Document:

WILLARD PEASE OIL AND GAS COMPANY

                             1993 STOCK OPTION PLAN

         1. Purpose of Plan. The purpose of this 199i Stock Option Plan ("Plan")
is to secure and retain key employees, consultants and directors responsible for
the success of Willard Pease Oil and Gas Company ("Company"), to motivate such
persons to exert their best efforts on behalf of the Company, to encourage stock
ownership and to provide such persons with proprietary interests in, and a
greater concern for, the welfare of, and an incentive to continue service with,
the Company. Options issued pursuant to this Plan will constitute incentive
stock options within the meaning of ss. 422A of the Internal Revenue Code of
1986 ("Code"), as amended, ("Incentive Stock Options") or other options
("Nonstatutory Stock Options") as specified at the time of grant. Incentive
Stock Options or Nonstatutory Stock Options may be granted hereunder and any
option granted which is specified as a Nonstatutory Stock Option or which for
any reason does not qualify as an Incentive Stock Option, including any option
granted to a director of the Company or other person who is not also an employee
of the Company, shall be a Nonstatutorv Stock Option.

         2. Stock Subject to the Plan. The number of shares of the Company's
$0.05 par value common stock ("Common Stock") which may be optioned under the
Plan is 1,500,000 shares. Such shares may consist, in whole or in part, of
unissued shares or treasury shares. Nonstatutorv Stock Options to acquire no
more than 500,000 of such shares may be granted to directors or consultants of
the Company or other interested stockholders who are not also employees. The
maximum number of shares issuable pursuant to the Plan, including shares subject
to outstanding options, shall be subject to adjustment as provided in Section 6
of the Plan. No option shall be granted under the Plan after May 10, 2003. The
aggregate fair market value of the shares subject to Incentive Stock Options
g-ranted to any optionee which become exercisable in a particular calendar year
shall not exceed $100,000. For purposes of this Plan, the fair market value of
Common Stock subject to an option shall be the bid price reported in the
over-the-counter market at the close of business on the date the option is
granted. If no market exists, the Compensation Committee described in Section 3
shall determine the fair market value for purposes of this Plan. If any
outstanding option under the Plan for any reason expires or is terminated, the
shares of Common Stock allocable to the unexercised portion of such option may
again be optioned under the Plan subject to the limitations, terms and
conditions of the Plan. The Board of Directors, and the proper officers of the
Company shall from time to time take appropriate action required for delivery of
Common Stock, in accordance with the options and any exercises thereof.

         3. Administration. Administration of the Plan, insofar as it relates to
Incentive Stock Options and the granting of Incentive Stock Options under the
Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company, hereinafter referred to as the "Committee," provided
that the action of the Board of Directors of the Company, if at least a majority
of the directors are not also employees of the Company at the time of any
action, shall be deemed to be the action of the Committee. The Committee shall
consist of' at least three members of the Board of Directors of the Company
chosen by the Board, who as of the date of any action of the Committee, are not,
and have not been during the preceding 12 months, employees of the Company- If
the Committee thus established shall consist of fewer than three members at the
time of any action by the Committee, then the directors shall select enough

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other shareholders to serve on the Committee to have three members and to meet
any requirements of ss. 422A of the Code and regulations adopted thereunder and
regulations adopted under Section 16(b) of the Securities Act of 1933, as
amended (the "Act"). The decision of a majority of those present at any meeting
of the Committee where a quorum consisting of a majority of the Committee is
present shall constitute the decision of the Committee. The Committee is
authorized and empowered to administer the Plan insofar as it relates to
Incentive Stock Options and, consistent with the terms of the Plan, to (a)
select the employees to whom Incentive Stock Options are to be granted and to
fix the number of shares and other terms and conditions of the Incentive Stock
Options to be granted; (b) determine the date upon which options shall be
granted and the terms and conditions of the granted options in a manner
consistent with the Plan, which terms need not be identical as between options
or optionees; (c) interpret the Plan and the Incentive Stock Options granted
under the Plan; (d) adopt, amend and rescind rules and regulations for the
administration of the Plan insofar as it relates to Incentive Stock Options; and
(e) direct the Company to execute Incentive Stock Option agreements pursuant to
the Plan. All such actions of the Committee shall be binding upon all
participants in the Plan.

         The administration of the Plan insofar as it relates to Nonstatutory
Stock Options and the granting of Nonstatutory Stock Options under the Plan
shall be administered by the Committee, except for any grant of Nonstatutory
Stock Options to directors who are not also employees which shall be
administered by the Board of Directors. The Committee or the Board is authorized
and empowered to administer the Plan insofar as it relates to Nonstatutory Stock
Options and, consistent with the terms of the Plan, to (a) select any directors
or employees of the Company or other individuals whose assistance or service
shall be deemed beneficial to the Company, to whom Nonstatutory Stock Options
are to be granted and to fix the number of shares and other terms and conditions
of the options to be granted; (b) determine the date upon which Nonstatutory
Stock Options shall be granted and the terms and conditions of the granted
options in a manner consistent with the Plan, which terms need not be identical
as between options or optionees; (c) interpret the Plan and the Nonstatutory
Stock Options granted under the Plan; (d) adopt, amend and rescind rules and
regulations for the administration of the Plan insofar as it relates to
Nonstatutory Stock Options; and (e) direct the Company to execute Nonstatutory
Stock Option agreements pursuant to the Plan. All such actions shall be binding
upon all participants in the Plan.

         4. Eligibility. The employees of the Company who shall be eligible to
receive grants of Incentive Stock Options under the Plan shall be those key
employees, including officers or directors of the Company who are also
employees, who are from time to time responsible for the management, growth or
success of the business of the Company and who shall have been selected by the
Committee. Officers of the Company who are also directors shall be eligible to
participate in the Plan if they are also employees. The directors of the Company
and other stockholders shall be eligible to receive grants of Nonstatutory Stock
Options only.

         The persons to receive Incentive Stock Options and Nonstatutory Stock
Options under the Plan shall be selected from time to time by the Committee, in
its sole discretion, and the Committee shall determine, in its sole discretion,
the number of shares to be covered by the Incentive or Nonstatutory Stock

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Option(s) granted to each person selected provided, however, that any grant of
Nonstatutory Stock Options to directors who are not also employees shall be
administered by the Board of Directors. Subject to the exception under Section
5(b), no person may be granted an Incentive Stock Option if such person, at the
time the option is granted, owns shares of Common Stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company. For
purposes of calculating such stock ownership, the attribution rules of stock
ownership set forth in Section 422(b)(6) of the Code as amended shall apply.
Accordingly, an optionee with respect to whom such 10% limitation is being
determined, shall be considered as owning Common Stock owned directly or
indirectly by or for the optionee's brothers and sisters (whether by the whole
or half-blood), spouse, ancestors and lineal descendants; and any Common Stock
owned directly or indirectly by or for a corporation, partnership, estate or
trust, shall be considered as being owned proportionately by or for its
shareholders, partners or beneficiaries.

