Document:

CONSULTING AGREEMENT

THIS  AGREEMENT  dated for  reference  January  12,  2001,  is between Wet Coast
Management Corp., a British Columbia company ("Wet Coast"),  of 6th  Floor, 1100
Melville  Street,  Vancouver,  B.C.  V6E 4A6,  and fax (604)  682-6509;  and San
Joaquin  Resources Inc., a Nevada company ("San  Joaquin"),  of 1305 - 1090 West
Georgia Street, Vancouver, British Columbia, V6E 3V7, and fax (604) 683-1585.

WHEREAS  San  Joaquin  is in the oil and gas  business  and  intends  to acquire
Pannonian Energy Inc., a Delaware  company in the oil and gas business  ("PEI"),
and Wet Coast has  agreed  to  provide  financing,  public  relations,  investor
relations  and  advertising  services to San Joaquin,  IN  CONSIDERATION  of the
following mutual promises, the parties agree that:

1.       Engagement.  San  Joaquin  engages  Wet Coast to provide  the  services
         described  in  paragraph of this  agreement  and Wet Coast  accepts the
         engagement.

2.       Term.  This  agreement is effective  for twelve months from February 1,
         2001 (the "Term").

3.       Services. Wet Coast, working with San Joaquin and PEI, will provide the
         following  services  (collectively  the "Services")  during the Term to
         broaden  San   Joaquin's   exposure  to  the   financial  and  business
         communities:

         a.       Public Relations Services. Wet Coast will design and implement
                  a public  relations  program  through the financial  media and
                  will introduce San Joaquin to potential business alliances.

         b.       Investor  Relations  Services.   Wet  Coast  will  design  and
                  implement an investor  relations program directed to financial
                  industry analysts,  financial  institutions,  brokerage firms,
                  individual brokers and the investing public.

         c.       Advertising  Services.  Wet Coast will develop a marketing and
                  branding strategy for San Joaquin that may involve electronic,
                  print or broadcast advertising in financial media.

4.       Approval of San Joaquin. Wet Coast will make no public announcements or
         issue oral or written  material  concerning  San  Joaquin  without  the
         express approval of San Joaquin.

5.       Provision  of Services.  Wet Coast will  provide the Services  upon the
         terms and conditions contained in this agreement. Wet Coast will assign
         three of its employees to provide the Services.  These individuals will
         be John Foulkes,  Michael Kowalewich and Leigh Jeffs (the "Employees").
         However,  Wet Coast may retain the services of  qualified  professional
         firms or persons to assist with or to provide the Services. San Joaquin
         acknowledges that Wet Coast maintains similar consulting  relationships
         with other public and private companies.

6.       Fee for the Services. San Joaquin will pay Wet Coast in advance for the
         Services  at the rate of $5,000 per month (the  "Fee") on the first day
         of each month during the Term of this agreement.

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CONSULTING AGREEMENT                                                         2/3

7.       Stock  Options for  Employees.  San Joaquin will  immediately  grant an
         aggregate  of  options  for 20,000  common  shares to Wet Coast for the
         Employees pursuant to the terms of San Joaquin's stock option plan. Wet
         Coast will  determine  the number of  options to be  allocated  to each
         individual  Employee.  The options will vest  immediately and expire at
         the end of twelve months from the day on which they are granted.

8.       Reimbursement of Expenses. San Joaquin will reimburse Wet Coast for any
         expenses  incurred  while  providing the  Services,  including its long
         distance  telephone,  fax,  postage and photocopying  expenses.  Normal
         overhead expenses of Wet Coast, such as secretarial,  incidental legal,
         etc.  are included  within the monthly fee payable by San Joaquin.  Wet
         Coast will submit its expense report for each month as soon as possible
         in the following  month. San Joaquin will pay the expense report within
         10 days of receiving it. Wet Coast must obtain San  Joaquin's  approval
         for any  expense  in  excess of a  monthly  total of $5000 of  expenses
         reimbursable under this Agreement.

9.       Covenants  of San  Joaquin.  If  requested by Wet Coast to enable it to
         provide the Services, San Joaquin will, at its own cost,

         a.       provide administrative, technical and managerial support,

         b.       ensure that  members of its  executive  and  management  teams
                  designated by Wet Coast are available to attend  meetings with
                  institutional    investors,    investment   bankers,   lending
                  institutions and high net worth individual investors, and with
                  members of Wet Coast or agents of Wet Coast,

         c.       provide any corporate information,  documentation and material
                  requested by Wet Coast, and

         d.       provide any material and sign any document that is required to
                  obtain daily DTC sheets for San Joaquin.

10.      San Joaquin's  Expenses.  San Joaquin will bear for its own account all
         of the costs of providing the information,  support and human resources
         described in paragraph 8.

11.      Direction.  Wet Coast  will  report to the  C.E.O.  or the C.O.O of San
         Joaquin, and reporting to either is deemed to be reporting to both.

12.      Termination.  Either party may terminate  this  agreement with 30 days'
         written notice. If San Joaquin  terminates this agreement,  it must pay
         any unpaid Fee and any expenses incurred to date of termination.

