Document:

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                           PRIDE INTERNATIONAL, INC.

                          EMPLOYMENT/NON-COMPETITION/
                           CONFIDENTIALITY AGREEMENT

                             MARCELO D. GUISCARDO

                         EFFECTIVE DATE: MARCH 1, 2000
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                                     INDEX
                                     -----

<TABLE>
<C>         <S>                                                                                 <C>
I.          PRIOR AGREEMENTS/EMPLOYMENT CONTRACTS............................................    2

            1.01   Prior Agreements..........................................................    2

II.         DEFINITION OF TERMS..............................................................    2

            2.01   Company...................................................................    2
            2.02   Executive/Office Employee.................................................    3
            2.03   Office/Position/Title.....................................................    3
            2.04   Effective Date............................................................    3
            2.05   Change in Control.........................................................    3
            2.06   Termination...............................................................    4
            2.07   Customer..................................................................    5

III.        EMPLOYMENT.......................................................................    5

            3.01   Employment................................................................    5
            3.02   Best Efforts and other Employment of Executive............................    5
            3.03   Term of Employment........................................................    6
            3.04   Compensation and Benefits.................................................    6
            3.05   Termination without Change in Control.....................................    7

IV.         CHANGE IN CONTROL................................................................    8

            4.01   Extension of Employment Period............................................    8
            4.02   Change in Control Termination Payments & Benefits.........................    8
            4.03   Voluntary Resignation upon Change in Control..............................    9

V.          NON-COMPETITION AND CONFIDENTIALITY..............................................    9

            5.01   Consideration.............................................................    9
            5.02   Non-Competition...........................................................    9
            5.03   Confidentiality...........................................................   10
            5.04   Geographical Area.........................................................   11
            5.05   Company Remedies for Violation of Non-Competition or Confidentiality
                    Agreement................................................................   11
            5.06   Termination of Benefits for Violation of Non-Competition and
                    Confidentiality..........................................................   12
</TABLE>

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<TABLE>
<C>         <S>                                                                                 <C>
VI.         GENERAL..........................................................................   12
            6.01   Enforcement Costs.........................................................   12
            6.02   Income, Excise or other Tax Liability.....................................   13
            6.03   Payment of Benefits upon Termination for Cause............................   13
            6.04   Non-Exclusive Agreement...................................................   13
            6.05   Notices...................................................................   14
            6.06   Non-Alienation............................................................   14
            6.07   Entire Agreement Amendment................................................   14
            6.08   Successors andAssigns.....................................................   14
            6.09   Governing Law.............................................................   15
            6.10   Venue.....................................................................   15
            6.11   Headings..................................................................   15
            6.12   Severability..............................................................   15
            6.13   Partial Invalidity........................................................   15
            6.14   Counterparts..............................................................   15
</TABLE>

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              EMPLOYMENT/NON-COMPETITION/CONFIDENTIALITY AGREEMENT

DATE:               March 1, 2000

COMPANY/EMPLOYER:   Pride International, Inc.

                    a Louisiana corporation

                    5847 San Felipe, Suite 3300

                    Houston, Texas 77057

EXECUTIVE/EMPLOYEE: Marcelo D. Guiscardo

                    9624 Doliver

                    Houston, Texas 77063

     This Agreement is made as of the date first above written and to become
effective as herein provided.

                                    PREAMBLE

     WHEREAS, the Company wishes to attract and retain well-qualified Executives
and key personnel and to assure itself of the continuity of its management;

     WHEREAS, Executive will be elected an officer of the Company with
significant management responsibilities in the conduct of its business;

     WHEREAS, the Company recognizes that Executive is a valuable resource of
the Company and the Company desires to be assured of the continued services of
Executive;

     WHEREAS, the Company desires to obtain assurances that Executive will
devote his best efforts to his employment with the Company and will not enter
into competition with the Company in its business as now conducted and to be
conducted, or solicit customers or other employees of the Company to terminate
their relationships with the Company;

     WHEREAS, Executive is a key employee of the Company and he acknowledges
that his talents and services to the Company are of a special, unique, unusual
and extraordinary character and are of particular and peculiar benefit and
importance to the Company;

     WHEREAS, the Company is concerned that in the event of a possible or
threatened change in control of the Company, uncertainties necessarily arise;
Executive may have concerns about the

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continuation of his employment status and responsibilities and may be approached
by other offering competing employment opportunities; the Company, therefore,
desires to provide Executive assurances as to the continuation of his employment
status and responsibilities in such event;

     WHEREAS, the Company further desires to assure Executive that, if a
possible or threatened change in control should arise and Executive should be
involved in deliberations or negotiations in connection therewith, Executive
would be in a secure position to consider and participate in such transaction as
objectively as possible in the best interest of the company and to this end
desires to protect Executive from any direct or implied threat to his financial
well-being;

     WHEREAS, Executive is willing to continue to serve as such but desires
assurances that in the event of such a change in control he will continue to
have the employment status and responsibilities he could reasonably expect
absent such event and, that in the event this turns out not to be the case, he
will have fair and reasonable severance protection on the basis of his service
to the Company to that time;

     WHEREAS, different factors affect the Company and executive under
circumstances of regular employment between the Company and the Executive when
there is no threat of change in control and/or none has occurred, as opposed to
circumstances under which a change in control is rumored, threatened, occurring
or has occurred. For this reason this Employment Agreement is primarily in tow
parts. One part deals with the regular employment of Executive under
circumstances whereby no change in control is threatened, occurring or occurred;
herein called "Regular Employment". The second part deals with circumstances
whereby a change in control is threatened, occurring or has occurred. Other
parts of the Agreement deal with matters affecting both Regular Employment and
employment following changes in control, including non-competition and
confidentiality; and

     WHEREAS, Executive is willing to enter into and carry out the Non-
Competition and Confidentiality Agreement set forth herein in consideration of
the employment agreement set forth herein.

                                   AGREEMENT
                                   ---------

     NOW, THEREFORE, the parties agree as follows:

I.  PRIOR AGREEMENTS/EMPLOYMENT CONTRACTS.

1.01  Prior Agreements.  Executive has no continuing non-competition agreements
      with any prior employers that have not been disclosed to Company.
      Executive has completed a Company employment application and all
      information provided therein is true and correct to the best of his
      knowledge and belief and is incorporated herein by reference.

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II.  DEFINITION OF TERMS.

2.01  Company. Company means Pride International, Inc., a Louisiana corporation,
      as the same presently exists, as well as any and all successors,
      regardless of the nature of the entity or the State or Nation of
      organization, whether by reorganization, merger, consolidation, absorption
      or dissolution. For the purpose of the Non-Competition and Confidentiality
      agreement, Company includes any subsidiary or affiliate of the Company to
      the extent it is carrying on any portion of the business of the Company or
      a business similar to that being conducted by the Company.

2.02  Executive/Office Employee.  Executive/Officer/Employee means Marcelo
      Guiscardo.

2.03  Office/Position/Title. The Office, Position and Title for which the
      Executive is employed is that of Vice President, E&P Services for the
      Company and President of Servicos Especiales San Antonio, S.A., a
      subsidiary of the Company and carries with it such duties,
      responsibilities, rights, benefits and privileges or as may reasonably be
      assigned to the Executive that are customary and usual for such position
      at the Company.

