Exhibit 10.4

THIS AGREEMENT is made the 1st day of November, 1997

BETWEEN:-

(1)      HORSE ENERGY LP, a limited partnership registered in the State of
         Texas, USA under number 102487-10 whose principal place of business is
         at 5 Silver Elm Place, The Woodlands, Texas 77381 ("Horse"); and

(2)      NATIONAL EQUITIES HOLDINGS INC., a company registered in the State of
         Delaware, USA under number 2144417 whose principal place of business is
         at 616 FM 1960 West, Suite 200, Houston, Texas 77090 ("NEHI")

WHEREAS:


(A)      Horse is a company which specializes in horizontal oil recovery. Horse
         identifies oil and gas reserves which have previously been considered
         uneconomical to develop and re-enters the wells using specialist
         techniques. Horse identifies wells as development candidates, secures
         operational rights and develops the reserves. Horse has produced a
         confidential business plan entitled "Horizontal Oil Recovery
         Specialists" ("the Business Plan")

(B)      NEHI is a company which is involved in oil and gas exploration and
         production. NEHI is seeking funding in the sum of US $5,000,000 (five
         million US dollars) and as part of its further commercial objectives
         will be seeking additional funding in the form of a sale of shares by
         offer or capital investment and/or is seeking to increase the value of
         its stock and wants to disclose the contents of the Business Plan and
         describe association with the Horse LP partners for purposes of raising
         capital or to increase the value of its stock as aforesaid. Horse is
         disclosing to NEHI a copy of the Business Plan in accordance with the
         terms and conditions of this Agreement and NEHI shall be entitled to
         make no more than 2 further copies. (For the avoidance of doubt NEHI
         shall only be entitled to disclose 3 versions of the Business Plan
         including the original copy).

IN CONSIDERATION of the disclosure by Horse of a copy of the confidential
Business Plan to NEHI THE PARTNERS HEREBY AGREE:-

1        NEHI shall:-

         1.1      immediately upon disclosure by Horse to NEHI of a copy of the
                  Business Plan issue to Horse 7,871,023 (seven million eight
                  hundred seventy one thousand twenty three) shares of common
                  stock in NEHI together with a share certificate therefor and,
                  for the avoidance of doubt, Horse shall not be liable to make
                  any payment for 7,871,023 (seven million eight hundred seventy
                  one thousand twenty three) shares, and a certificate of
                  delivery of the Business Plan to NEHI by Horse in the form
                  annexed to this Agreement in Schedule 1 and signed by both
                  parties shall be conclusive evidence of disclosure.

         1.2      give to Horse US $5,000,000 (five million US dollars) cash
                  free of any incumbrances the first installment being due 30
                  days after any investment vehicle is available to be sold to
                  the public but not later than January 1st 1998. The US
                  $5,000,000 (five million US dollars) is to


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                  be paid as needed but not less than US $300,000 per month, the
                  balance being due by June 30th, 1998.

         1.3      pay 80% of all funds raised by a loan or offering or sale of
                  shares in NEHI or any other capital investments made as a
                  result of the disclosure by NEHI of the Business Plan, or
                  summary of the Business Plan or a described association with
                  Horse or any of the Horse partners, to a third party, into an
                  account opened by Horse, according to the schedule set out in
                  clause 1.2 until the balance of such account is at least US
                  $5,000,000 (five million US dollars) in credit unless a lesser
                  amount is allowed by Horse under clause 3 below ("the
                  Requisite Amount").

         1.4      retain 20% of all funds raised by a loan or offering or sale
                  of shares in NEHI or any other capital investments made as a
                  result of the disclosure by NEHI of the Business Plan, or
                  summary of the Business Plan or a described association with
                  Horse or any of the Horse partners to cover NEHI overheads and
                  all costs related to the fund raising.

2        Horse shall:-

         2.1      agree that NEHI shall be granted a 25% limited partner
                  interest (I.C. profit and losses only) in Horse.

         2.2      Upon signature of this document, NEHI shall appoint George
                  Sutherland ("GS"), Jack Chance ("JC") and Feroze Variava
                  ("FV") (together "the Participants") as executive directors on
                  the board of NEHI.

