon notice to
          the Borrower and the Agent, such Bank shall remain
          responsible for the performance of its obligations
          hereunder, and the Borrower and the Agent shall continue
          to deal solely and directly with such Bank in connection
          with such Bank's rights and obligations under this
          Agreement.  Any agreement pursuant to which any Bank may
          grant such a participating interest shall provide that
          such Bank shall retain the sole right and responsibility
          to enforce the obligations of the Borrower hereunder
          including, without limitation, the right to approve any
          amendment, modification or waiver of any provision of
          this Agreement; provided that such participation
          agreement may provide that such Bank will not agree to
          any modification, amendment or waiver of this Agreement
          or any other action described in Section 7.1 without the
          consent of the Participant.  The Borrower agrees that
          each Participant shall, to the extent provided in its
          participation agreement, be entitled to the benefits of
          Article 8 and Sections 2.12, 2.14(i) and 9.3 with respect
          to its participating interest as if directly a party
          hereto, provided that if such a Participant is a non-
          resident of Canada for the purposes of The Income Tax Act
          (Canada) then such Participant shall not be entitled to
          the benefit of the indemnities contained in Section 8.4
          for any amount greater than that which the Bank from
          which such Participant acquired its participation would
          have been entitled to be indemnified for under
          Section 8.4.  An assignment or other transfer which is
          not permitted by subsection (c) or (d) below shall be
          given effect for purposes of this Agreement only to the
          extent of a participating interest granted in accordance
          with this subsection (b). 

     (c)  Any Bank may at any time assign, with notice to the Agent
          and the Borrower, to an affiliate of such transferor Bank
          or another Bank which is not a non-resident of Canada for
          the purposes of The Income Tax Act (Canada) (each an
          "Assignee") all of its rights and obligations under this
          Agreement and the Notes in respect of all or any portion
          of its Commitment (if such Bank s Commitment has not
          terminated) and its outstanding Loans, provided that the
          Outstanding Principal in

                                 - 64 -

          respect thereof is not less than Cdn. $5,000,000, and such
          Assignee shall assume such rights and obligations. Upon execution
          and delivery of an instrument of assignment and payment by such
          Assignee to such transferor Bank of an amount equal to the
          purchase price agreed between such transferor Bank and such
          Assignee, such Assignee shall be a Bank party to this Agreement
          and shall have all the rights and obligations of a Bank with a
          Commitment (if the Commitments have not terminated) as set forth
          in such instrument of assignment, and, subject to Section
          2.14(h), the transferor Bank shall be released from its
          obligations hereunder to a corresponding extent, and no further
          consent or action by any party shall be required.  Upon the
          consummation of any assignment pursuant to this subsection (c),
          the transferor Bank, the Agent and the Borrower shall make
          appropriate arrangements so that, if required, a new Note is
          issued to the Assignee.  In connection with any such assignment,
          the transferor Bank shall pay to the Agent an administrative fee
          for processing such assignment in the amount of Cdn. $2,000.  The
          Assignee shall, prior to the first date on which interest or fees
          are payable hereunder for its account, deliver to the Borrower
          and the Agent the forms and evidence regarding residency
          specified by and in accordance with Section 8.4.

     (d)  Subject to the Section 9.6(b), except for any assignment
          of all or any portion of its rights under this Agreement
          and its Note to a Canadian chartered bank under the Bank
          Act (Canada), a Bank shall not be entitled to assign all
          or any portion of its rights under this Agreement and its
          Note without the consent of the Borrower not to be
          unreasonably withheld.

     (e)  No Assignee, Participant or other transferee of any
          Bank's rights shall be entitled to receive any greater
          payment under Section 8.3 than such Bank would have been
          entitled to receive with respect to the rights
          transferred, unless such transfer is made with the
          Borrower's prior written consent or by reason of the
          provisions of Section 8.2 or 8.3 requiring such Bank to
          designate a different Applicable Lending Office under
          certain circumstances or at a time when the circumstances
          giving rise to such greater payment did not exist. 

9.7       Collateral

          Each of the Banks represents to the Agent and each of the
other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation X) as collateral in the extension
or maintenance of the credit provided for in this Agreement.