         5. Terms and Conditions. Nonstatutory Stock Options granted under the
Plan shall be subject to the restrictions of Sections 5(a), 5(c), 5(d), 5(e),
5(f), 5(g), 5(h), 50) and 5(o) and Incentive Stock Options granted under this
Plan shall be subject to all of the restrictions of this Section 5, as follows:

                  (a) Option Price. Subject to the provisions of Section 5(b),
         the option price per share shall be determined by the Committee but
         shall not be less than 100% of the fair market value of such shares at
         the time the option is granted.

                  (b) More than 10% Shareholder. If an employee owns more than
         10% of the fair market value of Common Stock as determined under
         Section 4, at the time an Incentive Stock Option is granted under the
         Plan, the Committee may issue an Incentive Stock Option to such person
         at 110% of the fair market value of Common Stock determined by using
         the average of the closing bid and asked prices listed on the National
         Association of Securities Dealers Automated Quotation System ("NASDAQ")
         or, if the Common Stock is not listed on NASDAQ, in the
         over-the-counter market at the close of the market on the date such
         option was granted or if there is no public trading market, II 0% of
         the fair market value of the Common Stock as determined by the
         Committee. Any Incentive Stock Option granted to any employee who owns
         more than 10% of the fair market value of Common Stock shall not be
         exercisable after the expiration of five years from the date such
         option is granted.

                  (c) Limitations on Grant of Options. Subject to the
         limitations under Section 5(b) of this Plan, no Incentive Stock Option
         nor any Nonstatutory Stock Option shall be granted which may be
         exercised more than ten years after the date it was granted.

                  (d) Limitations on Exercise of Option. No optionee granted an
         Incentive Stock Option or a Nonstatutory Stock Option under the Plan
         may exercise such option for six months following the date of grant of
         the option and unless at all times during the period beginning on the
         date of the granting of the option and ending on the day three months
         before the date of such exercise such optionee was employed by the

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         Company or a corporation or subsidiary thereof issuing or assuming the
         option in a transaction set forth under Section 6 of this Plan (as to
         an Incentive Stock Option) or within three months of the date when the
         optionee ceased to serve as a director of the Company (as to a
         Nonstatutory Stock Option).

                  (e) Payment for Shares. Payment in full, in cash, shall be
         made for all shares at the time of the exercise of either an Incentive
         Stock Option or a Nonstatutory Stock Option, provided that the
         Committee may permit payment to be made with shares of the Company's
         Common Stock owned by the optionee to be valued at the fair market
         value at the date of exercise. All Incentive Stock Options or
         Nonstatutory Stock Options shall be exercised for 100 shares, or a
         multiple thereof, or for the full number of shares for which the
         Incentive Stock Option or Nonstatutory Stock Option is then
         exercisable. No optionee shall have the right to dividends or other
         rights of a stockholder with respect to shares subject to an Incentive
         Stock Option or Nonstatutory Stock Option until the optionee has given
         written notice of exercise of the Incentive Stock Option or
         Nonstatutory Stock Option and paid in full for such shares.

                  (f) Manner of Exercise. Any Incentive Stock Option or
         Nonstatutory Stock Option granted pursuant to this Plan may be
         exercised at such time or times as set forth in the option, by the
         delivery of written notice to any officer of the Company. other than
         the optionee, together with payment in full, in cash, for the number of
         shares to be purchased pursuant to such exercise. Such notice (i) shall
         state the election to exercise the Incentive Stock Option or
         Nonstatutory Stock Option, (ii) shall state the number of shares in
         respect of which the option is being exercised, (iii) shall state the
         optionee's address, (iv) shall state the optionee's social security
         number, (v) shall contain such representations and agreements
         concerning optionee's investment intent with respect to such shares of
         Common Stock as shall be satisfactory to the Company's counsel, (vi)
         shall state that the certificate evidencing the shares may be stamped
         with a restrictive legend and the shares evidenced by such certificate
         will constitute "restricted securities" as defined in Rule 144
         promulgated under the Act (unless the shares to be acquired are
         registered under such statute) and (vii) shall be signed by optionee.

                  (g) Limitation on Transfer of Shares. Unless shares issued
         upon exercise are registered at the time of exercise under the Act, all
         shares of Common Stock acquired by an optionee upon exercise of an
         Incentive Stock Option or a Nonstatutory Stock Option granted under the
         Plan shall be deemed to be "restricted securities" as defined in Rule
         144 promulgated under the Act and the certificate evidencing such
         shares shall contain a legend as follows:

                  "The securities represented by this certificate may not be
                  offered for sale, sold or otherwise transferred except
                  pursuant to an effective registration statement under the
                  Securities Act of 1933 (the 'Act') or pursuant to an exemption
                  from registration under the Act, the availability of which is
                  to be established to the satisfaction of the Company."

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<PAGE>

                  (h) Other Representations or Warranties. As a further
         condition to exercise of any Incentive Stock Option or Nonstatutory
         Stock Option granted under the Plan, the Company may require each
         optionee to make any representation or warranty to the Company as may
         be required by any applicable law or regulation.

                  (i) Holding Period of Shares. No shares of Common Stock
         acquired upon exercise of an Incentive Stock Option granted under this
         Plan shall be sold or otherwise disposed of, within the meaning of
         Section 425(c) of the Code, at any time before the sooner of two years
         from the date of the grant of an Incentive Stock Option under this Plan
         or one year after the date of exercise of the Incentive Stock Option.
         However, an optionee who has acquired shares of Common Stock upon
         exercise of an Incentive Stock Option granted under this Plan, who
         transfers such shares to a trustee, receiver, or other similar
         fiduciary in any proceeding under Title 11 of the United States
         Bankruptcy Law or any other similar insolvency proceeding at a time
         when such optionee is insolvent shall not have been deemed to have made
         a transfer or disposition for purposes of this subsection, nor shall
         one who acquires the shares from the Company with another person in
         joint tenancy be deemed to have made a transfer or disposition.

                  (j) Death of Optionee. If an optionee dies, any Incentive
         Stock Option or Nonstatutory Stock Option previously granted to the
         optionee shall be exercisable by the personal representative or
         administrator of the deceased optionee's estate, or by any trustee,
         heir, legatee or beneficiary who shall have acquired the option
         directly from the optionee by will or by the laws of descent and
         distribution at any time within one year after his death, but not more
         than ten years [five years if Section 5(b) is applicable] after the
         date of granting of the option, provided the deceased optionee was
         entitled to exercise such option at the time of his death.