13.      Non-exclusive.  San  Joaquin  may  engage  any other  person to provide
         similar services as provided by Wet Coast during the Term, provided San
         Joaquin  first   provides   written   notice  to  Wet  Coast  to  avoid
         duplications  and  conflicts.   San  Joaquin   acknowledges   that  any
         information  gathered or contacts generated by Wet Coast as it provides
         the Services are the exclusive property of Wet Coast.

14.      Currency. "$" means United States dollars unless otherwise indicated.

15.      Independent Legal Advice. San Joaquin  acknowledges that this agreement
         was prepared for Wet Coast by Jeffs & Company Law  Corporation and that
         it  may  contain  terms  and  conditions  onerous  to it.  San  Joaquin
         expressly acknowledges that Wet Coast

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CONSULTING AGREEMENT                                                         3/3

         has given it  adequate  time to review this  agreement  and to seek and
         obtain  independent  legal advice,  and represents to Wet Coast that it
         has in  fact  sought  and  obtained  independent  legal  advice  and is
         satisfied with the terms and conditions of this agreement.

16.      Notices.  Any  notice  that  must be  given  or  delivered  under  this
         agreement  must be in writing and  delivered  by hand to the address or
         transmitted  by fax to the fax number given for the party on page 1 and
         is  deemed  to  have  been  received  when it is  delivered  by hand or
         transmitted  by fax unless the delivery or  transmission  is made after
         4:00 p.m. or on a non-business day where it is received,  in which case
         it is deemed to have been delivered or transmitted on the next business
         day.  Any  payments  of  money  must be  delivered  by hand or wired as
         instructed in writing by the receiving party. Any delivery other than a
         written  notice or money must be made by hand at the receiving  party's
         address.  Any notice  sent to San  Joaquin  during the  pendency of the
         Pannonian  Energy merger should also be sent to Robert Thorup,  Esq. at
         fax 801-532-7543.

17.      Governing  Law.  This  agreement  is  governed  by the laws of  British
         Columbia and must be litigated in the courts of British Columbia.

18.      Assignment.  Wet Coast may assign its  interest in this  agreement to a
         company formed for the purpose of providing the Services.

19.      Enurement.  This  agreement  enures  to the  benefit  of and  binds the
         parties and their respective successors and permitted assigns.

20.      Entire  Agreement.  This  agreement  constitutes  the entire  agreement
         between  the   parties  and   supersedes   all   previous   agreements,
         negotiations,  and discussions between the parties regarding consulting
         services.  This  agreement  may be amended or varied  only by a written
         agreement signed by all of the parties.

21.      Counterparts.   This  agreement  may  be  signed  in  counterparts  and
         delivered to the parties by fax, and the counterparts together, whether
         original or faxed, constitute one original document.

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CONSULTING AGREEMENT                                                         4/3

         THE PARTIES' SIGNATURES below are evidence of their agreement.

Wet Coast Management Corp.                San Joaquin Resources Inc.

_________________________________         ________________________________
Authorized signatory                      Authorized signatory

                                          Approved:

                                          This agreement has been reviewed
                                          and approved by Pannonian Energy, Inc.

                                          _____________________________________
                                          Authorized signatoryACQUISITION AGREEMENT

     This Acquisition Agreement is made this 18 day of December, 2000, between
Pannonian Energy, Inc. ("Pannonian"), a Delaware corporation whose address is
6400 South Fiddler's Green Circle, Plaza Tower One, Suite 180, Englewood,
Colorado 80111, and Phillips Petroleum Company ("Phillips"), a Delaware
corporation whose address is 6330 West Loop South, Bellaire, Texas 77401.

     1. The Prospect Area. The term "Prospect Area," as used in this Agreement,
means the following area in Uintah and Duchesne Counties, Utah:

               Sections 13-36 of Township 9 South, Range 19 East; S/2 of
               Township 9 South, Ranges 15, 16, 17 and 18 East; and All of
               Township 10 South, Ranges 15, 16, 17, 18 and 19 East.

          Within the Prospect Area,

               Pannonian owns one State lease and four Federal leases (the
               "Existing Leases") that are specifically described in Schedule 1
               to this Agreement, covering approximately 4,098.19 acres and
               further described on Exhibit "A" attached to and made a part
               hereof by this reference;

               Pannonian is the farmee under a Farmout Agreement dated May 1,
               2000 (as amended by three separate amendments dated September 7,
               2000, September 12, 2000, and November 15, 2000, (the "Medallion
               Farmout") from Medallion Exploration, as farmor, covering
               approximately 1,780.12 acres and further described on Exhibit "B"
               attached to and made a part hereof by this reference;

               Pannonian is the farmee under a Farmout Agreement dated September
               12, 2000 (the "Shenandoah Farmout") from Shenandoah Operating
               Company and Pendragon Energy Partners, as farmors, covering
               approximately 25,422.70 acres and further described on Exhibit
               "C" attached to and made a part hereof by this reference;