3        In any sale of common stock in NEHI by Horse, NEHI shall have right of
         first refusal to purchase such stock at market value. In any sale of
         common stock in Horse by NEHI, Horse shall have right of first refusal
         to purchase such stock at market value.

4        NEHI shall be entitled to inform third parties of the fact that there
         is a working relationship between Horse and NEHI and a 25% interest in
         Horse and to disclose up to three copies or summaries of the Business
         Plan to third parties, but shall provide Horse with details of the
         identity of any such party and the contents of any such statement and
         any such disclosure to a third party can only be for the purpose of
         raising capital in accordance with this Agreement and shall be subject
         to the confidentiality provisions below.

5        For the purpose of this Agreement it is necessary that Horse discloses
         to NEHI confidential information (the "Information") relating to
         proprietary, business and technical information in the possession of
         Horse including without limitation future or proposed products and
         services, intellectual property rights, business forecasts, information
         on methods of working and application of know-how and for the avoidance
         of doubt the Business Plan shall be confidential information and the
         copyright in the Business Plan is proprietary to Horse. The Information
         may be contained in writing, diagrams, computer programs and may be
         delivered or communicated orally, in document form, by demonstration or
         otherwise to NEHI through the personnel of NEHI or of any company
         associated with NEHI.

6.1      NEHI shall maintain the Information confidential and NEHI shall not
         disclose such Information to a third party or reproduce the Information
         in whole or in part or alter, revise, copy or summarize the Business
         Plan without Horse's prior written consent.


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6.2      NEHI shall not disclose to third parties any more than three copies of
         the Business Plan without the prior written consent of Horse and Horse
         shall decide the form and format of any further copies and shall be
         entitled to stipulate whether or not the names of the Participants
         shall be disclosed in any further copy of the Business Plan.

6.3      any third party to whom NEHI discloses a copy of the Business Plan must
         sign a confidentiality agreement in the form annexed to this Agreement
         in Schedule 2 prior to the disclosure of the Business Plan by NEHI to
         such third party.

7        NEHI shall neither use the Information nor circulate it within its own
         organization except and only to the extent necessary for:-

         7.1      discussions and consultations with employees of NEHI solely
                  for the purpose set out in this Agreement and in any event
                  only on a need to know basis; or

         7.2      any other purpose Horse may hereafter authorize in writing.

8        All Information and materials (whether in human-readable or
         machine-readable form), including without limitation development plans,
         product or service descriptions, electronic media, documents, manuals,
         specifications, flowcharts, program listings and file printouts
         furnished to NEHI shall be and remain the property of Horse and shall
         be returned to Horse promptly at its request together with any copies
         made. If Horse shall request the destruction of all material held by
         NEHI comprised in the Information NEHI shall deliver to Horse within
         one month of such request a sworn deposition authorized by a notary
         public confirming that all such material has been destroyed or returned
         securely to Horse.

9.1      Nothing contained in this Agreement shall be construed as granting or
         conferring any rights by license or otherwise, expressly or impliedly,
         for any intellectual property in which Horse or any of the directors
         thereof may claim proprietary rights or for any use or exploitation of
         any Information, invention, discovery or improvement made, conceived or
         acquired prior to or after the date of this Agreement.

9.2      For the avoidance of doubt JC and SM own the intellectual property
         rights in a device identified any generally described as "A Downhole
         Adjustable Device for Trajectory Control in the Drilling of Deviated
         Wells" and described as a "L-R Tool" in the Business Plan (the
         "Device") and no rights in the Device are given to the parties to this
         Agreement.

10.1     If Horse decides to make an initial public offering in relation to
         Horse then NEHI shall have the option to purchase the first 25% of the
         offered stock at market value.

10.2     In the event that NEHI acquires stock in Horse under clause 10.1 then
         in any sale of stock in Horse by NEHI, Horse and/or the Participants
         shall have the first right of refusal to purchase such stock at market
         value.

10.3     In any sale or offering or proposed disposition of stock in NEHI by
         NEHI or its directors, Horse and/or the Participants shall have the
         first option to purchase such stock at market value.


