Document:

EXHIBIT 10.1

                                 FIRST AMENDMENT

                                       to

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                      among

                          HOWELL PETROLEUM CORPORATION,

                                  as Borrower,

                               HOWELL CORPORATION,

                                  as Guarantor,

                                BANK OF MONTREAL,

                                    as Agent,

                              BANK OF AMERICA, N.A.

                              as Syndication Agent,

                         UNION BANK OF CALIFORNIA, N.A.,

                             as Documentation Agent,

                                       and

                          The Lenders Signatory Hereto

                          Effective as of July 26, 2001

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      This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT Agreement (this "First
Amendment")  executed  effective  as of the 26th of July,  2001 (the  "Effective
Date") is among HOWELL  PETROLEUM  CORPORATION,  a corporation  formed under the
laws  of  the  State  of  Delaware  (the  "Borrower");   HOWELL  CORPORATION,  a
corporation  formed under the laws of the State of Delaware  (the  "Guarantor");
the other  Persons  party  hereto as  Obligors;  each of the  lenders  that is a
signatory hereto (collectively,  the "Lenders");  BANK OF MONTREAL, as agent for
the Lenders (in such capacity,  together with its successors, the "Agent"); BANK
OF AMERICA, N.A. (formerly known as Nationsbank, N.A.), as syndication agent for
the Lenders (in such capacity,  together with its successors,  the  "Syndication
Agent");  and UNION BANK OF  CALIFORNIA,  N.A., as  documentation  agent for the
Lenders (in such  capacity,  together with its  successors,  the  "Documentation
Agent").

                                    Recitals

      A. The  Borrower,  the Agents and the Lenders  entered  into that  certain
Credit Agreement dated as of December 17, 1997 (the "Prior Credit Agreement").

      B. The  Borrower,  the Agents and the Lenders  entered  into that  certain
Amended and Restated Credit Agreement dated as of December 1, 1998 (the "Amended
and  Restated  Credit  Agreement")  amending  and  restating  the  Prior  Credit
Agreement.

      C. The Borrower has  requested  and the Agents and the Lenders have agreed
to amend certain provisions of the Amended and Restated Credit Agreement.

      D.  NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
covenants herein contained, for good and valuable consideration, the receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

      Section  1.Defined  Terms.  Each  capitalized term which is defined in the
Amended and Restated  Credit  Agreement,  but which is not defined in this First
Amendment, shall have the meaning ascribed such term in the Amended and Restated
Credit Agreement.  Unless otherwise  indicated,  all section  references in this
First Amendment refer to the Amended and Restated Credit Agreement.

      Section 2.Amendments  to the  Amended  and  Restated  Credit
Agreement.

      2.1  Amendments to Section 1.02.

      (a) The  definition  of  "Aggregate  Commitments"  is  hereby  amended  by
deleting  such  definition  in its  entirety  and  inserting in lieu thereof the
following:

           "Aggregate Commitments" at any time shall equal the amount calculated
      in accordance with Section 2.03(a).

      (b) The  definition of "Aggregate  Facility A Maximum  Credit  Amounts" is
hereby amended by deleting such definition in its entirety and inserting in lieu
thereof the following:

<PAGE>
           "Aggregate Maximum Credit Amounts" at any time shall equal the sum of
      the  Maximum  Credit  Amounts of the  Lenders,  as the same may be reduced
      pursuant to Section 2.03(b) or increased pursuant to Section 2.01(d).

      (c) The  definition  of  "Agreement"  is hereby  amended by deleting  such
definition in its entirety and inserting in lieu thereof the following:

           "Agreement" shall mean this Amended and Restated Credit Agreement, as
      amended by the First Amendment, and as further amended from time to time.

      (d) The  definition of  "Applicable  Margin" is hereby amended by deleting
such definition in its entirety and inserting in lieu thereof the following:

           "Applicable  Margin" shall mean the applicable  per annum  percentage
      set forth at the appropriate  intersection in the table shown below, based
      on the  Borrowing  Base  Utilization  Percentage as in effect from time to
      time:

      Borrowing Base Utilization                        Eurodollar   Base Rate
      --------------------------                        ----------   ---------

      Less than or equal to 50%                           1.50%        0.00%

      Greater than 50%, but less than or equal to 80%     1.75%        0.00%

      Greater than 80%, but less than or equal to 90%     2.00%        0.00%

      Greater than 90%                                    2.25%        0.25%

           The Applicable  Margin as provided herein shall apply effective as of
      the First Amendment  Effective Date for all  outstandings on that date and
      thereafter.

           Each change in the Applicable  Margin  resulting from a change in the
      Borrowing  Base  Utilization  Percentage  shall take effect at the time of
      such change in the Borrowing Base Utilization Percentage.

      (e) The  definition  of  "Commitment"  is hereby  amended by deleting such
definition in its entirety and inserting in lieu thereof the following:

           "Commitment"  shall mean, for any Lender,  its obligation to (i) make
      Loans up to the  lesser  of such  Lender's  Maximum  Credit  Amount or the
      Lender's  Percentage  Share of the then effective  Borrowing Base and (ii)
      participate  in the  issuance  of Letters of Credit as provided in Section
      2.01(b).

      (f) The  definition  of  "Facility A" is hereby  amended by deleting  such
definition in its entirety and inserting in lieu thereof the following:

                                       2
<PAGE>
           "Facility" shall mean the facility  pursuant  to Sections 2.01(a) and
      (b).

      (g) The definition of "Facility A Maximum Credit Amount" is hereby amended
by deleting  such  definition  in its entirety and inserting in lieu thereof and
where alphabetically appropriate the following:

           "Maximum Credit Amount" shall mean, as to each Lender, the amount set
      forth  opposite such  Lender's name on Annex I under the caption  "Maximum
      Credit Amounts" (as the same may be increased  pursuant to Section 2.01(d)
      or reduced  pursuant to Section  2.03(b) pro rata to each Lender  based on
      its  Percentage  Share),  as  modified  from time to time to  reflect  any
      assignments permitted by Section 12.06(b).

      (h) The  definition of "Facility A Termination  Date" is hereby amended by
deleting such definition in its entirety and inserting in lieu thereof and where
alphabetically appropriate the following:

           "Termination  Date"  shall mean the  earlier to occur of (i) July 26,
      2004 or (ii) the date that the Commitments are sooner terminated  pursuant
      to Sections 2.03(b) or 10.02.

      (i) The definition of "Interest  Period" is hereby amended by deleting the
second  paragraph  of such  definition  in its  entirety  and  inserting in lieu
thereof the following:

           Notwithstanding  the foregoing:  (i) no Interest Period may end after
      the Termination  Date; (ii) each Interest Period which would otherwise end
      on a day which is not a  Business  Day  shall  end on the next  succeeding
      Business Day (or, if such next  succeeding  Business Day falls in the next
      succeeding  calendar month, on the next preceding Business Day); and (iii)
      no Interest  Period  shall have a duration of less than one month  (unless
      otherwise  agreed to by the Lenders)  and, if the Interest  Period for any
      Eurodollar Loans would otherwise be for a shorter period, such Loans shall
      not be available hereunder.

      (j) The  definition  of "Letters of Credit" is hereby  amended by deleting
such definition in its entirety and inserting in lieu thereof the following:

           "Letters of Credit" shall mean the letters of credit issued  pursuant
      to Section  2.01(b) and all  reimbursement  obligations  pertaining to any
      such letters of credit,  and "Letter of Credit"  shall mean any one of the
      Letters of Credit and the reimbursement obligations pertaining thereto.

      (k)  The  definition  of  "Loans"  is  hereby  amended  by  deleting  such
definition in its entirety and inserting in lieu thereof the following:

           "Loans"  shall  mean  loans  made  pursuant  to  Section 2.01(a).

      (l) The  definition  of  "Mortgages"  is hereby  amended by deleting  such
definition in its entirety and inserting in lieu thereof the following:

                                      3
<PAGE>
           "Mortgages"  shall  mean (i) that  certain  Mortgage,  Deed of Trust,
      Assignment of Production, Security Agreement and Financing Statement dated
      July 31, 1998  executed by the Borrower in favor of the Agent on behalf of
      the  Lenders  covering  Oil and Gas  Properties  located  in the states of
      Alabama, Louisiana,  Montana and Wyoming, (ii) that certain Mortgage, Deed
      of Trust,  Assignment  of  Production,  Security  Agreement  and Financing
      Statement  dated October 14, 1998 executed by the Borrower in favor of the
      Agent on behalf of the Lenders covering Oil and Gas Properties  located in
      the states of Louisiana, Mississippi, Utah and Wyoming, (iii) that certain
      Mortgage, Deed of Trust, Assignment of Production,  Security Agreement and
      Financing  Statement  dated  October 20, 1998  executed by the Borrower in
      favor  of the  Agent  on  behalf  of the  Lenders  covering  Oil  and  Gas
      Properties  located  in the  state  of North  Dakota,  (iv)  that  certain
      Mortgage, Deed of Trust, Assignment of Production,  Security Agreement and
      Financing Statement dated January 22, 1999 executed by Voyager in favor of
      the Agent on behalf of the Lenders covering Oil and Gas Properties located
      in the  state of  Louisiana,  (v) that  certain  Mortgage,  Deed of Trust,
      Assignment of Production, Security Agreement and Financing Statement dated
      January 22, 1999  executed by the Borrower in favor of the Agent on behalf
      of the Lenders  covering Oil and Gas  Properties  located in the states of
      Colorado, Louisiana, Mississippi, Oklahoma, Texas and Wyoming and (vi) all
      other similar mortgages and deeds of trust executed by the Borrower or any
      other  Obligor  in  favor of the  Agent  with  respect  to its Oil and Gas
      Properties.

      (m) The  definition of "Mortgaged  Property" is hereby amended by deleting
such definition in its entirety and inserting in lieu thereof the following:

           "Mortgaged Property" shall mean the Property owned by the Borrower or
      any other Obligor and which is subject to the Liens  existing and to exist
      under the terms of the Loan Documents.

      (n)  The  definition  of  "Notes"  is  hereby  amended  by  deleting  such
definition in its entirety and inserting in lieu thereof the following:

           "Notes" shall mean the promissory note or notes (whether one or more)
      of the Borrower described in Section 2.06 and being in the form of Exhibit
      A, together with all amendments,  modifications,  replacements, extensions
      and rearrangements thereof.

      (o) The  definition of  "Subordinated  Debt" is hereby amended by deleting
such definition in its entirety and inserting in lieu thereof the following:

           "Subordinated  Debt" shall mean any Debt of the Borrower or any other
      Obligor  and  any  guarantees   thereof  expressly   subordinated  to  the
      Indebtedness pursuant to agreements in form and substance  satisfactory to
      the Majority Lenders.

      (p) The following new  definitions  are hereby added where  alphabetically
appropriate:

           "Agents" shall mean collectively the Agent, the Syndication Agent and
      the Documentation Agent.

           "Convertible Preferred Shares" shall mean those 690,000 shares of the
      Guarantor's  $3.50  Convertible   Preferred  Stock,  Series  A,  having  a
      liquidation  preference  of  $50.00  per share  plus  accrued  and  unpaid
      dividends.