               Pannonian is negotiating a farmout agreement (the "Proposed Yates
               Farmout") with Yates Petroleum Corporation and others, as
               farmors, which is anticipated to cover approximately 320 acres;

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               Pannonian is negotiating a farmout agreement (the "Proposed
               Inland Resources Farmout") with Inland Resources, Inc., as
               farmor, which is anticipated to cover certain as yet undetermined
               interests held by Inland Resources, Inc.; and

               Pannonian is negotiating an agreement for the acquisition of
               leases covering approximately 12,000 acres, insofar as such
               leases cover depths from the top of the Mancos formation to the
               center of the earth (the "Hill Leases"), from Gilman A. Hill,
               although Pannonian now has only an oral right of first refusal in
               respect of these leasehold interests.

          The term "Contracts," as used in this Agreement shall mean the
Medallion Farmout and Shenandoah Farmout, and, if actually obtained by
Pannonian, the Proposed Yates Farmout and Proposed Inland Resources Farmout. The
term "Contracts" does not include any current or future agreement that may be
reached between Pannonian with Gilman A. Hill concerning the Hill Leases.

     2. Cash Payment and Grant of Exclusive Rights. Phillips shall, within two
business days after the date of this Agreement, pay $1,000,000 to Pannonian by
electronic funds transfer to an account designated by Pannonian. In
consideration of this payment, Phillips shall have the exclusive right to earn
an undivided 80% interest in the Existing Leases and the Contracts upon the
terms and conditions set forth below. In addition, Pannonian agrees, while this
Agreement remains in effect, not to create against the interest which may be
earned by Phillips under this Agreement any liens, encumbrances, overriding
royalties or other burdens against any of the Contracts or Leases or to assign
or transfer any interest in the Contracts or Existing Leases to any third party,
unless such party expressly assumes and agrees to be bound by this Agreement.

     3. Obligation Wells and Special Intermediate Well.

         3.1 General. At its sole risk and expense, Phillips shall drill to a
depth of 12,700 feet or at least 500' below the base of the Mesaverde Formation,
whichever is the lesser, (the "Objective Depth") and complete (equipped to flow,
if capable of commercial production, or plugged, abandoned and reclaimed, if not
capable of commercial production) two Obligation Wells (the "Obligation Wells")
within the Prospect Area, as more fully described below. The base of Mesaverde
shall be defined as the stratigraphic equivalent of 10,804'md seen on the
Compensated Neutron- Density log of the Pacific Gas Transmission Natural #1-2,
Sec.2, 10S 20E, Uintah Co., Utah. While not an Obligation Well, Phillips is also
required to indicate whether it wishes to drill the second earning well on the
Medallion Farmout, as discussed below in Paragraph 3.3.

          3.2 First Obligation Well: Medallion Farmout. On or before January 31,
2001, Phillips shall commence the actual drilling of the first of these two
Obligation Wells at a legal location in Section 29, Township 9 South, Range 19
East, on lands covered by the Medallion Farmout. Drilling, testing, completing
and, if warranted, equipping operations shall be continuously prosecuted
thereafter, with all operations and ancillary activities in connection with this
well conducted in strict compliance with the Medallion Farmout. Phillips shall
simultaneously provide copies of all information required by Medallion under the
Medallion Farmout to both Medallion and Pannonian.

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<PAGE>

          3.3 Special Intermediate Well: Medallion Farmout. Under the terms of
the Medallion Farmout, the drilling of the first Obligation Well on lands
covered by the Medallion Farmout will trigger an obligation on Pannonian to
drill another well if Pannonian wishes to earn interests in all of the lands
covered by the Medallion Farmout. This second earning well under the Medallion
Farmout is not an Obligation Well under this Agreement, but Phillips must,
within 90 days after release of the drilling rig from the first Obligation Well,
provide Pannonian notice of whether Phillips wishes to drill the second earning
well under the Medallion Farmout and complete (equipped to flow, if capable of
commercial production, or plugged, abandoned and reclaimed, if not capable of
commercial production) such well.

               If Phillips does not wish to drill this well or if Phillips fails
to provide the required notice to Pannonian within 90 days after rig release
from the first Obligation Well, then the Medallion Farmout shall cease to be
subject to this Agreement and, from and after the date of the notice, shall no
longer be included within the meaning of the term "Contract" as used herein.
Pannonian may then attempt to drill this second earning well for its own
account, although Phillips will have no liability to Pannonian if Pannonian is
unable to do so under these circumstances. In addition, if Pannonian does timely
drill this second earning well and if this second earning well is also located
by Pannonian in Section 29, Township 9 South, Range 19 East, then the assignment
earned by Phillips from Pannonian under this Agreement will, notwithstanding
anything to the contrary in Paragraph 3.5, be limited to the 320-acre
half-section in which Phillips drilled the first Obligation Well, and Pannonian
will retain (or receive a reassignment from Phillips of) the 320-acre
half-section in which Pannonian drills the second earning well. Phillips and
Pannonian do not now indicate whether these 320-acre half sections will be
determined on a lay-down or stand-up basis, but do agree that the half-sections
will be determined in such a manner that Phillips will not be entitled, by
involuntary pooling or otherwise, to participate in the costs of, or the
production from, the second earning well drilled by Pannonian.