2.04  Effective Date. This Agreement becomes effective and binding as of March
      1, 2000.

2.05  Change in Control. The term "Change in Control" of the Company shall mean,
      and shall be deemed to have occurred on the date of the first to occur of
      any of the following:

      a.  there occurs a Change in Control of the Company of the nature that
          would be required to be reported in response to item 6(e) of Schedule
          14A of Regulation 14A or Item 1 of Form 8(k) promulgated under the
          Securities Exchange Act of 1934 as in effect on the date of this
          Agreement, or if neither item remains in effect, any regulations
          issued by the Securities and Exchange Commission pursuant to the
          Securities Exchange Act of 1934 which serve similar purposes;

      b.  any "person" (as such term is used in Sections 12(d) and 14(d)(2) of
          the Securities Exchange Act of 1934) is or becomes a beneficial owner,
          directly or indirectly, of securities of the company representing
          twenty percent (20%) or more of the combined voting power of the
          Company's then outstanding securities;

      c.  the individuals who were members of the Board of Directors of the
          Company immediately prior to a meeting of the shareholders of the
          Company involving a contest for the election of Directors shall not
          constitute a majority of the Board of Directors following such
          election;

      d.  the Company shall have merged into or consolidated with another
          corporation, or merged another corporation into the Company, on a
          basis whereby less than fifty percent (50%)

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          of the total voting power of the surviving corporation is represented
          by shares held by former shareholders of the Company prior to such
          merger or consolidation;

      e.  the Company shall have sold, transferred or exchanged all, or
          substantially all, of its assets to another corporation or other
          entity or person.

2.06  Termination. The term "termination" shall mean termination, prior to the
      expiration of the Employment Period, of the employment of the Executive
      with the Company [including death and disability (as described below)] for
      any reason other than cause (as described below) or voluntary resignation
      (as described below). Termination includes "Constructive Termination" as
      described below. Termination includes non-renewal or failure to extend
      this Agreement at the end of any employment term, except for cause.

      a.  The term "disability" means physical or mental incapacity qualifying
          the Executive for a long-term disability under the Company's long-term
          disability plan. If no such plan exists on the Effective date of this
          Agreement, the term "disability" means physical or mental incapacity
          as determined by a doctor jointly selected by the Executive and the
          Board of Directors of the Company qualifying the Executive for long-
          term disability under reasonable employment standards.

      b.  The term "cause" means: (i) the failure of the Executive to perform
          his duties with the Company (other than any failure due to physical or
          mental incapacity) after a demand for substantial performance is
          delivered to him by his supervisor which specifically identifies the
          manner in which he believes he has not substantially performed his
          duties, (ii) misconduct materially and demonstrably injurious to the
          Company, (iii) violation of any Company policy including the covenant
          not to compete (except after termination under the change in Control
          provisions and confidentiality provisions hereof), or (iv) making a
          false statement on his employment application which is incorporated
          herein by reference. The unwillingness of the Executive to accept any
          change in the nature or scope of his position, authorities or duties
          or any other reasonable request of the Company in respect of his
          position, authority, or responsibility may be considered by his
          supervisor to be a failure to perform by the Executive unless it
          occurs after a Change in Control. Notwithstanding the foregoing, the
          Executive shall not be deemed to have been terminated for cause for
          purposes of this Agreement unless and until there shall have been
          delivered to him a letter setting out the particulars and basis for
          his termination for cause.

      c.  The resignation of the Executive shall be deemed "voluntary" if it is
          for any reason other than one or more of the following:

          (i)  the Executive's resignation or retirement is requested by the
               Company other than for cause;

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         (ii)  any reduction in the Executive's total compensation or benefits
               from that provided in the Compensation and Benefits Section
               hereof;

        (iii)  the material breach by the Company of any other provision of this
               Agreement;

         (iv)  non-renewal or failure to extend any employment term, contrary to
               the wishes of the Executive.

     Termination that entitles the Executive to the payments and benefits
provided in the "Termination Payments and Benefits" Section hereof shall not be
deemed or treated by the Company as the termination of the Executive's
employment or the forfeiture of his participation, award, or eligibility, for
the purpose of any plan, practice or agreement of the Company referred to in the
Compensation and Benefits Section hereof.

2.07  Customer. The term "Customer" includes all persons, firms or entities that
      are purchasers or end-users of services or products offered, provided,
      developed, designed, sold or leased by the Company during the relevant
      time periods, and all persons, firms or entities which control or which
      are controlled by, the same person, firm or entity which controls such
      purchase.

II.   EMPLOYMENT.

3.01  Employment. Except as otherwise provided in this Agreement, the Company
      hereby agrees to continue the Executive in its employ, and the Executive
      hereby agrees to remain in the employ of the Company, for the Term of
      Employment ("Employment Period") herein specified. During the Employment
      Period, Executive shall exercise such position and authority and perform
      such responsibilities as are commensurate with the position and as
      directed by his supervisor which services shall be performed at such
      location as the Company may reasonably require.

3.02  Best Efforts and other Employment of Executive.

      a.  Executive agrees that he will at all times faithfully, industriously
          and to the best of his ability, experience and talents, perform all of
          the duties that may be required of and from him pursuant to the
          express and implicit terms hereof, to the reasonable satisfaction of
          the Company and in compliance with the Company Policy Manual. Said
          duties shall be rendered at such place or places within or outside the
          United States as the Company shall in good faith require or as the
          interest, needs, business, or opportunities of the Company shall
          require.

      b.  Executive shall devote his normal and regular business time, attention
          and skill to the business and interests of the Company, and the
          Company shall be entitled to all of the

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          benefits, profits or other issue arising from or incident to all work,
          services and advise of Executive performed for the Company. Such
          employment shall be considered "full time" employment. Executive shall
          have the right to make investments in businesses which engage in
          activities other than those engaged by the company. Executive shall
          also have the right to devote such incidental and immaterial amounts
          of his time which are not required for the full and faithful
          performance of his duties hereunder to any outside activities and
          businesses which are not being engaged in by the Company and which
          shall not otherwise interfere with the performance of his duties
          hereunder. Executive shall have the right to make investments in the
          manner and to the extent authorized and set forth in the Non-
          Competition Section of this Agreement and the Securities' Transaction
          Policy of the Company (Policy I-37 dated 12-1-97).

3.03  Term of Employment. ("Employment Period"). Executive's regular employment
      (no Change in Control being presently contemplated) will commence on the
      Effective Date of this Agreement and will be a for a term of two (2) years
      ending at 12:00 o'clock midnight February 28, 2002; thereafter, the Term
      of Employment of executive will be automatically extended for successive
      terms of one (1) year each commencing March 1, 2002, and ending on
      February 28 of each year thereafter, unless Company or Executive gives
      written notice to the other that employment will not be renewed or
      continued after the next scheduled expiration date which is not less than
      one (1) year after the date that the notice of non-renewal was given. All
      extended employment terms will be considered to be within the Employment
      Period while Executive is employed with the Company.

3.04  Compensation and Benefits. During the Employment Period the Executive
      shall receive the following compensation and benefits:

      a.  He shall receive an annual base salary which is not less than his
          annual base salary, with the opportunity for increases, from time to
          time thereafter, which are in accordance with the Company's regular
          executive compensation practices ("annual base salary"). Executive's
          salary will be reviewed at least annually. Executive's initial annual
          base salary will be $230,000.00.

      b.  To the extent that such plans exist immediately prior to the Effective
          Date of this Agreement, he shall be eligible to participate on a
          reasonable basis, and to continue his existing participation, in
          annual bonus, stock option and other incentive compensation plans
          which provide opportunities to receive compensation in addition to his
          annual base salary which is provided by the Company for Executives
          with comparable duties.

      c.  To the extent such plans exist immediately prior to the Effective Date
          of this Agreement, he will be entitled to receive and participate in
          exempt employee benefits (including, but not limited to, medical,
          life, health, accident and disability insurance and disability
          benefits) and prerequisites provided by the Company to Executives with
          comparable duties.

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      d.  Paid vacations each year to the same extent as provided to Executives
          with comparable duties. Presently vacation accrues at the rate of two
          weeks annually for those salaried employees with less than ten (10)
          years of service.

      e.  Participation in all other executive incentive stock and benefit plans
          approved by the Committee.

