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                                                                    EXHIBIT 4(E)

THE WARRANTS AND THE ORDINARY SHARES TO BE ISSUED PURSUANT TO THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER ANY FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF ABSENT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAWS UNLESS AND
UNTIL THE HOLDER HEREOF PROVIDES (i) INFORMATION REASONABLY NECESSARY TO CONFIRM
THAT SUCH REGISTRATION IS NOT REQUIRED OR (ii) AN OPINION OF COUNSEL TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

                              AMENDED AND RESTATED
                                  WARRANT NO. 1

July 23, 2001                                     For the Purchase of 12,619,500
                                                  Ordinary Shares of Seven Seas
                                                  Petroleum Inc.

         FOR VALUE RECEIVED, SEVEN SEAS PETROLEUM INC., a Cayman Islands
exempted company limited by shares (the "Corporation"), hereby grants to
CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation, or its registered
assigns (collectively the "Holder"), the right (the "Warrants") to purchase at
any time before the Expiration Date (as hereafter defined) twelve million six
hundred nineteen thousand five hundred (12,619,500) duly authorized, validly
issued, fully paid and non-assessable shares (the "Warrant Shares") of the
Corporation's ordinary shares, $.0001 par value (the "Ordinary Shares"), at the
Exercise Price (as hereafter defined) and on the terms and conditions herein set
forth. The number of Warrant Shares and the Exercise Price will be subject to
adjustment as provided in this Warrant.

         This Warrant is issued to amend and restate the original Warrant issued
July 23, 2001 (the "Original Warrant") in order to correct an error in the
computation of number of Ordinary Shares to be covered by the Warrant. This new
Warrant is being issued pursuant to paragraph 20 of the Original Warrant to
reflect the correction in the number of Ordinary Shares covered by the Warrant
and to adjust the date on which this Warrant is first exercisable. When executed
by the Corporation and the Holder this Warrant will supercede the Original
Warrant effective July 23, 2001. This Warrant is issued subject to the following
terms and conditions:

1.       Exercise of Warrant. The Warrants are exercisable at the option of the
Holder in whole or in part at any time prior to the Expiration Date by the
delivery to the Corporation of written notice of the exercise of the Warrants
specifying the number of Warrant Shares to be acquired, surrender of this
Warrant to the Corporation and satisfaction of the Exercise Price for the
Warrant Shares to be acquired through such exercise. The Warrants will be deemed
exercised immediately prior to the close of business on the day that all of the
foregoing requirements for the exercise of the Warrants are completed and the
person entitled to receive the Warrant Shares will be treated for all purposes
as the holder of record of such Warrant Shares at such time including, without
implied limitation, the right to vote, receive dividends and to receive
distributions for which the record date falls on or

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after such date. As promptly as possible after such date (in any event within
five (5) business days) the Corporation will deliver to the Holder a stock
certificate evidencing the Warrant Shares covered by the exercise. In the case
of an exercise for less than all the Warrant Shares the Corporation will cancel
this Warrant on the surrender hereof and will execute and deliver a new Warrant
of like tenor for the balance of the unexercised Warrant Shares within such five
(5) day period. If an exercise of all or part of the Warrants is to be made in
connection with a registered public offering or a transaction described in
paragraph 10 of this Warrant, the exercise of the Warrants may, at the election
of the Holder, be conditioned on the consummation of the public offering or
other transaction under paragraph 10 of this Warrant. In that case the exercise
will not be deemed to be effective until the consummation of the specified
condition.

2.       Term. The Warrants may be exercised in full or in part at any time
after October 15, 2001 and on or before 11:59 p.m. Oklahoma City, Oklahoma, time
on, June 30, 2008 (the "Expiration Date"). To the extent not exercised prior to
the Expiration Date, the Warrants and all of the rights of the Holder hereunder
will expire and terminate on such date without any action or notice by the
Corporation.

3.       Exercise Price. On the exercise of the Warrants, the Holder agrees to
pay to the Corporation for the Warrant Shares purchased by the Holder pursuant
to the terms of this Warrant an amount (the "Exercise Price") multiplied by the
number of Warrant Shares at the time of determination. The initial Exercise
Price per Warrant Share is equal to the Aggregate Consideration (as hereafter
defined) divided by twelve million six hundred nineteen thousand five hundred
(12,619,500), but is subject to adjustment pursuant to the terms of this
Warrant. In no event will the aggregate Exercise Price for all of the Warrant
Shares to be acquired under this Warrant, whether as a result of a change in the
par value of the Ordinary Shares or a change in the number of Warrant Shares,
exceed an amount (the "Aggregate Consideration") equal to Twenty-Two Million
Five Hundred Thousand Dollars United States Dollars ($22,500,000.00). The
Exercise Price may be paid as follows, at the election of the Holder: (a) in
lawful money of the United States of America; (b) by the Holder crediting
against unpaid interest and principal due and owing under the Note (as hereafter
defined) an amount equal to the Exercise Price; (c) by the Holder surrendering
or assigning to the Corporation the Warrants under this Warrant with an
aggregate Equity Value (as hereafter defined) equal to the Exercise Price; or
(d) by the Holder surrendering or assigning to the Corporation Ordinary Shares
having a Current Market Price (as hereafter defined) equal to the Exercise
Price. For purposes of this Warrant the term: (y) "Equity Value" means the
difference between the Current Market Price for one Ordinary Share and the
Exercise Price for one Warrant Share; and (z) "Note" means that certain
promissory note of even date herewith executed by the Corporation in favor of
the Holder in the original principal amount of Twenty-Two Million Five Hundred
Thousand United States Dollars ($22,500,000.00).

4.       Representations, Warranties and Covenants.  The Corporation represents
to and warrants, covenants and agrees with the Holder as follows:

         4.1      Reservation of Shares. At all times while the Warrants are
                  outstanding the Corporation will reserve out of the
                  Corporation's authorized but unissued Ordinary Shares, free
                  from preemptive rights and solely for the purpose of effecting
                  the exercise of the Warrants, a sufficient number of Ordinary
                  Shares to provide for the

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                  exercise of the Warrants and all other options, warrants and
                  convertible securities of the Corporation. The Corporation
                  will take all such actions necessary to assure that all such
                  Warrant Shares may be issued without violation of any
                  applicable law, governmental regulation or requirements of any
                  domestic securities exchange or automated quotation system on
                  which the Ordinary Shares are listed or quoted (except for
                  official notice of issuance, which will be immediately
                  delivered by the Corporation upon each such issuance). The
                  Corporation will take all necessary actions to assure that all
                  of the Warrant Shares are authorized, approved for and listed
                  on any national securities exchange or quotation system on
                  which the Corporation's Ordinary Shares are listed or quoted.
                  The Corporation will not take any action which would cause the
                  number of authorized but unissued Ordinary Shares to be less
                  than the number of Ordinary Shares required to be reserved for
                  issuance on exercise of the Warrants.