               If Phillips does provide the required notice to Pannonian within
90 days after rig release from the first Obligation Well, indicating that it
wishes to drill this second earning well under the Medallion Farmout, then
Phillips, at its sole risk and expense, must drill, complete and equip this
second earning well within the time and in the manner required by the Medallion
Farmout.

          3.4 Second Obligation Well: Shenandoah Farmout. On or before August
31, 2001, Phillips shall commence the actual drilling of the second of the two
Obligation Wells at a legal location on lands covered by the Shenandoah Farmout.
Drilling, testing, completing and, if warranted, equipping operations shall be
continuously prosecuted thereafter, with all operations and ancillary activities
in connection with this well conducted in strict compliance with the Shenandoah
Farmout. Copies of all information required by the farmors under the Shenandoah
Farmout shall simultaneously be provided by Phillips to both the farmors and
Pannonian.

               The Shenandoah Farmout currently requires that the first well
thereunder be commenced no later than March 31, 2001, but allows an extension
until August 31, 2001 upon the payment to the farmors of $250,000. Pannonian
hereby undertakes to seek an amendment of the

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<PAGE>

Shenandoah  Farmout removing or reducing the required $250,000 amount,  although
Pannonian can provide no assurance  that it will be  successful in so doing.  If
Phillips does not commence this second  Obligation  Well by March 31, 2001, then
the  $250,000  extension  amount (or any lesser  amount to which the farmors may
agree) shall be paid 80% by Phillips and 20% by Pannonian.

               Moreover, Pannonian undertakes to seek (but does not promise that
it will succeed in securing) a further amendment of the Shenandoah Farmout so
that an earning well drilled thereunder on lands covered by a lease expiring
within six months after the commencement of drilling operations and located in
Sections 4, 5, 6, 7, 8, 9, 16, 17 or 18, Township 10 South, Range 18 East, will
earn all interests promised by the Shenandoah Farmout in that nine section
block, so that the well need not be located in the center of the nine section
block.

               Finally, Pannonian undertakes to seek (but does not promise that
it will succeed in securing) an amendment of the Shenandoah Farmout rendering
the call on production contained in Section 14 of the Shenandoah Farmout
inapplicable in its entirety to any interest that Phillips may earn or acquire
in lands covered by the Shenandoah Farmout.

          3.5 Earned Interest. If Phillips drills, completes and, if warranted,
equips both of the two Obligation Wells in compliance with the terms of this
Agreement and the terms of the Medallion Farmout or Shenandoah Farmout, as
applicable, then Pannonian shall assign to Phillips 80% of the leasehold
interest which Pannonian is assigned by the concerned farmor in the 640-acre
section in which each Obligation Well was drilled, subject to existing landowner
royalties, overriding royalties, conversion and back-in rights, as well as to
Pannonian's reservation of 1% of 8/8ths overriding royalty interest as provided
in Paragraph 8 below, subject to proportionate reduction. Phillips recognizes
that no leasehold interest will be assigned to Pannonian under the terms of
either the Medallion Farmout or the Shenandoah Farmout in connection with a dry
hole; instead, a well must be capable of producing in paying quantities in order
for Pannonian to earn an interest under the Medallion Farmout and in commercial
quantities in order for Pannonian to earn an interest under the Shenandoah
Farmout.

               In addition, if Phillips drills, completes and, if warranted,
equips both of the two Obligation Wells and also drills, completes and equips
the second earning well under the Medallion Farmout, then Pannonian shall assign
to Phillips 80% of the leasehold interest it receives from Medallion in the
640-acre section in which such second earning well was drilled, subject to
existing landowner royalties, overriding royalties, conversion and back-in
rights, as well as to Pannonian's reservation of 1% of 8/8ths overriding royalty
interest as provided in Paragraph 8 below, subject to proportionate reduction.

     4. Option Wells.

          4.1 General. If Phillips drills, completes and, if warranted, equips
both of the two foregoing Obligation Wells in compliance with the terms of this
Agreement and the terms of the Medallion Farmout or Shenandoah Farmout, as
applicable, then Phillips may, within 90 days after

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release of the drilling rig from the second Obligation Well, provide Pannonian
notice of its desire to drill Option Wells (the "Option Wells") to the Objective
Depth on lands covered by the Existing Leases or the Contracts and to complete
(equipped to flow, if capable of commercial production, or plugged, abandoned
and reclaimed, if not capable of commercial production) such wells as more fully
described below; provided, however, that if any Option Well is drilled within
one mile of a well which previously logged the Mancos formation but which was
not completed in the Mancos formation, then the Objective Depth for such well
shall be limited (if Phillips so desires) to the depth required by the Contract
covering the drill site for such well or, if such well is drilled on an Existing
Lease, then at least to the base of the Mesaverde formation, as defined in
Paragraph 3.1.

