Document:

Exhibit 10.1
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      P R I M A
      OIL & GAS COMPANY
      Trinity Place
      1801 Broadway, Suite 500
      Denver, Colorado  80202
      303-297-2300

Exhibit 10.1
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November 7, 1996

Unioil
P.O. Box 310
Evans, Colorado 80620

Re:  Farmout/Farmout Option
     Weld County, Colorado

Gentlemen:

Pursuant to our discussions, Prima Oil & Gas Company (Prima) and Unioil hereby
agree as follows:

1.     Unioil's Contribution. Unioil is the owner of certain potential
       drillsites as described on Exhibit A.1. attached to and made a part
       hereof (hereinafter sometimes referred to as the "Unioil Drillsites").
       Unioil is desirous of having oil and gas wells drilled on such
       drillsites. Prima is willing to drill wells on the Unioil Drillsites
       subject to the terms and conditions herein contained. Accordingly, Unioil
       hereby contributes the Unioil Drillsites to the "Drillsite Pool" as
       further defined in this agreement subject to the terms and conditions of
       this agreement.

       Unioil is also the owner of certain oil and gas wells (as set forth on
       Exhibit A.1.b.) identified as potential recompletion candidates. Unioil
       is desirous of having such oil and gas wells recompleted subject to the
       terms and conditions of this agreement. Accordingly, Unioil hereby
       contributes the recompletion candidates to this agreement.

2.     Prima's Contribution. Prima is the owner of certain potential drillsites
       as described on Exhibit A.2. attached to and made a part hereof
       (hereinafter sometimes referred to as the "Prima Drillsites"). Prima is
       willing to drill wells on the Prima Drillsites subject to the terms and
       conditions herein contained. Accordingly, Prima hereby contributes the
       Prima Drillsites to the "Drillsite Pool" as further defined in this
       agreement, subject to the terms and conditions of this agreement.

3.     Drillsite Pool. The Drillsite Pool shall be defined as the total of all
       potential locations contributed to this agreement by both Unioil and
       Prima and from which will be drawn locations to be drilled pursuant to
       this agreement. All lands contributed to the Drillsite Pool will be
       delivered subject to total drillsite burdens of 25% (the intent being to
       deliver a 75% net revenue working interest, assuming such is available)
       with the difference between current burdens which may be of record as of
       the date of this agreement and a total leasehold burden of 25% being
       reserved to the contributing party in the form of an overriding royalty.

<PAGE>

3.1.   Inadequate Leasehold Net revenue Interest. In the event the available
       leasehold net revenue interest in a given location contributed to the
       Drillsite pool is less than 75%, then the contributing party shall notify
       the noncontributing party of the actual leasehold net revenue interest
       available to the location. The noncontributing party shall then have the
       option, for a period of 5 days, to accept the location at the leasehold
       net revenue available or to reject the location. Should the location be
       accepted, then Prima shall proceed to drill the location in the normal
       course of a proposed drilling program. However, should the location be
       rejected, the contributing party shall have the option, for a period of
       10 days, to propose a substitute location within a three mile radius of
       the location in question or to simply withdraw the location. Should the
       contributing party propose a substitute location, the non-contributing
       party shall have the option, for a period of 10 days, of either accepting
       or rejecting the substitute location. Should the non-contributing party
       elect to reject the substitute location, then the location shall be
       deemed to be withdrawn. Upon withdrawal of a location as described above,
       within 5 days, the non-contributing party shall likewise withdraw one
       location within a three mile radius of the rejected location.

3.2.   Title Failure. In like manner, in the event, after review by a title
       attorney, it should be determined that a location contributed to the
       drillsite pool does NOT have drillable title (drillable title shall mean:
       title of a quality adequate to enable a prudent operator to drill an oil
       anchor gas well on a given location while assuming only reasonably
       minimal business risks), then the contributing party shall have 15 days
       in which to cure whatever title defects are rendering the location
       un-drillable. Should both parties agree that the title defects have been
       or can be cured within the 15 day period, then Prima shall proceed to
       drill the location as planned. However, should the defects not prove to
       be curable within the 15 day time frame, the location may at the option
       of the non-contributing party he rejected. Should a location be rejected,
       then the same procedure as described above concerning locations with
       inadequate leasehold net revenue interest shall be followed.

4.     Recompletion Potential. In addition to those lands contributed to the
       Drillsite Pool, Unioil also owns and operates certain wells identified as
       leaving "Recompletion Potential." Recompletion Potential shall be defined
       as any well(s) which in Prima's opinion, after scientific, engineering
       and economic review, is determined or believed to have the potential,
       upon recompletion, to produce a rate of return and an over all return on
       investment sufficient to justify the expenditure of the funds necessary
       to perform the recompletion(s). Prima will perform all such recompletions
       pursuant to this agreement at its sole expense, bearing all costs
       associated with the operations through and including returning the well
       to production. Unioil specifically recognizes that there are certain
       risks associated with such recompletions and there is no guarantee that
       the recompleted well(s) will out perform the well as it presently is
       configured and that further there is a risk that the well could be lost
       permanently or that there will be no further production from such well.
       Unioil expressly agrees that Prima will hear no liability to Unioil or it
       shareholders in such case and Prima's only liability will be that of any
       operator pursuant to the Joint Operating Agreement (JOA) described below.

                                        2
<PAGE>

       Although it will bear none of the costs associated with the recomple-
       tions, commencing with the first sales following the recompletion, Unioil
       will receive a 27.5% working interest subject to its proportionate share
       of the leasehold burdens in existence as of the date of this agreement.
       Further, Unioil will continue to receive 100% of the Net Revenue Working
       Interest from the wells with Recompletion Potential until such time as
       the recompletion is performed. ("Net Revenue Working Interest" shall be
       defined as the working interest or cost bearing interest owned by a given
       party reduced by the leasehold burdens allocable to that percentage of
       working interest. For example: Unioil's Net Revenue Working Interest on a
       tract with leasehold burdens totaling 25% would be 20.625%, or 27.5%
       working interest times 75% leasehold net revenue interest equals 20.625%
       Net Revenue Working Interest) It is the intent of both parties that the
       recompletions be performed as soon as reasonably possible. Prima
       presently recognizes probable Recompletion Potential in approximately six
       wells among those shown on Exhibit A.1. However, the parties recognize
       that there are two additional wells identified on Exhibit A.1.c. which,
       as of the date of this agreement are not recognized to have Recompletion
       Potential. However, following further study such wells may in fact prove
       to have such potential. Accordingly, Prima is hereby granted an option,
       during the term of this agreement, to recomplete such additional wells
       under the same terms and conditions as set forth in this agreement.

5.     Oil and Gas Contracts. Unioil agrees that Prima shall have the right to
       negotiate or renegotiate any dedication and or oil and gas purchase
       agreements on the recompletion wells as well as any lands and locations
       contributed to the Drillsite Pool. For this purpose and to the extent
       necessary Unioil agrees to appoint Prima as its agent or otherwise
       empower Prima to act on Unioil's behalf in discussions with potential gas
       purchaser's or markets.