         4.2      Valid Issuance. All Warrant Shares that may be issued on
                  exercise of the Warrants will be duly and validly issued,
                  fully paid and nonassessable and free from all taxes, liens,
                  charges and encumbrances on issuance by the Corporation. The
                  Corporation will not take any action or fail to take any
                  action which will cause a contrary result (including, without
                  limitation, any action that would cause the Exercise Price
                  then in effect to be less than the par value, if any, of the
                  Ordinary Shares).

         4.3      Cooperation. The Corporation will: (a) not close its books
                  against the transfer of the Warrants or of any Warrant Shares
                  in any manner which interferes with the timely exercise of the
                  Warrants; (b) assist and cooperate with the Holder should the
                  Holder be required to make any governmental filings or obtain
                  any governmental approvals prior to or in connection with any
                  exercise of the Warrants (including, without limitation,
                  making any filings required to be made by the Corporation).

         4.4      Authority. The Corporation has taken all necessary action to
                  authorize the execution and delivery of this Warrant and the
                  issuance of the Warrant Shares on the exercise of the
                  Warrants. This Warrant is a valid, binding and enforceable
                  obligation of the Corporation subject to applicable
                  bankruptcy, insolvency, fraudulent conveyance, moratorium and
                  similar laws now or hereafter in effect relating to creditors'
                  rights and remedies generally. The execution, delivery and
                  performance of this Warrant will not violate: (a) any
                  provision of the organizational documents or charter of the
                  Corporation; (b) any order, writ, injunction or decree of any
                  court, administrative agency or governmental body applicable
                  to the Corporation or the Ordinary Shares; or (c) any
                  contract, lease, note, bond, mortgage or other agreement to
                  which the Corporation is a party, by which the Corporation is
                  bound or to which any of the Corporation's assets are subject.

         4.5      Capitalization. As of the date of this Warrant: the
                  Corporation's authorized capital stock consists of one hundred
                  fifty million (150,000,000) Ordinary Shares and fifty million
                  (50,000,000) shares of which may be designated by the board of
                  directors of the Corporation, none of which preferred shares
                  have been designated or issued. As of the date of this Warrant
                  the only shares of capital stock issued and outstanding,

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                  reserved for issuance or committed to be issued are: (a)
                  thirty-seven million eight hundred fifty-eight thousand five
                  hundred thirty-two (37,858,532) fully paid and non-assessable
                  Ordinary Shares duly issued and outstanding; (b) twelve
                  million six hundred nineteen thousand five hundred
                  (12,619,500) Ordinary Shares reserved for issuance as a result
                  of the proposed issuance of warrants (the "Series A Warrants")
                  in connection with the sale by the Corporation of Twenty-two
                  million Five Hundred Thousand Dollars ($22,500,000.00) of 12%
                  Senior Secured Series A Notes due 2004; (c) twelve million six
                  hundred nineteen thousand five hundred (12,619,500) Ordinary
                  Shares reserved for issuance on exercise of the Warrants; and
                  (d) the remaining unissued Ordinary Shares issuable with
                  respect to five million three hundred fifty-six thousand eight
                  hundred eighty-eight (5,356,888) Ordinary Shares reserved for
                  issuance under the Corporation's 1995, 1996 and 1997 stock
                  option plans. The Warrant Shares reserved for issuance
                  represent now less than twenty percent (20%) of the
                  Corporation's fully diluted Ordinary Shares which as of the
                  date of the issuance of this Warrant includes all of the
                  issued and outstanding Ordinary Shares, any Ordinary Shares
                  issuable under this Warrant, the maximum number of Ordinary
                  Shares issuable in connection with the Series A Warrants and
                  any other Options or Convertible Securities (as hereafter
                  defined) excluding only Ordinary Shares issuable as a result
                  Options issued under the Corporation's 1995, 1996 and 1997
                  compensatory stock option plans.

         4.6      Office. The Corporation will maintain an office for the
                  purposes specified in this Warrant (the "Warrant Office"). The
                  Warrant Office will initially be the Corporation's offices at
                  Suite 1700, 5555 San Felipe Houston, Texas, 77056 and may
                  subsequently be any other office of the Corporation or any
                  transfer agent for the Ordinary Shares in the continental
                  United States as to which written notice has previously been
                  given to the Holder. The Corporation will maintain at the
                  Warrant Office a register for the Warrants in which the
                  Corporation will record the name and address of the person in
                  whose name this Warrant has been issued. The Holder will be
                  able to take any action permitted in this Warrant including,
                  without implied limitation, the exercise or transfer of the
                  Warrants.

         4.7      Participating Preferred Stock. At all times that any of the
                  Warrants are outstanding, the Corporation will not issue any
                  capital stock or shares of any class preferred as to dividends
                  or as to the distribution of assets on voluntary or
                  involuntary liquidation, dissolution or winding up: (a)
                  without the prior written consent of the holders of sixty
                  percent (60%) of the outstanding Warrants; or (b) unless such
                  securities are limited to a fixed sum or percentage of par
                  value in respect of participation in dividends and
                  distributions.

5.       Restrictive Legend. The Warrants are being acquired and any Warrant
Shares to be acquired by the Holder pursuant to this Warrant (collectively,
"Securities") will be acquired for investment for the Holder's own account and
not with a view to, or for resale in connection with, any distribution of such
Securities within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Securities will not be sold, transferred or otherwise
disposed of without registration under the Securities Act and state securities
laws or qualification for exemptions therefrom. The

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Holder agrees that each certificate evidencing the Warrant Shares may be
inscribed with a legend to the foregoing effect, which legend will be as
follows:

                  THE ORDINARY SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
                  ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD,
                  TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF UNLESS AND
                  UNTIL SUCH SHARES ARE FIRST REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, ALL APPLICABLE STATE SECURITIES LAWS AND ALL
                  RULES AND REGULATIONS PROMULGATED THEREUNDER OR UNLESS AND
                  UNTIL THE HOLDER HEREOF PROVIDES (i) INFORMATION REASONABLY
                  NECESSARY TO CONFIRM THAT SUCH REGISTRATION IS NOT REQUIRED OR
                  (ii) AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH
                  REGISTRATION IS NOT REQUIRED.