               If Phillips does not provide the required notice to Pannonian
within 90 days after rig release from the second Obligation Well, then this
Agreement (other than any reassignment obligation in respect of the Hill Leases
as set forth in Paragraph 7) shall terminate.

               If Phillips does provide the required notice to Pannonian within
90 days after rig release from the second Obligation Well, then Phillips shall
have the right to drill, complete and equip Option Wells, at its sole risk and
expense, subject to the terms set forth below.

          4.2 Option Well Requirements. Each Option Well shall be drilled in
strict compliance with the Existing Lease or with the Contract that covers the
drill site. The first Option Well may not be drilled on an Existing Lease, but
must be drilled as an earning well under a Contract.

               Preservation of the earning rights under the Contracts is of
paramount importance to Pannonian. Consequently, if Phillips is willing to drill
as an Option Well a well necessary to keep Pannonian's earning rights under a
Contract in effect, then Phillips must notify Pannonian of this decision
promptly after it is made, but in no event less than 90 days after rig release
from the preceding earning well, as applicable. If Phillips gives such notice,
then drilling the well necessary to keep the earning rights under the concerned
contract well will conclusively become a fixed obligation of Phillips.

               If Phillips does not send such a notice at least 90 days after
rig release from the preceding earning well, then the concerned Contract, except
as to the interest earned, shall thereupon cease to be subject to this Agreement
and, from and after the date of the notice, shall no longer be included within
the meaning of the term "Contract" as used herein. Pannonian may then attempt to
drill the required well for its own account, although Phillips will have no
liability to Pannonian if Pannonian is unable to do so under these
circumstances.

               Subject to the foregoing, actual drilling of each Option Well
must be commenced within the time allowed by the applicable Contract, but no
Option Well may be commenced after March 1, 2002. Phillips shall simultaneously
provide copies of all information required under the applicable Contract to both
the farmor and to Pannonian. If an Option Well is drilled on an Existing
Pannonian Lease rather than on lands covered by a Contract, then Phillips shall
provide Pannonian such information and at such times as if the concerned well
were being drilled on lands covered by the Medallion Farmout.

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<PAGE>

          4.3 Earned Interest. If Phillips drills, completes and, if
warranted, equips an Option Well in compliance with the terms of this Agreement
and the terms of any applicable Contract, then Pannonian shall assign to
Phillips 80% of the leasehold interest that is assigned by the concerned farmor
(or 80% of its interest in the concerned Existing Lease) in the 640-acre section
in which each Option Well was drilled, subject to landowner royalties,
overriding royalties, conversion and back-in rights of record or of which
Phillips has actual knowledge at the date of this Agreement, as well as to
Pannonian's reservation of an additional overriding royalty interest, subject to
proportionate reduction, in accordance with the schedule set forth in Paragraph
8, below.

     5. Work Commitment To Earn.

          When Phillips has expended $8,000,000 in connection with all drilling
operations, completing, equipping wells and building of flow lines to the point
of sale under this Agreement, then Phillips shall have the right, within 30 days
after it has expended the full amount of $8,000,000, to purchase 80% of
Pannonian's interest, subject to Pannonian's reservation of an overriding
royalty interest as set forth in Paragraph 8 below, in all of the Existing
Leases and Contracts (except to the extent such Existing Leases or Contracts
cover lands previously earned by Phillips by drilling Obligation or Option Wells
or lands which are then being earned by the drilling of an Option Well which
already has been commenced) by assigning, without warranty of the title of any
kind, express or implied, to Pannonian 100% of the Wasatch Formation and 20% of
other depths of Phillips' interest in Federal Lease UTU-018260-A, and U-05148 if
Phillips holds title to this lease, but reserving to Phillips an overriding
royalty interest (subject to proportionate reduction) equal to the difference
between 19% and all landowner royalties, overriding royalties, and other burdens
of record at the date hereof. The Wasatch Formation shall be defined as that
interval from the stratigraphic equivalent of 5303'md down to the stratigraphic
equivalent of 8588'md seen on the Gr-Dual Laterolog of the Mapco Federal 7-25A
well, sec.25, 9S-18E, Uintah Co., Utah. As soon as Phillips has expended a
cumulative total of $8,000,000 in connection with drilling, completing and
equipping the Obligation and Option Wells described hereinabove, Pannonian shall
become responsible for its 20% share of all subsequent drilling, completing and
equipping expenses in connection with Option Wells which are not yet drilled to
total depth, completed or equipped and bear its share of operations on existing
wells. However, if Phillips is in compliance with the well performance
requirement of this Agreement but has not met its spending obligation as set
forth above, Phillips may elect to pay in cash to Pannonian the difference
between its actual expenditures and the expenditure obligation amount on or
before April 1, 2002 and by making such cash payment Phillips shall be deemed to
have satisfied its spending obligation.

          If Phillips does not expend $8,000,000 of its funds as provided above
by April 2, 2002 under this Agreement, then this Agreement (other than the
assignment obligation as to each Obligation Well and Option Well which has been
drilled by Phillips and any reassignment obligation in respect of the Hill
Leases as set forth in Paragraph 7) shall terminate.