                  (k) Retirement. If an optionee's employment with the Company
         terminates by reason of retirement, any Incentive Stock Option
         previously granted to him shall be exercisable as determined in the
         sole discretion of the Committee within three months after the date of
         such termination, but not more than ten years [five years if Section
         5(b) is applicable] after the date of granting of the Incentive Stock
         Option, and then only to the extent to which it was exercisable at the
         time of such termination by retirement; provided, however, that if the
         optionee dies within three months after termination by retirement, any
         unexercised Incentive Stock Option, to the extent to which it was
         exercisable at the time of his death, shall thereafter be exercisable
         for one year after the date of his death, but not more than ten years
         after the date of granting of the Incentive Stock Option.

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<PAGE>

                  (l) Disability. If an optionee becomes disabled within the
         meaning of Section 105(d)(4) of the Code, and at the time of such
         disability the optionee is entitled to exercise an Incentive Stock
         Option, the optionee shall have the right to exercise the Incentive
         Stock Option within one year after such disability provided that the
         optionee exercises within ten years after the date of grant thereof
         [or five years if Section 5(b) is applicable], and then only to the
         extent to which it was exercisable at the time of such disability.

                  (m) Optionee's Termination. If an optionee's employment by the
         Company is terminated for any reason other than death, retirement or
         disability, any Incentive Stock Option previously granted to the
         optionee which was exercisable at the time of termination shall
         terminate three months after the date upon which the optionee's
         employment terminates or at such earlier time as provided in the terms
         of the optionee's Incentive Stock Option,

                  (n) Leave of Absence. For the purposes of this Plan (i) a
         leave of absence, duly authorized in writing by the Company for
         military service or sickness, or for any other purpose approved by the
         Company, if the period of such leave does not exceed 90 days and (ii) a
         leave of absence in excess of 90 days, duly authorized in writing by
         the Company provided the optionee's right to re-employment is
         guaranteed either by statute or by contract, shall not be deemed a
         termination of employment.

                  (o) Nontransferability of Options. No Incentive Stock Option
         or Nonstatutory Stock Option granted under this Plan will be
         transferable by the optionee other than by will or the laws of descent
         and distribution. During the lifetime of the optionee, the Incentive
         Stock Option or Nonstatutory Stock Option will be exercisable only by
         optionee.

         6. Recapitalization or Merger. If the outstanding shares of Common
Stock which are eligible for the granting of Incentive Stock Options or
Nonstatutory Stock Options hereunder, or subject to Incentive Stock Options or
Nonstatutory Stock Options theretofore granted, shall at any time be changed or
exchanged by declaration of a stock dividend. split-up, subdivision or
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization in which the Company is the surviving corporation, the
number and kind of shares subject to this Plan or subject to any Incentive Stock
Options or Nonstatutory Stock Options previously granted, and the price per
share, shall be appropriately and equitably adjusted, so as to maintain the
proportionate number of shares without changing the aggregate Incentive Stock
Option or Nonstatutory Stock Option price. In the event of a dissolution or
liquidation of the Company, or a merger, consolidation, sale of all or
substantially all of its assets, or other corporate reorganization in which the
Company is not the surviving corporation and the holder of Common Stock receives
securities of another corporation, any outstanding Incentive Stock Options or
Nonstatutory Stock Options hereunder shall terminate as of the effective date of

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<PAGE>

such event; provided that immediately prior to such event each optionee shall
have the right to exercise any unexpired Incentive Stock Option or Nonstatutory
Stock Option in whole or in part. The Company shall afford each person who holds
an Incentive Stock Option or Nonstatutory Stock Option under this Plan at least
30 days advance written notice of such event, However, no Incentive Stock Option
or Nonstatutory Stock Option shall be exercised more than ten years [five years
if Section 5(b) is applicable] after the granting thereof. The existence of this
Plan, or of any Incentive Stock Options or Nonstatutory Stock Options hereunder,
shall not in any way prevent any transaction described in this section, nor
shall anything contained in this Plan prevent the substitution of a new
Incentive Stock Option or Nonstatutory Stock Option by a surviving corporation.

         7. Use of Proceeds. Proceeds from the sale of stock pursuant to
Incentive Stock Options or Nonstatutory Stock Options granted under this Plan
shall constitute general funds of the Company.

         8. Reservation of Issuance of Shares. The Company shall at all times
during the duration of this Plan reserve and keep available such number of
shares of Common Stock as will be sufficient to satisfy the requirements of all
Incentive Stock Options or Nonstatutory Stock Options granted pursuant to this
Plan, and shall pay all original issue and transfer taxes with respect to the
issuance of shares pursuant to the exercise of such Incentive Stock Options or
Nonstatutory Stock Options, and shall pay all of the fees and expenses
necessarily incurred in connection with the exercise of such Incentive Stock
Options or Nonstatutory Stock Options and the issuance of such shares.

         9. Amendments. The Board of Directors may amend, alter, or discontinue
this Plan, but no amendment, alteration or discontinuation shall be made which
would impair the rights of any optionee under any Incentive Stock Options or
Nonstatutory Stock Options previously granted, without the optionee's consent,
or which, without the approval of the stockholders, would:

               a. except as is provided in Section 6 of this Plan, increase the
          total number of shares reserved for the purposes of the Plan-,

               b. decrease the option price to less than I 00% of the fair
          market value for [or 110% if Section 5(b) is applicable] on the date
          of the granting of the Incentive Stock Option or Nonstatutory Stock
          Option;

               c. change the persons (or class of persons) eligible to receive
          Incentive Stock Options or Nonstatutory Stock Options under the Plan;

               d. increase the number of shares which may be subject to
          Nonstatutory Stock Options granted under this Plan; or

               e. increase the aggregate fair market value of the shares subject
          to Incentive Stock Options which may be g-ranted under this Plan to
          any person and which become exercisable in any year to an amount in
          excess of $100,000.

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          10. Indemnification. In addition to such other rights of
indemnification they may have as directors, the members of the Committee and the
Board of Directors shall be indemnified by the Company against reasonable
expenses, including attorneys' fees actually incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therefrom. to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Incentive
Stock Option or Nonstatutory Stock Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of judgment in any action, suit or proceeding, except in relation
to matters as to which it shall be adjudged in such action, suit or proceeding,
that such member of the Board of Directors is liable for gross negligence, fraud
or willful misconduct in the performance of the director's duties so long as
within 60 days after institution of any such action, suit or proceeding, the
director shall in writing offer the Company the opportunity, at its own expense,
to handle and defend such action, suit or proceeding.