                                       4
<PAGE>
           "Fee Letter" shall mean that certain letter from BMO to the Borrower,
      dated July 24, 2001, describing certain amounts payable to BMO.

           "First  Amendment" shall mean that certain First Amendment to Amended
      and  Restated  Credit  Agreement  dated  as of July  26,  2001  among  the
      Obligors, the Agents and the Lenders.

           "First  Amendment  Effective Date" shall mean the "Effective Date" as
      such term is defined in the First Amendment.

           "Obligors"  shall mean  collectively  the Borrower, the Guarantor and
      Voyager.

           "Unused Amount" shall mean the Aggregate Commitments minus the sum of
      the outstanding Loans and the LC Exposure.

           "Voyager" shall mean Voyager Energy Corp., a corporation formed under
      the laws of the state of Texas.

      (q) The  following  definitions  are hereby  deleted in their  entirety in
Section 1.02 and where used in the Credit Agreement:

          Aggregate Facility A Commitments,
          Aggregate Facility B Commitments,
          Facility A Commitment,
          Facility A Loans,
          Facility A Notes,
          Facility B,
          Facility B Commitment,
          Facility B Loans,
          Facility B Notes and
          Facility B Maturity Date,
          Minimum Capital,
          Rearrangement.

      2.2 Amendments to Section 2.01. Section 2.01 is hereby amended by deleting
such section in its entirety and inserting in lieu thereof the following:

           (a) Loans.  Each Lender severally agrees, on the terms and conditions
      of this  Agreement,  to make loans to the Borrower  during the period from
      and including (i) the First  Amendment  Effective  Date or (ii) such later
      date that such  Lender  becomes a party to this  Agreement  as provided in
      Section 12.06(b), to and up to, but excluding,  the Termination Date in an
      aggregate  principal  amount at any one time  outstanding  up to,  but not
      exceeding,  the  amount of such  Lender's  Commitment  as then in  effect;
      provided,  however,  that the aggregate principal amount of all such Loans
      by all Lenders hereunder at any one time outstanding  together with the LC
      Exposure shall not exceed the Aggregate Commitments.  Subject to the terms
      of this Agreement,  during the period from the First  Amendment  Effective
      Date to and up to, but excluding,  the Termination  Date, the Borrower may
      borrow, repay and reborrow the amount described in this Section 2.01(a).

                                      5
<PAGE>
           (b) Letters of Credit. During the period from and including the First
      Amendment  Effective Date to, but  excluding,  the  Termination  Date, the
      Issuing Bank, as issuing bank for the Lenders, agrees to extend credit for
      the account of the Borrower and its Subsidiaries at any time and from time
      to time by issuing,  renewing,  extending or reissuing  Letters of Credit;
      provided  however,  the LC Exposure at any one time outstanding  shall not
      exceed  the  lesser  of (i)  the  LC  Commitment  or  (ii)  the  Aggregate
      Commitments,  as then in effect,  minus the aggregate  principal amount of
      all Loans then outstanding.  The Lenders shall participate in such Letters
      of Credit according to their  respective  Percentage  Shares.  Each of the
      Letters of Credit  shall (i) be issued by the Issuing  Bank,  (ii) contain
      such terms and provisions as are reasonably  required by the Issuing Bank,
      (iii) be for the  account of the  Borrower  and (iv) expire not later than
      the earlier of (x) fourteen  (14) months from the date of issuance and (y)
      the Termination Date.

           (c)  Limitation  on Types of Loans.  Subject  to the other  terms and
      provisions of this Agreement, at the option of the Borrower, the Loans may
      be Base Rate Loans or Eurodollar Loans;  provided that,  without the prior
      written consent of the Majority Lenders, no more than eight (8) Eurodollar
      Loans may be outstanding at any time.

           (d) Increase in Aggregate  Maximum Credit Amount.  The Borrower shall
      have the right, with the prior written consent of the Agent (provided that
      such consent shall not be unreasonably  withheld or delayed),  to increase
      the  Aggregate  Maximum  Credit  Amounts;  provided that (i) the aggregate
      amount of all such increases shall not exceed $50,000,000, (ii) no Default
      or Event of Default shall have occurred and be continuing at the effective
      date  of such  proposed  increase,  (iii)  on the  effective  date of such
      increase,  no Eurodollar  Loans shall be outstanding (or if any Eurodollar
      Loans are  outstanding,  the Borrower shall be responsible for any and all
      related  breakage costs under Section 5.05 with respect to such Eurodollar
      Loans) and (iv) no Lender's Maximum Credit Amount may be increased without
      the consent of such Lender.

           If the  Borrower  desires  to effect  an  increase  in the  Aggregate
      Maximum Credit Amounts, the Borrower and the financial institution(s) that
      the Borrower proposes to become a Lender hereunder, and/or, if applicable,
      any  existing  Lender(s)  the  Borrower  proposes to increase its existing
      Maximum  Credit  Amount,   shall  execute  and  deliver  to  the  Agent  a
      certificate  substantially in the form of Exhibit G hereto (an "Additional
      Lender Certificate").  Upon receipt of such Additional Lender Certificate,
      if the Agent  consents to the proposed  increase in the Aggregate  Maximum
      Credit  Amounts:  (A) the amount of the Aggregate  Maximum  Credit Amounts
      shall be so  increased,  (B) the Agent shall amend and  distribute to each
      party  to  this  Agreement  a  revised  Annex I  adding  or  amending,  as
      applicable,  the  Maximum  Credit  Amount  of  the  Lender  executing  the
      Additional  Lender  Certificate and the revised  Percentage  Share of each
      Lender,  (C) any such  additional  Lender shall be deemed to be a party in
      all  respects to this  Agreement  and the other Loan  Documents  as of the
      effective date set forth in such Additional Lender  Certificate,  (D) upon
      the effective date set forth in such Additional  Lender  Certificate,  the
      Borrower  shall  deliver  to each  Lender  party to an  Additional  Lender
      Certificate a new Note in an amount equal to the Maximum Credit Amount set
      forth in its Additional Lender Certificate and (E) upon the effective date
      set forth in such Additional Lender Certificate, each such Lender party to
      the Additional Lender Certificate shall purchase a pro rata portion of the
      outstanding  Loans (and  participation  interests in Letters of Credit) of
      each of the  current  Lenders  such  that,  after  giving  effect  to such
      purchases,  each Lender  (including any additional  Lender, if applicable)
      shall  hold  their  Percentage   Share  of  the  outstanding   Loans  (and
      participation  interests) as reflected in Annex I required by this Section
      2.01(d).

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<PAGE>
           If the  Agent  does not  consent  to the  increase  in the  Aggregate
      Maximum  Credit  Amount in  accordance  with this Section  2.01(d) it will
      provide its  reasons in writing to the  Borrower  and the  Maximum  Credit
      Amounts, undivided and in the aggregate, shall remain unchanged.

      2.3  Amendments  to Section  2.02.  Section  2.02(b) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (b)  Minimum  Amounts.  All Base  Rate  Loan  borrowings  shall be in
      amounts of at least  $100,000 or the  remaining  balance of the  Aggregate
      Commitments, if less, or any whole multiple of $100,000 in excess thereof,
      and all Eurodollar Loans shall be in amounts of at least $1,000,000 or any
      whole multiple of $500,000 in excess thereof.

      2.4  Amendments  to Section  2.02.  Section  2.02(d) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (d)  Continuation  Options.  Subject to the  provisions  made in this
      Section 2.02(d), the Borrower may elect to continue all or any part of any
      Eurodollar Loan beyond the expiration of the then current  Interest Period
      relating  thereto by giving advance notice as provided in Section  2.02(c)
      to the Agent (which shall  promptly  notify the Lenders) of such election,
      specifying the amount of such Loan to be continued and the Interest Period
      therefor.  In the  absence  of such a  timely  and  proper  election,  the
      Borrower shall be deemed to have elected to convert such  Eurodollar  Loan
      to a Base Rate Loan  pursuant to Section  2.02(e).  All or any part of any
      Eurodollar Loan may be continued as provided herein, provided that (i) any
      continuation  of any such Loan shall be (as to each Loan as continued  for
      an applicable  Interest  Period) in amounts of at least  $1,000,000 or any
      whole  multiple of $500,000 in excess thereof and (ii) no Event of Default
      shall have occurred and be  continuing.  If an Event of Default shall have
      occurred and be continuing,  each  Eurodollar Loan shall be converted to a
      Base Rate Loan on the last day of the Interest Period applicable thereto.

      2.5  Amendments  to Section  2.02.  Section  2.02(e) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (e) Conversion Options.  The Borrower may elect to convert all or any
      part of any Eurodollar  Loan on the last day of the then current  Interest
      Period  relating  thereto to a Base Rate Loan by giving  advance notice to
      the Agent (which  shall  promptly  notify the  Lenders) of such  election.
      Subject to the provisions made in this Section  2.02(e),  the Borrower may
      elect to  convert  all or any part of any Base  Rate  Loan at any time and
      from  time to time  to a  Eurodollar  Loan by  giving  advance  notice  as
      provided in Section  2.02(c) to the Agent (which shall promptly notify the
      Lenders) of such election.  All or any part of any outstanding Loan may be
      converted as provided herein, provided that (i) any conversion of any Base
      Rate Loan into a Eurodollar Loan shall be (as to each such Loan into which
      there is a conversion for an applicable  Interest Period) in amounts of at
      least  $1,000,000 or any whole  multiple of $500,000 in excess thereof and
      (ii) no Event of Default  shall have  occurred  and be  continuing.  If an
      Event of Default shall have occurred and be continuing,  no Base Rate Loan
      may be converted into a Eurodollar Loan.

                                       7
<PAGE>
      2.6  Amendments  to Section  2.03.  Section  2.03(a) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (a) The  Aggregate  Commitments  shall  at all  times be equal to the
      lesser of (i) the Aggregate  Maximum  Credit Amounts or (ii) the Borrowing
      Base as determined from time to time.

      2.7  Amendments  to Section  2.04.  Section  2.04(a) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (a)  Commitment  Fee.  The  Borrower  shall  pay to the Agent for the
      account of each  Lender a  commitment  fee on the Unused  Amount,  for the
      period from and including  the First  Amendment  Effective  Date up to but
      excluding  the  Termination  Date at a rate  per  annum  set  forth at the
      appropriate intersection in the table shown below based upon the Borrowing
      Base Utilization Percentage as in effect from time to time:

      Borrowing Base Utilization Percentage         Commitment Fee
      -------------------------------------         --------------

      Less than or equal to 50%                          .25%

      Greater than 50%
      but less than or equal to 80%                      .30%

      Greater than 80%                                   .375%

      Accrued  commitment  fees  shall be payable  quarterly  in arrears on each
Quarterly Date and on the Termination Date.

      2.8 Amendments to Section 2.04.  Section  2.04(b)(ii) is hereby amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (ii)  The  Borrower  agrees  to pay  the  Issuing  Bank,  for its own
      account, an issuing fee for issuing Letters of Credit on the daily average
      outstanding  of the maximum  liability of the Issuing Bank  existing  from
      time to time under such Letter of Credit  (calculated  separately for each
      Letter of  Credit) at the rate of .125% per annum,  payable  quarterly  in
      arrears on each Quarterly Date and upon cancellation or expiration of each
      such Letter of Credit.