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<PAGE>

     6. Limitation to Earned Interest

     Insofar as lands subject to the Existing Leases, Medallion Farmout and
Proposed Yates and Inland Farmouts that are located within Townships 9 and 10
South, Range 19 East of the Prospect Area, any assignment earned by Phillips
shall be limited to depths below the base of the Wasatch Formation. The Base of
the Wasatch, also being the Top of Mesaverde, is defined as the Stratigraphic
equivalent of 8588'md seen on the Gr-Dual Laterolog of the Mapco Federal 7-25A
well, sec.25, 9S-18E, Uintah Co., Utah.

     7. The Hill Leases. On or before December 22, 2000, Pannonian shall advise
Phillips of the best terms it believes it will be able to secure in connection
with an acquisition of the Hill Leases from Gilman A. Hill and, on or before
January 5, 2001, Phillips will advise Pannonian whether it wishes to participate
in such acquisition.

          If Phillips provides timely notice that it wishes to participate in
such acquisition, then Pannonian shall endeavor to conclude an acquisition
agreement on the indicated terms with Gilman A. Hill on behalf of both Pannonian
and Phillips. Phillips shall pay 100% of all cash amounts due Mr. Hill under
such agreement (but not more than the amount previously indicated by Pannonian)
and shall receive an undivided 80% interest in all leasehold interests acquired
from Mr. Hill, but subject in all cases to a grant or reservation, as
appropriate, of an additional 1% of 8/8ths overriding royalty interest (subject
to proportionate reduction) in favor of Pannonian. If, however, Phillips
thereafter fails timely to fulfill the Work Commitment to Pannonian as described
in Paragraph 5, Phillips shall promptly assign all of its right, title and
interest without warranty of title in the Hill Leases to Pannonian for a total
aggregate cash consideration of $10.

          If Phillips fails to provide timely notice that it wishes to
participate in such acquisition, then Pannonian shall have the unfettered right
to conclude an acquisition agreement on terms no less favorable to Mr. Hill than
those previously indicated by Pannonian. Any such acquisition by Pannonian from
Mr. Hill shall be for the sole account of Pannonian, and Phillips shall have no
right to acquire any interest in the Hill Leases from Pannonian.

     8. Pannonian Overriding Royalties. Any leasehold interest which may be
assigned by Pannonian to Phillips as a result of Phillips' successful drilling,
completing and equipping of the Obligation Wells or Option Wells and any
leasehold interests in the Existing Leases or Contracts which may be assigned by
Pannonian to Phillips following satisfaction of the Work Commitment described in
Paragraph 5 will be subject to the reservation by Pannonian of an overriding
royalty interest (exclusive of other outstanding burdens, but subject to
proportionate reduction) determined in accordance with the following schedule:

          5.0% overriding royalty on production under the terms of the Existing
          Leases that were obtained by Pannonian as the original lessee;

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<PAGE>

          0.5% overriding royalty on production under the terms of the Existing
          Leases that were obtained by Pannonian as the assignee of Retamco
          Operating, Inc.;

          1.0% overriding royalty on production under the terms of leases that
          are obtained under the Medallion Farmout, the Shenandoah Farmout and,
          if actually obtained by Pannonian, the Proposed Inland Resources
          Farmout;

          1.0% overriding royalty on production under the terms of the Hill
          Leases and any other leases or contracts for the acquisition of leases
          in the Prospect Area that may be obtained by Pannonian after the date
          of this Agreement; provided, however, that any such leases or
          contracts obtained by Pannonian shall automatically be added to the
          definition of Existing Leases and thereby be made subject to this
          Agreement; and

          No overriding royalty on production under the terms of leases that are
          obtained under the Proposed Yates Farmout.

If any lease in the Prospect Area is ever assigned directly into Phillips and
Pannonian by a farmor under a Contract (for example, after the satisfaction of
the Work Commitment by Phillips), then the applicable overriding royalty may be
created by a grant from Phillips, rather than a reservation by Pannonian. The
intention is that Pannonian shall receive the foregoing overriding royalties on
production under all leases obtained under the Contracts, whether such
overriding royalties are best created by grant or reservation.

     9. Covenants.

          9.1 Delay Rentals. While this Agreement remains in effect, Phillips
shall reimburse Pannonian 80% of all delay rentals paid by Pannonian to maintain
the Existing Leases in effect, as well as 80% of all delay rentals or delay
rental reimbursements that Pannonian must pay under the terms of the Contracts.

          9.2 Additional Geophysical Work. Phillips shall have the right, but
not the obligation, to acquire additional geophysical data, processing and
interpretation on and in respect of the Existing Leases and, only with the
consent of the farmors or owners, the lands which are subject to the Contracts
or within the Prospect Area. Phillips shall share with Pannonian its
interpretation of the additional data or processing, and Pannonian shall have
the right to access such data, processing and interpretation for its own use.
Pannonian's access will be granted only in the offices of Phillips and only upon
ten days prior written notice from Pannonian to Phillips. Pannonian shall have
no direct ownership of such data, processing or interpretation, and shall keep
all such data, processing and interpretation confidential.