The Holder agrees that the Corporation may place a stop transfer order with the
Corporation's transfer agent, if any, with respect to any noncomplying transfer
of the certificates representing any Warrant Shares, which stop transfer order
will be removed by the Corporation on compliance with the foregoing.

6.       Registration Rights Agreement. The Holder and any other holder of
Warrant Shares will have the registration rights provided for in that certain
Registration Rights Agreement dated of even date herewith (the "Registration
Rights Agreement"), between the Corporation and the Holder. The Corporation will
maintain copies of the Registration Rights Agreement available for inspection by
the Holder during normal business hours at its office.

7.       Anti-Dilution Adjustments. In order to prevent dilution of the rights
granted with respect to the Warrants, the Exercise Price and the number of
Warrant Shares obtainable on the exercise of a Warrant are subject to adjustment
from time to time as follows:

         7.1      Issuance of Ordinary Shares. If and whenever on or after the
                  date of this Warrant the Corporation issues or sells, or in
                  accordance with paragraph 7.2 of this Warrant is deemed to
                  have issued or sold, any Ordinary Shares for a consideration
                  per share less than the Exercise Price in effect immediately
                  prior to such time, then immediately on such issuance or sale
                  the Exercise Price will be reduced to the new Exercise Price
                  determined by dividing:

                  7.1.1    the sum of (a) the product derived by multiplying the
                           Exercise Price in effect immediately prior to such
                           issue or sale times the number of Ordinary Shares
                           Deemed Outstanding (as hereafter defined) immediately
                           prior to such issue or sale, plus (b) the
                           consideration, if any, received by the Corporation on
                           such issuance or sale, divided by

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                  7.1.2    the number of Ordinary Shares Deemed Outstanding
                           immediately after such issuance or sale.

                  On each such adjustment of the Exercise Price hereunder, the
                  number of Warrant Shares acquirable on exercise of a Warrant
                  will be adjusted to the number of shares obtained by dividing
                  the Aggregate Consideration by the Exercise Price resulting
                  from the foregoing adjustment.

         7.2      Effect on Exercise Price of Certain Events.  For purposes of
                  determining the adjusted Exercise Price under paragraph 7.1 of
                  this Warrant, the following will be applicable:

                  7.2.1    Issuance of Rights or Options. If the Corporation in
                           any manner grants, issues or sells any Options (as
                           hereafter defined) and the price per share for which
                           Ordinary Shares are issuable on the exercise of such
                           Options (or on the conversion or exchange of any
                           Convertible Securities (as hereafter defined)
                           issuable on the exercise of such Options) is less
                           than the Exercise Price in effect immediately prior
                           to the time of the grant, issuance or sale of such
                           Options, then the total maximum number of shares of
                           Ordinary Shares issuable on the exercise of such
                           Options (or on the conversion or exchange of the
                           total maximum amount of such Convertible Securities
                           issuable on the exercise of such Options) will be
                           deemed to be outstanding and to have been issued and
                           sold by the Corporation at the time of the granting
                           or sale of such Options for such price per share. For
                           purposes of this paragraph, the "price per share for
                           which Ordinary Shares are issuable on exercise of
                           such Options or on the conversion or exchange of any
                           Convertible Securities" is determined by dividing (a)
                           the total amount, if any, received or receivable by
                           the Corporation as consideration for the granting or
                           sale of such Options, plus the minimum aggregate
                           amount of additional consideration payable to the
                           Corporation on the exercise of all such Options, plus
                           in the case of such Options which relate to
                           Convertible Securities, the minimum aggregate amount
                           of additional consideration, if any, payable to the
                           Corporation on the issuance or sale of such
                           Convertible Securities and the conversion or exchange
                           thereof, by (b) the total maximum number of shares of
                           Ordinary Shares issuable on exercise of such Options
                           or on the conversion or exchange of all such
                           Convertible Securities issuable on the exercise of
                           such Options. No further adjustment of the Exercise
                           Price will be made on the actual issuance of such
                           Ordinary Shares or of such Convertible Securities on
                           the exercise of such Options or on the actual
                           issuance of Ordinary Shares as a result of the
                           conversion or exchange of such Convertible
                           Securities.

                  7.2.2    Issuance of Convertible Securities. If the
                           Corporation in any manner issues or sells any
                           Convertible Securities and the price per share for
                           which Ordinary Shares are issuable on conversion or
                           exchange thereof is less than the Exercise Price in
                           effect immediately prior to the time of such issue or
                           sale, then the maximum number of shares of Ordinary
                           Shares issuable on conversion or exchange of such
                           Convertible Securities will be deemed to be

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                           outstanding and to have been issued and sold by the
                           Corporation at the time of the issue or sale of such
                           Convertible Securities for such price per share. For
                           the purposes of this paragraph, the "price per share
                           for which Ordinary Shares are issuable on conversion
                           or exchange thereof" is determined by dividing (a)
                           the total amount received or receivable by the
                           Corporation as consideration for the issue or sale of
                           such Convertible Securities, plus the minimum
                           aggregate amount of additional consideration, if any,
                           payable to the Corporation on the conversion or
                           exchange thereof, by (b) the total maximum number of
                           shares of Ordinary Shares issuable on the conversion
                           or exchange of all such Convertible Securities. No
                           further adjustment of the Exercise Price will be made
                           on the actual issue of such Ordinary Shares on
                           conversion or exchange of such Convertible
                           Securities, and if any such issue or sale of such
                           Convertible Securities is made on exercise of any
                           Options for which adjustments of the Exercise Price
                           had been or are to be made pursuant to other
                           provisions of this paragraph 7.2, no further
                           adjustment of the Exercise Price will be made by
                           reason of such issue or sale.

                  7.2.3    Change in Option Price or Conversion Rate. If the
                           purchase price provided for in any Options, the
                           additional consideration, if any, payable on the
                           issue, conversion or exchange of any Convertible
                           Securities, or the rate at which any Convertible
                           Securities are convertible into or exchangeable for
                           Ordinary Shares changes at any time, the Exercise
                           Price in effect at the time of such change will be
                           adjusted immediately to the Exercise Price which
                           would have been in effect at such time had such
                           Options or Convertible Securities still outstanding
                           provided for such changed purchase price, additional
                           consideration or changed conversion rate, as the case
                           may be, at the time initially granted, issued or sold
                           and the number of shares of Ordinary Shares issuable
                           hereunder will be correspondingly adjusted. For
                           purposes of this paragraph 7.2, if the terms of any
                           Option or Convertible Security which was outstanding
                           as of the date of this Warrant are changed in the
                           manner described in the immediately preceding
                           sentence, then such Option or Convertible Security
                           and the Ordinary Shares deemed issuable on exercise,
                           conversion or exchange thereof will be deemed to have
                           been issued as of the date of such change.
                           Notwithstanding the foregoing no such change will at
                           any time cause the Exercise Price hereunder to be
                           increased.