         11. Approval of Shareholders. The Plan shall take effect upon approval
by the holders of a majority of the shares of the Company's Common Stock by
written consent or present at a meeting attended by a quorum of shareholders,
which approval must occur within 12 months after the date the Plan is adopted by
the Board of Directors.

         12. Miscellaneous. Unless the context requires otherwise, words
denoting the singular may be construed as denoting the plural, and words of the
plural may be construed as denoting the singular, and words of one gender may be
construed as denoting the other gender as is appropriate. Paragraph headings are
not to be considered part of this Plan and are included solely for convenience
and are not intended to be full or accurate descriptions of the contents
thereof.

Adopted by stockholders effective the 25th day of June, 1993.

                                          WILLARD PEASE OIL AND GAS
                                          COMPANY,
                                          a Nevada corporation

ATTEST:
                                          By /s/ Willard H. Pease, Jr.
                                             ---------------------------------
                                              Willard H. Pease, Jr., President

/s/ Lily Roeland
-------------------------------------
Lily Roeland
Secretary

S E A LCONSULTING AGREEMENT

     This Consulting Agreement (this "Agreement") is made and entered into as of
March 9, 1996 by and between Pease Oil and Gas Company,  or the surviving entity
in any merger of the Company or any entity which  receives all or  substantially
all of its assets (hereinafter  referred to as the "Company"),  and Beta Capital
Group,  Inc.,  or  any  entity  or  individuals  which  or  who  receive  all or
substantially all of its assets (hereinafter referred to as the "Consultant").

                                    RECITALS

    WHEREAS, Consultant has certain experience and contacts associated with
developing and implementing  capitalization plans, including utilization of debt
capital in business operations; and

WHEREAS,  the  Consultant  and the Company over the past six months have met and
discussed  potential  opportunities  that may  exist,  and as a result  of those
discussions  agreed in concept to the mutual  promises and  covenants  contained
hereon on February 12, 1996; and

WHEREAS,  the Company  wishes to engage the  Consultant  as described  herein to
assist the Company in the  business  operations  of the  Company and  Consultant
desires to provide such services to the Company;

NOW,  THEREFORE,  in  consideration  of the mutual promises and covenants herein
contained,  the parties hereby  memorialize those concepts agreed to on February
12, 1996 and agree as follows:

1.       CONSULTING SERVICES

         Attached  hereto as Exhibit A is a  description  of the  services to be
provided by the Consultant  hereunder (the  "Consulting  Services").  Consultant
hereby agrees to utilize its best efforts in performing the Consulting Services;
however, the Consultant makes no warranties, representation or guarantees to the
other regarding the funds to be raised, any appreciation of Company stock price,
the results of the Consulting Services to be provided herein.

2.       TERM OF AGREEMENT

         Subject to the  following,  this  Agreement  shall be in full force and
effect  commencing  on the  earlier  of March  9,  1996 or the  signing  of this
Agreement and concluding two years  thereafter,  unless  extended as hereinafter
provided.

         (A)  Cancellation  by  Company.  This  Agreement  can  be  unilaterally
         canceled by the Company on 15 days written  notice if (a) 90 days after
         the date a private offering memorandum for use in the Series A offering
         contemplated  by Exhibit A is completed  by the Company,  at least $1.0
         million in gross  proceeds has not been raised by the  Company,  (b) if
         after  one year  from the  effective  date of this  contract,  at least
         one-half

<PAGE>

         of the Company's presently  outstanding callable $1.25 warrants are not
         callable  and have not been  callable  during the past year because the
         market price of the Company's common stock has not increased to a point
         where the Company is entitled to call the warrants for redemption,  (c)
         if after one year from the  effective  date of this  contract,  (i) the
         Series A warrants  described  in Exhibit A are not callable or have not
         been  callable  during the past year  because  the market  price of the
         Company's  common stock has not  increased to a point where the Company
         is entitled to call the warrants for redemption, and (ii) at least $0.5
         million in gross proceeds has not been received by the Company  through
         the  exercise of warrants to purchase  Company  common stock unless the
         Company elects not to call or interferes with the call of the warrants,
         or (d) if the total  consulting  fees paid under  Exhibit B,  including
         compensation  for the broker  relations  consultant,  as  described  in
         Section 10, and the  reimbursed  expenses  actually paid by the Company
         under Exhibit C, exceed 15% of the sum of (i) the net amounts  received
         by the Company from the Series A and Series B  financings  described or
         contemplated  in Exhibit A and (ii) from exercise of any warrants.  The
         provisions  set forth in 2(A)(d)  shall be computed on an annual  basis
         commencing on the anniversary date of this Agreement.  In the event the
         Consultant has received funds in excess of 15% as described  above, the
         Company shall give Consultant  written notice, and Consultant will have
         30 days to cure the overpayment.  Furthermore, the provisions set forth
         in 2(A)(d) shall be subject to additional  authorized  expenditures  as
         approved and ratified prior to expenditure by the Company.

         (B)  Extension  by  Consultant.  This  Agreement  can  be  unilaterally
         extended by Consultant for up to one year (until  February 28, 1999) if
         at least $5.0 million in gross  proceeds has been raised by the Company
         from the sale of  Series A or  Series B debt  and/or  the  exercise  of
         Series A or Series B warrants as described or contemplated on Exhibit A
         and (i) the  Company's  reported  common stock market price has been at
         least $3.00 per share for two  consecutive  weeks  between June 1, 1997
         and  February  28, 1998 and (ii) the  Company has  received at least an
         additional  $500,000 in gross  proceeds  from the  exercise of warrants
         described or  contemplated  on Exhibit A or other equity  investment in
         the Company.

         (C) Other Terminations.  Either party shall have the right to terminate
         this Agreement  without notice in the event of bankruptcy,  insolvency,
         or assignment  for the benefit of creditors of the other party or, with
         10 days prior written  notice,  if the other party shall have failed to
         comply  with  its  obligations  under  the  terms  of  this  Agreement,
         including,  without limitation, any responsibilities for payment of fee
         or performance of services set forth herein.