          9.3 Indemnification. Phillips shall, to the full extent permitted by
applicable law, protect, indemnify, and hold Pannonian harmless against all
liens, claims, expenses (including attorneys' fees), actions and causes of
action of every kind arising out of or in connection with

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operations and activities conducted or caused to be conducted by Phillips in
connection with geophysical data acquisition, Obligation Wells or Option Wells
under this Agreement until Pannonian comes back in for its working interest.

     10. Joint Operating Agreement. As to any leasehold interests acquired by
Phillips that were subject to a Contract, Phillips shall ratify and join in the
joint operating agreements required or provided in such Contract, and shall, if
permitted by the concerned Contract, be designated as the Operator. As to any
leasehold interest acquired by Phillips in the Existing Leases pursuant to this
Agreement, Phillips and Pannonian shall enter into a joint operating agreement
in the same form as is provided in the Shenandoah Farmout, with Phillips
designated as the Operator.

               As between Phillips and Pannonian, however, no more than an
aggregate of twelve drilling operations subject to an authorization for
expenditure under the terms of all joint operating agreements applicable to the
Prospect Area shall be proposed or in progress at any given time. In addition,
as between Phillips and Pannonian, the non-consent penalty if Pannonian does not
consent to an operation shall conclusively be deemed to provide a pre-agreed
farmout by Pannonian of the concerned wellbore and depth in which the proposed
operation will be conducted, such that Phillips will be able to earn by its
conduct of the operation all of Pannonian's interest in the wellbore and depth,
subject only to the reservation by Pannonian of a 2.5% overriding royalty
interest (exclusive of other burdens then in existence), convertible to a 20%
working interest at payout. Both the overriding royalty interest and the working
interest into which it may be converted at payout shall be subject to
proportionate reduction, so that if Pannonian assigns, for example, a 20%
interest in the wellbore and concerned depths to Phillips, Pannonian will
actually be entitled to a 0.5% overriding royalty, convertible to a 4.0% working
interest at payout. The definition of "payout" and timing as to when such payout
shall occur as used herein shall be the same as set out in Paragraph 4 of the
Shenandoah Farmout.

     11. Titles and Curative Work. Pannonian does not warrant title of any kind,
express or implied, with respect to the Existing Leases or any other lease
subject to this Agreement, and Pannonian shall not be obligated to perform any
curative work or to furnish any materials with respect thereto other than copies
of such title opinions and other relevant documents as Pannonian may have in its
possession. Nevertheless, any curative work by Phillips shall inure to the
benefit of Pannonian and Pannonian shall be promptly furnished copies of all
opinions and curative instruments pertaining to such leases.

     12. New Leases and Contracts. Any leasehold interest or right to
acquire any leasehold interest within the Prospect Area which may be acquired by
or on behalf of Pannonian or Phillips ("Acquiring Party") or any affiliate of
Pannonian or Phillips before the Work Commitment under Paragraph 5 is satisfied
shall automatically be included in the definition of an Existing Lease, if a
leasehold interest, or in the definition of Contract, if a right to acquire a
leasehold interest. However, the Acquiring Party shall have the right to retain
from such Existing Lease or Contract an overriding royalty equal to the
difference between the existing burdens and 19% but in no event less then 1%
overriding royalty. Consequently, while there will be no expense reimbursement
to the Acquiring Party, any such leasehold interest or right to acquire a
leasehold

                                       9
<PAGE>

interest shall be subject to this Agreement. If Phillips fails to satisfy the
Work Commitment as provided in Paragraph 5, then Phillips shall assign all of
its right, title and interest in such Leases and Contracts to Pannonian for a
total cash consideration of $5. However, Pannonian has the option to purchase
those leases and contracts acquired after the date hereof, Pannonian will
reimburse Phillips for it's actual acquisition cost

               Any leasehold interest or right to acquire any leasehold
interest within the Prospect Area which may be acquired by or on behalf of
Pannonian or Phillips ("Acquiring Party") or any affiliate of Pannonian or
Phillips after satisfaction of the Work Commitment is made under Paragraph 5
shall be offered to the other party by written notice promptly following its
acquisition. Within 30 days after receiving the Acquiring Party's notice, the
other party may notify the Acquiring Party of its election to accept an interest
(80% in the case of offers made to Phillips; 20% in the case of offers made to
Pannonian) in the concerned leasehold interest or right to acquire leasehold
interest. If such notice is given, the Acquiring Party shall, within 21 days
after such notice given, assign the appropriate percentage interest in the
leasehold interest or right to acquire the leasehold interest to the other
party, without warranty of title and without any new overriding royalties, liens
or encumbrances, and the other party shall pay to the Acquiring Party its
proportionate share of the Acquiring Party's actual purchase price and other
out-of-pocket acquisition costs. Any leasehold interest so acquired by both
parties shall automatically be added to the joint operating agreement covering
the Existing Leases.