6.     Operations. Prima will be the Operator of all of the Recompletions and
       all of the wells drawn from the Drillsite Pool and drilled pursuant to
       this agreement. Prima shall be responsible for selecting the wells to be
       drilled from the Drillsite Pool and for the conduct of all operations,
       including but not limited to clearing title to the locations, obtaining
       permits, drilling, completing and equipping the wells and obtaining
       access to a market for the production from the well. All operations
       conducted pursuant to this agreement will be conducted pursuant to an
       AAPL model from JOA (1989) as is commonly used in the area.

7.     Drilling Packages/Payout. For purposes of this agreement all wells
       selected from the Drillsite Pool shall be divided into packages of not
       less than two and not more than eight wells hereinafter referred to as a
       Drilling Package. On all Drilling Packages drilled pursuant to this
       agreement, Prima agrees to pay 100% of the costs associated with
       drilling, completing, equipping and operating the wells included in such
       packages until Payout. Likewise. Prima shall be entitled to receive 100%
       of the Net Revenue Working Interest until Payout on each Drilling Package
       drilled pursuant to this agreement. After Payout, Unioil shall be
       entitled to receive a 27.5% working interest subject to its proportionate
       share of leasehold burdens and shall be responsible for paying its share
       of the costs of all further operations on that Drilling Package. Payout
       shall be determined on Drilling Package basis, meaning on the basis of

                                        3
<PAGE>

       all expenses and revenues attributable to all wells identified as and
       included in a given Drilling Package. Payout shall be defined as follows:

       Payout shall be deemed to have occurred at such time as Prima shall have
       recovered 100% of the actual costs and expenses of Prima, as Operator, in
       drilling, completing, equipping and operating the well, including but not
       limited to all costs associated with plugging back, recompleting,
       reworking, and testing well(s) in a given Drilling Package, plus an
       amount, computed on a monthly basis, equal to the remaining balance to be
       recovered times the prime interest rate (as quoted in the Wall Street
       Journal on the first business day of each month) plus one percent. Such
       costs and expenses shall be reduced by deducting 100% of the proceeds of
       production for a given month from all wells in a Drilling Package, after
       having deducted the lessor's royalty, any overriding royalties (including
       any reserved to the party contributing the location as described above)
       and any similar burdens on production, with which the leasehold is
       burdened and which may be of record as of the date of this agreement, as
       well as all severance, ad valorem and other similar taxes attributable to
       the before payout interest.

       Payout shall be deemed to occur and Unioil's after Payout interest shall
       be deemed to vest in Unioil as of the first day of the month following
       the point at which Payout occurs. On leases and lands contributed to the
       Drillsite Pool by Prima, Prima agrees to promptly make assignment to
       Unioil of its 27.5% working interest in each well in a given drilling
       package effective as of the date each well is spud. However, Unioil's
       working interest share of revenue shall be deemed to be relinquished to
       Prima until each drilling package has reached payout. Prima agrees to
       provide to Unioil statements, no less frequently than quarterly (although
       individual statements may be requested more frequently if Unioil needs
       such from time to time), showing the Payout status of the various
       Drilling Packages.

8.     Commencement. The parties agree that Prima shall commence actual drilling
       operations on the first Drilling Package no later than thirty days
       following receipt of title clearance on the wells in that Drilling
       Package. The target date for commencing the first well subject hereto
       will he November 30, 1996. Prima's right to drill wells pursuant to this
       agreement shall terminate upon the drilling of the last location included
       in the Drillsite Pool or December 31, 1999, whichever comes first. In the
       event that Prima should fail to complete the drilling of all such
       locations within the time allowed, then the following procedure shall be
       employed. The parties hereto will conduct a "Draft" with each party
       selecting one location at a time until all locations have been selected.
       The parties shall then assign 100% of the working interest, subject to
       the same leasehold burdens as described in paragraph 3 above to the party
       selecting each given location in the "Draft". That party shall then own
       such location and with regard to such location have the full right to
       drill and otherwise operate on such location {subject to the terms of the
       underlying lease and any pertinent existing agreements). As regards such
       undrilled locations, upon assignment to the respective parties, the JOA
       shall terminate effective as of the date of the assignment.

                                        4
<PAGE>

9.     Notice and Assignments. Prima shall notify Unioil of its intent to drill
       certain locations from the Drillsite Pool prior to submitting
       applications for permits to drill to the Colorado Oil and Gas
       Conservation Commission. In the case of locations contributed to the
       Drillsite Pool by Unioil, at any time following the commencement of
       actual drilling operations on a given location, Prima may request an
       assignment from Unioil of Prima's working interest share of the oil and
       gas lease(s) covering that location. Within ten days of receipt of such
       request. Unioil shall assign 72.5% of its right title and interest in and
       to those Unioil Locations for which request for assignment is made,
       subject to the reservation of an overriding royalty (ORR) equal to the
       difference between all land owner royalties, overriding royalties and
       other similar burdens on production and a total leasehold burden of 25%.
       All ORR's reserved pursuant to this agreement shall be proportionately
       reduced to the extent the ORR holder owns less than 100% of the leasehold
       covering the Subject Lands and to the extent the burdened leasehold
       covers less than 100% of the mineral ownership of the Subject Lands and
       further to the extent the burdened interests represent less than 100% of
       any pooled unit or spacing unit. In addition, Unioil shall be deemed to
       have relinquished its 27.5% working interest per well on each package
       (subject to the same ORR's described above) to Prima until Payout as
       described in paragraph 7 above. At Payout, Unioil's relinquished working
       interests will revert to Unioil without any further action by either
       party in the time and manner described above.

       The parties recognize that as of the date of this agreement, the Unioil
       Drillsites and Recompletion Candidates are encumbered by two mortgages.
       The first such mortgage is to First National Bank of Greeley, and the
       second is to Joseph Associates of Greeley, Inc. Unioil agrees that prior
       to making assignments pursuant to this agreement, it will secure the
       release of such mortgages insofar as such mortgages encumber the interest
       to be assigned.

10.    Confidentiality. It is agreed that Prima has developed certain knowledge
       and techniques for drilling and completing and operating wells in the
       vicinity of the locations contributed to the Drillsite Pool. It is
       further agreed that such knowledge and techniques have been developed at
       great expense to Prima and that such knowledge and techniques are not
       generally known to the majority of operators in the vicinity of the
       locations such knowledge, techniques and associated information shall
       hereinafter he referred to as the "Proprietary Data". Prima agrees that
       it will share with Unioil, that portion of the Proprietary Data, relevant
       to the Drillsite Pool and the Recompletion Candidates. Accordingly,
       Unioil agrees that during the term of this agreement, and except as
       required by law or governmental regulation, Unioil shall not reveal or
       disseminate any information it may acquire regarding the technical,
       geologic or engineering techniques employed by Prima in the conduct of
       its operations pursuant to this agreement. Unioil may use the Proprietary
       Data on its own wells and locations during the term of this agreement,
       however, for a period of two (2) years from the date hereof, Unioil
       specifically agrees not to compete with Prima regarding the acquisition
       of additional lands, leases, locations or wells with the intent of
       employing the Proprietary Data on such without first making available to
       Prima the opportunity to participate in such acquisition for a 50%
       working interest.

                                        5
<PAGE>

11.    Requisite Authority. Both parties represent that they have the full and
       requisite authority to bind their respective corporations to the terms of
       this agreement, and that this agreement shall he binding upon each such
       party their respective heirs, successors and assigns and that by the
       signature of the party set forth below do hereby evidence the same.