3.       TIME DEVOTED BY CONSULTANT

         It is  expected  that  Steve  Antry,  President  of  Consultant,  shall
initially devote a majority of his time to the Consulting  Service  described in
this Agreement, in particular during the time when the Company is undertaking to
offer and sell the  Series A and Series B debt  described  on Exhibit A or other

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<PAGE>

alternate   financing   arrangements  to  which  the  parties   mutually  agree;
thereafter,  the  Consultant  shall  devote  such time as is  reasonably  deemed
necessary  by the  Consultant  and the  Company to perform  the  obligations  of
Consultant hereunder. Consultant reasonably shall make available the services of
Steve Antry  during the term of this  Agreement,  unless Mr.  Antry has suffered
death or  disability  and the Company has raised at least $6.0  million from the
financings  described or  contemplated  in Exhibit A and/or from the exercise of
warrants or from other equity investments.  It is agreed by the parties that the
amount  of time  devoted  to the  business  of the  Company  by other  partners,
independent  contractors  or employees of the  Consultant  may vary from time to
time and that other employees of the Consultant may provide consulting  services
for other clients during the term of this  Agreement.  Consultant  shall provide
written  reports  to the  Board  of  Directors  of the  Company  describing  the
consulting services performed for the Company on a monthly or other basis as may
be mutually agreed upon by the Consultant and the Company.

4.       PLACE WHERE SERVICES WILL BE PERFORMED

         The  Consultant  will perform  most  services in  accordance  with this
Agreement at offices of the  Consultant.  Consultant  will be available,  at the
expense  of the  Company,  to  perform  services  at such  other  places  as the
Consultant and Company shall mutually agree,  given the nature and extent of the
services described on Exhibit A.

5.       COMPENSATION TO CONSULTANT

         The  Consultant's  compensation for the Consulting  Services  performed
under this Agreement shall be the fees and compensation  described on Exhibit B.
All direct expenses related to the Consulting  Services being performed incurred
by Consultant  and the broker  relations  consultant  described in Section 10 in
performing the Consulting Services hereunder shall be reimbursed by the Company,
including,  but not  limited to,  telephone  and other  communications  expenses
incurred  by  Consultant  or  the  broker  relations  consultant,  photocopying,
printing  and postage;  and for travel,  lodging and  entertainment.  Consultant
agrees to obtain  prior  approval  from the  Company  for any single  expense in
excess of $1,000  which is not  itemized on the  two-year  reimbursable  expense
budget set forth on Exhibit C. In  addition,  Consultant  agrees to obtain prior
approval,  at least in concept,  for any single expense or activity in excess of
$1,000   regardless  of  whether  such  expense  is  itemized  on  the  two-year
reimbursable expense budget set forth on Exhibit C. Company and Consultant agree
that all the  services  of the broker  relations  consultant,  and cash  monthly
consulting fees and reimbursed expenses as budgeted on Exhibit C will not exceed
15% of the  Company's  net  proceeds  from the Series A and Series B  financings
described  or  contemplated  on  Exhibit  A, and  other  financings  that may be
contemplated and mutually agreed upon, plus the net proceeds to the Company from
the  exercise of any  warrants.  In the event this  Agreement is extended for an
additional year by the Consultant under Section 2, it is agreed that the Exhibit
C budget  shall  serve as the  reimbursable  expense  budget for the third year,
subject to the 15%  limitation  described in this Section 5. For the purposes of
this  calculation  expenditures and proceeds are agreed to be cumulative for the
term of the contract.

                                        3

<PAGE>

         The Company  shall pay  separately  the costs and expenses it incurs in
connection with the financing  activities  described on Exhibit A, including the
Company's legal fees and independent due diligence reports or evaluations.

         The Company shall pay consulting fees to Consultant on a monthly basis,
in  advance,  by the first day of each  month,  with the  first  monthly  fee of
$12,500  due on signing of this  Agreement.  The Company  shall  prepay the last
month's  consulting  fee at the  earlier of (1)  receipt of proceeds of at least
$12,500  from the  exercise of Team  Warrants  (as  described  in Section (5) of
Exhibit B) or (2) upon  receipt by the Company of at least $1.0 million in gross
proceeds from the exercise of outstanding Warrants or proceeds from the Series A
and/or  Series B debt  financings  or, other  alternate  financings  that may be
contemplated and mutually agreed upon.

         Company and Consultant agree that any additional  consulting or similar
services  performed by the Consultant for the Company not  contemplated  by this
Agreement or agreed to by the parties shall be negotiated before performance and
any  fee or  compensation  to be  earned  by  Consultant  from  the  Company  or
obligation  to pay by  Company  shall be set  forth in a  writing  signed by the
obligated  party.   This  includes  any   acquisitions   that  may  result  from
introduction by Consultant or Consultant's contacts inclusive of and not limited
to those defined as Consultant's confidential information in Section 7.

6.       INDEPENDENT CONTRACTOR

         Consultant and the broker relations consultant shall each be, and shall
each be  deemed to be,  an  independent  contractor  in the  performance  of the
Consulting  Services  under this  Agreement.  Consultant  shall have no power to
enter into any agreement on behalf of, or otherwise  bind,  Company.  Consultant
shall be free to pursue,  conduct  and carry on for its own  account (or for the
account of others) such activities,  employments, ventures, businesses, or other
pursuits as may  determine  in its sole,  absolute  and  unfettered  discretion,
provided  that,  Consultant  agrees  not to  engage  in any  activity,  venture,
business  or pursuit  that is harmful to the  business of the  Company.  Nothing
contained in this Agreement shall be construed to imply that Consultant,  or any
employee, agent or other authorized  representative of Consultant, is a partner,
joint venturer, agent, officer, employee, or other representative of Company and
neither the Consultant nor any  representative of the Consultant shall represent
to anyone to the  contrary;  provided  that Steve Antry may become a director of
the Company as described in Section 11.

7.       CONFIDENTIAL INFORMATION

         Consultant  recognizes  that,  in the course of  providing  services to
Company  hereunder,  Company may divulge  information  relating to its  business
affairs,  financial affairs and future plans that Company considers confidential
and  proprietary  (collectively,  "Confidential  Information"),  and  Consultant
agrees that Consultant will use such  Confidential  Information  only within the
scope of Consultant  providing services to Company  hereunder,  and will neither
disclose  to,  nor  permit,  any person or entity,  other than  Company  and its
principals, agents, employees and

                                        4

<PAGE>

other paid experts and  professionals who agree to be bound by the terms of this
paragraph,   to  view  or  have   access   to  the   Confidential   Information.
Notwithstanding   anything   contained   herein  to  the   contrary,   the  term
"Confidential  Information"  shall not include the  following:  (i)  information
previously  known  to  Consultant,   (ii)  information  rightfully  received  by
Consultant from a third party holding such Confidential  Information legally and
without a continuing  restriction on its use, or (iii)  information  which is or
becomes a part of the  public  domain  through no breach by  Consultant  of this
Agreement.  Notwithstanding anything to the contrary hereunder, Consultant shall
not be liable for (i) any inadvertent or accidental disclosure if Consultant has
exercised  the same  degree of care as  Consultant  would  take to  preserve  or
safeguard  his  own   proprietary   information,   or  (ii)  disclosure  of  the
Confidential  Information  which is  within  the  public  domain  at the time of
disclosure, or is or becomes publicly available without breach of this Agreement
by  Consultant,  or is received  by  Consultant  from a third party  holding the
Confidential  Information  legally and having the legal right to  disseminate it
without  breach of this  Agreement by  Consultant  or is disclosed by Consultant
with the  written  approval of the  President  of Company,  or is  disclosed  by
Company to others on a nonrestricted  basis.  Upon expiration of this Agreement,
Consultant shall, at the request of Company, return all Confidential Information
and other materials belonging to Company which are in Consultant's possession.