Notwithstanding anything to the contrary in this provision, as to any leasehold
interest or right to acquire any leasehold interest within the Prospect Area
which may be acquired by either Pannonian or Phillips, including, but not
limited to, the Proposed Yates Farmout, Proposed Inland Resources Farmout and
Hill Leases, neither party can be bound to the terms and conditions of such
acquisition without its express written acceptance. Failure to provide to the
Acquiring Party such written acceptance within 30 days from receipt of the full
disclosure of such acquisition shall be deemed an election not to participate in
such acquisition and such acquisition shall not be subject to this Agreement.

This provision shall not apply to acquisition of interests by merger,
reorganization, consolidation or the purchase of all or substantially all of the
selling party's interest.

     13. Relationship of the parties. Nothing contained in this agreement shall
make any party the partner or the joint venturer of any other party, or, except
as otherwise expressly provided, make any party the agent or legal
representative of any other party, or create any fiduciary relationship between
or among them. The parties do not intend to create, and this agreement shall not
be construed to create any mining, commercial or other partnership or joint
venture.

               No party, nor any of its directors, officers, members, managers,
employees, agents and attorneys, or affiliates, shall act for or assume any
obligation or responsibility on behalf of another party except as otherwise
expressly provided herein, and any such action or assumption by a party's
directors, officers, members, managers, employees, agents and attorneys, or
affiliates shall be a breach by such party of this agreement. The rights,
duties, obligations and liabilities of the parties are several and not joint or
collective.

                                       10
<PAGE>

     14. No Third Party Beneficiary Rights. This agreement is to be construed to
benefit the parties and their respective successors and assigns only, and is not
to be construed to create third party beneficiary rights in any other party or
in any governmental organization or agency.

     15. General Provisions.

          15.1 Notices. All notices, payments and other required or permitted
communications to a party shall be in writing, and shall be addressed to such
party at its address first set forth above, or such other address as the party
to be notified may have designated by written notice to the other. All notices
shall be given (a) by personal delivery to the party, or (b) by facsimile
transmission (if to Pannonian, on 303-771-5477; if to Phillips, on 713-669-2953)
from a machine producing a printed transmission report, (c) by registered or
certified mail return receipt requested; or (d) by nationally recognized
overnight or other express courier service. All notices shall be effective and
shall be deemed given on the date of receipt at the principal address if
received during normal business hours, and, if not received during normal
business hours, on the next business day following receipt.

          15.2 Force Majeure. Except for the obligation to make payments when
due hereunder, the obligations of a party shall be suspended to the extent and
for the period as allowed by the concerned Contract or, if the concerned
obligation does not arise under a Contract, to the extent and for the period
that performance is prevented by any cause, whether foreseeable or
unforeseeable, beyond its reasonable control, including, without limitation,
labor disputes (however arising and whether or not employee demands are
reasonable or within the power of the party to grant); acts of God; laws,
instructions or requests of any government or governmental entity; inability to
obtain on reasonably acceptable terms any public or private permit, approval or
other authorization; curtailment or suspension of activities to remedy or avoid
a present or prospective violation of environmental laws; action or inaction by
any federal, state or local agency that delays or prevents the issuance or
granting of any approval or authorization required to conduct operations beyond
the reasonable expectations of the party seeking the approval or authorization;
fire, explosion, earthquake, storm, flood, sink holes, drought or other adverse
weather condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment or by contractors' or subcontractors'
shortage of, or inability to obtain at reasonable cost, labor, transportation,
materials, machinery, equipment, supplies, utilities or services or the
inability to mobilize or demobilize the same at reasonable cost; accidents;
breakdown of equipment, machinery or facilities; actions by native rights
groups, environmental groups, or other similar special interest groups; or any
other cause whether similar or dissimilar to the foregoing. The affected party
shall promptly give notice to the other parties of the suspension of
performance, stating therein the nature of the suspension, the reasons
therefore, and the expected duration thereof. The affected party shall resume
performance as soon as reasonably possible.

          15.3 Assignment. Neither this agreement nor any rights under this
agreement may be assigned by Phillips to any third party prior to earning an
assignment of interest, unless the written consent of Pannonian (which shall not
be unreasonably withheld) has first been obtained.

                                       11
<PAGE>

               If Pannonian does give such consent, then all of the terms,
               conditions and covenants of this agreement shall be binding upon
               and inure to the benefit of the assignee. This agreement shall be
               binding upon and inure to the benefit of the permitted successors
               and assigns of the parties.

          15.4 Entire Agreement. This agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof. It may
not be modified or amended except in writing executed by both parties.

          15.5 Governing Law. This agreement shall be construed under Utah law.

          IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first set forth above.

PANNONIAN ENERGY, INC.                        PHILLIPS PETROLEUM COMPANY

By: /s/ Mark A. Erickson                      By: /s/ B. C. Nolen
   ----------------------------                   -----------------------------
   Mark A. Erickson, President                    B. C. Nolen, Attorney-in-Fact

                                       12

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