      2.9 Amendments to Section 2.04. Section 2.04(c) is hereby deleted.

                                       8
<PAGE>
      2.10  Amendments  to  Section  2.06.  Section  2.06 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           Notes.  The Loans made by each Lender  shall be evidenced by a single
      promissory  note of the Borrower in  substantially  the form of Exhibit A,
      dated (i) as of the First  Amendment  Effective Date or (ii) the effective
      date of an Assignment  pursuant to Section 12.06(b),  payable to the order
      of such Lender in a principal amount equal to its Maximum Credit Amount as
      originally in effect and  otherwise  duly  completed  and such  substitute
      Notes as required by Section 12.06(b).  The date, amount,  Type,  interest
      rate  and  Interest  Period  of each  Loan  made by each  Lender,  and all
      payments  made on account of the principal  thereof,  shall be recorded by
      such Lender on its books for its Notes,  and, prior to any transfer may be
      endorsed  by such  Lender on the  schedule  attached  to such Notes or any
      continuation  thereof or on any separate record maintained by such Lender.
      Failure to make any such notation or to attach a schedule shall not affect
      any Lender's or the  Borrower's  rights or  obligations in respect of such
      Loans or affect the validity of such transfer by any Lender of its Note.

      2.11  Amendments to Section  2.07.  Section  2.07(a) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (a)  Voluntary  Prepayments.  The  Borrower  may prepay the Base Rate
      Loans upon not less than one (1) Business  Day's prior notice to the Agent
      (which shall promptly notify the Lenders),  which notice shall specify the
      prepayment  date  (which  shall be a  Business  Day) and the amount of the
      prepayment  (which shall be at least  $100,000 or the remaining  aggregate
      principal  balance  outstanding on the Notes) and shall be irrevocable and
      effective  only upon receipt by the Agent,  provided  that interest on the
      principal  prepaid,  accrued to the prepayment  date, shall be paid on the
      prepayment  date.  The  Borrower may prepay  Eurodollar  Loans on the same
      conditions  as for Base Rate Loans  (except that prior notice to the Agent
      shall be not less than three (3) Business Days for  Eurodollar  Loans) and
      in addition such  prepayments of Eurodollar  Loans shall be subject to the
      terms of  Section  5.05  and  shall  be in an  amount  equal to all of the
      Eurodollar Loans for the Interest Period prepaid.

      2.12 Amendments to Section 2.07. Section  2.07(b)(ii) is hereby amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (ii) Upon any  redetermination of the amount of the Borrowing Base in
      accordance with Section 2.08, if the  redetermined  Borrowing Base is less
      than the aggregate  outstanding  principal amount of the Loans plus the LC
      Exposure,  then the Borrower  shall within  thirty (30) days of receipt of
      written  notice  thereof:  (i) prepay the Loans in an aggregate  principal
      amount  equal to such  excess,  together  with  interest on the  principal
      amount paid accrued to the date of such prepayment and (ii) if a Borrowing
      Base  deficiency  remains  after  prepaying all of the Loans because of LC
      Exposure,  the Borrower shall pay to the Agent on behalf of the Lenders an
      amount  equal  to  such  Borrowing  Base  deficiency  to be  held  as cash
      collateral as provided in Section 2.10(b).  Notwithstanding the foregoing,
      if such  redetermination  results from the issuance of  Subordinated  Debt
      permitted by Section 9.01(g) or the sale of Properties  under Section 9.15
      (iv) and if the  redetermined  Borrowing  Base is less than the  aggregate
      outstanding  principal amount of the Loans plus the LC Exposure,  then the
      Borrower shall be obligated to make such prepayment and/or deposit of cash
      collateral on the date it issues such  Subordinated  Debt or receives cash
      proceeds from such sale.

                                        9
<PAGE>
      2.13 Amendments to Section 2.07. Section 2.07(b)(iii) is hereby amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (iii) From the net cash proceeds hereafter raised pursuant to Section
      9.15(iv),  the Notes shall be repaid and the Borrowing Base reduced by the
      amount which the Majority Lenders determine in their sole discretion to be
      the value of the Oil and Gas  Properties  disposed of for  Borrowing  Base
      purposes.

      2.14  Amendments to Section  2.07.  Section  2.07(c) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (c) Generally.  Prepayments  permitted or required under this Section
      2.07 shall be without premium or penalty, except as required under Section
      5.05 for prepayment of Eurodollar  Loans. Any prepayments on the Loans may
      be reborrowed subject to the then effective Aggregate Commitments.

      2.15  Amendments to Section  2.08.  Section  2.08(a) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (a) During the period  from and after the First  Amendment  Effective
      Date  until the first  redetermination  pursuant  to  Section  2.08(d)  or
      adjustment pursuant to Section 8.08(c), 9.01(g) or 9.15(iv), the amount of
      the Borrowing  Base shall be  $115,000,000.  The  Borrowing  Base shall be
      redetermined  in  accordance  with  Section  2.08(b) by the Agent with the
      concurrence of the Lenders and is subject to redetermination in accordance
      with Section 2.08(d). Upon any redetermination of the Borrowing Base, such
      redetermination   shall  remain  in  effect  until  the  next   successive
      Redetermination Date.  "Redetermination Date" shall mean the date that the
      redetermined  Borrowing  Base  becomes  effective  subject  to the  notice
      requirements   specified   in   Section   2.08(e)   both   for   scheduled
      redeterminations and unscheduled  redeterminations.  So long as any of the
      Commitments  are in effect  or any LC  Exposure  or Loans are  outstanding
      hereunder, this facility shall be governed by the then effective Borrowing
      Base.

      2.16  Amendments to Section  2.08.  Section  2.08(b) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (b) Upon  receipt of the reports  required  by Section  8.07 and such
      other reports, data and supplemental  information as from time to time may
      be  reasonably  requested  by the Agent,  the Agent will  redetermine  the
      Borrowing Base. Such redetermination will be in accordance with its normal
      and customary  procedures  for  evaluating  oil and gas reserves and other
      related assets as such exist at that  particular  time. The Agent,  in its
      sole discretion, may make adjustments to the rates, volumes and prices and
      other  assumptions  set forth  therein in  accordance  with its normal and
      customary procedures for evaluating oil and gas reserves and other related
      assets as such exist at that particular time. The oil and gas reserves and
      related assets shall include proved developed producing  reserves,  proved
      developed non-producing reserves,  proved undeveloped reserves and related
      processing and gathering assets.  The Agent shall propose to the Lenders a

                                       10
<PAGE>
      new  Borrowing  Base no less than 20 Business  Days before each  Scheduled
      Redetermination Date. After having received notice of such proposal by the
      Agent,  the Lenders  shall have 10 Business Days to agree or disagree with
      such  proposal.  If at the end of 10  Business  Days,  any  Lender has not
      communicated its approval or disapproval,  such silence shall be deemed to
      be an approval.  If, however,  at the end of 10 Business Days, the Lenders
      have not approved or deemed to have approved,  as aforesaid,  the proposed
      Borrowing  Base, then the Borrowing Base shall be determined in accordance
      with Section 2.08(f).

      2.17  Amendments  to Section  2.08(f).  Section 2.08 is hereby  amended by
adding such subsection in its entirety:

           (f) Except as hereinafter provided,  the decision of the Lenders with
      respect to any  Borrowing  Base  determination  shall  control;  provided,
      however,  if the  Lenders  have not  approved  or are not  deemed  to have
      approved the Borrowing Base as of the date such a determination  is called
      for in Section 2.08(b),  the Agent shall poll the Lenders to ascertain the
      highest  Borrowing  Base then  acceptable  to the  Lenders and such amount
      shall  then   become  the   Borrowing   Base  until  the  next   Scheduled
      Redetermination Date or the next date on which an interim  redetermination
      occurs under Section 2.08(e) or the next  adjustment  under either Section
      8.08(c), Section 9.01(g) or Section 9.15.

      2.18  Amendments  to  Section  3.01.  Section  3.01 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           In addition to any Mandatory Prepayments required by Section 2.07, on
      the Termination  Date, the Borrower shall repay the outstanding  aggregate
      principal and accrued and unpaid interest under the Notes.

      2.19  Amendments  to  Section  4.02.  Section  4.02 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           Except to the extent  otherwise  provided  herein each Lender  agrees
      that:  (i) each  borrowing  from the Lenders  under  Section 2.01 and each
      continuation  and  conversion  under  Section  2.02 shall be made from the
      Lenders pro rata in accordance with their Percentage  Share,  each payment
      of commitment fee or other fees under Section  2.04(a) and Section 2.04(b)
      shall be made for the account of the Lenders pro rata in  accordance  with
      their Percentage Share, and each termination or reduction of the amount of
      the  Aggregate  Maximum  Credit  Amounts  under  Section  2.03(b) shall be
      applied to the Maximum Credit Amount of each Lender, pro rata according to
      the amount of its respective  Maximum Credit Amount;  (ii) each payment of
      principal  of Loans by the  Borrower  shall be made for the account of the
      Lenders pro rata in accordance with the respective unpaid principal amount
      of the Loans held by the  Lenders;  and (iii) each  payment of interest on
      Loans by the  Borrower  shall be made for the  account of the  Lenders pro
      rata in  accordance  with the amounts of  interest  due and payable to the
      respective  Lenders;  and  (iv)  each  reimbursement  by the  Borrower  of
      disbursements under Letters of Credit shall be made for the account of the
      Issuing Bank or, if funded by the Lenders, pro rata for the account of the
      Lenders,  in accordance with the amounts of reimbursement  obligations due
      and payable to each respective Lender.

                                       11
<PAGE>
      2.20  Amendments  to  Section  6.01.  Section  6.01 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           Intentionally Omitted.

      2.21  Amendments  to  Section  7.06.  Section  7.06 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           No  authorizations,  approvals  or  consents  of,  and no  filings or
      registrations  with,  any  Governmental  Authority  are  necessary for the
      execution,  delivery or  performance by the Borrower of the Loan Documents
      or for the validity or  enforceability  thereof,  except for the recording
      and filing of the Loan  Documents as required by this Agreement and except
      in the case of  performance  (i)  those  matters  customarily  done  after
      execution  and (ii) those  matters  required in raising  the  Subordinated
      Debt.

      2.22  Amendments  to  Section  7.07.  Section  7.07 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           The  proceeds  of the  Loans  shall  be used  to  finance  the  Amoco
      Acquisition,  refinance  existing  bank debt and for  working  capital and
      general corporate purposes. The Borrower is not engaged principally, or as
      one of its important  activities,  in the business of extending credit for
      the purpose,  whether  immediate,  incidental  or  ultimate,  of buying or
      carrying  margin stock  (within the meaning of Regulation T, U or X of the
      Board of  Governors  of the  Federal  Reserve  System)  and no part of the
      proceeds  of any Loan  hereunder  will be used to buy or carry any  margin
      stock.