3.05  Termination without Change in Control. The Company shall have the right to
      terminate Executive at any time during the Employment Period (including
      any extended term). Should the Company choose not to renew or extend the
      employment Period of this Employment Agreement or choose to terminate the
      Executive, during or at the end of the Employment Period, or in the event
      of death or disability of the Executive, if the termination is not after a
      Change in Control and is not for cause, the Company shall, within thirty
      (30) days following such termination, pay and provide to the Executive (or
      his Executor, Administrator or Estate in the event of death, as soon as
      reasonably practical):

      a.  An amount equal to one (1) full year of his base salary (including the
          amount allocated to the covenant not to compete), which base salary is
          here defined as twelve (12) times the then current monthly salary in
          effect for the Executive and all other benefits due him based upon the
          salary in effect on the Date of Termination (but not less than the
          highest annual base salary paid to the Executive during any of the
          three (3) years immediately preceding his Date of Termination). There
          shall be deducted only such amounts as may be required by law to be
          withheld for taxes and other applicable deductions.

      b.  The Company shall make available to Executive and his immediate family
          for a period of one (1) full year following the date of Termination,
          life, health, accident and disability insurance which are not less
          than the highest benefits furnished to the Executive and his immediate
          family during the term of this Agreement.

      c.  An amount equal to the target award for the Executive under the
          Company's annual bonus plan for the fiscal year in which termination
          occurs, provided that if the Executive has deferred his award for such
          year under a Company plan, the payment due the Executive under this
          subparagraph shall be paid in accordance with the terms of the
          deferral or as specified by the Executive.

      d.  The Company shall pay, distribute and otherwise provide to the
          Executive the amount and value of his entire plan account and interest
          under any employee benefit plan, investment plan or stock ownership
          plan, if any exists on the Date of Termination, and all employer
          contributions made or payable to any such plan for his account prior
          to the end of the month in which Termination occurs shall be deemed
          vested and payable to him. Such payment or distribution shall be in
          accordance with the elections made by the Executive

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          in respect of distributions in accordance with the plan as if the
          Executive's employment in the Company terminated at the end of the
          month in which Termination occurs.

      e.  All stock options and awards to which the Executive is entitled will
          immediately vest and the time for exercising any option will be as
          specified in the plan; provided however, if the immediate vesting of
          all benefits under the plan is not permitted by the plan, then the
          benefits will be vested only to the extent authorized or permitted by
          the plan.

      f.  All life, health, hospitalization, medical and accident benefits
          available to Executive's spouse and dependents shall continue for the
          same term as the Executive's benefits. If the Executive dies, all
          benefits will be provided for a term of one (1) year (or two (2) years
          after a change in Control) after the date of death of the Executive.

      g.  The Company's obligation under this section to continue to pay or
          provide health care, life, accident and disability insurance to the
          Executive, the Executive's spouse and Executive's dependents, during
          the remainder of the Employment Period shall be reduced when and to
          the extent of any such benefits are paid or provided to the Executive
          by another employer, provided that the Executive shall have all rights
          afforded to retirees to convert group insurance coverage to the
          individual insurance coverage as to the extent of, and whenever his
          group insurance coverage under this Section is reduced or expires. A
          part from this subparagraph, the Executive shall have and be subject
          to no obligation to mitigate.

      h.  The Company shall deduct applicable withholding taxes in performing
          its obligation under this Section.

     Nothing in this Section is intended, nor shall be deemed or interpreted, to
be an amendment to any compensation, benefit or other plan to the Company. To
the extent the Company's performance under this Section includes the performance
of the Company's obligations to the Executive under any other plan or under
another agreement between the Company and the Executive, the rights of the
Executive under such other plan or other agreements, which are discharged under
this Agreement, are discharged, surrendered, or released pro tanto.

IV.  CHANGE IN CONTROL.

4.01  Extension of Employment Period. Upon any Change in Control the Employment
      Period shall be immediately and without further action extended for a term
      of two (2) years following the Effective Date of the Change in Control and
      will expire at 12:00 o'clock midnight on the last day of the month
      following two (2) years after the Change in Control. Thereafter, the
      employment period will be extended for successive terms of one (1) year
      each, unless terminated, all in the manner specified in the Term of
      Employment Section pertaining to regular employment.

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4.02  Change in Control Termination Payments and Benefits. In the event the
      Executive is terminated within two (2) years following a Change in
      Control, the Executive will receive the payments and benefits specified in
      the "Termination without Change in Control" Section in the same time and
      manner therein specified except as amended and modified hereby:

      a.  The salary and benefits specified in Section 3.05a. will be paid based
          upon a multiple of two (2) years (instead of one (1) year).

      b.  Life, health, accident and disability insurance specified in section
          3.05b. will be provided until (i) Executive becomes reemployed and
          receives similar benefits from a new employer or (ii) two (2) years
          after the Date of Termination, whichever is earlier.

      c.  An amount equal to two (2) times the maximum award that the Executive
          could receive under the company's Annual Bonus Plan for the fiscal
          year in which the termination occurs, instead of the benefits provided
          in Section 3.05c.

      d.  All other rights and benefits specified in section 3.05.

4.03  Voluntary Resignation upon Change in Control. If the Executive voluntarily
      resigns his employment within six (6) months after a Change in Control
      (whether or not Company may be alleging the right to terminate employment
      for cause), he will receive the same payments, compensation and benefits
      as if he had been terminated on the date of resignation after Change in
      Control.

V.  NON-COMPETITION AND CONFIDENTIALITY.

5.01  Consideration. The base salary awarded to the Executive and to be paid to
      the Executive in the future includes consideration for the Non-Competition
      and Confidentiality agreement set forth herein and the amount to be paid
      to Executive in the event of the termination of employment of Executive,
      voluntarily, involuntarily, or under a Change of Control, under Section
      3.05a. and 4.02a. hereof constitute payment, in part, for the Non-
      Competition and Confidentiality of the Executive. It is contracted,
      stipulated and agreed that fifteen percent (15%) of such amount paid and
      to be paid to the Executive shall constitute the consideration for the
      non-Competition and Confidentiality Agreement set forth herein.

5.02  Non-Competition. Executive acknowledges that his employment with the
      company has in the past and will, of necessity, provide him with
      specialized knowledge which, if used in competition with the Company could
      cause serious harm to the Company. Accordingly, the Executive agrees that
      during his employment with the company and for a period of one (1) year
      after he is no longer employed by the Company (unless his employment is
      terminated after a Change in Control, in which event there will be no
      covenant not to

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      compete and the provisions of the covenant not to compete herein contained
      will terminate on the date of termination of Executive). Executive will
      not, directly or indirectly, either as an individual, proprietor,
      stockholder {other than as a holder of up to one percent (1 %) of the
      outstanding shares of a corporation whose shares are listed on a stock
      exchange or traded in accordance with the automated quotation system of
      the National Association of Securities Dealers}, partner, officer,
      employee or otherwise:

      a.  work for, become an employee of, invest in, provide consulting
          services or in any way engage in any business which provides,
          produces, leases or sells products or services of the same or similar
          type provided, produced, leased or sold by the Company and with regard
          to which Executive was engaged, or over which Executive had direct or
          indirect supervision or control, within one (1) year preceding the
          Executive's termination of employment, in any area where the company
          provided, produced, leased or sold such products or services at any
          time during the one (1) year preceding such termination of employment;
          or

      b.  Provide, sell, offer to sell, lease, offer to lease, or solicit any
          orders for any products or services which the Company provided and
          with regard to which the Executive had direct or indirect supervision
          or control, within one (1) year preceding Executive's termination of
          employment, to or from any person, firm or entity which was a customer
          for such products or services of the Company during the one (1) year
          preceding such termination from whom the Company had solicited
          business during such one (1) year; or

      c.  Solicit, aid, counsel or encourage any officer, director, employee or
          other individual to (i) leave his or her employment or position with
          the Company or (ii) compete with the business of the Company, or (iii)
          violate the terms of any employment, non-competition or similar
          agreement with the Company; or

      d.  employ, directly or indirectly; permit the employment of; contract for
          services or work to be performed by; or otherwise use, utilize or
          benefit from the services of any officer, director, employee or any
          other individual holding a position with the Company within two (2)
          years after the Date of Termination of employment of Executive with
          the Company or within two (2) years after such officer, director,
          employee or individual terminated employment with the Company,
          whichever occurs earlier.