                  7.2.4    Expired Options and Securities. On the expiration of
                           any Option or the termination of any right to convert
                           or exchange any Convertible Securities without the
                           exercise of such Option or right, the Exercise Price
                           then in effect and the number of shares of Ordinary
                           Shares acquirable hereunder will be adjusted
                           immediately to the Exercise Price and the number of
                           shares which would have been in effect at the time of
                           such expiration or termination had such Option or
                           Convertible Securities, to the extent outstanding
                           immediately prior to such expiration or termination,
                           never been issued. For purposes of this paragraph
                           7.2, the expiration or termination of any Option or
                           Convertible Security which was outstanding on or
                           before the date of execution of this

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                           Warrant will not cause the Exercise Price hereunder
                           to be adjusted unless, and only to the extent that, a
                           change in the terms of such Option or Convertible
                           Security caused it to be deemed to have been issued
                           after the date of this Warrant.

                  7.2.5    Calculation of Consideration Received. If any
                           Ordinary Shares, Options or Convertible Securities
                           are issued or sold or deemed to have been issued or
                           sold for cash, the consideration received therefor
                           will be deemed to be the amount received by the
                           Corporation therefor. In case any Ordinary Shares,
                           Options or Convertible Securities are issued or sold
                           for consideration other than cash, the amount of the
                           consideration other than cash received by the
                           Corporation will be the fair value of such
                           consideration, except where such consideration
                           consists of securities, in which case the amount of
                           consideration received by the Corporation will be the
                           Current Market Price thereof as of the date of
                           receipt. In case any Ordinary Shares, Options or
                           Convertible Securities are issued to the owners of
                           the non-surviving entity in connection with any
                           merger in which the Corporation is the surviving
                           entity the amount of consideration therefor will be
                           deemed to be the fair value of such portion of the
                           net assets and business of the non-surviving entity
                           as is attributable to such Ordinary Shares, Options
                           or Convertible Securities, as the case may be. The
                           fair value of any consideration other than cash or
                           securities will be determined at the reasonable
                           discretion of the board of directors of the
                           Corporation consistent with the value assigned for
                           generally accepted accounting principles for purposes
                           of financial reporting. Notice of such determination
                           will be given to the Holder. If such valuation is
                           objected to by the holders of more than twenty-five
                           percent (25%) of the Warrants within ten (10) days
                           after notice of such valuation, then the valuation
                           will be determined by a reputable investment bank of
                           national standing selected by the holders of a
                           majority of the Warrants, subject to the reasonable
                           approval of the Corporation. The Corporation will pay
                           the reasonable expense of such valuation.

                  7.2.6    Integrated Transactions. In case any Option or
                           Convertible Security is issued in connection with the
                           issue or sale of other securities of the Corporation,
                           together comprising one integrated transaction in
                           which no specific consideration is allocated to such
                           Options or Convertible Security by the parties
                           thereto, the Options or Convertible Security will be
                           deemed to have been issued for consideration
                           determined at the reasonable discretion of the board
                           of directors of the Corporation consistent with the
                           value assigned for purposes of generally accepted
                           accounting principles. Notice of such determination
                           will be given to the Holder. If such determination is
                           objected to by the holders of more than twenty-five
                           percent (25%) of the Warrants within ten (10) days
                           after notice of such determination, then the
                           determination will be made by a reputable investment
                           bank of national standing selected by the holders of
                           a majority of the Warrants, subject to the

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                           reasonable approval of the Corporation. The
                           Corporation will pay the reasonable expense of such
                           determination.

                  7.2.7    Treasury Shares. The number of shares of Ordinary
                           Shares outstanding at any given time will not include
                           Ordinary Shares owned or held by or for the account
                           of the Corporation or any subsidiary, and any
                           issuance or disposition of any Ordinary Shares so
                           owned or held will be considered an issuance or sale
                           of Ordinary Shares.

                  7.2.8    Record Date. If the Corporation takes a record of the
                           holders of Ordinary Shares for the purpose of
                           entitling them (a) to receive a dividend or other
                           distribution payable in Ordinary Shares, Options or
                           in Convertible Securities or (b) to subscribe for or
                           purchase Ordinary Shares, Options or Convertible
                           Securities, then such record date will be deemed to
                           be the date of the issue or sale of the shares of
                           Ordinary Shares deemed to have been issued or sold on
                           the declaration of such dividend or the making of
                           such other distribution or the date of the granting
                           of such right of subscription or purchase, as the
                           case may be.

         7.3      Stock Splits and Reverse Splits. In the event that the
                  Corporation at any time after the date of this Warrant
                  subdivides its outstanding shares of Ordinary Shares into a
                  greater number of shares (by stock split, stock dividend,
                  recapitalization or otherwise), the Exercise Price in effect
                  immediately prior to such subdivision will be proportionately
                  reduced and the number of Warrant Shares purchasable on the
                  exercise of the Warrants immediately prior to such subdivision
                  will be proportionately increased. Conversely, in the event
                  that the outstanding shares of Ordinary Shares at any time are
                  combined into a smaller number of shares (by reverse stock
                  split or otherwise), the Exercise Price in effect immediately
                  prior to such combination will be proportionately increased
                  and the number of Warrant Shares purchasable on the exercise
                  of the Warrants immediately prior to such combination will be
                  proportionately reduced.

         7.4      Certain Events. If any event occurs of the type contemplated
                  by the provisions of this paragraph 7 but not expressly
                  provided for by such provisions (including, without
                  limitation, the granting of stock appreciation rights, phantom
                  stock rights or other rights with equity features), then the
                  Corporation's board of directors will make an appropriate
                  adjustment in the Exercise Price and the number of shares of
                  Ordinary Shares obtainable on exercise the Warrants so as to
                  protect the rights of the holders of the Warrants.
                  Notwithstanding anything herein to the contrary, no such
                  adjustment will increase the Exercise Price or decrease the
                  number of shares of Ordinary Shares as otherwise determined
                  pursuant to this paragraph 7.