         The Consultant and the Company  acknowledge  that each will have access
to proprietary  information  regarding their respective  business operations and
agree to keep all such  information  secret and  confidential  and not to use or
disclose any such  information  to any  individual or  organization  without the
non-disclosing  party's prior written consent.  Consultant hereby designates its
sources of funding,  sources of  acquisitions,  advisors,  agents  identified by
Consultant  to Company as  Consultant's  confidential  information.  The parties
agree that from time to time  Consultant  or the Company may  designate  certain
additional information as confidential for purposes of this Agreement.

8.       NON-CIRCUMVENTION AND NON-DISCLOSURE

         The Company hereby  irrevocably agrees not to circumvent or disclose to
others, either directly or indirectly,  the clients, sources of funding, sources
of acquisitions,  advisers,  agents, brokers,  associates or other contacts that
Consultant or its affiliates have, provided that the Company may make disclosure
required by law and shall notify Consultant before any such disclosure is made.

         The  Company  hereby  confirms  that the  identity of any or all of the
entities  introduced to the Company by Consultant  which did not have a previous
relationship  with the Company or have not been  previously  engaged in business
negotiations  with the Company are considered  proprietary to the Consultant and
its  affiliates  and shall remain so for the term of this  Agreement and for one
year beyond the term of this  Agreement.  The  Company  agrees not to complete a
financing  with any of such  entities  unless this  Agreement  is in force.  The
Company and the  Consultant  agree that  financings  not  described on Exhibit A
completed  with  persons or  entities  not first  identified  to the  Company by
Consultant or completed  without  substantial  involvement  or assistance by the

                                        5

<PAGE>

Consultant shall not be considered proprietary to the Consultant.  For instance,
bank financings by the Company,  financings  completed through  relationships or
assistance by persons not associated or affiliated  with  Consultant,  mezzanine
financings  with  which  Consultant  had no  material  involvement  and  similar
financings would not be covered by this Section 8 of this Agreement. The parties
agree  that  any  financings  not  contemplated  by  this  Agreement  for  which
Consultant  may claim  compensation  shall be  discussed  by the parties  before
involvement  by  the  Consultant  and  the  Company's  agreement  to  deem  such
financings covered by this Agreement shall be reduced to writing.

         If the  Company  completes  a  financing  within  one year after it has
terminated this Agreement in accordance with its rights under  subparagraph  (A)
of  Section  2  above,  or,  should  circumvention  to any of such  entities  be
attempted  by the Company or should the Company seek to disclose the identity of
any such entities for purposes inconsistent with this Agreement, the Consultant,
in addition to having the right to invoke  other  legal or  equitable  remedies,
shall be compensated by the Company in an amount equal to what such compensation
would have been had this  Agreement been in full force and effect at the time of
such action by the Company, or if larger, the amount which Consultant would have
received had such financing with the other entity been completed with the advise
and  assistance  of  Consultant.  Any  amount  payable  hereunder  shall  be due
immediately upon any attempted circumvention and/or disclosure together with any
court costs,  attorney fees, or other charges or damages reasonably  incurred in
connection with enforcement of rights under this paragraph.

9.       INDEMNIFICATION

         The Company  hereby  agrees to indemnify and hold  Consultant  harmless
from any and all liabilities  incurred by Consultant under the Securities Act of
1933,  as  amended,  and  the  Securities  Exchange  Act  of  1934,  as  amended
(collectively  referred to as the "Act"),  the various state securities acts, or
otherwise,  insofar as such  liabilities  arise out of or are based upon (i) any
material  misstatement or omission  contained in any offering documents provided
by the  Company  (ii)  any  actions  by the  Company,  direct  or  indirect,  in
connection  with any  offering by the Company,  in  violation of any  applicable
federal  or state  securities  laws or  regulations,  or (iii) a breach  of this
Agreement by the Company. The Company's obligation to indemnify Consultant shall
not extend to any liability under the Act or any state securities act arising or
alleged as a result of unlawful activities by Consultant or activity alleged not
to be in compliance with the requirements of the Act or various state securities
acts.

         Consultant  hereby  agrees to indemnify  and hold the Company  harmless
from any and all liabilities  incurred by the Company under the Act, the various
state  securities acts, or otherwise,  insofar as such liabilities  arise out of
and are  based  upon (i) any  actions  by  Consultant,  direct or  indirect,  in
connection  with any  offering by the Company,  in  violation of any  applicable
federal  or state  securities  laws or  regulations,  or (ii) any breach of this
Agreement by Consultant.

                                        6

<PAGE>

10.      BROKER RELATIONS CONSULTANT

         The Company agrees that Steve Fischer,  or another individual agreed on
by the Company,  shall be retained by Consultant as an independent contractor of
Consultant to perform as broker relations  services to benefit the Company.  The
Company shall  reimburse  Consultant  for $5,000 per month for these  additional
services for a period of up to two years  commencing  when $1.0 million in gross
proceeds is received by the Company from the Series A debt  financing  described
or  contemplated  on Exhibit A. The Company agrees that the  arrangement for the
broker  relations  consultant will be extended for an additional one year if the
Consultant extends this Agreement as authorized under Section 2(B) above.

11.      BOARD SEATS

         The Company  agrees to use its best efforts to increase the size of its
Board of Directors at the earliest  practicable  time (including  using its best
efforts to obtain  shareholder  approval  of an  amendment  to its  Articles  of
Incorporation  if it  becomes  necessary  to  increase  the size of the Board of
Directors above 10 members) and to add Mr. Richard  Houlihan and Mr. Steve Antry
as directors of the Company if such persons are willing to serve as directors at
the time that the Series A  financing  described  on Exhibit A is  completed  or
anytime  thereafter  during the term of this  Agreement.  Upon completion of the
Series B debt  financing  described on Exhibit A, the Company and the Consultant
shall  mutually  agree  on  one  additional  Board  Member   affiliated  with  a
substantial  equity investor in the Company to become a director at the earliest
practicable  time. The Company  agrees to purchase of appropriate  Directors and
Officers  Liability  Insurance  Policy to provide  coverage for directors of the
Company,  including coverage for expenses and liabilities incurred in connection
with  defense or payment of a claim  under the Act,  provided  that  appropriate
coverage acceptable to the Board of Directors of the Company can be obtained for
an annual  premium not greater than $50,000 per year.  Such  insurance  shall be
acquired,  if  available,  by the end of 1996.  The  Board of  Directors  of the
Company will consider  compensation for outside  directors of the Company with a
view  toward  increasing  compensation  to a  level  comparable  to  what  other
similarly sized public companies pay outside directors.