5.03  Confidentiality. Executive acknowledges that his employment with the
      Company has in the past and will, of necessity, provide him with
      specialized knowledge which, if used in competition with the Company, or
      divulged to others, could cause serious harm to the Company. Accordingly,
      executive will not at any time during or after his employment by the
      Company, directly or indirectly, divulge, disclose or communicate to any
      person, firm or corporation in any manner whatsoever any information

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      concerning any matter affecting or relating to the Company or the business
      of the Company. While engaged as an employee of the Company, Executive may
      only use information concerning any matters affecting or relating to the
      Company or the business of the company for a purpose which is necessary to
      the carrying out of the Executive's duties as an employee of the company,
      and Executive may not make use of any information of the Company after he
      is no longer an employee of the company. Executive agrees to the foregoing
      without regard to whether all of the foregoing matters will be deemed
      confidential, material or important, it being stipulated by the parties
      that all information, whether written or otherwise regarding the Company's
      business, including, but not limited to, information regarding customers,
      customer lists, costs, prices, earnings, products, services, formulae,
      compositions, machines, equipment, apparatus, systems, manufacturing
      procedures, operations, potential acquisitions, new location plans,
      prospective and executed contracts and other business arrangements, and
      sources of supply, is prima facie presumed to be important, material and
      confidential information of the Company for the purposes of this
      Agreement, except to the extent that such information may be otherwise
      lawfully and readily available to the general public. Executive further
      agrees that he will, upon termination of his employment with the Company,
      return to the company all books, records, lists and other written, typed
      or printed materials, whether furnished by the company or prepared by
      Executive, which contain any information relating to the Company's
      business, and Executive agrees that he will neither make nor retain any
      copies of such materials after termination of employment.

5.04  Geographical Area. The geographical area within which the non-competition
      covenants of this Agreement shall apply is that territory within two
      hundred (200) miles of: (i) any of the Company's present offices, (ii) any
      of the Company's present rig yards or rig operations, and (iii) any
      additional location where the Company, as of the date of any action taken
      in violation of the non-competition covenants of this Agreement, has an
      office, a rig yard, rig operation or definitive plans to locate an office,
      a rig operation or a rig yard or has recently conducted rig operations.
      Notwithstanding the foregoing, if the two hundred (200) mile radius
      extends into another country or its territorial waters and the Company is
      not then doing business in that other country, there will be no
      territorial limitations extending into such other country.

5.05  Company Remedies for Violation of Non-Competition or Confidentiality
      Agreement. Without limiting the right of the Company to pursue all other
      legal and equitable rights available to it for violation of any of the
      covenants made by Executive herein, it is agreed that:

      a.  the skills, experience and contacts of Executive are of a special,
          unique, unusual and extraordinary character which give them a peculiar
          value;

      b.  Because of the business of the Company, the restrictions agreed to by
          Executive as to time and area contained in this Agreement are
          reasonable; and

      c.  The injury suffered by the Company by a violation of any covenant in
          this Agreement resulting from loss of profits created by the
          competitive use of such skills, experience and contacts and otherwise
          will be difficult to calculate in damages in an action at law and

                                      -11-
<PAGE>

          cannot fully compensate the Company for any violation of any covenant
          in this Agreement, accordingly:

          (i)  the Company shall be entitled to injunctive relief to prevent
               violations thereof and to prevent Executive from rendering any
               services to any person, firm or entity in breach of such covenant
               and to prevent Executive from divulging any confidential
               information; and

         (ii)  compliance with this Agreement is a condition precedent to the
               Company's obligation to make payments of any nature to Executive.

5.06  Termination of Benefits for violation of Non-Competition and
      Confidentiality . If Executive's termination was not after a Change in
      Control and if Executive shall be violating the Confidentiality and/or
      Non-Competition Agreement or any agreement he may have signed as an
      employee of the Company, Executive agrees that after receipt of written
      notice he shall continue such action and that there shall be no obligation
      on the part of the Company to provide any payments or benefits (other than
      payments or benefits already earned or accrued) described in the
      Termination of Rights and Benefits Section hereof, subject to the
      provisions of Section 6.01 hereof. There will be no withholding of
      benefits or payments if the termination occurred after a Change in Control
      and Executive will not be bound by the non-competition provisions if
      terminated while the Change in Control provisions hereof are applicable.

VI.  GENERAL.

6.01  Enforcement Costs. The Company is aware that upon the occurrence of a
      Change in Control, or under other circumstances even when a Change in
      Control has not occurred, the Board of Directors or a shareholder of the
      company may then cause or attempt to cause the Company to refuse to comply
      with its obligations under this Agreement, or may cause or attempt to
      cause the Company to institute, or may institute, litigation seeking to
      have this Agreement declared unenforceable, or may take, or attempt to
      take, other action to deny Executive the benefits intended under this
      Agreement; or actions may be taken to enforce the non-competition or
      confidentiality provisions of this Agreement. In these circumstances, the
      purpose of this Agreement could be frustrated. It is the intent of the
      parties that the executive not be required to incur the legal fees and
      expenses associated with the protection or enforcement of his rights under
      this agreement by litigation or other legal action because such costs
      would substantially detract from the benefits intended to be extended to
      Executive hereunder, nor be bound to negotiate any settlement of his
      rights hereunder under threat of incurring such costs. Accordingly, if at
      any time after the Effective Date of this Agreement, it should appear to
      Executive that the Company is or has acted contrary to or is failing or
      has failed to comply with any of its obligations under this Agreement for
      the reason that it regards this Agreement to be void or unenforceable,
      that Executive has violated the terms of this Agreement, or for any other
      reason, or that the company has purported to terminate his

                                      -12-
<PAGE>

      employment for cause or is in the course of doing so, or is withholding
      payments or benefits, or is threatening to withhold payments or benefits,
      contrary to this Agreement, or in the event that the Company or any other
      person takes any action to declare this Agreement void or unenforceable,
      or institutes any litigation or other legal action designed to deny,
      diminish or to recover from Executive the benefits provided or intended to
      be provided to him hereunder, and Executive has acted in good faith to
      perform his obligations under this Agreement, the Company irrevocably
      authorized Executive from time to time to retain counsel of his choice at
      the expense of the company to represent him in connection with the
      protection and enforcement of his rights hereunder, including, without
      limitation, representation in connection with termination of his
      employment or withholding of benefits or payments contrary to this
      Agreement or with the initiation or defense of any litigation or any other
      legal action, whether by or against Executive or the company or any
      Director, Officer, Shareholder or other person affiliated with the
      Company, in any jurisdiction. Company is not authorized to withhold the
      periodic payments of attorneys' fees and expenses hereunder based upon any
      belief or assertion by the Company that Executive has not acted in good
      faith or has violated this Agreement. If Company subsequently establishes
      that Executive was not acting in good faith and has violated this
      Agreement, Executive will be liable to the company for reimbursement of
      amounts paid due to Executive's actions not based on good faith and in
      violation of this Agreement. The reasonable fees and expenses of counsel
      selected from time to time by Executive as hereinabove provided shall be
      paid or reimbursed to Executive by the Company, on a regular, periodic
      basis within thirty (30) days after presentation by Executive of a
      statement or statements prepared by such counsel in accordance with its
      customary practices, up to a maximum aggregate amount of One Hundred Fifty
      thousand Dollars ($150,000.00).

6.02  Income, Excise or other Tax Liability. Executive will be liable for and
      will pay all income tax liability by virtue of any payments made to
      Executive under this Agreement, as if the same were earned and paid in the
      normal course of business and not the result of a Change in Control and
      not otherwise triggered by the "golden parachute" or excess payment
      provisions of the Internal Revenue Code of the United States, which would
      cause additional tax liability to be imposed.