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11       NEHI and NEHI's board of directors shall indemnify Horse and the
         Participants against any and all liability, loss, damage, costs and
         expenses which Horse may suffer whether direct or consequential as a
         result of the use, disclosure or publication by NEHI and third parties
         of the Business Plan in an altered, revised or summarized version or
         format which has not been authorized by Horse. The indemnity shall also
         apply to any action proceedings or claims taken by the Securities
         Exchange Commission or other financial regulatory body taken as a
         result of an altered, revised or summarized version or format which has
         not been authorized by Horse.

12       NEHI and NEHI's board of directors shall indemnify Horse and the
         Participants against any and all liability, loss, damage, costs and
         expenses which Horse may suffer whether direct or consequential as a
         result of any activities of NEHI prior to the signing of this
         Agreement, and vice versa. The indemnity shall also apply to any action
         proceedings or claims taken by the Securities Exchange Commission or
         other financial regulatory body taken as a result of an altered,
         revised or summarized version or format which has not been authorized
         by Horse.

13       NEHI shall be responsible for ensuring compliance with all financial
         regulations relating to the subject matter of this Agreement save for
         any financial regulations relating to the Business Plan which shall be
         the responsibility of Horse except insofar as any such financial
         regulations relate to NEHI's use or disclosure of the Business Plan.

14       If NEHI does not comply with the provisions of clauses 1.1, 1.2 and 1.3
         above as per the installments set out in clause 1.2, Horse reserves the
         right to terminate this Agreement without prejudice and NEHI shall
         immediately cease to be a partner in Horse and shall be entitled to no
         payment or consideration for the termination.

15       This Agreement contains the entire agreement of the parties concerning
         the subject matter hereof and supersedes any and all prior agreements
         between the parties or any of them concerning the same, including the
         Agreement dated August 20th, 1997 and the Extension of the same dated
         October 18th, 1997. Each of the parties hereby declares and
         acknowledges that he or it (as the case may be) is not entering into
         this Agreement in reliance upon any representation or warranty or
         understanding express or implied which is not contained expressly in
         this Agreement itself and (for the avoidance of doubt) hereby
         irrevocably and unconditionally waives any right to any remedy of
         whatsoever nature (whether damages rescission or otherwise) for any
         breach of any such representation or warranty which there may have been
         or which may hereafter occur.

16       If any provision of this Agreement is held invalid void or
         unenforceable for any reason whatsoever the validity legality and
         enforceability of the remaining provisions hereof shall not in any way
         be affected, impaired or restricted thereby.

17       The parties agree that all terms and conditions contained in this
         Agreement are reasonable.

18       This Agreement is personal to the parties and may not be assigned to
         any third party.


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19       This Agreement may not be modified or varied in whole or in part except
         by a written instrument duly executed by each of the parties.


IN WITNESS WHEREOF the parties hereto have caused this Agreement to be signed by
their respective duly authorized representatives.

Signed for and on behalf of         )
HORSE ENERGY LP                     )
by                                  )

/s/ George Sutherland
 ................................
Name (signed and printed)

Date:    .....11/5..... 1997


Signed for and on behalf of         )
NATIONAL EQUITIES HOLDINGS INC.     )
by                                  )

/s/ Bill M. Knollenberg
 ................................
Name (signed and printed)

Date:    .....11/05.... 1997


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                                   SCHEDULE 1
                                   ----------



                             CERTIFICATE OF DELIVERY
                             -----------------------


I, George Sutherland, a director of Horse Energy L.P. hereby certify that at 9
a.m./p.m. on November 1st, 1997 I did hand over to Bill Knollenberg of National
Equities Holdings Inc. a copy of the Business Plan as defined in paragraph (A)
of the Recitals and referred to in clause 1 of the Agreement dated November 1st,
1997 between Horse Energy L.P. and National Equities Holdings Inc.




/s/ George Sutherland
---------------------------------
George Sutherland
for and on behalf of
Horse Energy L.P.



/s/ Bill Knollenberg
---------------------------------
Bill Knollenberg
received by and on behalf of
National Equities Holdings Inc.