      2.23  Amendments to Section  8.01.  Section  8.01(a) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (a) Annual  Financial  Statements.  As soon as  available  and in any
      event  within 90 days after the end of each fiscal  year of the  Borrower,
      the audited consolidated and unaudited consolidating statements of income,
      stockholders'  equity,  changes in financial position and cash flow of the
      Guarantor and its Consolidated  Subsidiaries for such fiscal year, and the
      related consolidated and consolidating balance sheets of the Guarantor and
      its  Consolidated  Subsidiaries  as at the end of such  fiscal  year,  and
      setting forth in each case in comparative form the  corresponding  figures
      for the preceding  fiscal year, and  accompanied by the related opinion of
      independent  public  accountants  of recognized  national  standing  which
      opinion  shall state that said  financial  statements  fairly  present the
      consolidated  and  consolidating   financial   condition  and  results  of
      operations of the Guarantor and its  Consolidated  Subsidiaries  as at the
      end of, and for, such fiscal year and that such financial  statements have
      been  prepared in  accordance  with GAAP,  except for such changes in such
      principles  with  which the  independent  public  accountants  shall  have
      concurred  and such  opinion  shall not contain a "going  concern" or like
      qualification or exception.

                                       12
<PAGE>
      2.24  Amendments to Section  8.01.  Section  8.01(b) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (b) Quarterly Financial  Statements.  As soon as available and in any
      event  within  45 days  after the end of each of the  first  three  fiscal
      quarterly  periods of each fiscal year of the Guarantor,  consolidated and
      consolidating  statements  of  income,  stockholders'  equity,  changes in
      financial  position and cash flow of the  Guarantor  and its  Consolidated
      Subsidiaries  for such period and for the period from the beginning of the
      respective  fiscal  year  to the  end of  such  period,  and  the  related
      consolidated  and  consolidating  balance  sheets  as at the  end of  such
      period,   and  setting  forth  in  each  case  in  comparative   form  the
      corresponding figures for the corresponding period in the preceding fiscal
      year,  accompanied  by the  certificate  of a Responsible  Officer,  which
      certificate shall state that said financial  statements fairly present the
      consolidated  and  consolidating   financial   condition  and  results  of
      operations  of  the  Guarantor  and  its   Consolidated   Subsidiaries  in
      accordance  with GAAP, as at the end of, and for, such period  (subject to
      normal year-end audit adjustments).

      2.25  Amendments  to Section 8.01 (h).  Section 8.01 is hereby  amended by
adding a new Section 8.01(h) in its entirety as follows:

           (h) Issuance of  Subordinated  Debt. In the event the Borrower or the
      Guarantor intends to issue any Subordinated  Debt, prior written notice of
      such intended  offering,  the amount thereof and the  anticipated  date of
      closing,  a copy of the preliminary  offering  memorandum (if any) and the
      final offering memorandum.

      2.26 Amendments to Section 8.11. Section 8.11 is hereby deleted.

      2.27  Amendments to Section  9.01.  Section  9.01(f) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (f) Debt of the Borrower under Hedging  Agreements  entered into as a
      part of the Borrower's  normal  business  operations as a risk  management
      strategy  and/or hedge against  changes  resulting from market  conditions
      relating to the Borrower's  operations,  the notional  amounts on which do
      not exceed 87.5% of the Borrower's and its Subsidiaries'  projected proved
      developed  producing  production  of each of crude oil and natural gas for
      the period such Hedge Agreement is in effect, except that the Borrower may
      enter into Hedging Agreements which are price floor contracts, options for
      a price floor or other  similar  arrangements  (and for which the Borrower
      has no  liability  other than the  payment of an  initial  premium  price)
      which, with all Hedging Agreements then in effect, result in the aggregate
      volumes  exceeding  87.5% (but in no event 100%) of the  projected  proved
      developed producing production of each of crude oil and natural gas of the
      Borrower and its Subsidiaries;

      2.28  Amendments to Section  9.01.  Section  9.01(g) is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (g)  Subordinated  Debt not to  exceed  $100,000,000  at any one time
      outstanding,  provided  that in  connection  with the issuance of any such
      Subordinated  Debt, the Borrowing Base is redetermined  (and any Borrowing
      Base deficiency is cured) on terms satisfactory to the Majority Lenders;

                                       13
<PAGE>
      2.29  Amendments  to  Section  9.04.  Section  9.04 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           Section 9.04 Dividends,  Distributions and Redemptions; Repayment  of
      Subordinated Debt.

           (a)  Dividends,  etc.  The  Borrower  will  not  declare  or pay  any
      dividend, purchase, redeem or otherwise acquire for value any of its stock
      now or hereafter  outstanding,  return any capital to its  stockholders or
      make any distribution of its assets to its stockholders except (so long as
      no Default has occurred and is  continuing  or would result  therefrom) as
      follows:  (i)  cash  dividends  to the  extent  necessary  (A)  to  permit
      Guarantor to pay regular  installments of interest from time to time owing
      on up to $100,000,000 of  Subordinated  Debt and (B) to cover  Guarantor's
      reasonable  on-going  operating  expenses as a holding company;  (ii) cash
      dividends to the extent necessary for Guarantor to continue to pay regular
      dividends on its  preferred  and common stock at  historical  levels;  and
      (iii) cash  dividends to the extent  necessary for Guarantor to redeem any
      Convertible  Preferred Shares outstanding at the First Amendment Effective
      Date so long as no  Default  or  Event  of  Default  has  occurred  and is
      continuing or would result therefrom.

           (b) Repayments of Subordinated  Debt. The Borrower will not, and will
      not permit any  Subsidiary or the  Guarantor to, prior to the  Termination
      Date:  (i)  make or  offer  to make any  optional  or  voluntary  payment,
      prepayment,  repurchase  or  redemption  of  or  otherwise  optionally  or
      voluntarily  defease or segregate  funds with respect to any  Subordinated
      Debt; (ii) amend,  modify,  waive or otherwise change, any of the terms of
      any  Subordinated  Debt if (A) the effect  thereof would be to shorten the
      maturity or increase  the amount of any  payment of  principal  thereof or
      increase the rate or shorten any period for payment of interest thereon or
      (B) such  action  requires  the  payment of a consent  fee in excess of 50
      basis  points on the  stated  principal  amount of any  Subordinated  Debt
      (provided that if a Default is continuing or a Borrowing  Base  deficiency
      then exists, then no consent fee shall be payable), or (iii) designate any
      Debt (other than obligations of the Borrower and the Guarantor pursuant to
      the Loan  Documents)  as  "Specified  Senior  Indebtedness"  or "Specified
      Guarantor  Senior  Indebtedness"  or give any such  other  Debt any  other
      similar designation for the purposes of any Subordinated Debt.

      2.30  Amendments  to  Section  9.09.  Section  9.09 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           The Borrower  will not permit the proceeds of the Notes or Letters of
      Credit to be used for any purpose  other than those  permitted  by Section
      7.07. Neither the Borrower nor any Person acting on behalf of the Borrower
      has  taken or will  take any  action  which  might  cause  any of the Loan
      Documents to violate  Regulation T, U or X or any other  regulation of the
      Board of Governors of the Federal  Reserve System or to violate  Section 7
      of  the  Securities  Exchange  Act  of  1934  or any  rule  or  regulation
      thereunder,  in each case as now in effect or as the same may  hereinafter
      be in effect.

                                       14
<PAGE>
      2.31  Amendments  to  Section  9.15.  Section  9.15 is hereby  amended  by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           The Borrower will not, and will not permit any  Subsidiary  to, sell,
      assign, farm-out, convey or otherwise transfer any Oil and Gas Property or
      any  interest  in any Oil  and Gas  Property  except  for (i) the  sale of
      Hydrocarbons  in  the  ordinary  course  of  business;  (ii)  farmouts  of
      undeveloped  acreage (including  undeveloped  horizons) and assignments in
      connection  with such  farmouts;  (iii) the sale or transfer of  equipment
      that is no longer  necessary  for the  business  of the  Borrower  or such
      Subsidiary  or is replaced by equipment of at least  comparable  value and
      use; and (iv) between any two Scheduled Redeterminations, sales of Oil and
      Gas Properties which shall not exceed $15,000,000 in the aggregate.

      2.32  Amendments to Section 10.01.  Section  10.01(d) is hereby amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (d) (i) the Borrower  shall default in the  performance of any of its
      obligations under Article IX or Sections 8.08(a),  8.09 and 8.12; (ii) the
      Guarantor shall default in the performance of any of its obligations under
      the  Guaranty  Agreement;  and (iii) the  Borrower  shall  default  in the
      performance  of any of its  obligations  under  Article  VIII  other  than
      Sections 8.08(a),  8.09 and 8.12 or any other Article of this Agreement or
      the Borrower or the Guarantor  shall default in the  performance of any of
      their  obligations  under any Loan  Documents  (other than as set forth in
      Sections  10.01(a) ) and such  default  shall  continue  unremedied  for a
      period of thirty (30) days after the earlier to occur of notice thereof to
      the  Borrower  by the  Agent or any  Lender  (through  the  Agent)  or the
      Borrower or the Guarantor otherwise becoming aware of such default; or

      2.33  Amendments to Section 10.01.  Section  10.01(k) is hereby amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (k) Guarantor takes, suffers or permits to exist any of the events or
      conditions  referred  to in  paragraphs  (e),  (f),  (g)  or (h) or if any
      provision of the Guaranty Agreement shall for any reason cease to be valid
      and binding on Guarantor or if Guarantor shall so state in writing; or

      2.34  Amendments  to Section  12.04.  Section  12.04 is hereby  amended by
deleting  such  section  in its  entirety  and  inserting  in lieu  thereof  the
following:

           Any  provision of this  Agreement or any other Loan  Documents may be
      amended,  modified or waived with the Borrower's and the Majority Lenders'
      prior written  consent;  provided that (i) no amendment,  modification  or
      waiver  which  extends  the final  maturity  of the  Loans,  modifies  the
      Borrowing  Base,   forgives  the  principal  amount  of  any  Indebtedness
      outstanding   under  this   Agreement,   releases  any  guarantor  of  the
      Indebtedness  or  releases  all or  substantially  all of the  collateral,
      reduces the interest  rate  applicable to the Loans or the fees payable to
      the Lenders  generally,  affects  Section  2.03(a),  this Section 12.04 or
      Section 12.06(a) or modifies the definition of "Majority Lenders" shall be

                                       15
<PAGE>
      effective without consent of all Lenders; (ii) no amendment,  modification
      or waiver which increases the Maximum Credit Amount of any Lender shall be
      effective  without the  consent of such  Lender;  and (iii) no  amendment,
      modification or waiver which modifies the rights, duties or obligations of
      the Agent shall be effective without the consent of the Agent.

      2.35  Amendments to Section 12.13.  Section  12.13(a) is hereby amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           (a) This  Agreement and the Notes shall be governed by, and construed
      in  accordance  with,  the laws of the State of Texas except to the extent
      that United  States  federal law permits any Lender to charge  interest at
      the rate  allowed by the laws of the state  where such  Lender is located.
      The  provisions of Chapter 346,  Texas  Finance  Code, as amended,  do not
      apply to this Agreement or any Note issued hereunder.