       Should the foregoing be in accord with your understanding of our
       agreement please so signify by signing and returning one copy of this
       agreement as soon as possible.

Sincerely,
PRIMA OIL & GAS COMPANY

/s/ G. Walter Lunsford

G. Walter Lunsford
Vice President, Land

Agreed to and accepted this   8th   day of November, 1996.
                           --------

UNIOIL

By:  /s/ Charles ?
   -----------------------------------

Its:   CEO & Chairman
    ----------------------------------

                                        6
<PAGE>

                                   Exhibit "A"

                                  (Page 1 of 2)

Attached  to and  made a part  of that  certain  Farmout/Farmout  Option  letter
agreement  dated  November 7, 1996,  by and  between  Unioil and Prima Oil & Gas
Company.

1.a.   Drilling locations contributed by Unioil "Union Drillsites"

       Township 5 North, Range 65 West
       -------------------------------
       Section 22: SWNE
       Section 26: NENW
       Section 27: NESW, SWSE
       Section 32: NESW

       Township 5 North, Range 66 West
       -------------------------------
       Section 17: SW
       Section 19: N/2NW, SENW

       Township 5 North, Range 67 West
       -------------------------------
       Section 13: NENW, S/2NW, SW/4
       Section 23: SW/4, N/2 SE, SWSE

1.b.   Location of wells identified as possible  reccompletion  candidates as of
       the date of this agreement. Note: It is not the intent of this exhibit to
                                   -----
       in  any  way  limit  the  wells  to  be  recompleted  to  strictly  those
       hereinbelow described.

       Township 5 North, Range 65 West
       -------------------------------
       Section 22: SENE (River #1)
       Section 27: SESE (Bunting #1)
       Section 32: NWSW (Ewing #1)

       Township 5 North, Range 66 West
       -------------------------------
       Sections 19: SWNW (Sheep Draw North #1)

       Township 5 North, Range 67 West
       -------------------------------
       Section 13: NWNW (Sheep Draw #1)
       Section 23: SESE (Sheep Draw South #1)

1.c.   Locations of Wells NOT identified as having recompletion  potential as of
       the date of this  agreement.  Prima  shall  have an option to  recomplete
       these wells should  additional  review indicate that they do in fact have
       such potential.

       Township 5 North, Range 65 West
       -------------------------------
       Section 26: NWNW (HL 26-1)
       Section 27: NWSW (Sitzman #1)

<PAGE>

                                   Exhibit "A"

                                  (Page 2 of 2)

Attached  to and  made a part  of that  certain  Farmout/Farmout  Option  letter
agreement  dated  November 7, 1996,  by and  between  Unioil and Prima Oil & Gas
Company.

2.     Drilling locations contributed by Prima "Prima Drillsites"

       Township 5 North, Range 65 West
       -------------------------------
       Section 14: SWSE
       Section 23: SWNE, NESW, SWSE
       Section 24: SWNW

       Township 5 North, Range 67 West
       -------------------------------
       Section 11: SE/4, E/2SW, NWSW
       Section 12: SW/4
       Section 22: E/2SE, NWSE, W/2NE, SENE
       Section 24: SENW, E/2SW, NWSW

<PAGE>

                                    EXHIBIT B
                                    ---------

         Attached in and made a part of that certain Farmout and Farmout
        Option Agreement between Unioil and Prima Oil & Gas Company dated
                                November 7, 1996

         (Map showing locations of Prima Farmout Acreage, Unioil Farmout
        Acreage, Proposed Recompletions and Proposed Wells in Township 5
                       North, Ranges 65, 66 and 67 West.)Exhibit 10.2
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                         PRODUCTION PREPAYMENT AGREEMENT

                                     BETWEEN

                       PANENERGY FINANCIAL SERVICES, INC.,
                             A DELAWARE CORPORATION

                                       AND

                                  UNIOIL, INC.
                              A NEVADA CORPORATION

<PAGE>

                                      INDEX
                                      -----

1.     PRODUCTION PREPAYMENTS BY PANENERGY................................... 2
       -----------------------------------

2.     USE AND APPLICATION OF PRODUCTION PREPAYMENTS......................... 5
       ---------------------------------------------

3.     REPAYMENT OF THE PRODUCTION PREPAYMENTS............................... 5
       ---------------------------------------

4.     DEDICATION OF WELLS/OIL AND GAS LEASES................................ 6
       --------------------------------------

5.     COLLATERAL SECURITY................................................... 6
       -------------------

6.     INFORMATION........................................................... 7
       -----------

7.     DEFAULT............................................................... 8
       -------

8.     MISCELLANEOUS......................................................... 9
       -------------

                                        i
<PAGE>

                         PRODUCTION PREPAYMENT AGREEMENT

       THIS  PRODUCTION  PREPAYMENT  AGREEMENT  (the  "Agreement")  is made  and
entered  into this  12th day of  December,  1996,  between  PANENERGY  FINANCIAL
SERVICES, INC., a Delaware corporation ("PanEnergy"), and UNIOIL, INC., a Nevada
corporation (hereinafter referred to as "UNIOIL").

                                R E C I T A L S:
                                - - - - - - - -

A.     UNIOIL owns or owns an interest in the oil and gas leases located in Weld
       County,  Colorado (the "Leases") set forth in Exhibit "A" attached hereto
                                                     -----------
       and incorporated herein by reference,  which Leases, along with other oil
       and gas leases,  have been  dedicated to PanEnergy  Field  Services  Inc.
       ("PFS")  pursuant to that  certain  Amended and Restated Gas Purchase and
       Processing  Agreement  between  UNIOIL and PFS of even date herewith (the
       "GPA").

B.     In order to induce PanEnergy to partially  finance the costs of drilling,
       completing  and  equipping  eight  (8)  oil and gas  wells  of the  types
       described  in Section 1.1 herein on the Leases (the  "Program  Wells") at
       the locations set forth on Exhibit "B" attached hereto, UNIOIL desires to
                                  -----------
       commit and sell to  PanEnergy's  affiliate the  condensate  and crude oil
       produced and saved from the Leases  attributable to the working  interest
       of UNIOIL (the "Production").

C.     To promote the drilling,  completing  and equipping of the Program Wells,
       PanEnergy  is willing to make  certain  payments  to third  parties  (the
       "Production  Prepayments") upon the terms and conditions set forth herein
       for well drilling or completion services,  materials or equipment,  as an
       advance to UNIOIL and a prepayment for the Production from the Leases, in
       return for the premise of repayment by UNIOIL.

D.     In connection with and prior to any Production  Prepayments by PanEnergy,
       UNIOIL  shall,  among other  things,  execute and deliver to  PanEnergy a
       Mortgage,  as defined in Section 1.2 herein,  which will secure  UNIOIL's
       repayment of the Production  Prepayments,  with accrued interest thereon,
       in accordance  herewith.  The security for the Mortgage shall include the
       Program Wells and that portion of the Leases within the spacing units for
       the  Program  Wells  along with other oil and gas wells,  and oil and gas
       leases within the spacing units for such wells, that will use common tank
       batteries  and  measurement  facilities  with the  Program  Wells and all
       equipment used or useful for the operation of such wells (all such wells,
       leases,  facilities  and  equipment are referred to  collectively  as the
       "Program Leases").