         7.5      Notice of Adjustment. Whenever the Exercise Price or the
                  number of Warrant Shares issuable on the exercise of the
                  Warrants will be adjusted as herein provided, or the rights of
                  the Holder hereof will change by reason of other events
                  specified herein, the Corporation will compute the adjusted
                  Exercise Price and the adjusted

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                  number of Warrant Shares in accordance with the provisions
                  hereof and will prepare an Officer's Certificate setting forth
                  the adjusted Exercise Price and the adjusted number of Warrant
                  Shares issuable on the exercise of the Warrants or specifying
                  the other shares of stock, securities or assets receivable as
                  a result of such change in rights, and showing in reasonable
                  detail the facts and calculations on which such adjustments or
                  other changes are based. The Corporation will promptly cause
                  to be mailed to the Holder copies of such Officer's
                  Certificate together with a notice stating that the Exercise
                  Price and the number of Warrant Shares purchasable on exercise
                  of the Warrants have been adjusted and setting forth the
                  adjusted Exercise Price and the adjusted number of Warrant
                  Shares purchasable on the exercise of the Warrants.

         7.6      Dividends. If the Corporation declares or pays a dividend on
                  Ordinary Shares payable other than in cash out of earnings or
                  earned surplus (determined in accordance with generally
                  accepted accounting principles, consistently applied), then
                  the Corporation will pay to the Holder at the time of payment
                  thereof the amount or assets which would have been paid to the
                  Holder had all of the Warrants been fully exercised
                  immediately prior to the date on which a record was taken for
                  such dividend, or, if no record is taken, the date as of which
                  the record holders of Ordinary Shares entitled to such
                  dividends are determined.

         7.7      Exceptions to Anti-Dilution Adjustment. Notwithstanding
                  anything to the contrary contained in this Warrant, there will
                  be no adjustment in the Exercise Price or the number of
                  Warrant Shares obtainable on exercise of the Warrants as a
                  consequence of the issuance by the Corporation of: (a) any
                  option, warrant, convertible security or other right to
                  acquire Ordinary Shares outstanding or in effect as of the
                  date of this Warrant and not amended after the date of this
                  Warrant; (b) any options, stock purchase rights or other
                  rights to acquire up to five million three hundred fifty-six
                  thousand eight hundred eighty-eight (5,356,888) shares of
                  Ordinary Shares of the Corporation on exercise of options
                  granted or that may be granted under the Corporation's
                  compensatory 1995, 1996 and 1997 stock option plans at an
                  exercise price no less than the current market price on the
                  date of issuance; (c) up to twelve million six hundred
                  nineteen thousand five hundred (12,619,500) of the Series A
                  Warrants to be issued in connection with the issuance of the
                  Note by the Corporation; or (d) the issuance of Ordinary
                  Shares as a result of the exercise of any of the foregoing.
                  The number of Ordinary Shares exempted from the anti-dilution
                  adjustments under foregoing clause (b) assumes that no such
                  Options have been exercised and as a result will be reduced
                  for any Options issued under the Corporation's 1995, 1996 and
                  1997 stock option plans which were exercised prior to the date
                  of this Warrant.

         7.8      Definitions. For purposes of this Warrant the following terms
                  will have the designated meanings: (a) "Ordinary Shares Deemed
                  Outstanding" means at any given time, the number of Ordinary
                  Shares actually outstanding at such time, plus the number of
                  Ordinary Shares deemed to be outstanding pursuant to paragraph
                  7 hereof regardless of whether the Options or Convertible
                  Securities are actually exercisable at such time; (b)
                  "Convertible Securities" means any stock or securities
                  (directly or

                                      -10-

<PAGE>   11

                  indirectly) convertible into or exchangeable for Ordinary
                  Shares; and (c) "Options" means any rights or options to
                  subscribe for or purchase Ordinary Shares or Convertible
                  Securities.

         7.9      Current Market Price. For purposes of this Warrant the
                  "Current Market Price" means: (a) with respect to a security
                  which is traded on an organized national exchange or market
                  for which sales price information for the last transaction is
                  updated contemporaneously, the average closing prices of the
                  security on the stock exchange or market where the security is
                  traded or the average last bid prices as quoted on the
                  applicable exchange or market for the immediately preceding
                  five (5) trading days; and (b) if the security is not traded
                  on such an organized exchange or market, the price per share
                  of the security as determined in good faith by the
                  Corporation's board of directors and set forth in a notice of
                  such valuation to the Holder. If such determination is
                  objected to by the holders of more than twenty-five percent
                  (25%) of the Warrants within ten (10) days after notice of
                  such determination, then the determination will be made by a
                  reputable investment bank of national standing selected by the
                  holders of a majority of the Warrants subject to reasonable
                  approval by the Corporation. The Corporation will pay the
                  reasonable expense of such determination.

8.       Purchase Rights. If at any time the Corporation grants, issues or sells
any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of Ordinary Shares,
then, in substitution of pre-emptive rights under the shareholder rights
agreement of even date herewith, the Holder may elect to acquire, on the terms
applicable to such purchase rights, the aggregate purchase rights which the
Holder could have acquired if the Holder had held the number of shares of
Ordinary Shares acquirable on complete exercise of the Warrants immediately
before the date on which a record is taken for the grant, issuance or sale of
such purchase rights, or, if no such record is taken, the date as of which the
record holders of Ordinary Shares are to be determined for the grant, issue or
sale of such purchase rights. The rights under this paragraph 8 will: (a) not
apply to the rights offering for the Series A Notes; and (b) terminate on the
transfer of this Warrant by the Holder to an unaffiliated third party.

9.       Reorganizations and Asset Sales. If any recapitalization,
reorganization or reclassification of the capital stock of the Corporation, or
any consolidation, merger or share exchange of the Corporation with another
person, or the sale, transfer or other disposition of all or substantially all
of its assets to another person will be effected in such a way that a holder of
Ordinary Shares of the Corporation will be entitled to receive capital stock,
securities or assets with respect to or in exchange for shares of Ordinary
Shares, then the following provisions will apply:

         9.1      Replacement Instrument. As a condition of such
                  recapitalization, reorganization, reclassification,
                  consolidation, merger, share exchange, sale, transfer or other
                  disposition (except as otherwise provided below in paragraph
                  9.2) lawful and adequate provisions in form and substance
                  reasonably satisfactory to the holders of a majority of the
                  Warrants will be made whereby the holders of Warrants will
                  thereafter have the right to purchase and receive on the terms
                  and conditions specified in this Warrant and in lieu of or
                  addition to (as the case may be) the