      2.36  Amendments  to Section  12.14.  Section  12.14 is hereby  amended by
deleting  such  subsection  in its  entirety  and  inserting in lieu thereof the
following:

           It is the  intention  of the parties  hereto  that each Lender  shall
      conform  strictly  to usury laws  applicable  to it.  Accordingly,  if the
      transactions  contemplated hereby would be usurious as to any Lender under
      laws  applicable to it (including the laws of the United States of America
      and the  State  of  Texas  or any  other  jurisdiction  whose  laws may be
      mandatorily applicable to such Lender notwithstanding the other provisions
      of this Agreement),  then, in that event,  notwithstanding anything to the
      contrary in any of the Loan  Documents  or any  agreement  entered into in
      connection with or as security for the Notes, it is agreed as follows: (i)
      the aggregate of all consideration  which  constitutes  interest under law
      applicable to any Lender that is contracted for, taken, reserved,  charged
      or received by such Lender under any of the Loan  Documents or  agreements
      or otherwise  in  connection  with the Notes shall under no  circumstances
      exceed the maximum amount allowed by such  applicable  law, and any excess
      shall be canceled  automatically and if theretofore paid shall be credited
      by such Lender on the  principal  amount of the  Indebtedness  (or, to the
      extent that the principal  amount of the  Indebtedness  shall have been or
      would thereby be paid in full,  refunded by such Lender to the  Borrower);
      and (ii) in the event that the  maturity  of the Notes is  accelerated  by
      reason of an election of the holder  thereof  resulting  from any Event of
      Default under this Agreement or otherwise, or in the event of any required
      or permitted prepayment, then such consideration that constitutes interest
      under law applicable to any Lender may never include more than the maximum
      amount  allowed  by such  applicable  law,  and excess  interest,  if any,
      provided  for  in  this   Agreement   or   otherwise   shall  be  canceled
      automatically  by such  Lender  as of the  date of  such  acceleration  or
      prepayment and, if theretofore  paid,  shall be credited by such Lender on
      the  principal  amount of the  Indebtedness  (or,  to the extent  that the
      principal amount of the  Indebtedness  shall have been or would thereby be
      paid in full,  refunded by such Lender to the Borrower).  All sums paid or
      agreed to be paid to any Lender for the use,  forbearance  or detention of
      sums due hereunder  shall,  to the extent  permitted by law  applicable to
      such Lender, be amortized,  prorated,  allocated and spread throughout the

                                       16
<PAGE>
      full term of the Loans  evidenced  by the Notes  until  payment in full so
      that the rate or amount of interest on account of any Loans hereunder does
      not exceed the maximum  amount allowed by such  applicable  law. If at any
      time and from  time to time (i) the  amount  of  interest  payable  to any
      Lender on any date shall be computed at the Highest Lawful Rate applicable
      to such Lender  pursuant to this Section  12.14 and (ii) in respect of any
      subsequent  interest  computation  period the amount of interest otherwise
      payable to such Lender  would be less than the amount of interest  payable
      to such  Lender  computed at the Highest  Lawful Rate  applicable  to such
      Lender,  then the amount of interest  payable to such Lender in respect of
      such subsequent interest  computation period shall continue to be computed
      at the Highest  Lawful  Rate  applicable  to such  Lender  until the total
      amount of interest  payable to such Lender shall equal the total amount of
      interest  which would have been payable to such Lender if the total amount
      of interest had been computed without giving effect to this Section 12.14.
      To the extent that  Chapter 303 of the Texas  Finance Code is relevant for
      the purpose of determining the Highest Lawful Rate applicable to a Lender,
      such Lender  elects to determine  the  applicable  rate ceiling under such
      Chapter by the weekly ceiling from time to time in effect.  Chapter 346 of
      the Texas Finance Code does not apply to Borrower's obligations hereunder.

      2.37  Amendments  to Annex I. Annex I is hereby  amended by deleting  such
annex in its entirety and inserting in lieu thereof Annex I attached hereto.

      2.38 Amendments to Exhibit A-1.  Exhibit A-1 is hereby amended by deleting
such exhibit in its entirety  and  inserting in lieu thereof  Exhibit A attached
hereto.

      2.39 Amendments to Exhibit A-2. Exhibit A-2 is hereby deleted.

      2.40 Amendments to Exhibit B. Exhibit B is hereby amended by deleting such
exhibit in its entirety and inserting in lieu thereof Exhibit B attached hereto.

      2.41 Amendments to Exhibit C. Exhibit C is hereby amended by deleting such
exhibit in its entirety and inserting in lieu thereof Exhibit C attached hereto.

      2.42 Amendments to Exhibit D. Exhibit D is hereby amended by deleting such
exhibit  iin its  entirety  and  inserting  in lieu  thereof  Exhibit D attached
hereto.

      2.43 Amendments to Exhibit E. Exhibit E is hereby amended by deleting such
exhibit in its entirety and inserting in lieu thereof Exhibit E attached hereto.

      2.44  Amendments  to Exhibit G. Exhibit G is hereby added as a new exhibit
to the Amended and Restated Credit Agreement,  in the form of Exhibit G attached
hereto.

      2.45 Amendments to the Amended and Restated Credit Agreement:  The Amended
and  Restated  Credit  Agreement  is  hereby  amended  by  deleting  each of the
following terms from the Amended and Restated Credit Agreement and inserting the
indicated defined terms in lieu of such deleted terms:

                                       17
<PAGE>
    Deleted Term                                Substituted Term
    ------------                                ----------------
    Aggregate Facility A Commitments            Aggregate Commitments
    Aggregate Facility A Maximum Credit Amounts Aggregate Maximum Credit Amounts
    Facility A                                  Facility
    Facility A Commitment                       Commitment
    Facility A Loans                            Loans
    Facility A Maximum Credit Amount            Maximum Credit Amount
    Facility A Notes                            Notes
    Facility A Termination                      Termination Date
    Nationsbank, N.A.                           Bank of America, N.A.

      2.46 Amendment to Bank of Montreal  Signature Page. The notice information
provided  on the  signature  page  executed  by Bank of  Montreal  is amended to
substitute  Joseph  Bliss in place of Robert L.  Roberts and to  substitute  the
telephone number (713) 546-9735 in place of (713) 546-9754.

      Section 3.Conditions Precedent.  The effectiveness of this First Amendment
is  subject  to  the  receipt  by  the  Agent  of the  following  documents  and
satisfaction of the other  conditions  provided in this Section 3, each of which
shall be reasonably satisfactory to the Agent in form and substance:

      3.1 Loan Documents. The Agent shall have received multiple counterparts as
requested of (i) this First  Amendment  from the  Obligors,  each Agent and each
Lender,  (ii) new Notes in the form of Exhibit A to this First Amendment,  (iii)
the First  Amendment  to Amended  and  Restated  Guaranty  Agreement,  (iv) each
Amendment to the  Mortgages  and (v) an executed copy of the Fee Letter dated as
of July 24, 2001.

      3.2 No Default.  No Default or Event of Default shall have occurred and be
continuing as of the Effective Date.

      3.3 Payment of Lenders' Fees. The payment of .15% of each Lender's Maximum
Credit Amount to each respective Lender.

      3.4 Payment of Agent's Fees.  The payment of any and all fees set forth in
the Fee Letter.

      Section  4.Representations  and  Warranties;   Etc.  Each  Obligor  hereby
affirms:  (a)  that as of the  date of  execution  and  delivery  of this  First
Amendment,  all of the  representations  and  warranties  contained in each Loan
Document to which such  Obligor is a party are true and correct in all  material
respects as though made on and as of the  Effective  Date  (unless  made as of a
specific  earlier date, in which case,  was true as of such date);  and (b) that
after giving effect to this First Amendment and to the transactions contemplated
hereby,  no Default or Event of Default  exists under the Loan Documents or will
exist under the Loan Documents.

      Section 5.Miscellaneous.

      5.1  Confirmation.  The provisions of the Credit  Agreement (as amended by
this First  Amendment)  shall remain in full force and effect in accordance with
its terms following the effectiveness of this First Amendment.

                                       18
<PAGE>
      5.2 Ratification and Affirmation of Obligors.  Each of the Obligors hereby
expressly (i) acknowledges the terms of this First Amendment,  (ii) ratifies and
affirms  its  obligations  under  the  Guaranty  Agreement  and the  other  Loan
Documents  to which it is a party,  (iii)  acknowledges,  renews and extends its
continued liability under the Guaranty Agreement and the other Loan Documents to
which it is a party and agrees that its guarantee  under the Guaranty  Agreement
and the other Loan  Documents  to which it is a party  remains in full force and
effect with respect to the Indebtedness as amended hereby.

      5.3  Counterparts.  This First Amendment may be executed by one or more of
the  parties  hereto in any  number of  separate  counterparts,  and all of such
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.

      5.4 No Oral Agreement.  THIS WRITTEN FIRST AMENDMENT, THE CREDIT AGREEMENT
AND THE OTHER LOAN  DOCUMENTS  EXECUTED IN  CONNECTION  HEREWITH  AND  THEREWITH
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.

      5.5 Governing Law. THIS FIRST  AMENDMENT  (INCLUDING,  BUT NOT LIMITED TO,
THE VALIDITY AND  ENFORCEABILITY  HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

                          [SIGNATURES BEGIN NEXT PAGE]

                                       19
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed effective as of the date first written above.

BORROWER:                                 HOWELL PETROLEUM CORPORATION

                                          By: /s/ ROBERT T. MOFFETT
                                          Robert T. Moffett, Vice President

OBLIGORS:                                 HOWELL CORPORATION

                                          By: /s/ ALLYN R. SKELTON, II
                                          Allyn R. Skelton, II, Vice President &
                                          Chief Financial Officer

                                          VOYAGER ENERGY CORP.

                                          By: /s/ ROBERT T. MOFFETT
                                          Robert T. Moffett, Vice President

                                Signature Page 1
<PAGE>

AGENT:                                    BANK OF MONTREAL,
                                          as Agent

                                          By: /s/ JAMES DUCOTE
                                          James Ducote, Vice President

SYNDICATION AGENT:                        BANK OF AMERICA, N.A.,
                                          as Syndication Agent

                                          By: /s/ PAUL SQUIRES
                                          Paul Squires, Managing Director

DOCUMENTATION AGENT:                      UNION BANK OF CALIFORNIA, N.A.,
                                          as Documentation Agent

                                          By: /s/ GARY SHEKERJIAN
                                          Gary Shekerjian, Vice President

                                Signature Page 2
<PAGE>

LENDERS:                                  BANK OF MONTREAL

                                          By: /s/ JAMES DUCOTE
                                          James Ducote, Vice President

                                          BANK OF AMERICA, N.A.

                                          By: /s/ PAUL SQUIRES
                                          Paul Squires, Managing Director

                                          UNION BANK OF CALIFORNIA, N.A.