IN CONSIDERATION  of the mutual promises  contained  herein,  the benefits to be
derived by each party hereunder and other good and valuable  consideration,  the
receipt and sufficiency of which are hereby acknowledged,  PanEnergy and UNIOILL
agree as follows:

<PAGE>

1.     PRODUCTION PREPAYMENTS BY PANENERGY
       -----------------------------------

       1.1    Upon  receipt  of written  request  from  UNIOIL for a  Production
Prepayment, which shall not be made for amounts less than $10,000, together with
copies of invoices (the  "Invoices")  for well drilling or completion  services,
materials or equipment  performed  or supplied by third  parties  (collectively,
"Vendors") in connection with the drilling and completion of the Programs Wells,
aggregating  an amount not less than the requested  Production  Prepayment,  and
subject  to the terms and  conditions  set  forth in this  Agreement,  PanEnergy
agrees to pay the Vendors,  as a Production  Prepayment  for UNIOIL,  95% of the
amount of the  Invoices  for such  Program  Well,  but not to exceed the Maximum
Advance (as defined below) for such Program Well, as follows:

              (a)    UNIOIL  shall  drill,  or caused to be drilled,  all of the
                     Program  Wells to at least a depth  sufficient  to test the
                     Codell  formation.  If any  Program  Well is,  in  UNIOIL's
                     reasonable  judgment  as a  prudent  operator,  capable  of
                     producing oil and/or gas in commercial  quantities,  UNIOIL
                     shall diligently complete and equip such well. UNIOIL shall
                     drill and  complete  the Program  Wells by May 31, 1997 and
                     shall  submit all  Invoices to  PanEnergy by July 31, 1997.
                     The time  limits set out in this  paragraph  are limits for
                     the purpose of qualifying to receive Production Prepayments
                     and are not contractual  undertakings by UNIOIL to drill or
                     complete the Program Wells.

              (b)    Upon receipt of the Invoices as set forth above,  PanEnergy
                     shall calculate the amount of such Invoices attributable to
                     UNIOIL's  share of the  working  interest  in that  Program
                     Well. If UNIOIL owns less than all of the working  interest
                     in any of the Program Wells,  the amount which PanEnergy is
                     obligated to advance UNIOIL hereunder for such Program Well
                     shall be  proportionately  reduced.  PanEnergy shall pay to
                     the  Vendors  for each  Program  Well 95% of the  amount of
                     their  respective  Invoices,   proportionately  reduced  to
                     UNIOIL's working interest, but not more, collectively, than
                     the "Maximum Advance" for such Program Well as set forth in
                     Exhibit  "B" (the  "Maximum  Advance")  after  taking  into
                     ------------
                     consideration  previous Production Prepayments by PanEnergy
                     with respect to such Program  Well.  UNIOIL shall  promptly
                     pay that portion of the Invoices  which exceeds the amounts
                     advanced hereunder by PanEnergy for any Program Well.

              (c)    To the  extent  that  a  Program  Well  has  been  drilled,
                     completed and equipped and the  Production  Prepayments  to
                     which UNIOIL has become  entitled are less than the Maximum
                     Advance set out in Exhibit "B" for such Program Well,  then
                                        -----------
                     such difference may be carried over and applied to increase
                     the  Maximum  Advance of another  Program  Well;  provided,
                     however, that such difference may only be carried over from
                     such  Program  Wells  which are,  according  to  reasonably
                     prudent  operator  standards,   producing  hydrocarbons  in
                     commercial quantities.

       1.2    In  addition  to  the   Invoices,   each   Production   Prepayment
disbursement  shall be evidenced by and be  contingent  upon  receipt  (and,  if
applicable,  recording  in  such  county  and  state  government  offices  which
PanEnergy determines is appropriate), and approval by PanEnergy of the following
documentation:

                                        2
<PAGE>

              (a)    Execution and delivery by UNIOIL of a Promissory  Note (the
                     "Note"),  in  a  form  acceptable  to  PanEnergy,   in  the
                     principal sum of $1,722,350.

              (b)    Execution  and  deliver by UNIOIL of a  Mortgage,  Security
                     Agreement,   Assignment  of  Production  and  Proceeds  and
                     Financing   Statement  (as  the  same  may  be  amended  or
                     supplemented  from time to time, the  "Mortgage") in a form
                     acceptable  to PanEnergy,  granting a security  interest to
                     PanEnergy  in the  Program  Leases and the  Production  and
                     Production   Proceeds   (defined  in  Section  1.5,  below)
                     attributable to the Program Leases.

              (c)    Execution  and  delivery  by  UNIOIL  (to  both   PanEnergy
                     Transport and Trading Company ("PT&T") and PFS) of transfer
                     orders  and/or  Letters-in-Lieu,  in a form  acceptable  to
                     PanEnergy,  transferring  payments for Production  from the
                     Program Leases to PanEnergy.

              (d)    Execution  and  delivery by UNIOIL of a properly  completed
                     Form UCC-1 Financing Statement (the "Financing Statement"),
                     in a form  acceptable  to  PanEnergy,  covering the Program
                     Leases and the Production and Production  Proceeds from the
                     Program Leases.

              (e)    Execution and delivery by UNIOIL of the GPA.

              (f)    Execution  and  delivery of a crude oil  purchase  contract
                     (the "Crude  Contract")  between UNIOIL and PT&T, in a form
                     acceptable  to PT&T,  for the purchase by PT&T of the crude
                     oil and/or condensate produced and saved, or to be produced
                     and saved,  from the  Program  Leases.  If, for any reason,
                     PT&T is not  purchasing  UNIOIL's crude oil pursuant to the
                     Crude  Contract,   UNIOIL  shall  execute  and  deliver  to
                     PanEnergy   transfer  orders  and/or   letters-in-lieu   as
                     reasonably  requested by  PanEnergy in order that  payments
                     for such crude oil will be paid  directly to  PanEnergy  or
                     its designee.

              (g)    A drilling  title opinion by a Colorado  licensed  attorney
                     approved by  PanEnergy,  for each Program Well and approval
                     of title thereto by PanEnergy prior to PanEnergy making any
                     Production Prepayments for such Program Well.

              (h)    Execution  and  delivery by UNIOIL of a  Memorandum  of the
                     GPA, in a form acceptable to PanEnergy.

              (i)    Execution  and delivery by each holder of a mortgage,  lien
                     or other  encumbrance on the Leases of a  Ratification  and
                     Subordination Agreement, in a form acceptable to PanEnergy,
                     which  covers  all of the  oil  and gas  leases  and  lands
                     dedicated  to gas  gathering,  processing  and/or  purchase
                     agreements between UNIOIL and PFS.

                                        3
<PAGE>

              (j)    Execution  and delivery by each holder of a mortgage,  lien
                     or other  encumbrance on the Program Leases of a Release of
                     Lien in a form acceptable to PanEnergy.

              (k)    Delivery  by UNIOIL of UNIOIL's  (i) most  recent  year-end
                     audited financial statements prior to ninety days after the
                     end of UNIOIL's fiscal years and (ii) most recent month end
                     financial  statements prior to thirty days after the end of
                     each such months.

              (l)    Execution and/or delivery by UNIOILL of any other documents
                     reasonably   requested  by  PanEnerg  for  the  purpose  of
                     perfecting  PanEnergy's liens in the Program Leases and the
                     wells and other equipment located thereon.