                                 - 65 -

9.8       Further Assurances

          Each party hereto shall, at the request of the other (but
at the expense of the Borrower), perform all such further acts and
execute and deliver all such further documents as may, in the
reasonable opinion of the other, be necessary or desirable in order
to fully perform and carry out the purpose and intent of the
Financing Documents.

9.9       Conflicting Provisions

          In the event of (but to the extent only of) a conflict or
inconsistency between the terms of this Agreement and any of the
other Financing Documents, the terms of this Agreement shall
govern.

9.10      Section 426 Waiver

          Without restriction upon the rights, remedies, powers and
authorities available to the Banks in relation to security granted
to it under Section 426 of the Bank Act (Canada), the Borrower does
hereby waive all rights, benefits and protections available to the
Borrower pursuant to Subsection 426(6) of the Bank Act (Canada). 
The Borrower does hereby acknowledge and agree that the Banks may,
notwithstanding the provisions of Subsection 426(6) of the Bank Act
(Canada), without advertisement or public notice of sale or
intention to sell, and without any other formality whatsoever,
conduct and complete any sale of all or any of the assets assigned
to the Banks pursuant to such Section 426 security, at such times,
in such manner and upon such terms, including without limitation
terms regarding the form, amount and time for payment of sale
proceeds, as the Banks may in their sole and absolute discretion
deem fit.

9.11      Governing Law

          THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF ALBERTA
AND THE LAWS OF CANADA APPLICABLE THEREIN AND SHALL BE TREATED AS
ALBERTA CONTRACTS.

9.12      Submission to Jurisdiction

          The Borrower hereby submits to the nonexclusive
jurisdiction of the Courts of Alberta for purposes of all legal
proceedings arising out of or relating to this Agreement and each
Note or the transactions contemplated hereby.  The Borrower
irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought
in an inconvenient forum. 

9.13      Counterparts; Integration

          This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same

                                 - 66 -

instrument.  This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to
the subject matter hereof. 

          IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.  

                                  WAINOCO OIL CORPORATION


                                  By:  /s/ Julies H. Edwards
                                       ----------------------------------------
                                  Title:  Senior Vice President - Finance & 
                                             Chief Financial Officer

                                  On or prior to March 29, 1996:
                                  2100 Citicorp Center
                                  1200 Smith Street
                                  Houston, Texas  77002
                                  Telecopy number: (713) 655-7530

                                  After March 29, 1996:
                                  600, 10000 Memorial Drive
                                  Houston, Texas   77024
                                  Telecopy number:  (713) 655-7530


                                  J.P. MORGAN CANADA, as Agent


                                  By:  /s/ Andrew Shelton
                                       ____________________________________
                                  Title:  President

                                  Royal Bank Plaza, South Tower
                                  Suite 2200, P.O. Box 80
                                  Toronto, Ontario
                                  M5J 2J2
                                  Telecopy number: (416) 981-9278


                                         
This is page 66 to the Amended and Restated Credit Agreement dated January
30, 1996 among Wainoco Oil Corporation, as Borrower, J.P. Morgan Canada, as 
Agent and as a Bank, and Paribas Bank of Canada, as Fronting Bank and as a 
Bank.

                                 - 67 -

                                  PARIBAS BANK OF CANADA, as
                                  Fronting Bank


                                  By:  /s/ Douglas McCormick
                                       --------------------------------------
                                  Title:  Assistant Vice President

                                 By:  /s/ James Goodall
                                       ----------------------------------------
                                 Title:  Group Vice President

                                  Royal Trust Tower
                                  4100 Toronto Dominion Centre
                                  Toronto, Ontario
                                  M5K 1N8
                                  Telecopy number: (416) 947-0086

Commitments                 Banks

Cdn. $9,750,000              J.P. MORGAN CANADA


                                  By:  /s/ Andrew Shelton
                                        ---------------------------------------
                                  Title:  President


Cdn. $8,250,000              PARIBAS BANK OF CANADA


                                  By:  /s/ Douglas McCormick
                                        ---------------------------------------
                                  Title:  Assistant Vice President

                                  By:  /s/ James Goodall
                                       ----------------------------------------
                                 Title:  Group Vice President



This is page 67 to the Amended and Restated Credit Agreement dated January
30, 1996 among Wainoco Oil Corporation, as Borrower, J.P. Morgan Canada, as
Agent and as a Bank, and Paribas Bank of Canada, as Fronting Bank and as a 
Bank.