6.03  Payment of Benefits upon Termination for Cause. If the termination of
      executive is for cause and not after a Change in Control, the Company will
      have the right to withhold all payments (except those specified in Section
      6.01); provided however, that if a final judgment is entered finding that
      cause did not exist for termination, the Company will pay all benefits to
      Executive to which he would have been entitled had the termination not
      been for cause, plus interest on all amounts withheld from Executive at
      the rate specified for judgements under Article 5069-1.05 V.A.T.S. If the
      termination for cause occurs after a Change in Control, the Company shall
      have the right to suspend or withhold payments to Executive under any
      provision of this Agreement until or unless a final judgment is entered
      upholding the company's determination that the termination was for cause,
      in which event Executive will be liable to the Company for all amounts
      paid, plus interest at the rate allowed for judgments under Article 5069-
      1.05 V.A.T.S.

                                      -13-
<PAGE>

6.04  Non-Exclusive Agreement. The specific arrangements referred to herein are
      not intended to exclude or limit Executive's participation in other
      benefits available to executive personnel generally, or to preclude or
      limit other compensation or benefits as may be authorized by the Board of
      Directors of the company at any time, or to limit or reduce any
      compensation or benefits to which Executive would be entitled but for this
      Agreement.

6.05  Notices. Notices, requests, demands and other communications provided for
      by this Agreement shall be in writing and shall either be personally
      delivered by hand or sent by: (i) Registered or Certified Mail, Return
      Receipt Requested, postage prepaid, properly packaged, addressed and
      deposited in the United States Postal System; (ii) via facsimile
      transmission if the receiver acknowledges receipt; or (iii) via Federal
      Express or other expedited delivery service provided that acknowledgment
      of receipt is received and retained by the deliverer and furnished to the
      sender, if to Executive, at the last address he has filed, in writing,
      with the Company, or if to the Company, to its Corporate Secretary at its
      principal executive offices.

6.06  Non-Alienation. Executive shall not have any right to pledge, hypothecate,
      anticipate, or in any way create a lien upon any amounts provided under
      this Agreement, and no payments or benefits due hereunder shall be
      assignable in anticipation of payment either by voluntary or involuntary
      acts or by operation of law. So long as Executive lives, no person, other
      than the parties hereto, shall have any rights under or interest in this
      Agreement or the subject matter hereof Upon the death of Executive, his
      Executors, Administrators, Devisees and Heirs, in that order, shall have
      the right to enforce the provisions hereof.

6.07  Entire Agreement; Amendment. This Agreement constitutes the entire
      agreement of the parties with respect of the subject matter hereof. No
      provision of this Agreement may be amended, waived, or discharged except
      by the mutual written agreement of the parties. The consent of any other
      person(s) to any such amendment, waiver or discharge shall not be
      required.

6.08  Successors and Assigns. This Agreement shall be binding upon and inure to
      the benefit of the Company, its successors and assigns, by operation of
      law or otherwise, including, without limitation, any corporation or other
      entity or persons which shall succeed (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all
      of the business and/or assets of the Company, and the Company will require
      any successor, by agreement in form and substance satisfactory to
      Executive, expressly to assume and agree to perform this Agreement. Except
      as otherwise provided herein, this agreement shall be binding upon and
      inure to the benefit of Executive and his legal representatives, heirs and
      assigns, provided however, that in the event of Executive's death prior to
      payment or distribution of all amounts, distributions and benefits due him
      hereunder, each such unpaid amount and distribution shall be paid in
      accordance with this Agreement to the person or persons designated by
      Executive to the company to receive such payment or distribution and in
      the event Executive has made no applicable designation, to his Estate. If
      the Company should split, divide or otherwise become more than one entity,
      all liability

                                      -14-
<PAGE>

      and obligations of the Company shall be the joint and several liability
      and obligation of all of the parts.

6.09  Governing Law. Except to the extent required to be governed by the laws of
      the State of Louisiana because the company is incorporated under the laws
      of said State, the validity, interpretation and enforcement of this
      Agreement shall be governed by the laws of the State of Texas.

6.10  Venue. Venue for all proceedings hereunder will be in the U.S. District
      Court for the Southern District of Texas, Houston Division. Executive
      hereby waives his right to request a jury.

6.11  Headings. The headings in this Agreement are inserted for convenience of
      reference only and shall not affect the meaning or interpretation of this
      Agreement.

6.12  Severability. In the event that any provision or portion of this Agreement
      shall be determined to be invalid or unenforceable for any reason, the
      remaining provisions of this Agreement shall be binding upon the parties
      hereto and the Agreement will be construed to give meaning to the
      remaining provisions of this agreement in accordance with the intent of
      this Agreement.

6.13  Partial Invalidity. In the event that any part, portion or Section of this
      Agreement is found to be invalid or unenforceable for any reason, the
      remaining provisions of this Agreement shall be binding upon the parties
      hereto and the Agreement will be construed to give meaning to the
      remaining provisions of this Agreement in accordance with the intent of
      this Agreement.

6.14  Counterparts. This Agreement maybe executed in one or more counterparts,
      each of which shall be deemed to be original, but all of which together
      constitute one and the same instrument.

                                      -15-
<PAGE>

     IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to
the authorization from its Board of Directors and the Compensation Committee,
the Company has caused these presents to be executed in its name and on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary or Assistant Secretary, all as of the day and year first above
written.

     EXECUTED in multiple originals and/or counterparts as the Effective Date.

WITNESS:                      EXECUTIVE EMPLOYEE:

                               /s/ Marcelo D. Guiscardo
                              --------------------------
                              Marcelo D. Guiscardo

                              COMPANY/EMPLOYER:

ATTEST:                       PRIDE INTERNATIONAL, INC.

   /s/ Robert W. Randall        By:  /s/ Paul A. Bragg
-----------------------------       ------------------------------
Robert W. Randall, Secretary        Paul A. Bragg, President & CEO

                                      -16-<PAGE>

                           FIFTH AMENDMENT TO FIRST
                     AMENDED AND RESTATED CREDIT AGREEMENT

     This Fifth Amendment to First Amended and Restated Credit Agreement (the
"Amendment") is made and entered into as of December 29, 2000, between AMERICAN
RESOURCES OFFSHORE, INC. ("ARO"), and BLUE DOLPHIN EXPLORATION COMPANY ("BDEX").

                              W I T N E S S E T H:

     WHEREAS, American Resources Offshore, Inc., Southern Gas Co. of Delaware,
Inc. ("Southern"), Den norske Bank, ASA ("Den norske Bank") and DNB Energy
Assets, Inc. ("DNB") entered into that certain Third Amendment to First Amended
and Restated Credit Agreement dated as of August 1, 1999 ("Third Amendment");

     WHEREAS, pursuant to the Third Amendment, ARO executed a certain promissory
note dated August 1, 1999 in the original principal amount of $51,223,000 made
payable to the order of Den norske Bank (the "$51,223,000 Note");

     WHEREAS, a Note Purchase Agreement dated November 11, 1999 was entered into
by and between DNB, Den norske Bank, BDEX and Fidelity Oil Holdings, Inc.
("Fidelity") ("Note Purchase Agreement");

     WHEREAS, pursuant to the Note Purchase Agreement, BDEX is the owner and
holder of the $51,223,000 Note and all rights of Den norske Bank under the Loan
Documents (defined below);

     WHEREAS, BDEX agreed, in exchange for ARO undertaking certain obligations
under the terms of the Note Purchase Agreement, to reduce the amount of the
indebtedness previously evidenced by the $51,223,000 Note to the principal
amount of $5,000,000;

     WHEREAS, ARO and BDEX entered into that certain Fourth Amendment to First
Amended and Restated Credit Agreement dated as of December 2, 1999 ("Fourth
Amendment");

     WHEREAS, pursuant to the Fourth Amendment, ARO executed a certain
promissory note dated December 2, 1999 in the original principal amount of
$5,000,000 made payable to the order of BDEX ("Replacement Note");

     WHEREAS, third parties have initiated the Subject Litigation (defined
below);

     WHEREAS, ARO denys that the Subject Transaction Occurrences and Events
(defined below) give rise to any liability to third parties.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties set forth in this Amendment, the parties hereto agree as follows:
<PAGE>

                                   ARTICLE I

                                  DEFINITIONS

     1.01  Terms Defined Above.  As used herein, each of the terms "DNB", "Den
norske Bank", "Southern", "ARO", "BDEX", "Note Purchase Agreement", "Third
Amendment", "Fourth Amendment", "Replacement Note" and "$51,223,000 Note" shall
have the meaning assigned to such term hereinabove.