       1.3    Notwithstanding  anything  contained  herein to the  contrary,  if
PanEnergy,  in its sole  judgment,  and at any time,  determines  that  UNIOIL's
financial  condition  is  unsatisfactory  or that the  economics  of drilling or
completing any or all of the Program Wells do not meet Panenergy's expectations,
PanEnergy may discontinue making advances of Production Prepayments.

       1.4    The Production Prepayments shall be repaid,  together with accrued
interest  thereon,  in  accordance  with the Note and this  Section  1.4. On the
following  dates,  the following  amounts shall become due and payable under the
Note: (a) on April 1, 1998, 45% of the Base Amount (as herein  defined);  (b) on
April 1, 1999,  a  cumulative  50% of the Base  Amount;  (c) on April 1, 2000, a
cumulative 60% of the Base Amount; (d) on April 1, 2001, a cumulative 90% of the
Base Amount; and (e) on April 1, 2002, all remaining unpaid principal hereunder,
together  with  accrued  interest  thereon.   The  total  amount  of  Production
Prepayments advanced to UNIOIL pursuant to the Agreement,  plus accrued,  unpaid
interest  thereon is herein  called the "Base  Amount."  Such  amounts  shall be
repaid pursuant to the provisions of Section 3.1, 3.2, and 3.3 hereof.

       1.5    "Production  Proceeds" shall he defined as Gas Proceeds plus Crude
Oil Proceeds. "Gas Proceeds" shall be defined as all UNIOIL's share, pursuant to
the GPA, of the  proceeds  derived  from the sale of natural gas and natural gas
liquids  produced  and saved from and  attributable  to the working  interest of
UNIOIL in and to the Programs Leases, net of (i) royalties;  and (ii) ad valorem
and severance  taxes.  "Crude Oil Proceeds"  shall be defined as all of UNIOIL's
share,  pursuant to the Crude Contract, of the proceeds derived from the sale of
crude oil and/or  condensate  produced  and saved,  or to be produced and saved,
from and attributable to the working  interest of UNIOIL,  in and to the Program
Leases, net of (i) royalties; and (ii) ad valorem and severance taxes.

       1.6    UNIOIL hereby assigns to PanEnergy all rights to receive  proceeds
from  insurance  coverage  on any  well on the  Program  Leases  or any  related
equipment  or  production,  PanEnergy  agrees to use such  proceeds to repair or
replace any property damage covered by such insurance  (whether as reimbursement
for amounts reasonably expended by UNIOIL for such repair or to pay directly the
reasonable  costs for such repair).  To the extent any such proceeds  exceed the
reasonable  cost of repair  or are  attributable  to  property  which  cannot be
repaired or replaced  (such as  production),  then such of the proceeds shall be
applied  against  the Note or,  if the Note has been paid in full,  refunded  to
UNIOIL.

                                        4
<PAGE>

2.     USE AND APPLICATION OF PRODUCTION PREPAYMENTS
       ---------------------------------------------

       2.1    Each  Production  Prepayment  shall be  disbursed  by PanEnergy by
check  within five (5) days after  receipt  and  approval  by  PanEnergy  of the
Invoices.  In lieu of  disbursing  Production  Prepayments  directly  to UNIOIL,
PanEnergy will disburse the Production  Prepayments by making payments  directly
to the Vendors. UNIOIL shall remain liable for and assume all responsibility for
the payment of all invoices  related to all wells located on the Program Leases,
and lands  pooled  therewith.  UNIOIL  shall  defend  (with  counsel  reasonably
acceptable  to  PanEnergy)  and  indemnify  PanEnergy,  its parent  company  and
affiliates of and from any and all damages,  claims,  actions, causes of action,
costs and expenses, including attorneys' fees (collectively "Claims"),  stemming
from or in any way related to the drilling,  completion,  equipping or operation
of the wells on the  Program  Leases,  and on lands  pooled  therewith,  and the
payment of all  expenses  related  thereto,  including  expenses  related to the
acquisition  of the oil  and gas  leases  upon  which  any  wells  are  located;
provided,  however,  that PanEnergy shall not be entitled to indemnity hereunder
to the extent that a Claim is directly  attributable to the gross  negligence or
willful misconduct of PanEnergy.

       2.2    UNIOIL shall obtain and provide to PanEnergy copies of Lien waiver
statements from Vendors and contractors providing labor and/or materials related
to the drilling and completion of the Program Wells.

3.     REPAYMENT OF THE PRODUCTION PREPAYMENTS
       ---------------------------------------

       3.1    Each  month out of the  Production  Proceeds  attributable  to the
Program  Leases,  PanEnergy  shall  withhold  and apply to the  repayment of the
outstanding unpaid principal due on the Note, plus accrued interest thereon, the
lesser of (i) all  amounts  due and owing  under the Note,  or (ii)  ninety five
percent (95%) of the Production  Proceeds (as defined in Section 1.5),  less the
amount of $450 per Program Well and per each commercial  well ("Existing  Well")
located on the Program  Leases  within the prospect  area  associated  with such
Program Well as identified on Exhibit B for operating  expenses  attributable to
the  Program  Wells and  Existing  Wells,  proportionately  reduced  based  upon
UNIOIL's working interest in the respective Program Well or Existing Well, which
shall be  remitted  to UNIOIL,  unless  otherwise  mutually  agreed in  writing.
Operating  expenses to be paid on a Program Well and Existing Well shall be made
by PanEnergy  commencing  with the month in which  initial  production  from the
Program Well occurred, if such initial production occurred prior to the 15th day
of such  month,  and  commencing  with the  month  following  the month in which
initial production occurred, if such initial production occurred on or after the
15th day of such  month.  In the  event  such  operating  expenses  ever  exceed
Production  Proceeds for any month, any excess shall be borne and paid solely by
UNIOIL and shall not he deducted from  Production  Proceeds  attributable to the
month in which the excess  occurred  or any other  month.  PanEnergy  and UNIOIL
acknowledge  that UNIOIL shall have the  obligation  to continue to operate such
wells in a reasonably  prudent  manner  without  taking into  consideration  the
amounts  being paid to  PanEnergy  under the Note.  At such time as all sums due
under the Note have been repaid in full, all  Production  Proceeds shall be paid
over by PanEnergy to UNIOIL, as its interest may appear,  unless a default shall
have occurred  under this  Agreement,  the Note or under the Mortgage,  in which
case such  Production  Proceeds shall continue to be paid over to and applied by
PanEnergy as provided herein.

       3.2    All funds  withheld and received by PanEnergy  hereunder  shall be
applied  first to late  payment  fees,  if any,  provided in the Note and/or the
Mortgage;  costs  and  collection  fees  provided  for in the  Note  and/or  the

                                        5
<PAGE>

Mortgage;  accrued  interest on the Note,  and the remainder to the  outstanding
unpaid  principal of the Note. If at the end of the repayment  term hereof,  all
Production  Prepayments  made hereunder,  plus accrued  interest,  have not been
repaid in full,  PanEnergy  may  declare  a default  hereunder  and  proceed  in
accordance with the default procedures provided for herein.

       3.3    UNIOIL may at any time without  penalty prepay to PanEnergy all or
any  portion  of the  Production  Prepayments  made by  PanEnergy  hereunder  by
delivery to PanEnergy of cash or  certified  funds,  which sums shall be applied
first to accrued interest,  and the remainder to outstanding unpaid principal on
the Note.