                                          By: /s/ GARY SHEKERJIAN
                                          Gary Shekerjian, Vice President

                                Signature Page 3
<PAGE>

                                     ANNEX 1

                         LIST OF MAXIMUM CREDIT AMOUNTS

      Name of Lender                  Percentage Share    Maximum Credit Amount
      --------------                  ----------------    ---------------------
      Bank of Montreal                     35%            $35,000,000.00
      Bank of America, N.A.                32.5%          $32,500,000.00
      Union Bank of California, N.A.       32.5%          $32,500,000.00

                                   Annex I-1
<PAGE>

                                    EXHIBIT A
                                 [FORM OF] NOTE

$-----------------------------                      ------------, 200_

FOR VALUE RECEIVED,  HOWELL PETROLEUM  CORPORATION,  a Delaware corporation (the
"Borrower") hereby promises to pay to the order of _______________________  (the
"Lender"),  at the Principal Office of BANK OF MONTREAL, as Agent (the "Agent"),
at    ___________________________________________,    the   principal   sum   of
_____________ Dollars  ($____________) (or such lesser amount as shall equal the
aggregate  unpaid  principal  amount  of the  Loans  made by the  Lender  to the
Borrower under the Credit Agreement, as hereinafter defined), in lawful money of
the United States of America and in immediately  available  funds,  on the dates
and in the  principal  amounts  provided  in the  Credit  Agreement,  and to pay
interest on the unpaid  principal  amount of each such Loan, at such office,  in
like money and funds,  for the period  commencing on the date of such Loan until
such  Loan  shall be paid in full,  at the  rates  per  annum  and on the  dates
provided in the Credit Agreement.

The date, amount, Type, interest rate, Interest Period and maturity of each Loan
made by the  Lender to the  Borrower,  and each  payment  made on account of the
principal  thereof,  shall be recorded by the Lender on its books and,  prior to
any  transfer  of this Note,  may be  endorsed  by the  Lender on the  schedules
attached hereto or any continuation thereof or on any separate record maintained
by the Lender.  Failure to make any such notation or to attach a schedule  shall
not affect any Lender's or the  Borrower's  rights or  obligations in respect of
such Loans or affect the validity of such transfer by any Lender of this Note.

This Note is one of the Notes  referred to in the Amended  and  Restated  Credit
Agreement  dated as of  December  1, 1998  among the  Borrower,  the  Agents and
lenders  signatory  thereto  (including  the  Lender),  as  amended by the First
Amendment  dated as of July 26,  2001,  and  evidences  Loans made by the Lender
thereunder  (such  Amended  and  Restated  Credit  Agreement  as the same may be
further  amended,  supplemented  or  restated  from  time to time,  the  "Credit
Agreement").  Capitalized  terms used in this Note have the respective  meanings
assigned to them in the Credit Agreement.

This Note is issued  pursuant  to the Credit  Agreement  and is  entitled to the
benefits provided for in the Credit Agreement and the other Loan Documents.  The
Credit Agreement provides for the acceleration of the maturity of this Note upon
the occurrence of certain  events,  for  prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.

THIS NOTE SHALL BE GOVERNED BY, AND  CONSTRUED IN ACCORDANCE  WITH,  THE LAWS OF
THE STATE OF TEXAS.

                                     HOWELL PETROLEUM CORPORATION

                                     By:________________________________
                                     Name:______________________________
                                     Title:_____________________________

                                      A-1
<PAGE>

                                    EXHIBIT B
     [FORM OF] BORROWING, CONTINUATION AND CONVERSION REQUEST

                       ______________, 200_

HOWELL PETROLEUM CORPORATION, a Delaware corporation (the "Borrower"),  pursuant
to the Amended and Restated  Credit  Agreement  dated as of December 1, 1998, as
amended by the First  Amendment  dated as of July 26,  2001  (together  with all
amendments or supplements thereto, the "Credit Agreement"),  among the Borrower,
the Agents and the lenders (the "Lenders")  which are or become parties thereto,
makes the requests indicated below (unless otherwise defined herein, capitalized
terms are defined in the Credit Agreement):

1.    Borrowings:

(a)   Aggregate amount of new Loans to be $______________________;

(b)   Requested funding date is _________________, 200__;

(c)   $_____________________ of such borrowings are to be Eurodollar Loans;

      $_____________________ of such borrowings are to be Base Rate Loans; and

(d)   Length of Interest Period for Eurodollar Loans is:

      ------------------------

(e)   Amount of Borrowing Base then in effect: $_____________________

(f)   Amount of outstanding

           Loans and LC exposure             $_____________________

(g)   Available Amount [(e) minus (f)] $______________________

                                     [amount requested in (a) cannot exceed (g)]

2.    Continuation for Eurodollar Loans maturing on __________________:

(a)   Aggregate amount to be continued as Eurodollar Loans is $________________;

(b)   Aggregate amount to be converted to Base Rate Loans is $_________________;

(c)   Length of Interest Period for continued Eurodollar Loans is _____________.

3.    Conversion of Outstanding Base Rate Loans to Eurodollar Loans:

      Convert   $__________________  of  the  outstanding  Base  Rate  Loans  to
      Eurodollar  Loans  on  ____________________  with an  Interest  Period  of
      ______________________.

                                      B-1
<PAGE>
4. Conversion of outstanding Eurodollar Loans to Base Rate Loans:

      Convert  $__________________  of the  outstanding  Eurodollar  Loans  with
      Interest  Period  maturing  on  ____________________,  200_,  to Base Rate
      Loans.

The undersigned certifies that he is the  _____________________ of the Borrower,
and that as such he is authorized to execute this  certificate  on behalf of the
Borrower.  The undersigned further certifies,  represents and warrants on behalf
of the  Borrower  that  the  Borrower  is  entitled  to  receive  the  requested
borrowing,  continuation  or  conversion  under the terms and  conditions of the
Credit Agreement.

                                     HOWELL PETROLEUM CORPORATION

                                     By:________________________________
                                     Name:______________________________
                                     Title:_____________________________

                                      B-2
<PAGE>

                                    EXHIBIT C
                        [FORM OF] COMPLIANCE CERTIFICATE

      The undersigned hereby certifies that he is the ________________ of HOWELL
PETROLEUM CORPORATION,  a Delaware corporation (the "Borrower") and that as such
he is authorized  to execute this  certificate  on behalf of the Borrower.  With
reference to the Amended and Restated  Credit  Agreement dated as of December 1,
1998, as amended by the First Amendment dated as of July 26, 2001 (together with
all  amendments  or  supplements  thereto  being  the  "Agreement"),  among  the
Borrower,  BANK OF MONTREAL,  as Agent for the lenders (the "Lenders") which are
or become a party  thereto,  and such Lenders,  the  undersigned  represents and
warrants as follows (each  capitalized  term used herein having the same meaning
given to it in the Agreement unless otherwise specified):

           (a)  Except  as   expressly   stated  in   Schedule  1  hereto,   the
representations  and warranties of the Borrower  contained in Article VII of the
Agreement and in the other Loan Documents and otherwise made in writing by or on
behalf of the Borrower  pursuant to the  Agreement and the Loan  Documents  were
true and correct in all material  respects when made, and are repeated at and as
of the time of delivery hereof and are true and correct in all material respects
at  and  as  of  the  time  of  delivery  hereof,  except  to  the  extent  such
representations  and warranties are expressly  limited to an earlier date or the
Majority Lenders have expressly consented in writing to the contrary.

           (b) The Borrower has performed and complied with all  agreements  and
conditions  contained in the Agreement and in the other Loan Documents  required
to be  performed  or  complied  with by it prior  to or at the time of  delivery
hereof.

           (c) Since  December 31, 1999, no change has  occurred,  either in any
case or in the  aggregate,  in the  condition,  financial or  otherwise,  of the
Borrower or any Subsidiary which would have a Material Adverse Effect.

           (d) Except as expressly  stated in Schedule 1 hereto,  there  exists,
and,  after  giving  effect  to the loan or loans  with  respect  to which  this
certificate is being  delivered,  will exist,  no Default under the Agreement or
any event or circumstance which constitutes, or with notice or lapse of time (or
both) would  constitute,  an event of default  under any material loan or credit
agreement,  indenture,  deed of trust,  security agreement or other agreement or
instrument  evidencing  or  pertaining  to  any  Debt  of  the  Borrower  or any
Subsidiary,  or under any other  material  agreement or  instrument to which the
Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary
is bound.

           (e)  Attached  hereto  are the  detailed  computations  necessary  to
determine  whether the Guarantor is in compliance with Sections 5.3, 5.4 and 5.5
as of the end of the [fiscal quarter][fiscal year] ending ______________.

                                      C-1
<PAGE>

      EXECUTED AND DELIVERED this ____ day of ______________.

BORROWER:                      HOWELL PETROLEUM CORPORATION

                               By: ____________________________
                               Name:__________________________
                               Title:____________________________

GUARANTOR:                     HOWELL CORPORATION

                               By: ____________________________
                               Name:__________________________
                               Title:____________________________

                                      C-2
<PAGE>

                                    EXHIBIT D
                             LIST OF LOAN DOCUMENTS

1. Amended and Restated Guaranty Agreement dated as of December 1, 1998 executed
by Howell  Corporation  as amended by First  Amendment  to Amended and  Restated
Guaranty Agreement dated July
26, 2001.

2. Mortgage,  Deed of Trust,  Assignment of Production,  Security  Agreement and
Financing  Statement  dated as of July 31,  1998  executed by the  Borrower,  as
amended by First Amendment to Mortgage, Deed of Trust, Assignment of Production,
Security  Agreement  and  Financing  Statement  dated as of December 1, 1998 and
Second Amendment to Mortgage, Deed of Trust, Assignment of Production,  Security
Agreement and Financing  Statement dated as of July 26, 2001 with respect to its
properties in the states of Alabama, Louisiana, Montana and Wyoming.

3. Financing Statements executed by the Borrower with respect to item 2 above.

4. Mortgage,  Deed of Trust,  Assignment of Production,  Security  Agreement and
Financing  Statement  dated as of October 14, 1998 executed by the Borrower,  as
amended by First Amendment to Mortgage, Deed of Trust, Assignment of Production,
Security  Agreement  and  Financing  Statement  dated as of December 1, 1998 and
Second Amendment to Mortgage, Deed of Trust, Assignment of Production,  Security
Agreement and Financing Statement dated as of July 26, 2001, with respect to its
properties in Louisiana, Mississippi, Utah and Wyoming.

5. Financing Statements executed by the Borrower with respect to item 4 above.

6. Mortgage,  Deed of Trust,  Assignment of Production,  Security  Agreement and
Financing  Statement  (Mortgage of Commercial Real Property) dated as of October
20, 1998  executed by the Borrower,  as amended by First  Amendment to Mortgage,
Deed of Trust,  Assignment  of  Production,  Security  Agreement  and  Financing
Statement  (Mortgage of Commercial  Real Property)  dated as of December 1, 1998
and Second  Amendment  to Mortgage,  Deed of Trust,  Assignment  of  Production,
Security  Agreement  and  Financing   Statement  (Mortgage  of  Commercial  Real
Property)  dated as of July 26, 2001,  with respect to its  properties  in North
Dakota.

7. Financing Statements executed by the Borrower with respect to item 6 above.

8. Mortgage,  Deed of Trust,  Assignment of Production,  Security  Agreement and
Financing  Statement  dated as of January 22, 1999 executed by the Borrower,  as
amended by First Amendment to Mortgage, Deed of Trust, Assignment of Production,
Security  Agreement  and  Financing  Statement  dated as of July 26, 2001,  with
respect to its properties in Colorado, Louisiana,  Mississippi,  Oklahoma, Texas
and Wyoming.