     1.02  Additional Definitions.  As used herein the following terms shall
have the meanings specified below unless the context otherwise requires:

           a.  "Amended Replacement Note" shall mean a promissory note by ARO to
     BDEX of even date with this Amendment in the form of Exhibit A.

           b. "Collateral Documents" shall mean the liens, assignments and
     security interests evidenced, created and/or perfected pursuant to the Loan
     Documents, including, but not limited to, the instruments described in
     Exhibit A to the Note Purchase Agreement.

           c. "Credit Agreement" shall mean the First Amended and Restated
     Credit Agreement dated November 1, 1997 by and between ARO, Southern Gas
     Co. of Delaware, Inc. and DNB as amended by the First Amendment to First
     Amended and Restated Credit Agreement dated March 5, 1998, the Second
     Amendment to First Amended and Restated Credit Agreement dated October 1,
     1998, the Third Amendment to First Amended and Restated Credit Agreement
     dated August 1, 1999 between ARO, Den norske Bank and DNB and the Fourth
     Amendment to the First Amended and Restated Credit Agreement and this Fifth
     Amendment to First Amended and Restated Credit Agreement.

           d.  "Event of Default" shall have the same meaning as set forth in
     Article VIII.

           e.  "Investment Agreement" shall mean that certain Investment
     Agreement dated as of July 30, 1999 between ARO and BDEX.

           f.  "Loan Documents" shall mean the Amended Replacement Note, Credit
     Agreement and Collateral Documents, together with all documents,
     instruments and agreements executed in connection therewith including,
     without limitation, the mortgages and security agreements.

           g  "Related Interests" shall mean all liens, assignments, security
     interests, rights and remedies arising under or relating to the Loan
     Documents.

           h  "Release Determination Date" Provided that no additional
     litigation arising
<PAGE>

     out of or related to the subject matter of the Subject Litigation is filed
     against ARO or its officers, employees, directors, and agents based upon
     the Subject Transactions, Occurrences and Events prior to the release
     and/or dismissal with prejudice of all claims and causes of action asserted
     against ARO, its officers, employees, directors and agents in the Subject
     Litigation, then the Release Determination Date shall be the date on which
     all claims and causes of action asserted against ARO, its officers,
     employees, directors and agents in the Subject Litigation are released
     and/or dismissed with prejudice. In the event that additional litigation
     arising out of or related to the subject matter of the Subject Litigation
     is filed against ARO or its officers, employees, directors and agents based
     upon the Subject Transactions, Occurrences and Events prior to the release
     and/or dismissal with prejudice of all claims and causes of action asserted
     against ARO, its officers, employees, directors and agents in the Subject
     Litigation, then the Release Determination Date shall be the date on which
     all claims and causes of action asserted against ARO, its officers,
     employees, directors and agents in the Subject Litigation and the
     additional litigation are released and/or dismissed with prejudice.

           i.  "Subject Litigation" shall mean the cases styled (i) District
     Court No. 5:00-cv-00421; Bankruptcy Court No. 95-50894; Adversary No. 98-
     5023; In Re Wright Enterprises, Debtor, James D. Lyon, Trustee,
     Plaintiff/Appellant, vs. Southern Gas Company, Inc., Southern Gas Co.,
     Alpha Gas Development of Texas, Inc., Alpha Gas Development, Inc., Southern
     Gas Holding Company, Inc., Southern Gas Co. of Delaware, Inc., American
     Resources of Delaware, Inc., Rick Avare, Karen Underwood, William F. Nave
     II, and Wil F. Kowalke, Defendants/Appellees; in the United States District
     Court for the Eastern District of Kentucky at Lexington and (ii) Case
     Number H-00-1371; H&N Gas, Limited Partnership, and Howard Energy
     Marketing, L.L.C. v. Richard A. Hale, et al; in the United States District
     Court, Southern District of Texas.

           j.   "Subject Transactions Occurrences and Events" shall mean all
     actions, facts, matters or things, regardless of whether in the past,
     present or future, and regardless of whether now known or unknown which
     directly or indirectly arise out of or incidental to, or in any manner
     connected with the facts plead or disclosed in discovery and the claims
     made or that could have been made in the Subject Litigation.

                                   ARTICLE II

                                   CONDITIONS

     2.01  The obligations of BDEX to amend the Credit Agreement as provided
herein is subject to satisfaction of the following conditions precedent:

           a.  Receipt of Loan Documents and Other Items. BDEX shall have
     received multiple counterparts, as requested by BDEX, of the following
     documents and other items, appropriately executed when necessary and in
     form and substance satisfactory to BDEX:
<PAGE>

               (i)    this Amendment executed by ARO;

               (ii)   the Amended Replacement Note in partial renewal and
                      modification, but not in full discharge or novation of the
                      Replacement Note, executed by ARO; and

               (iii)  such other agreements, documents, instruments, opinions,
                      certificates, waivers, consents, and evidence as BDEX may
                      reasonably request.

           b.  Matters Satisfactory to BDEX.  All matters incident to the
     consummation of the transactions hereby contemplated shall be reasonably
     satisfactory to BDEX.

           c.  Consents and Litigation.  ARO shall have obtained all required
     third party consents to the transactions contemplated by this Amendment and
     all statutory requirements for valid consummation of the transactions
     contemplated by this Amendment shall have been fulfilled and all necessary
     governmental consents, approvals or reauthorizations shall have been
     obtained.  There shall not have been filed or threatened any suit, action
     or other proceeding (including any investigation of any governmental
     agency) to restrain or invalidate the transactions contemplated by this
     Amendment and no order, writ, injunction, or decree shall have been entered
     or be in effect that restrains, enjoins or limits the transactions
     contemplated by this Amendment.

           d.  Supporting Documents.  BDEX and its counsel shall receive
     reasonably satisfactory evidence that ARO has full power and authority and
     has taken all corporate actions necessary to execute and deliver this
     Amendment and consummate the transactions contemplated hereby and perform
     all of its obligations hereunder.

                                  ARTICLE III

                                 ACKNOWLEDGMENT

     ARO acknowledges and agrees that as of the date of this Agreement, after
giving effect to all payments, the unpaid principal balance due and owing on the
Replacement Note was $5,000,000, net of all claims and offsets.

                                   ARTICLE IV

                             RATIFICATION OF LIENS

     ARO hereby adopts, ratifies and confirms the Credit Agreement and the other
Loan Documents, in all things in accordance with the terms and provisions
thereof as amended.  ARO hereby confirms and agrees that any and all mortgages,
liens, security interests and other security or collateral acquired by BDEX
pursuant to the Note Purchase Agreement (which excludes the property conveyed by
ARO to Fidelity pursuant to the Property Purchase and Sale Agreement)
<PAGE>

and/or Assignment of Note, Claims, Liens, Security Interests and Other Rights
(subject to the Partial Release of Lien) as security for payment and performance
of the ARO Indebtedness hereby are renewed and carried forth to secure payment
and performance of the Amended Replacement Note.