       3.4    On or before  the 20th day of each  month  until the Note has been
repaid in Full and commencing  with the month following the month of the initial
Production  Prepayment  disbursement,   PanEnergy  shall  provide  to  UNIOIL  a
statement  for the prior month  showing the balance due under the Note as of the
beginning of such month,  the date and amount of any  Production  Prepayments by
PanEnergy  during  such  month,  the  application  of  Production   Proceeds  to
principal,  interest and fees, if any,  (which shall include the amount and date
of each such  application)  during such month, any other payments made by UNIOIL
to PanEnergy  during such month, and the balance due to PanEnergy under the Note
as of the end of such month.

4.     DEDICATION OF WELLS/OIL AND GAS LEASES
       --------------------------------------

       4.1    Commencing with the initial Production Prepayment  disbursement as
described in Section 1 hereof, all Leases, wells located on the Leases (or lands
pooled or unitized therewith) and Production therefrom,  shall become subject to
the GPA and the Crude  Contract.  All  wells,  drilled  and  produced,  or to be
drilled and  produced,  thereon  shall be dedicated to and governed by the terms
and provisions contained in the GPA and the Crude Contract.

       4.2    As long as there is any outstanding accrued interest and principal
amounts  due under the Note,  UNIOIL  agrees not to sell,  assign,  transfer  or
convey any  interest it owns or hereafter  acquires in the Program  Wells or the
Program  Leases or take any other  action  which  would  reduce the net  revenue
interest of UNIOIL therein without PanEnergy's prior written consent.

5.     COLLATERAL SECURITY
       -------------------

       Payment of the Note and all other  obligations of UNIOIL  hereunder shall
be secured by the following security documents:

       5.1    The Mortgage,  by which  PanEnergy  shall obtain a first and prior
right and secured interest, free of any and all liens and encumbrances in and to
the interest of UNIOIL in the Program  Leases and the  Production and Production
Proceeds attributable to the Program Leases.

       5.2    The Financing Statement described in Section 1.2(d) above.

                                        6
<PAGE>

6.     INFORMATION
       -----------

       6.1    At all times from the date hereof  until the  termination  of this
Agreement,  UNIOIL, at its own expense, shall furnish to PanEnergy the following
reports and information at the times indicated below:

              (a)    Within  ninety  (90) days after the end of each fiscal year
                     of  UNIOIL,  UNIOIL  shall  furnish  UNIOIL's  most  recent
                     financial  statements  as of the end of and for  each  such
                     period, including a balance sheet and statements of income,
                     stockholder's  equity  and cash flow,  each of which  shall
                     have been prepared in accordance  with  generally  accepted
                     accounting  principles  and  accompanied  by  a  report  of
                     UNIOIL's  independent  certified public accountants stating
                     that  their   examination   was  made  in  accordance  with
                     generally  accepted  auditing  standards and that, in their
                     opinion such financial  statements  fairly present UNIOIL's
                     financial  condition,  results of operations and changes in
                     financial  position in accordance  with generally  accepted
                     accounting principles consistently applied.

              (b)    Within  thirty (30) days after the end of each of the first
                     three (3) fiscal  quarters of UNIOIL,  UNIOIL shall furnish
                     UNIOIL's most recent financial  statements as of the end of
                     and  for  such  period,   including  a  balance  sheet  and
                     statements of income,  stockholder's  equity and cash flow,
                     each of which shall have been prepared in  accordance  with
                     generally accepted accounting principles and accompanied by
                     a certificate of UNIOIL's chief  financial  officer stating
                     that such  financial  statements  fairly  present  UNIOIL's
                     financial  condition,  results of operations and changes in
                     financial  position in accordance  with generally  accepted
                     accounting  principles  consistently  applied,  subject  to
                     changes resulting from year-end audit adjustments.

              (c)    If any indebtedness  under this Agreement remains unpaid on
                     December 31, 1997, then on April 1, l998 and annually on or
                     before April 1, of each year thereafter  until the Note and
                     accrued  interest  thereunder  are  repaid in full,  UNIOIL
                     shall furnish an engineering report reasonably satisfactory
                     to PanEnergy  (together with UNIOIL's  internally  prepared
                     summary  of such  report),  as of  January  1 of such  year
                     prepared by an independent petroleum engineering consulting
                     firm reasonably acceptable to PanEnergy,  incorporating all
                     current  information and data available to UNIOIL pertinent
                     to the estimation of oil and gas reserves  attributable  to
                     the Program Leases and setting forth the following;

                     (i)    an   estimation   of  the  oil  and  gas   reserves,
                     classified  by  appropriate  categories,  as of  such  date
                     attributable  to the Program  Leases  (with that portion of
                     such reserves  attributable  to the Production  Prepayments
                     and to  UNIOIL's  interest  in the  Program  Leases  (after
                     giving  effect  to the  Production  Prepayments)  being set
                     forth separately),

                     (ii)   a projection  of the rate of  production  of and net
                     income from, such reserves,

                                        7
<PAGE>

                     (iii)   a calculation  of the  present  worth  of such  net
                     income  discounted at a rate or rates  designated from time
                     to time by ParEnergy, and

                     (iv)   a   schedule   or   complete   description   of  all
                     assumptions,  estimates and projections made or used in the
                     preparation of such report,  including  without  limitation
                     estimated  future  product  prices,  capital  expenditures,
                     operating expenses and taxes.

                            Each such  report  pursuant to this  Section  6.1(c)
                     shall  be  prepared  in  accordance   with   customary  and
                     generally  accepted  standards  and practices for petroleum
                     engineers,  shall be based on such assumptions as to costs,
                     product  prices  and  similar  factors as  PanEnergy  shall
                     designate from time to time. PanEnergy shall be furnished a
                     copy of any other reserve  report  prepared for UNIOIL,  by
                     any  independent  petroleum  engineering  firm covering the
                     Program Leases.

              (d)    Upon request,  UNIOIL shall furnish such other  information
                     as PanEnergy may reasonably request.

7.     DEFAULT
       -------

       7.1    Upon the  occurrence  of an Event or Default as defined in Section
7.2 below, (a) the outstanding unpaid balance of the Note, plus accrued interest
thereon as of the date of the  occurrence of the Event of Default,  shall become
immediately due and payable, without any further notice,  presentment, or demand
of any  kind,  all of which are  expressly  waived by  UNIOIL,  (b)  PanEnergy's
obligation to make Production Prepayments shall terminate  immediately,  and (c)
PanEnergy may proceed  immmmediately  to exercise all rights it may have at law,
in equity, or under the Mortgage and the Financing Statement.

       7.2    For the purposes  hereof,  an Event of Default shall be defined as
any one or more of the following:

              (a)    Non-Payment  of the Note.  UNIOIL  fails to timely pay when
                     ------------------------
                     due any payment of principal, interest or other amounts due
                     under the Note and such failure continues for ten (10) days
                     after receipt by UNIOIL of notice thereof from PanEnergy.

              (b)    Default  Under the  Mortgage.  A default  occurs  under the
                     ----------------------------
                     terms of the  Mortgage  and  continues  for  more  than the
                     applicable period of grace, notice or cure, if any, therein
                     set forth.

              (c)    Cessation of Force and Effect of the Mortgage. The Mortgage
                     ----------------------------------------------
                     shall at any time  and for any  reason  cease to be in full
                     force and effect.