                                      -11-

<PAGE>   12

                  Warrant Shares immediately theretofore receivable on the
                  exercise of the rights represented hereby, such shares of
                  capital stock, securities or assets as may be issued or
                  payable with respect to or in exchange for a number of
                  outstanding shares of such Ordinary Shares equal to the number
                  of Warrant Shares immediately theretofore so receivable had
                  such recapitalization, reorganization, reclassification,
                  consolidation, merger, share exchange or sale not taken place.
                  In any such case appropriate provision (in form and substance
                  reasonably satisfactory to the holders of majority of the
                  Warrants) will be made with respect to the rights and
                  interests of the holders of the Warrants to the end that the
                  provisions hereof (including, without limitation, in the case
                  of any such consolidation, merger or sale in which the
                  successor entity or purchasing entity is other than the
                  Corporation, an immediate adjustment of the Exercise Price to
                  the value for the Ordinary Shares reflected by the terms of
                  such consolidation, merger or sale, and a corresponding
                  immediate adjustment in the number of shares of Ordinary
                  Shares acquirable and receivable on exercise of the Warrants,
                  if the value so reflected is less than the Exercise Price in
                  effect immediately prior to such consolidation, merger or
                  sale) will thereafter be applicable, as nearly as possible, in
                  relation to any shares of capital stock, securities or assets
                  thereafter deliverable on the exercise of the Warrants.

         9.2      Assumption. The Corporation will not effect any such
                  consolidation, merger, share exchange, sale, transfer or other
                  disposition unless prior to or simultaneously with the
                  consummation thereof the successor person (if other than the
                  Corporation) resulting from such consolidation, share exchange
                  or merger or the person purchasing or otherwise acquiring such
                  assets will have assumed by written instrument executed and
                  mailed or delivered to the Holder hereof at the last address
                  of the Holder appearing on the books of the Corporation, (a)
                  the obligation to deliver to the Holder such shares of capital
                  stock, securities or assets as, in accordance with the
                  foregoing provisions, the Holder may be entitled to receive,
                  and (b) all other liabilities and obligations of the
                  Corporation hereunder. The foregoing will be performed by
                  issuing a new warrant identical to the terms of this Warrant
                  revised to reflect the new parties thereto, a provision
                  indicating the replacement nature of the new warrant and any
                  modifications in Exercise Price and number of shares of stock
                  or equity interests obtainable on the exercise of the new
                  warrant as provided herein.

10.      Notices to Holder. If at any time the Corporation proposes to:

         10.1     to declare any dividend on its Ordinary Shares payable in
                  capital stock or make any dividend or other distribution
                  (including cash dividends) to the holders of the Ordinary
                  Shares;

         10.2     to offer for subscription pro rata to all of the holders of
                  the Ordinary Shares any additional shares of capital stock of
                  any class or other rights other than the Series A Notes or
                  Series A Warrants;

         10.3     to effect any capital reorganization, or reclassification of
                  the capital stock of the Corporation, or consolidation, merger
                  or share exchange of the Corporation with

                                      -12-

<PAGE>   13

         another person, or sale, transfer or other disposition of all or
         substantially all of its assets; or

         10.4     to effect a voluntary or involuntary dissolution, liquidation
                  or winding up of the Corporation,

         then, as a condition to taking any one or more of the foregoing actions
         and in addition to any other obligation under this Warrant, the
         Corporation will give the Holder: (a) at least thirty (30) days (but
         not more than 90 days) prior written notice of the date on which the
         books of the Corporation will close or a record will be taken for such
         dividend, distribution or subscription rights or for determining rights
         to vote in respect of such issuance, recapitalization, reorganization,
         reclassification, consolidation, merger, share exchange, sale,
         transfer, disposition, dissolution, liquidation or winding up, and (b)
         in the case of any such issuance, recapitalization, reorganization,
         reclassification, consolidation, merger, share exchange, sale,
         transfer, disposition, dissolution, liquidation or winding up, at least
         thirty (30) days (but not more than 90 days) prior written notice of
         the date when the same will take place. Any notice under foregoing
         clause (a) will specify the date on which the holders of Ordinary
         Shares will be entitled to any such dividend, distribution or
         subscription rights, and any notice under foregoing clause (b) will
         specify the date on which the holders of Ordinary Shares will be
         entitled to exchange their Ordinary Shares, as the case may be, for
         securities or other property deliverable on such reorganization,
         reclassification, consolidation, merger, share exchange, sale,
         transfer, disposition, dissolution, liquidation or winding up.

11.      Fractional Shares. Fractional shares will not be issued on the
         exercise of the Warrants. If the Holder would be entitled to receive a
         fractional share, the Corporation will pay to the Holder an amount
         equal to the fractional share multiplied by the Current Market Price
         for one share of Ordinary Shares less the Exercise Price.

12.      Fully Paid Stock; Taxes. The Corporation covenants and agrees that the
shares of stock represented by each and every certificate for its Ordinary
Shares to be delivered on the exercise of the Warrants will be duly authorized,
validly issued and outstanding, fully paid, nonassessable and free from all
taxes, liens, charges and encumbrances. The Corporation agrees to pay when due
and payable any and all federal and state taxes (including, without limitation,
all documentary, stamp, transfer or other transactional taxes but excluding
income taxes) which may be payable in respect of the Warrants, any Warrant
Shares or certificates therefor on the exercise of the Warrants.

13.      Notices. Any notice, demand or communication required or permitted to
be given by any provision of this Warrant will be in writing and will be deemed
to have been given and received when delivered personally or by telefacsimile to
the party designated to receive such notice, or on the date following the day
sent by overnight courier, or on the third (3rd) business day after the same is
sent by certified mail, postage and charges prepaid, directed to the following
addresses or to such other or additional addresses in the continental United
States of America as any party might designate by written notice to the other
parties:

                                      -13-

<PAGE>   14

         To the Corporation:        Mr. Larry A. Ray
                                    President
                                    Seven Seas Petroleum, Inc.
                                    Suite 1700, 5555 San Felipe
                                    Houston, Texas 77056
                                    Phone: (713) 622-8218
                                    Fax: (713) 621-9770

         To the Holder:             Mr. Aubrey K. McClendon
                                    Chief Executive Officer
                                    Chesapeake Energy Corporation
                                    6100 North Western
                                    Oklahoma City, Oklahoma 73118
                                    Phone: (405) 879-9226
                                    Facsimile: (405) 848-8858

14.      Assignment. Subject to conditions set forth herein, this Warrant and
all rights hereunder are transferable, in whole or in part, on the books of the
Corporation to be maintained for such purpose, on surrender of this Warrant at
the office of the Corporation maintained for such purpose, together with a
written assignment of this Warrant duly executed by the Holder and payment of
funds sufficient to pay any stock transfer taxes payable on the making of such
transfer. On such surrender and payment, the Corporation will, subject to
conditions set forth herein, execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in such
instrument of assignment, and this Warrant will promptly be canceled. The
conditions to transferability specified in this Warrant are intended to ensure
compliance with the provisions of the Securities Act and applicable state
securities laws in respect of the transfer of any Warrant or any Warrant Shares
and are to be strictly construed.