                                   ARTICLE V

                              CONDITIONAL RELEASE

     Subject to strict adherence to the terms and conditions contained in this
Amendment, if the Subject Transactions, Occurrences and Events do not constitute
or give rise to or result in the occurrence of an Event of Default,  BDEX agrees
to execute and deliver to ARO a release of the obligation evidenced by the
Amended Replacement Note on the Release Determination Date.  All liens created
pursuant to the Loan Documents and this Agreement shall remain in effect after
release of the Amended Replacement Note to secure the performance by ARO of its
obligations under the Note Purchase Agreement.   Provided that no Event of
Default has occurred, BDEX shall, on the Release Determination Date,  release
the liens created pursuant to the Loan Documents and this Amendment.  Time is of
the essence with respect to the satisfaction of the obligations and requirements
set forth in this Amendment.  Any right to a release created by this Amendment
terminates immediately upon the occurrence of an Event of Default.  No credit
against or discount on the Amended Replacement Note shall be earned by partial
performance of the requirements.

                                   ARTICLE VI

                                   MORATORIUM

     Prior to the occurrence of an Event of Default of the type described in
Section 7.01 of this Agreement, BDEX will forbear from exercising or enforcing
any right under the Credit Agreement.

                                  ARTICLE VII

                               EVENTS OF DEFAULT

     7.01 Events of Default During the Moratorium Period.  During the moratorium
period provided for in Article VI, the occurrence of any one or more of the
following events shall constitute an Event of Default:

           a.  Any representation, warranty, certification or statement by ARO
     in this Amendment or in any certificate or other document delivered
     pursuant to this Amendment shall prove to have been incorrect in any
     material respect when made or deemed to have been made and is not cured by
     ARO within ten (10) business days after written notice thereof has been
     given to ARO by BDEX.
<PAGE>

           b.  Any representation, warranty, certification or statement by ARO
     in the Investment Agreement or in any certificate or other document
     delivered pursuant to the Investment Agreement shall prove to have been
     incorrect in any material respect when made or deemed to have been made as
     a result of or based upon the Subject Transactions, Occurrences and Events.

           c.  If not released pursuant to Article V, the failure of ARO to pay
     when due the full indebtedness evidenced by the Amended Replacement Note.

           d. The failure of ARO to timely satisfy its obligations to Den norske
     Bank under the Note Purchase Agreement.

     7.02 Events of Default After Expiration of Moratorium Period.  Upon
termination of the moratorium period provided for in Article VI, Events of
Default shall include those set forth in the Credit Agreement.

     7.03 Remedies.  Upon the occurrence of an Event of Default of the type
described in Section 8.01 (i) the moratorium period provided pursuant to Article
VI shall terminate immediately, without notice, demand or presentment, all of
which are hereby waived, and (ii) any right pursuant to Article V shall
terminate immediately, without notice, demand or presentment, all of which are
hereby waived.  In addition to any other provision of this Amendment or any Loan
Document, BDEX shall have all rights, remedies and recoveries now or hereafter
existing in equity, at law or by virtue of statute or otherwise.

                                  ARTICLE VIII

                                 MISCELLANEOUS

     8.01 Credit Agreement as Amended.  All reference to the Credit Agreement in
any document heretofore or hereafter executed in connection with the
transactions contemplated in the Credit Agreement shall be deemed to refer to
the Credit Agreement as amended by this Amendment.

     8.02 Parties in Interest.  All provisions of this Amendment shall be
binding upon and shall inure to the benefit of ARO and BDEX and their respective
successors and assigns.

     8.03 Rights of Third Parties.  All provisions herein are imposed solely and
exclusively for the benefit of ARO and BDEX and no other person shall have
standing to require satisfaction of such provisions in accordance with their
terms and any or all of such provisions may be freely waived in whole or in part
by BDEX at any time if in its sole discretion it deems it advisable to do so.

     8.04 Indemnification.  As additional consideration to the execution,
delivery, and performance of this Amendment by the parties hereto and to induce
BDEX to enter into this Amendment, ARO hereby agrees to indemnify, hold
harmless, and defend each of the Released
<PAGE>

Parties from and against any and all Claims of any nature or character, at law
or in equity, known or unknown, which may have arisen prior to the date hereof,
or accrued to, or could be claimed or asserted by, any third party prior to the
date hereof, INCLUDING WITHOUT LIMITATION, ANY CLAIMS ARISING OUT OF OR IN ANY
MANNER ATTRIBUTABLE TO THE NEGLIGENCE (SOLE, CONCURRENT, ORDINARY OR OTHERWISE),
OF ANY OF THE RELEASED PARTIES. Notwithstanding any provision of this Amendment
or any other Loan Document, this section shall remain in full force and effect
and shall survive the delivery and payment of the Amended Replacement Note, this
Amendment and the other Loan Documents and the making, extension, renewal,
modification, amendment or restatement of any thereof. Notwithstanding the above
language, this indemnification shall not be deemed to impair or be applicable to
ARO's rights to assert a claim against the Released Parties which may result
from a breach by BDEX of the Investment Agreement

     8.05 ENTIRE AGREEMENT.  THIS AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SUPERSEDES ANY
PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, BETWEEN SUCH PARTIES REGARDING THE
SUBJECT HEREOF.  FURTHERMORE IN THIS REGARD, THIS AMENDMENT, THE CREDIT
AGREEMENT, THE REPLACEMENT NOTE, THE SECURITY INSTRUMENTS, AND OTHER WRITTEN
DOCUMENTS REFERRED TO IN THE CREDIT AGREEMENT OR EXECUTED IN CONNECTION WITH OR
AS SECURITY FOR THE AMENDED REPLACEMENT NOTE REPRESENT, COLLECTIVELY, THE FINAL
AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

     8.06 GOVERNING LAW.  THIS AMENDMENT AND THE AMENDED REPLACEMENT NOTE SHALL
BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.

     8.07 JURISDICTION AND VENUE.  ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF BDEX, IN COURTS HAVING SITUS IN HOUSTON, TEXAS.  ARO
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN
HOUSTON, TEXAS, AND HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE
THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY BDEX IN
ACCORDANCE WITH THIS SECTION.
<PAGE>

     IN WITNESS WHEREOF, this Fifth Amendment to the First Amended and Restated
Credit Agreement is executed as of the date first hereinabove written.

                                    AMERICAN RESOURCES OFFSHORE, INC.

                                    By:  /s/R.B. Keller
                                         --------------
                                    Name:   R.B. Keller
                                    Title:  Vice President

                                    BLUE DOLPHIN EXPLORATION COMPANY

                                     By:  /s/Brian Lloyd
                                          --------------
                                     Name:  Brian Lloyd
                                     Title: Vice President, Treasurer
<PAGE>

                            FIFTH AMENDMENT TO FIRST
                     AMENDED AND RESTATED CREDIT AGREEMENT

                                    EXHIBITS

EXHIBIT 99A      Amended Replacement Note
<PAGE>

                                   EXHIBIT A

                            AMENDED REPLACEMENT NOTE

$5,000,000.00  Houston, Texas                                 December 29, 2000

     FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned American Resources
Offshore, Inc. (successor by merger to American Resources of Delaware, Inc.)
("Maker") promises to pay to the order of Blue Dolphin Exploration Company
("Payee"), at its office at 801 Travis, Suite 2100, Houston, Texas  77002, the
sum of FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00).

     Reference is hereby made to the First Amended and Restated Credit Agreement
dated November 1, 1997 by and between ARO, Southern Gas Co. of Delaware, Inc.
and DNB Energy Assets, Inc. as amended by the (i) First Amendment to First
Amended and Restated Credit Agreement dated March 5, 1998, (ii) Second Amendment
to First Amended and Restated Credit Agreement dated October 1, 1998, (iii)
Third Amendment to First Amended and Restated Credit Agreement dated August 1,
1999 between ARO, Den Norske Bank and DNB Energy Assets, Inc., (iv) Fourth
Amendment to First Amended and Restated Credit Agreement dated effective as of
December 2, 1999 between ARO and Blue Dolphin Exploration Company, and (v) Fifth
Amendment to First Amended and Restated Credit Agreement dated effective as of
December 1, 2000 between ARO and Blue Dolphin Exploration Company (as the same
may be further amended, supplemented, or restated from time to time,
collectively the "Credit Agreement"), for matters governed thereby, including,
without limitation, certain events which will entitle the holder hereof to
accelerate the maturity of all amounts due hereunder.  Capitalized terms used
but not defined in this Amended Replacement Note shall have the meanings
assigned to such terms in the Credit Agreement.