              (d)    Bankruptcy,  Insolvency, etc.  UNIOIL becomes  insolvent or
                     ----------------------------
                     generally  fails to pay, or admits in writing its inability
                     to pay,  debts as they become due; or UNIOIL  applies  for,
                     consents to, or acquiesces in the appointment of a trustee,

                                        8
<PAGE>

                     receiver  or other  custodian  for  UNIOIL or any  property
                     thereof,  or makes a general  assignment for the benefit of
                     creditors; or, in the absence of such application,  consent
                     or acquiescence,  a trustee, receiver or other custodian is
                     appointed  for  UNIOIL  or for a  substantial  part  of the
                     property  thereof and is not discharged  within thirty (30)
                     days; or any bankruptcy,  reorganization, debt arrangement,
                     or  other  case  or  proceeding  under  any  bankruptcy  or
                     insolvency   law,  or  any   dissolution   or   liquidation
                     proceeding  is  commenced  in respect of UNIOIL and if such
                     case  or  proceeding  is not  commenced  by  UNIOIL,  it is
                     consented  to  or  acquiesced  in  by  UNIOIL,  or  is  not
                     dismissed  or remains  undismissed  for thirty (30) days or
                     UNIOIL takes any action to authorize, or in the furtherance
                     of, any of the foregoing.

              (e)    Dissolution of UNIOIL. UNIOIL shall dissolve for any reason
                     ---------------------
                     or shall transfer or assign a majority interest therein, or
                     transfer  or  assign  substantially  all of the  assets  of
                     UNIOIL to any other  person or  entity,  without  the prior
                     written consent of PanEnergy.

              (f)    Liens and  Encumbrances.  Any lien or encumbrance is placed
                     -----------------------
                     upon any of the Leases (or wells  located  thereon)  and/or
                     the   Production   attributable   thereto   which  lien  or
                     encumbrance impairs, or which PanEnergy reasonably believes
                     impairs the priority and/or of effectiveness of PanEnergy's
                     security  interest  therein,  notice  thereof  is  given to
                     UNIOIL and  UNIOIL  fails to pay off or  otherwise  resolve
                     said lien or encumbrance  within thirty (30) days from date
                     of receipt of said  notice.  In the event  UNIOIL  fails to
                     cure  such  default  within  the  time  period   specified,
                     PanEnergy,  without  waiver of any other rights it may have
                     hereunder,  or at law or in  equity,  may  apply all or any
                     portion  of  the   Production   Proceeds  to  the  payment,
                     settlement or resolution of such lien or  encumbrance  and,
                     to  the  extent  such  of  the  Production   Proceeds  have
                     previously  been applied to the Note,  such advances  shall
                     constitute  additional  indebtedness  of  UNIOIL  under the
                     Note.

              (g)    Default Under the Agreement and/or any Ancillary Agreements
                     -----------------------------------------------------------
                     With  PanEnergy.  UNIOIL  shall have  breached  any term or
                     ---------------
                     provision  herein  contained  and  having  received  notice
                     thereof,  fails to remedy  said breach  within  thirty (30)
                     days (unless an earlier time is specified) from the date of
                     receipt of said notice,  or UNIOIL shall have  breached any
                     term of or defaulted  under any other document  required or
                     requested  to  be  executed  and   delivered  to  PanEnergy
                     hereunder  and fails to cure such breach or default  within
                     thirty (30) days (unless an earlier time is specified) from
                     date of receipt of notice thereof.

8.     MISCELLANEOUS
       -------------

       8.1    Notices.  All notices  and  communications  required or  permitted
              -------
under this  Agreement  shall be in writing  and any  communication  or  delivery
hereunder  shall be deemed to have been duly made when  delivered  personally or
three (3) business days following  deposit in the United States mail,  certified

                                        9
<PAGE>

mail, return receipt requested,  or one (1) business day following delivery to a
recognized   overnight  courier  service,   or  one  (1)  busine  day  following
transmittal by facsimile, in each such case, addressed as follows:

       TO PANENERGY:
       -------------

                     PANENERGY FINANCIAL SERVICES, INC.
                     370 17th Street, Suite 900
                     P.O. Box 5493
                     Denver, Colorado 80217

                     ATTN:  Vice President - Rocky Mountain Region
                            (303) 595-3331
                            (303) 595-0480 - FAX

       WITH A COPY TO:
       ---------------

                     PANENERGY FINANCIAL SERVICES, INC.
                     600 Travis Street, Suite 6875
                     Houston, Texas 77002

                     ATTN:  Jeffrey Goodman
                            (713) 229-8800
                            (713) 247-0730 - FAX

       TO UNIOIL:
       ----------

                     UNIOIL INC.
                     3817 Carson Avenue
                     Post Office Box 310
                     Evans, Colorado 80620

                     ATTN:  Fred C. Jones
                            (970) 330-6300
                            (970) 330-6447 - FAX

       Either party may, by written notice so delivered to the other, change the
address or the person to which delivery shall thereafter be made.

       8.2    Payment  of  Costs,  Expenses  and  Taxes.  UNIOIL  agrees  to pay
              ------------------------------------------
PanEnergy on demand for all of  PanEnergy's  out-of-pocket  costs and  expenses,
including,   without  limitation,   attorneys'  fees,   reasonably  incurred  in
connection  with:  (i) the  administration  of this  Agreement,  the  Note,  the
Mortgage and all other instruments or documents provided for herein or delivered
or to be delivered  hereunder or in connection  herewith,  (ii) the preparation,
negotiation,  execution and delivery of any and all amendments to or replacement
of this Agreement, the Note, the Mortgage and all other instruments or documents

                                       10
<PAGE>

provided for herein or delivered or to he delivered  hereunder or in  connection
herewith, (iii) the filing, recording, refiling and re-recording of the Mortgage
and/or  any  financing   statements  relating  thereto  and  all  amendments  or
supplements  to any thereof,  and any and all other  documents or instruments of
further assurance  required to he filed or recorded or refiled or re-recorded by
the terms hereof or of the Mortgage,  (iv) examination of title to,  preparation
of title  opinions for, and curing title  problems  associated  with the Program
Leases and other oil and gas leases and lands  dedicated  by UNIOIL to PanEnergy
under gas purchase,  processing  and/or gathering  agreements as PanEnergy deems
appropriate to verify  UNIOIL's title therein,  and (v) the  enforcement of this
Agreement, the Note and the Mortgage. In addition,  UNIOIL agrees to pay, and to
save PanEnergy harmless from all liability for, any stamp or similar taxes which
may be payable in connection  with the execution or delivery of this  Agreement,
or the issuance of the Note or of any other  instruments  or documents  provided
for herein or delivered or to be delivered  hereunder or in connection  herewith
(but not for any  taxes on  income or gross or net  receipts).  All  obligations
provided for in this Section shall survive any termination of this Agreement.

       8.3    Amendment;  Waiver; Remedies. This Agreement may not be altered or
              ----------------------------
amended,  nor any  rights  hereunder  be waived,  except by  written  instrument
executed by both parties. No waiver of any term,  provision or condition of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing Waiver of any such term,  provision or condition or as a
waiver of any term,  provision  or condition  of this  Agreement.  No failure or
delay on the part of PanEnergy to exercise any right under this Agreement  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right under this Agreement,  the Mortgage,  the Financing  Statement or the Note
preclude any other or further  exercise of any right under this Agreement or any
other  right.  The  remedies  herein are  cumulative  and not  exclusive  of any
remedies provided by law.