12.      COMPANY MATTERS

         The  Company  specifically  makes  no  warranties,  representations  or
guarantees to Consultant  regarding the Company's  business or its past, present
or future business plans.

13.      MISCELLANEOUS

         (A) Any controversy arising out of or relating to this Agreement or any
         modification  or  extension  thereof,  including  any claim for damages
         and/or rescission, shall be settled by arbitration in Las Vegas, Nevada
         in accordance  with the  Commercial  Arbitration  rules of the American
         Arbitration   Association  before  a  panel  of  one  arbitrator.   The
         arbitrator sitting in any such controversy shall have no power to alter
         or modify any  express  provisions  of the  Agreement  or to render any
         award which by its terms effects any such

                                        7

<PAGE>

         alteration,  or   modification.  This  Section  13  shall  survive  the
         termination of the Agreement.

         (B) This Agreement shall be binding upon and shall inure to the benefit
         of the parties  hereto,  their heirs,  administrators,  successors  and
         assigns.  This Agreement shall not be assignable by either party hereto
         without the prior written consent of the other.

         (C) This Agreement contains the entire understanding of the parties and
         supersedes all prior agreements between them.

         (D) In the event of a dispute  related to or arising  from the terms of
         this  Agreement,   the  prevailing  party  shall  be  entitled  to  all
         attorney's fees and costs.

         (E) This Agreement  shall be constructed  and interpreted in accordance
         with and governed by the laws of the State of California.

         (F) No supplement, modification or amendment of this Agreement shall be
         binding unless executed in writing by the parties.  No waiver of any of
         the provisions of this Agreement shall be deemed,  or shall constitute,
         a waiver of any other provision,  whether or not similar, nor shall any
         waiver  constitute  a  continuing  waiver.  No waiver  shall be binding
         unless executed in writing by the party making the waiver.

         (G)  If  any  provision  hereof  is  held  to be  illegal,  invalid  or
         unenforceable  under present or future laws,  effective during the term
         hereof, such provisions shall be fully severable.  This Agreement shall
         be construed and enforced as if such illegal,  invalid or unenforceable
         provision  had  never  comprised  a  part  hereof,  and  the  remaining
         provisions  hereof  shall remain in full force and effect and shall not
         be affected by the illegal,  invalid or  unenforceable  provision or by
         its severance here from.

         (H) The  obligation  of the Company to pay  compensation  to Consultant
         under this  Agreement  is subject to the  ratification  and approval of
         this  Agreement  by a majority  of the  directors  of the  Company at a
         regular or special meeting of the Board of Directors.  If such approval
         has not been received by March 15, 1996,  either party may, upon notice
         to the other, terminate the Agreement with no further obligation.

IN WITNESS WHEREOF,  the parties hereto have placed their  signatures  hereon on
the day and year first above written.

PEASE OIL AND GAS COMPANY                          BETA CAPITAL GROUP, INC.

By:  /s/ Willard H. Pease, Jr.                     /s/ Steve Antry
     -------------------------                    -----------------------------
     Willard H. Pease, Jr., President             Steve Antry, President

                                        8

<PAGE>

                                    EXHIBIT A
                DESCRIPTION OF BETA CAPITAL'S CONSULTING SERVICES

Consultant  shall perform the following  services  pursuant to the terms of this
Agreement:

(1)  Locating  potential  sources of debt and equity  capital which is presently
     contemplated  to include the  provisions  set forth below.  The parties may
     mutually  agree to revise  the  nature  and terms of these  financings  and
     references  in the  Agreement  shall be modified  consistent  with any such
     revisions.

     (a)  Private Bond "Series A"

               o    $1.0  million   minimum  to  $1.5  million  maximum  of  10%
                    convertible  debt.
               o    10%  commission  will be paid to retail  broker  or  brokers
                    (with 5% warrants at $2.00).
               o    Five year term.
               o    Interest  only for five years;  principal  due at the end of
                    five years.
               o    Convertible   at  $3.00  per  share  into  public  stock  at
                    investor's option.
               o    Bond  will a call  feature  by the  Company  of $3.00 if the
                    stock  trades  at  $4.00  per  share  for  five  consecutive
                    business days.
               o    Each  $4.00 of  convertible  debt  sold will  include  three
                    warrants  exercisable at $1.25,  callable at $1.75 (the call
                    feature  will not be  enforceable  before six  months  after
                    issuances).
               o    Underlying   securities   will  be   registered   (piggyback
                    registration) at the Company's next registration.
               o    Bond A to become  senior debt pari passu to Bond B when bank
                    debt repaid (accomplished via proceeds of Bond B).
               o    The initial $1.0 million is an immediate  raise (targeted 30
                    days  after   offering   memorandum  is  prepared  by  legal
                    counsel).

              (b)  Registered Bond "Series B"

               o    $2.5 million minimum $5.0 million maximum 10% senior debt.
               o    10%  commission  will be paid to retail  broker  or  brokers
                    (with 5% warrants at $2.00).
               o    Five year term.
               o    Interest  only for five years;  principal  due at the end of
                    five years.
               o    Convertible   at  $4.00  per  share  into  public  stock  at
                    investor's option.
               o    Bond will have a call feature by the Company of $4.00 if the
                    stock trades at $5.00 per share for five consecutive days.
               o    One warrant for each $2.00 sold.  Exercise price will be 25%
                    premium  above  the  market  price  at  close  of  offering.
                    Callable at a 50% premium  above  market when  trading is at
                    that level for five consecutive days
               o    Underlying    securities    will   be   registered    (shelf
                    registration).

                                Exhibit A, Page 1

<PAGE>

               o    Bond A to be made senior debt pari passu to Bond B when bank
                    debt repaid (accomplished via proceeds of Bond B).