15.      Governing Law.  This Warrant is being delivered and is intended to be
performed in Oklahoma and will be construed and enforced in accordance with, and
the rights of the parties will be governed by, the law of such state.

16.      Agent Appointment; Jurisdiction. The Corporation hereby appoints CT
Corporation, located in Oklahoma City, Oklahoma, or such other person as may be
designated by the Corporation and approved by the Holder, in writing, as the
Corporation's agent (the "Agent") for the purpose of accepting notices and
service of process so long as the Holder owns any Warrants or the Warrant
Shares. The Corporation will not remove or terminate the Agent unless prior
thereto: (a) the Holder has consented to such removal or termination in writing;
and (b) a substitute Agent acceptable to the Holder has been appointed by the
Corporation. Any notice or service of process delivered to the Agent will be
deemed to be served on the Corporation for purposes of this Agreement. THE
CORPORATION HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE STATE OF OKLAHOMA AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON THE CORPORATION BY SERVICE ON THE AGENT IN
ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT BY ANY MEANS ALLOWED UNDER
OKLAHOMA OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT WILL BE BROUGHT AND LITIGATED EXCLUSIVELY IN THE
UNITED

                                      -14-

<PAGE>   15

STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA, TO THE EXTENT
IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE IN THE OKLAHOMA DISTRICT COURT
SITTING IN OKLAHOMA COUNTY, OKLAHOMA. THE PARTIES HERETO HEREBY WAIVE AND AGREE
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND FURTHER AGREE TO A TRANSFER OF ANY SUCH PROCEEDING TO A FEDERAL
COURT SITTING IN THE OKLAHOMA CITY, OKLAHOMA TO THE EXTENT THAT IT HAS SUBJECT
MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT IN OKLAHOMA COUNTY,
OKLAHOMA. IN FURTHERANCE THEREOF, THE CORPORATION AND THE HOLDER EACH HEREBY
ACKNOWLEDGE AND AGREE THAT IT WAS NOT INCONVENIENT FOR THEM TO NEGOTIATE AND
RECEIVE FUNDING OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN SUCH
COUNTY AND THAT IT WILL BE NEITHER INCONVENIENT NOR UNFAIR TO LITIGATE OR
OTHERWISE RESOLVE ANY DISPUTES OR CLAIMS IN A COURT SITTING IN SUCH COUNTY.

17.      Headings. The headings of the paragraphs of this Warrant are inserted
for convenience only and will not be deemed to constitute a part of this
Warrant.

18.      Lost, Stolen, Destroyed or Mutilated Warrant. In case this Warrant is
mutilated, lost, stolen or destroyed, the Corporation agrees to issue a new
Warrant of like date, tenor and denomination and deliver the same in exchange
and substitution for and on surrender and cancellation of this mutilated
Warrant, or in lieu of this Warrant being lost, stolen or destroyed, on receipt
of evidence reasonably satisfactory to the Corporation of the loss, theft or
destruction of this Warrant and on receipt of indemnity satisfactory to the
Corporation (provided that in the case of Chesapeake Energy Corporation, any
affiliate of Chesapeake Energy Corporation or an institutional investor, the
investor's own agreement will be deemed satisfactory to the Corporation).

19.      Fees and Expenses. The Corporation agrees to pay on demand all costs
and expenses (including attorney's fees and costs) incurred by the Holder
arising out of or in connection with the administration, enforcement or
preservation of any rights under this Warrant including, without limitation, the
enforcement of this Warrant by judicial proceedings, proceedings under Chapter 7
or 11 of the Bankruptcy Code or any successor statute thereto, or otherwise.

20.      Consent to Amendments; Waivers. The provisions of this Warrant may be
amended or waived at any time only by the written agreement of the Corporation
and the Holder. Any waiver, permit, consent or approval of any kind or character
on the part of the Holder of any provisions or conditions of this Warrant must
be made in writing and will be effective only to the extent specifically set
forth in such writing. No course of dealing between the Corporation and the
Holder and no delay in exercising any right, remedy, or power conferred hereby
or now or hereafter existing at law or under equity, by statute or otherwise,
will operate as a waiver of or otherwise prejudice any such right, power or
remedy.

21.      Warrant Holder Not Shareholder. This Warrant does not confer on the
Holder hereof any right to vote or to consent as a shareholder of the
Corporation, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a shareholder, prior to the exercise hereof as hereinbefore
provided.

                                      -15-

<PAGE>   16

22.      Severability. Should any part of this Warrant for any reason be
declared invalid, such decision will not affect the validity of any remaining
portion, which remaining portion will remain in full force and effect as if this
Warrant had been executed with the invalid portion thereof eliminated, and it is
hereby declared the intention of the parties hereto that they would have
executed and accepted the remaining portion of this Warrant without including
therein any such part, parts or portion which may, for any reason, be hereafter
declared invalid.

         IN WITNESS WHEREOF, this Warrant has been executed effective the 23rd
day of July, 2001.

                                      SEVEN SEAS PETROLEUM INC., a Cayman Island
                                      exempted company limited by shares

                                      By
                                        ----------------------------------------
                                        Larry A. Ray, President

                                      (the "Corporation")

                                      CHESAPEAKE ENERGY CORPORATION, an
                                      Oklahoma corporation

                                      By
                                        ----------------------------------------
                                      Name
                                          --------------------------------------
                                      Title
                                           -------------------------------------

                                      (the "Holder")

                                      -16-<PAGE>   1
                                                                    EXHIBIT 4(I)

                            MASTER WARRANT AGREEMENT

                                     BETWEEN

                            SEVEN SEAS PETROLEUM INC.