       8.4    Assignment.   This   Agreement  and  the  other   agreements   and
              ----------
instruments  contemplated hereby may not be assigned by UNIOIL without the prior
written consent of PanEnergy.

       8.5    Headings.  The  headings  of the  Articles  and  Sections  of this
              --------
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.

       8.6    Governing Law.  This Agreement and the  transactions  contemplated
              -------------
hereby shall be construed to accordance  with,  and governed by, the laws of the
State of Colorado without regard to principles of conilicts of law.

       8.7    Entirety of Agreement. This Agreement, together with the documents
              ---------------------
described in Section 1.2 above, the Mortgage,  the Crude Contract,  the Note and
the GPA constitute the entire understanding  between the parties with respect to
the subject matter hereof,  superseding all negotiations,  prior discussions and
prior agreements and  understandings,  whether written or oral, relating to such
subject matter.

       8.8    Binding Agreement. This Agreement shall be binding upon, and shall
              -----------------
inure to the benefit of, the parties hereto and their respective  successors and
assigns.

                                       11
<PAGE>

       8.9    Survivor.  This  Agreement,  and the rights and obligations of the
              --------
parties herein, shall survive the consummation hereof.

       8.10   Counterparts and Telecopies. This Agreement may be executed in any
              ---------------------------
number of  counterparts,  each of which shall he deemed an  original  but all of
which  together  shall  constitute  one and the same  instrument.  Telecopies of
signed copies of this Agreement shall constitute  signed original  documents for
all purposes.

IN WITNESS  WITNESS  WHEREOF,  the parties have executed this Agreement the date
first above mentioned.

ATTEST:                                   PANENERGY FINANCIAL SERVICES, INC.,
                                          A DELAWARE CORPORATION

BY:  /s/ William B. Mathews               BY:  /s/ Jeffrey B. Goodman
   -----------------------------------       -----------------------------------
   WILLIAM B. MATHEWS,                       JEFFREY B. GOODMAN,
   ASSISTANT SECRETARY                       VICE PRESIDENT

ATTEST:                                   UNIOIL, INC.
                                          A NEVADA CORPORATION

BY:  /s/ Fred C. Jones                    BY:  /s/ Charles E. Ayers, Jr.
   -----------------------------------       -----------------------------------
   FRED C. JONES,                            CHARLES E. AYERS, JR.,
   SECRETARY                                 CHAIRMAN OF THE BOARD,
                                             CHIEF EXECUTIVE OFFICER

                                       12
<PAGE>

STATE OF COLORADO            )
                             ) ss.
CITY & COUNTY OF DENVER      )

Before  me,  Yvette A.  Arceneaux,  a Notary  Public in and for said  County and
State, on this 12th day December,  1996,  personally appeared JEFFREY B. GOODMAN
and  WILLIAM B.  MATHEWS,  known to me to be the Vice  President  and  Assistant
Secretary,  respectively,  of  PanEnergy  Financial  Services,  Inc., a Delaware
corporation,  on behalf of said  corporation  and  acknowledged  to me that they
executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this 12th day of December, 1996.

MY COMMISSION EXPIRES                   /s/ Yvette A.  Arceneaux
                                        ---------------------------
                                        NOTARY PUBLIC

  September 30, 2000
------------------------

STATE OF COLORADO            )
                             ) ss.
COUNTY OF DENVER             )

Before  me,  Yvette A.  Arceneaux,  a Notary  Public in and for said  County and
State, on this 12th day of December, 1996, personally appeared CHARLES E. AYERS,
JR.  and FRED C.  JONES,  known to me to be the  Chairman  of the  Board,  Chief
Executive  Officer  and  Secretary,  respectively,  of  Unioil,  Inc.,  a Nevada
corporation,  on behalf of said  corporation  and  acknowledged  to me that they
executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this l2th day of December, 1996.

MY COMMISSION EXPIRES                   /s/ Yvette A.  Arceneaux
                                        ---------------------------
                                        NOTARY PUBLIC

  September 30, 2000
------------------------

                                       13
<PAGE>

                                    EXHIBIT A
                                    ---------

                                 PROGRAM LEASES
                                 --------------

All  recording  information  is to the Real  Property  Records  of the Clerk and
Recorder of Weld County, Colorado.

<TABLE>
<CAPTION>
     Lessor            Lessee        Lease Date                     Lands                     Recording Information
-------------------------------------------------------------------------------------------------------------------

<S>                <C>                <C>         <C>                                         <C>
Union Pacific      PanAmerican        11-25-70    Township 4 North, Range 64 West, 6th P.M.   Book 638
Railroad Company   Petroleum Corp.                -----------------------------------------   Rec. No. 1559660
                                                  Section 7: SW1/4
                                                  Township 4 North, Range 65 West, 6th P.M.
                                                  -----------------------------------------
                                                  Section 25: SW1/4

                                      07-30-70    Township 3 North, Range 66 West, 6th P.M.   Book 631
Union Pacific      PanAmerican                    -----------------------------------------   Reception 1553082
Railroad Company   Petroleum Corp.                Section 3: S1/2SW1/4
</TABLE>

<PAGE>

                                    EXHIBIT B
                                    ---------

                       PROGRAM WELLS AND MAXIMUM ADVANCES
                       ----------------------------------

All legal descriptions are in Weld County, Colorado.

<TABLE>
<CAPTION>
                  Location of          Location of Existing    Maximum
   Prospect      Program Wells                Wells            Advance          Interest Owner         Interest and Type
------------------------------------------------------------------------------------------------------------------------

<S>              <C>                   <C>                    <C>          <C>                         <C>        <C>
Beebe Draw       T4N, R65W, Sec. 25:   T4N, R65W, Sec. 25:    $239,000     Union Pacific Resources     15.0%      LOR
                 NE4/SW4               NW4/SW4                             Amoco Production Co.        100%       ORRI
                 SE4/SW4                                                   Pulsar Oil & Gas, Inc.      2.5005%    WI
                 SW4/SW4                                                                               1.875%     NRI
                                                                           River Partnership           14.1695%   WI
                                                                                                       10.625%    NRI
                                                                           Unioil                      83.3300%   WI
                                                                                                       62.50%     NRI

Platte Valley    T3N, R66W, Sec. 3:    T3N,R6W,Sec. 3:        $239,000     Union Pacific Resources     15.0%      LOR
                                                                           Amoco Production Co.        10.0%      ORRI
                 SE4/SW4               SW4/SW4                             Unioil                      100.0%     WI
                                                                                                       75.0%      NRI

Latham           T4N, R64W, Sec. 7:    T4N, R64W, Sec. 7:     $239,000     Union Pacific Resources     15.0%      LOR
                 NE4/SW4               NW4/SW4                for each     Amoco Production Co.        10.0%      ORRI
                                                              Program
                                                              Well;
                 SE4/SW4               (Latham #7-1)          $140,000     Pulsar Oil & Gas, Inc.      16.67%     WI
                 SW4/SW4                                      for comple-                              12.5%      NRI
                                                              tion of
                                                              Existing     Unioil                      83.33%     WI
                                                              Well                                     62.5%      NRI
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]