(2)  Coordinating  and  assisting  in  the  preparation  of  financing  offering
     documentation;

(3)  Utilizing Consultant's broker-dealer database and network;

(4)  Performing  ongoing  marketing  efforts via  selected  licensed  brokers in
     connection with the raising of capital;

(5)  Monitoring and assisting Company in development of road show  presentations
     and meetings for purposes of raising capital;

(6)  Identification of Market Markers;

(7)  Performing  ongoing  marketing  efforts via  selected  licensed  brokers in
     connection with stock promotion; and

(8)  Participation  of Steve Antry at meetings of the Board of  Directors,  when
     practicable. It is understood that no director's fees or other compensation
     will be paid to Mr. Antry or Consultant for the  participation of Mr. Antry
     at meetings of the Board of  Directors  regardless  of whether Mr. Antry or
     Beta serves as a consultant or as an advisor to the Board of Directors.

                                Exhibit A, Page 2

<PAGE>

                                    EXHIBIT B
                              TERMS OF COMPENSATION

         The  Consultant's  compensation  hereunder  shall be  divided  into the
following components:

         (1)      Private  Financing  Compensation:  Consultant shall receive an
                  amount equal to 2% of the gross  amount of all private  equity
                  and/or debt financing  received  directly or indirectly by the
                  Company  during the term of this Agreement if the financing is
                  (a) one of the  financings  described  on  Exhibit  A, (b) the
                  receipt  of  proceeds  from  exercise  of  warrants,   or  (c)
                  Consultant  is  the  identifying  or  procuring  cause  of the
                  financing,  or (d)  any  financing  not  contemplated  by this
                  Agreement  if the Company has agreed to pay the  compensation.
                  The foregoing  compensation  shall be payable when the Company
                  receives the equity or debt financing.  Up to one-third can be
                  assigned by Consultant to the broker relations consultant.

         (2)      Public  Financing  Compensation:  Consultant  shall receive an
                  amount  equal to 2% of the amount of any public  offering as a
                  nonrefundable  expense allowance on each public equity or debt
                  financing which is commenced during the term of this Agreement
                  if the  financing  is (a) one of the  financings  described on
                  Exhibit A, (b) the  receipt of proceeds  from the  exercise of
                  warrants,  or (c)  Consultant is the  identifying or procuring
                  cause of the financing, and (d) any financing not contemplated
                  by  this  Agreement  if the  Company  has  agreed  to pay  the
                  compensation. Up to one-third can be assigned by Consultant to
                  the broker relations consultant. The timing of payment of this
                  nonaccountable  expense  allowance  will be  discussed  at the
                  onset of each  offering,  but will  never be later than 50% at
                  the escrow break, and 50% thirty days thereafter.

         (3)      Consulting Fee: A monthly  consulting fee equal to $12,500 per
                  month  earned  upon the  effective  date of the  contract  and
                  payable on the first of each month with the exception of first
                  and last month's fees due upon signing as follows:  $12,500 at
                  signing (first  month),  and $12,500 at the earlier of receipt
                  of (1) proceeds from the exercise of at least $12,500 from the
                  exercise  of Team  Warrants,  or (2)  $1,000,000  of any gross
                  proceeds.

         (4)      Bonus Fee: A 5% Bonus Fee will be paid to Consultant  for each
                  warrant exercise,  inclusive of existing warrants, of which up
                  to  one-third   can  be  assigned  to  the  broker   relations
                  consultant.  This fee will be paid to  Consultant  at the time
                  the warrants are exercised  during the term of this  Agreement
                  and for up to six months after the  expiration or  termination
                  of this Agreement if the stock price was at a level  entitling
                  the  Company  to call  the  warrants  during  the term of this
                  Agreement.

         (5)      Equity   Compensation:   One  million  common  stock  purchase
                  warrants  exercisable  at $0.75 per share  will be  granted to
                  Consultant upon signing this Agreement, of which up to 50% are
                  assignable to other team members and certain key brokers.

                                Exhibit B, Page 1

<PAGE>

                  Shares  of  common  stock  issuable  upon  exercise  of  these
                  warrants  will  be  included  as   "piggyback"  in  the  shelf
                  registration  described  on Exhibit A and the  warrants  shall
                  have  a  five  year  term,  commencing  on the  date  of  this
                  Agreement  and  shall   include  the  following   cancellation
                  provisions:

      WARRANTS    CANCELLATION PROVISIONS

               (a)  250,000 Not cancelable.

               (b)  250,000 If $1.0  million in gross  proceeds  in the Series A
                    financing  has not been  raised  within six months  from the
                    effective  date of this  Agreement,  the  warrant  shall  be
                    deemed cancelled.

               (c)  250,000  If  $1.0  million  gross  proceeds  from  Series  A
                    financing  has not been  raised  within six months  from the
                    effective date or if $2.0 million of gross proceeds from the
                    Series B financing (or any agreed alternative) is not raised
                    within one year of the  completion  of $1.0 million of gross
                    proceeds  from the Series A financing or if the Agreement is
                    cancelled  under  Section 2(A) prior to raising $2.0 million
                    in Series B  financing  (or agreed upon  alternative),  this
                    warrant shall be deemed cancelled.

               (d)  250,000 If the  consulting  agreement is not  extended  into
                    year three under Section 2(B) of the Agreement, this warrant
                    shall be deemed cancelled.

         (6)      In the event the Company  chooses  not to accept or  otherwise
                  takes  action  (other than action  required  under  applicable
                  state corporate law or the Act or the Securities  Exchange Act
                  of 1934 upon the  written  advice of Company  counsel,  unless
                  Consultant's  counsel  disagrees  in writing  with the advice)
                  which has the effect of preventing a proposed financing or the
                  stock price  appreciation  goals from occurring,  or otherwise
                  terminates this Agreement  except in accordance with the terms
                  of this Agreement, all warrants shall be immediately vested.

                                Exhibit B, Page 2

<PAGE>

                                    EXHIBIT C
                            PEASE OIL AND GAS COMPANY
                     ANNUAL PROJECTED REIMBURSABLE EXPENSES

BETA TRAVEL EXPENSES:

         Two Conferences ...........................................    $ 20,000

         Boston/New York roadshows .................................       8,000

         Six other major city corporate presentations ..............      14,000

         Due diligence to Newport Beach, California or
           Grand Junction, Colorado or corporate presentations
           by outside participants (average 6 trips per annum
                                                                           6,000

OTHER MARKETING EXPENSES:

         Phone and fax charges .....................................      15,000
         (Salaries and commissions to telemarketers and
          staff paid by BCG, Inc.; refers to direct charges
          only)

         Marketing materials and supplies ..........................      10,000

         Initial mailout ...........................................       5,000

         Subsequent mailouts .......................................      15,000

         Local PR ..................................................      12,000
                                                                        --------

                                                                         105,000

         10% contingency fees ......................................      10,500
                                                                        --------

Total estimated expenses ...........................................    $115,500
                                                                        ========

                                Exhibit C, Page 1

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