     This Amended Replacement Note is payable in full on the earlier of (i) the
occurrence of an Event of Default, or (ii) December 31, 2005.  Prior to the
occurrence of an Event of Default as defined in the Fifth Amendment to First
Amended and Restated Credit Agreement dated effective December 1, 2000, interest
shall not accrue on the principal amount of this Amended Replacement Note.
Subject to compliance with applicable provisions of the Credit Agreement, Maker
may at any time pay the full amount or any part of this Amended Replacement Note
without the payment of any premium or fee, but such payment shall not, until
this Amended Replacement Note is fully paid and satisfied, excuse the payment as
it becomes due of any payment on this Amended Replacement Note provided for in
the Credit Agreement.

     This Amended Replacement Note is issued in renewal and modification, but
not in novation or discharge, of the principal balance of that certain
Replacement Note dated December 2, 1999 in the original principal amount of
$5,000,000 made payable to the order of Blue Dolphin Exploration Company
("Replacement Note").  The Replacement Note was issued in partial renewal and
modification, but not in novation or discharge, of the remaining principal
balance of that certain Promissory Note, dated August 1, 1999, in the original
principal amount of $51,223,000 made payable to the order of Den Norske Bank
(the "$51,223,000 Note").  The
<PAGE>

$51,223,000 Note was issued in partial renewal and modification, but not in
novation or discharge, of the remaining principal balance of those three certain
promissory notes dated March 5, 1998, in the original principal amount of
$1,500,000, $15,000,000 and $75,000,000 from Maker and Southern Gas Co. of
Delaware, Inc. ("Southern") to DNB Energy Assets, Inc. ("DNB"), which promissory
notes were in renewal and extension, but not novation or discharge of that
certain promissory note dated November 1, 1997, in the original principal amount
of $75,000,000 from Maker and Southern jointly to Den Norske Bank, which
promissory note was in renewal and extension, but not novation or discharge of
that certain promissory note dated September 28, 1995, in the original principal
amount of $20,000,000 from Maker and Southern jointly to Den Norske Bank, which
promissory note was in renewal and extension, but not in novation or discharge
of that certain promissory note dated August 14, 1995, in the original principal
amount of $15,000,000 from Maker and Southern jointly to Bank One, Texas,
National Association ("Bank One"), which promissory note was in renewal and
extension, but not in novation or discharge of that certain promissory note
dated March 27, 1995, in the original principal amount of $20,000,000 from Maker
and Southern to Bank One, which promissory note was in renewal and extension,
but not in novation or discharge of that certain promissory note dated February
24, 1994 in the original principal amount of $7,375,000 from Maker and Southern
jointly to Bank One, which promissory note was in renewal and extension, not
novation or discharge of that certain promissory note dated March 24, 1993, in
the original principal amount of $3,500,000 from Southern Gas Holding Company,
Inc., Southern Gas Company, Inc. and Alpha Gas Development, Inc. jointly to
National American Life Insurance Company of Pennsylvania.

     Without being limited thereto or thereby, this Amended Replacement Note is
secured by the Loan Documents (as that term is defined in the Fifth Amendment to
First Amended and Restated Credit Agreement dated effective December 1, 2000).

     If any sum payable under this Amended Replacement Note or under the Credit
Agreement is not paid when due (whether the same becomes due by acceleration or
otherwise) and this Amended Replacement Note is placed in the hands of an
attorney for collection or enforcement of this Amended Replacement Note or the
Credit Agreement, or if this Amended Replacement Note is collected through any
legal proceedings, including, but not limited to suit, probate, insolvency or
bankruptcy proceedings, Maker agrees to pay all reasonable attorneys' fees and
all expenses of collection and costs of court.

     It is the intention of the parties hereto to comply with applicable usury
laws; accordingly, notwithstanding any provision to the contrary in this Amended
Replacement Note, the Credit Agreement, or in any of the documents securing
payment hereof or otherwise relating hereto, in no event shall this Amended
Replacement Note, the Credit Agreement, or such documents require the payment or
permit the collection of interest in excess of the maximum amount permitted by
such laws.  If any such excess of interest is contracted for, charged, taken,
reserved or received under this Amended Replacement Note or under the terms of
any of the documents securing payment hereof or otherwise relating hereto, or in
the event the maturity of the indebtedness evidenced by this Amended Replacement
Note is accelerated in whole or in part, or in the event that all or part of the
principal or interest of this Amended Replacement Note shall be prepaid, so
<PAGE>

that under any of such circumstances the amount of interest contracted for,
charged or received under this Amended Replacement Note or under any of the
instruments securing payment hereof or otherwise relating hereto, on the amount
of principal actually outstanding from time to time under this Amended
Replacement Note shall exceed the maximum amount of interest permitted by
applicable usury laws, then in any such event (a) the provisions of this
paragraph shall govern and control, (b) any such excess which may have been
collected shall at final maturity of said indebtedness either be applied as a
credit against the then unpaid principal amount hereof or be refunded to Maker,
at Payee's option, and (c) upon such final maturity the effective rate of
interest shall be automatically reduced to the maximum lawful rate allowed under
applicable usury laws as now or hereafter construed by the courts having
jurisdiction thereof. Without limiting the foregoing, all calculations of the
rate of interest contracted for, charged, taken, reserved or received under this
Amended Replacement Note or under such other documents which are made for the
purpose of determining whether such rate exceeds the maximum lawful rate, shall
be made, to the extent permitted by law, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of the
loan evidenced hereby, all interest at any time contracted for, charged, taken,
reserved or received from Maker or otherwise by Payee in connection with such
indebtedness. The terms of this paragraph shall be deemed to be incorporated in
every loan document, security instrument, and communication relating to this
Amended Replacement Note and loan.

     In the event that the laws of the State of Texas are determined by a court
of competent jurisdiction to be applicable to this Amended Replacement Note,
notwithstanding the expressed intention of the parties to be governed by the
laws of the State of New York, then the provisions of Texas Financing Code,
Chapter 346 (formerly Tex. Rev. Civ. Stats., Title 79, Chapter 15) are
specifically declared by the parties hereto not to be applicable to this Amended
Replacement Note, the applicable interest rate ceiling is the weekly ceiling
(formerly the indicated rate ceiling) determined in accordance with Tex. Rev.
Civ. Stat., Title 79, Article 5069-1D.003 also codified at Texas Finance Code
Section 303.301 (formerly Article 5069-1.04(a)(1)), as amended, and, to the
extent that this Amended Replacement Note is deemed an open end account as such
term is defined in Tex. Rev. Civ. Stat., Title 79, Article 5069-1B.002(14) also
codified at Texas Finance Code, Section 301.001(3) (formerly Article 5069-
1.01(f)), as amended, the Payee retains the right to modify the interest rate in
accordance with applicable law.

     Maker warrants that this Amended Replacement Note is executed solely for
business or commercial purposes, other than agricultural purposes and warrants
that it is specifically exempted under Section 226.3(a) of Regulation Z issued
by the Board of Governors of the Federal Reserve System and under Title I
(Truth-in-Lending Act) and Title V (General Provision) of the Consumer Credit
Protection Act, and that no disclosures are required to be given under such
regulations and federal laws in connection with the above transaction.
<PAGE>

     THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING  TO CONFLICTS OF LAW.

                                  AMERICAN RESOURCES OFFSHORE, INC.

                                  By: /s/ R.B. Keller
                                     -----------------
                                  Name:  R.B. Keller
                                  Title: Vice President

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