9. Financing Statements executed by the Borrower with respect to item 8 above.

                                      D-1
<PAGE>
10.Mortgage,  Deed of Trust,  Assignment of  Production,  Security Agreement and
Financing Stated dated as of January 22, 1999 executed by Voyager, as amended by
First Amendment to Mortgage, Deed of Trust,  Assignment of Production,  Security
Agreement and Financing Statement dated as of July 26, 2001, with respect to its
properties in Louisiana.

11. Financing Statements executed by the Borrower with respect to item 10 above.

                                      D-2
<PAGE>

                                    EXHIBIT E
                         [FORM OF] ASSIGNMENT AGREEMENT

      THIS  ASSIGNMENT  AGREEMENT  ("Agreement")  dated  as of ________________,
200__ is between: _________________________________   (the   "Assignor")     and
__________________________  (the "Assignee").

                                    RECITALS

      A. The  Assignor is a party to the Amended and Restated  Credit  Agreement
dated as of December 1, 1998, as amended by the First Amendment dated as of July
26,  2001,  (as amended and  supplemented  and in effect from time to time,  the
"Credit Agreement") among HOWELL PETROLEUM  CORPORATION,  a Delaware corporation
(the  "Borrower"),  each of the  lenders  that is or becomes a party  thereto as
provided in Section 12.06 of the Credit Agreement  (individually,  together with
its successors and assigns,  a "Lender",  and collectively,  together with their
successors and assigns,  the "Lenders"),  and BANK OF MONTREAL,in its individual
capacity ("BMO"), and as agent for the Lenders (in such capacity,  together with
its successors in such capacity, the "Agent").

      B. The Assignor proposes to sell, assign and transfer to the Assignee, and
the Assignee proposes to purchase and assume from the Assignor, [all][a portion]
of the Assignor's  Maximum Credit Amount,  outstanding  Loans and its Percentage
Share of the  outstanding  LC Exposure,  all on the terms and conditions of this
Agreement.

      C. In consideration of the foregoing and the mutual  agreements  contained
herein,  and  for  other  good  and  valuable  consideration,  the  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

                                    ARTICLE I

                                  Definitions.

      Section  1.01  Definitions.  All  capitalized  terms used but not  defined
herein have the respective meanings given to such terms in the Credit Agreement.

      Section 1.02 Other Definitions.  As used herein,  the following terms have
the following respective meanings:

           "Assigned  Interest" shall mean all of Assignor's (in its capacity as
a Lender) rights and  obligations  (i) under the Credit  Agreement and the other
Loan  Documents in respect of the Maximum  Credit  Amount of the Assignor in the
principal amount equal to $____________________,  including, without limitation,
any obligation to participate pro rata in any LC Exposure and (ii) to make Loans
under the Maximum Credit Amount and any right to receive  payments for the Loans
outstanding  under the Maximum  Credit Amount  assigned  hereby of the amount of
$_____________  (the  "Loan  Balance"),  plus the  interest  and fees which will
accrue from and after the Assignment Date.

           "Assignment  Date"  shall  mean   _____________________, 200_.

                                      E-1
<PAGE>
                                   ARTICLE II

                              Sale and Assignment.

      Section 2.01 Sale and  Assignment.  On the terms and  conditions set forth
herein,  effective on and as of the Assignment  Date, the Assignor hereby sells,
assigns and transfers to the  Assignee,  and the Assignee  hereby  purchases and
assumes from the Assignor,  all of the right, title and interest of the Assignor
in and to,  and all of the  obligations  of the  Assignor  in  respect  of,  the
Assigned Interest.  Such sale,  assignment and transfer is without recourse and,
except as  expressly  provided  in this  Agreement,  without  representation  or
warranty.

      Section 2.02  Assumption  of  Obligations.  The  Assignee  agrees with the
Assignor  (for the express  benefit of the Assignor and the  Borrower)  that the
Assignee  will,  from  and  after  the  Assignment  Date,  perform  all  of  the
obligations of the Assignor in respect of the Assigned Interest.  From and after
the  Assignment  Date:  (a) the Assignor  shall be released from the  Assignor's
obligations in respect of the Assigned  Interest,  and (b) the Assignee shall be
entitled to all of the Assignor's rights, powers and privileges under the Credit
Agreement and the other Loan Documents in respect of the Assigned Interest.

      Section 2.03 Consent by Agent.  By  executing  this  Agreement as provided
below, in accordance with Section  12.06(b) of the Credit  Agreement,  the Agent
hereby  acknowledges  notice of the transactions  contemplated by this Agreement
and consents to such transactions.

                                   ARTICLE III

                                    Payments.

      Section 3.01  Payments.  As  consideration  for the sale,  assignment  and
transfer  contemplated  by Section  2.01  hereof,  the  Assignee  shall,  on the
Assignment  Date,  assume  Assignor's  obligations  in respect  of the  Assigned
Interest and pay to the Assignor an amount equal to the Loan Balance, if any. An
amount  equal to all accrued and unpaid  interest  and fees shall be paid to the
Assignor as provided in Section 3.02 (iii) below.  Except as otherwise  provided
in this  Agreement,  all  payments  hereunder  shall be made in  Dollars  and in
immediately available funds, without setoff, deduction or counterclaim.

      Section 3.02  Allocation of Payments.  The Assignor and the Assignee agree
that (i) the  Assignor  shall be entitled  to any  payments  of  principal  with
respect to the Assigned  Interest made prior to the  Assignment  Date,  together
with any interest and fees with respect to the Assigned  Interest  accrued prior
to the Assignment  Date,  (ii) the Assignee shall be entitled to any payments of
principal  with  respect  to the  Assigned  Interest  made  from and  after  the
Assignment Date, together with any and all interest and fees with respect to the
Assigned  Interest  accruing from and after the  Assignment  Date, and (iii) the
Agent is  authorized  and  instructed  to allocate  payments  received by it for
account of the Assignor and the Assignee as provided in the  foregoing  clauses.
Each party hereto agrees that it will hold any  interest,  fees or other amounts
that it may receive to which the other party hereto  shall be entitled  pursuant
to the preceding sentence for account of such other party and pay, in like money
and funds,  any such  amounts  that it may receive to such other party  promptly
upon receipt.

                                      E-2
<PAGE>
      Section  3.03  Delivery of Notes.  Promptly  following  the receipt by the
Assignor of the consideration required to be paid under Section 3.01 hereof, the
Assignor  shall, in the manner  contemplated  by Section  12.06(b) of the Credit
Agreement,  (i)  deliver  to the Agent (or its  counsel)  the Notes  held by the
Assignor  and (ii)  notify the Agent to request  that the  Borrower  execute and
deliver new Notes to the Assignor, if Assignor continues to be a Lender, and the
Assignee, dated the date of this Agreement in respective principal amounts equal
to the respective  Maximum Credit Amounts of the Assignor (if  appropriate)  and
the  Assignee  after  giving  effect  to  the  sale,   assignment  and  transfer
contemplated hereby.

      Section 3.04  Further  Assurances.  The  Assignor and the Assignee  hereby
agree to  execute  and  deliver  such  other  instruments,  and take such  other
actions,  as  either  party  may  reasonably  request  in  connection  with  the
transactions contemplated by this Agreement.

                                   ARTICLE IV

                              Conditions Precedent.

      Section  4.01  Conditions  Precedent.   The  effectiveness  of  the  sale,
assignment and transfer  contemplated  hereby is subject to the  satisfaction of
each of the following conditions precedent:

           (a) the execution and delivery of this  Agreement by the Assignor and
the Assignee;

           (b) the receipt by the Assignor of the payment required to be made by
the Assignee under Section 3.01 hereof; and

           (c) the  acknowledgment  and  consent  by the Agent  contemplated  by
Section 2.03 hereof.

                                    ARTICLE V

                         Representations and Warranties.

      Section 5.01 Representations and Warranties of the Assignor.  The Assignor
represents and warrants to the Assignee as follows:

           (a) it has all  requisite  power  and  authority,  and has  taken all
action  necessary  to execute  and  deliver  this  Agreement  and to fulfill its
obligations  under,  and  consummate  the  transactions  contemplated  by,  this
Agreement;

           (b) the execution,  delivery and compliance  with the terms hereof by
Assignor  and the  delivery of all  instruments  required to be  delivered by it
hereunder do not and will not violate any Governmental Requirement applicable to
it;

           (c) this  Agreement  has been duly  executed and  delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against it in accordance with its terms;

                                      E-3
<PAGE>
           (d) all  approvals  and  authorizations  of, all filings with and all
actions  by  any   Governmental   Authority   necessary   for  the  validity  or
enforceability of its obligations under this Agreement have been obtained;

           (e) the  Assignor  has  good  title  to,  and is the sole  legal  and
beneficial owner of, the Assigned Interest, free and clear of all Liens, claims,
participations or other charges of any nature whatsoever; and

           (f) the  transactions  contemplated  by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking business
of the Assignor.

      Section  5.02  Disclaimer.  Except as  expressly  provided in Section 5.01
hereof, the Assignor does not make any representation or warranty,  nor shall it
have any  responsibility  to the  Assignee,  with respect to the accuracy of any
recitals,  statements,  representations  or  warranties  contained in the Credit
Agreement or in any  certificate or other  document  referred to or provided for
in, or received by any Lender  under,  the Credit  Agreement,  or for the value,
validity,  effectiveness,   genuineness,  execution,  effectiveness,   legality,
enforceability  or sufficiency of the Credit  Agreement,  the Notes or any other
document  referred to or provided for therein or for any failure by the Borrower
or any other  Person  (other than  Assignor)  to perform any of its  obligations
thereunder or for the existence, value, perfection or priority of any collateral
security or the financial or other condition of the Borrower or the Subsidiaries
(or any other obligor or guarantor),  or any other matter relating to the Credit
Agreement or any other Loan Documents or any extension of credit thereunder.

      Section 5.03 Representations and Warranties of the Assignee.  The Assignee
represents and warrants to the Assignor as follows:

           (a) it has all  requisite  power  and  authority,  and has  taken all
action  necessary  to execute  and  deliver  this  Agreement  and to fulfill its
obligations  under,  and  consummate  the  transactions  contemplated  by,  this
Agreement;

           (b) the execution,  delivery and compliance  with the terms hereof by
Assignee  and the  delivery of all  instruments  required to be  delivered by it
hereunder do not and will not violate any Governmental Requirement applicable to
it;

           (c) this  Agreement  has been duly  executed and  delivered by it and
constitutes the legal, valid and binding obligation of the Assignee, enforceable
against it in accordance with its terms;

           (d) all  approvals  and  authorizations  of, all filings with and all
actions  by  any   Governmental   Authority   necessary   for  the  validity  or
enforceability of its obligations under this Agreement have been obtained;

           (e) the Assignee has fully reviewed the terms of the Credit Agreement
and the other Loan Documents and has independently and without reliance upon the
Assignor,  and based on such information as the Assignee has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement;

                                      E-4
<PAGE>
           (f) the Assignee hereby affirms that the representations contained in
Section  4.06(d)(i)(1)  of the  Credit  Agreement  are true and  accurate  as to
Assignee. If Section 4.06(d)(i)(2) is applicable to the Assignee, Assignee shall
promptly  deliver  to the  Agent and the  Borrower  such  certifications  as are
required thereby to avoid the withholding taxes referred to in Section 4.06; and

           (g) the  transactions  contemplated  by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking business
of the Assignee.

                                   ARTICLE VI

                                 Miscellaneous.

      Section 6.01 Notices.  All notices and other  communications  provided for
herein  (including,  without  limitation,  any  modifications  of,  or  waivers,
requests or consents under,  this  Agreement)  shall be given or made in writing
(including,  without limitation, by telex or telecopy) to the intended recipient
at its "Address for Notices"  specified  below its name on the  signature  pages
hereof or, as to either  party,  at such other address as shall be designated by
such party in a notice to the other party.

      Section  6.02  Amendment,  Modification  or Waiver.  No  provision of this
Agreement may be amended,  modified or waived except by an instrument in writing
signed by the Assignor and the Assignee, and consented to by the Agent.

      Section 6.03 Successors and Assigns.  This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their  respective  successors
and permitted  assigns.  The  representations  and warranties made herein by the
Assignee  are also made for the benefit of the Agent and the  Borrower,  and the
Assignee  agrees that the Agent and the  Borrower are entitled to rely upon such
representations and warranties.

      Section  6.04  Assignments.  Neither  party  hereto  may assign any of its
rights  or  obligations  hereunder  except in  accordance  with the terms of the
Credit Agreement.

      Section 6.05 Captions.  The captions and section headings appearing herein
are included  solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.

      Section 6.06 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together,
shall constitute one and the same instrument, and each of the parties hereto may
execute this Agreement by signing any such counterpart.

      Section 6.07  Governing  Law.  This  Agreement  shall be governed  by, and
construed in accordance with, the law of the State of Texas.

      Section 6.08 Expenses.  To the extent not paid by the Borrower pursuant to
the terms of the Credit Agreement, each party hereto shall bear its own expenses
in connection with the execution, delivery and performance of this Agreement.

                                      E-5
<PAGE>
      Section  6.09 Waiver of Jury  Trial.  EACH OF THE  PARTIES  HERETO  HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL  BY  JURY IN ANY  LEGAL  PROCEEDING  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

      IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Assignment
Agreement to be executed and delivered as of the date first above written.

                               ASSIGNOR

                               By:   ________________________
                               Name: ________________________
                               Title:________________________

                               Address for Notices:

                               ______________________________
                               ______________________________

                               Telecopier No.:
                               Telephone No.:
                               Attention:

                               ASSIGNEE

                               By:   ________________________
                               Name: ________________________
                               Title:________________________

                               Address for Notices:

                               ______________________________
                               ______________________________

                               Telecopier No.:
                               Telephone No.:
                               Attention:

ACKNOWLEDGED AND CONSENTED TO:

BANK OF MONTREAL,
as Agent

By:    ________________________
Name:  ________________________
Title: ________________________

                                      E-6
<PAGE>

                                    EXHIBIT G
                     [FORM OF] ADDITIONAL LENDER CERTIFICATE

                         __________, 200__

To:   BANK OF MONTREAL,
      as Agent

      The Borrower,  the Agents and certain Lenders have heretofore entered into
an Amended and  Restated  Credit  Agreement,  dated as of  December 1, 1998,  as
amended by the First  Amendment  dated as of July 26,  2001 ( as the same may be
further  amended,  supplemented  or  restated  from  time to time,  the  "Credit
Agreement").  Capitalized  terms not  otherwise  defined  herein  shall have the
meaning given to such terms in the Credit Agreement.

      This Additional Lender  Certificate is being delivered pursuant to Section
2.01(d) of the Credit Agreement.

[Language for Existing Lender]

      [Please be advised that the undersigned has agreed to increase its Maximum
Credit  Amount  under the  Credit  Agreement  effective  __________,  200__ from
$_________  to  $_________  and (b) that it shall  continue to be a party in all
respects to the Credit Agreement and the other Loan Documents.]

[Language for New Lender]

      [Please be advised that the  undersigned has agreed (a) to become a Lender
under the Credit  Agreement  effective  __________,  200__ with a Maximum Credit
Amount  of  $____________  and (b) that it shall be  deemed to be a party in all
respects to the Credit Agreement and the other Loan Documents.]

                               Very truly yours,

                               ______________________________

                               By:   ________________________
                               Name: ________________________
                               Title:________________________

                                      G-1
<PAGE>

Accepted and Agreed:

BANK OF MONTREAL,
  as Agent

By:   ________________________
 Name: _______________________
 Title: ______________________

Accepted and Agreed:

HOWELL PETROLEUM CORPORATION

By:   ________________________
 Name: _______________________
 Title: ______________________

                                      G-2Exhibit 4.1

<PAGE>

                         SUBSEQUENT TRANSFER INSTRUMENT

                  Pursuant to this Subsequent Transfer Instrument, dated July
18, 2001 (the "Instrument"), between Ameriquest Mortgage Securities Inc. as
seller (the "Depositor") and Bankers Trust Company of California, N.A. as
trustee (the "Trustee") of the Ameriquest Mortgage Securities Inc., Floating
Rate Mortgage Pass-Through Certificates, Series 2001-1, and pursuant to the
Pooling and Servicing Agreement, dated as of June 1, 2001 (the "Pooling and
Servicing Agreement"), among the Depositor as depositor, Ameriquest Mortgage
Company as master servicer and the Trustee as trustee, the Depositor and the
Trustee agree to the sale by the Depositor and the purchase by the Trustee on
behalf of the Trust Fund, of the Mortgage Loans listed on the attached Schedule
of Mortgage Loans (the "Subsequent Mortgage Loans").

                  Capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Pooling and Servicing Agreement.

                  Section 1.        Conveyance of Subsequent Mortgage Loans.
                                    ---------------------------------------

                  (a) The Depositor does hereby sell, transfer, assign, set over
and convey to the Trustee on behalf of the Trust Fund, without recourse, all of
its right, title and interest in and to the Subsequent Mortgage Loans, and
including all amounts due on the Subsequent Mortgage Loans after the related
Subsequent Cut-off Date, and all items with respect to the Subsequent Mortgage
Loans to be delivered pursuant to Section 2.01 of the Pooling and Servicing
Agreement; provided, however that the Depositor reserves and retains all right,
title and interest in and to amounts due on the Subsequent Mortgage Loans on or
prior to the related Subsequent Cut-off Date. The Depositor, contemporaneously
with the delivery of this Agreement, has delivered or caused to be delivered to
the Trustee each item set forth in Section 2.01 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Depositor of the Subsequent
Mortgage Loans identified on the Mortgage Loan Schedule shall be absolute and is
intended by the Depositor, the Master Servicer, the Trustee and the
Certificateholders to constitute and to be treated as a sale by the Depositor to
the Trust Fund.

                  (b) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey to
the Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, in, to and under the Subsequent
Mortgage Loan Purchase Agreement, dated the date hereof, between the Depositor
as purchaser and the Master Servicer as originator and as seller, to the extent
of the Subsequent Mortgage Loans.

                  (c) Additional terms of the sale are set forth on Attachment A
hereto.

                  Section 2.        Representations and Warranties; Conditions
                                    Precedent.
                                    ------------------------------------------

                  (a) The Depositor hereby confirms that each of the conditions
precedent and the representations and warranties set forth in Section 2.10 of
the Pooling and Servicing Agreement are satisfied as of the date hereof.

<PAGE>

                  (b) All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict, the provisions of this Instrument shall control over the
conflicting provisions of the Pooling and Servicing Agreement.

                  Section 3.        Recordation of Instrument.
                                    -------------------------

                  To the extent permitted by applicable law, this Instrument, or
a memorandum thereof if permitted under applicable law, is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the Certificateholders' expense on direction of the related
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Subsequent Mortgage Loans.

                  Section 4.        Governing Law.
                                    -------------

                  This Instrument shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.

                  Section 5.        Counterparts.
                                    ------------

                  This Instrument may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same instrument.

<PAGE>

                  Section 6.        Successors and Assigns.
                                    ----------------------

                  This Instrument shall inure to the benefit of and be binding
upon the Depositor and the Trustee and their respective successors and assigns.

                                           AMERIQUEST  MORTGAGE SECURITIES INC.

                                           By:      /s/John P. Grazer
                                                    ---------------------------
                                           Name:    John P. Grazer
                                           Title:   CFO

                                           BANKERS TRUST COMPANY OF CALIFORNIA,
                                           N.A., as trustee

                                           By:      /s/Ronaldo Reyes
                                                    ---------------------------
                                           Name:    Ronaldo Reyes
                                           Title:   Associate

Attachments
-----------

A.       Additional terms of sale.
B.       Schedule of Subsequent Mortgage Loans.

<PAGE>

                                  ATTACHMENT A
                                  ------------

                            ADDITIONAL TERMS OF SALE

         A.       General

                  1.       Subsequent Cut-off Date: July 1, 2001
                  2.       Subsequent Transfer Date: July 18, 2001
                  3.       Aggregate Principal Balance of the Subsequent
                           Mortgage Loans as of the Subsequent Cut-off Date:
                           $60,720,795.83
                  4.       Purchase Price:  100.00%

         B. The following representations and warranties with respect to each
Subsequent Mortgage Loan determined as of the Subsequent Cut-off Date is true
and correct: (i) the Subsequent Mortgage Loan may not be 30 or more days
delinquent as of the related Subsequent Cut-off Date; (ii) the term to stated
maturity of the Subsequent Mortgage Loan will not be less than 180 months and
will not exceed 360 months from its first payment date; (iii) the Subsequent
Mortgage Loan may not provide for negative amortization; (iv) the Subsequent
Mortgage Loan will not have a Loan-to-Value Ratio greater than 95%; (v) the
Subsequent Mortgage Loans will have, as of the Subsequent Cut-off Date, a
weighted average term since origination not in excess of 15 months; (vi) no
Subsequent Mortgage Loan shall have a Mortgage Rate less than 6.88% or greater
than 14.99%; (vii) the Subsequent Mortgage Loan shall have been serviced by the
Master Servicer since origination or purchased by the Originator in accordance
with its underwriting guidelines; (viii) the Subsequent Mortgage Loan must have
a first payment date occurring on or before September 1, 2001 and (ix) the
Subsequent Mortgage Loan shall have been be underwritten in accordance with the
criteria set forth under the section "The Mortgage Pool--Underwriting Standards;
Representations" in the Prospectus Supplement.

         C. Following the purchase of the Subsequent Mortgage Loans by the Trust
Fund, the Mortgage Loans (including the Subsequent Mortgage Loans) will, as of
the related Subsequent Cut- off Date: (i) have a weighted average original term
to stated maturity of not more than 360 months from the first payment date
thereon; (ii) have a weighted average Mortgage Rate of not less than 9.15% and
not more than 9.40%, by aggregate principal balance of the Mortgage Loans; (iii)
have a weighted average Loan-to-Value Ratio of not less than 70.00% and more
than 90.00%; (iv) have no Mortgage Loan with a principal balance in excess of
$650,000 and (v) have a weighted average Gross Margin of not less than 6.37%, in
each case, as applicable, by aggregate principal balance of the Mortgage Loans
as of the related Subsequent Cut-off Date.

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