                                       AND

                       U.S. TRUST COMPANY OF TEXAS, N.A.,

                                AS WARRANT AGENT

                          DATED AS OF ___________, 2001

             WARRANTS TO PURCHASE 12,619,500 SHARES OF COMMON STOCK

<PAGE>   2

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                                Page
                                                                                                                ----

<S>                                                                                                              <C>
1.       Definitions..............................................................................................1
         1.1      Affiliate.......................................................................................1
         1.2      Agreement.......................................................................................1
         1.3      Business Day....................................................................................1
         1.4      Common Stock....................................................................................1
         1.5      Company.........................................................................................1
         1.6      Company Order...................................................................................2
         1.7      Convertible Securities..........................................................................2
         1.8      Corporate Agency Office.........................................................................2
         1.9      Current Market Price............................................................................2
         1.10     Effective Registration Statement................................................................2
         1.11     Exercise Date...................................................................................2
         1.12     Exercise Price..................................................................................2
         1.13     Exchange Act....................................................................................2
         1.14     Expiration Date.................................................................................2
         1.15     Holder..........................................................................................2
         1.16     Indenture.......................................................................................2
         1.17     Non-Surviving Combination.......................................................................2
         1.18     Note............................................................................................2
         1.19     Options.........................................................................................3
         1.20     Person..........................................................................................3
         1.21     Registrar.......................................................................................3
         1.22     Registration Statement..........................................................................3
         1.23     Rule 144........................................................................................3
         1.24     SEC.............................................................................................3
         1.25     Securities Act..................................................................................3
         1.26     Subsidiary......................................................................................3
         1.27     Warrant Agent...................................................................................3
         1.28     Warrant Certificates............................................................................3
         1.29     Warrant Register................................................................................3
         1.30     Warrant Shares..................................................................................3
         1.31     Warrants........................................................................................3
2.       Warrants.................................................................................................4
         2.1      Issuance of Warrants............................................................................4
         2.2      Form, Denomination and Date of Warrants.........................................................4
         2.3      Execution and Delivery of Warrant Certificates..................................................4
                  2.3.1    Maximum Number.........................................................................4
                  2.3.2    Execution..............................................................................4
         2.4      Transfer and Exchange...........................................................................5
                  2.4.1    Transfer of Warrants...................................................................5
                  2.4.2    Expenses...............................................................................5
                  2.4.3    Identification.........................................................................5
         2.5      Temporary Securities............................................................................5
</Table>

                                      -i-

<PAGE>   3

<Table>
<S>                                                                                                              <C>
3.       Exercise and Expiration of Warrants......................................................................6
         3.1      Exercise of Warrants............................................................................6
         3.2      Expiration of Warrants..........................................................................6
         3.3      Method of Exercise..............................................................................6
         3.4      Partial Exercise................................................................................7
         3.5      Issuance of Warrant Shares......................................................................7
         3.6      Time of Exercise................................................................................7
         3.7      Application of Funds Upon Exercise of Warrants..................................................7
         3.8      Payment of Taxes................................................................................7
         3.9      Surrender of Certificates.......................................................................8
         3.10     Shares Issuable.................................................................................8
4.       Registration Rights......................................................................................8
         4.1      Registration Procedures.........................................................................8
         4.2      Suspension of Exercise..........................................................................9
5.       Anti-Dilution Adjustments................................................................................9
         5.1      Issuance of Common Stock........................................................................9
         5.2      Effect on Exercise Price of Certain Events.....................................................10
                  5.2.1    Issuance of Rights or Options.........................................................10
                  5.2.2    Issuance of Convertible Securities....................................................10
                  5.2.3    Change in Option Price or Conversion Rate.............................................11
                  5.2.4    Expired Options and Unexercised Convertible Securities................................11
                  5.2.5    Calculation of Consideration Received.................................................11
                  5.2.6    Integrated Transactions...............................................................12
                  5.2.7    Treasury Shares.......................................................................12
                  5.2.8    Record Date...........................................................................12
         5.3      Stock Splits and Reverse Splits................................................................12
         5.4      Reorganizations and Asset Sales................................................................12
                  5.4.1    Reorganization or Reclassification....................................................13
                  5.4.2    Consolidation; Merger, Etc. ..........................................................13
         5.5      Certain Events.................................................................................13
         5.6      Notice of Adjustment...........................................................................13
         5.7      Notices to Holders.............................................................................14
         5.8      Exceptions to Anti-Dilution Adjustment.........................................................14
6.       Loss or Mutilation......................................................................................15
7.       Capitalization..........................................................................................15
8.       Reservation and Authorization of Warrant Shares.........................................................16
9.       Warrant Transfer Books..................................................................................16
10.      Warrant Holders.........................................................................................17
         10.1     Voting or Dividend Rights......................................................................17
         10.2     Rights of Action...............................................................................17
         10.3     Treatment of Holders...........................................................................17
         10.4     Communications to Holders......................................................................17
11.      Warrant Agent...........................................................................................18
         11.1     Nature of Duties and Responsibilities Assumed..................................................18
         11.2     Right to Consult Counsel.......................................................................19
         11.3     Compensation, Reimbursement and Indemnification................................................19
</Table>

                                      -ii-

<PAGE>   4

<Table>
<S>                                                                                                              <C>
         11.4     Warrant Agent May Hold Company Securities......................................................19
         11.5     Resignation and Removal; Appointment of Successor..............................................20
         11.6     Appointment of Countersigning Agent............................................................20
12.      Miscellaneous...........................................................................................21
         12.1     Notices Generally..............................................................................21
         12.2     APPLICABLE LAW.................................................................................22
         12.3     Persons Benefitting............................................................................22
         12.4     Counterparts...................................................................................22
         12.5     Amendments.....................................................................................22
         12.6     Inspection.....................................................................................23
         12.7     Entire Agreement...............................................................................23
         12.8     Headings.......................................................................................23

EXHIBITS

Form of Warrant Certificate.....................................................................................A-1
</Table>

                                     -iii-

<PAGE>   5

                            MASTER WARRANT AGREEMENT

                  THIS MASTER WARRANT AGREEMENT is entered into ___________,
2001, between SEVEN SEAS PETROLEUM INC., a Cayman Islands exempted company
limited by shares (the "Company"), and U.S. TRUST COMPANY OF TEXAS, N.A. (the
"Warrant Agent").

                                    RECITALS:

         A. The Company is offering the Company's 12% Series A Senior Secured
Notes due 2004 (the "Notes") in the aggregate principal amount of Twenty-Two
Million Five Hundred Thousand Dollars ($22,500,000.00) pursuant to a rights
offering to the Company's shareholders and others.

         B. The Company proposes to issue with the Notes, Common Stock Purchase
Warrants (the "Warrants") to purchase Twelve Million Six Hundred Nineteen
Thousand Five Hundred (19,619,500) of the Company's ordinary shares, par value
$0.001, pursuant to this Agreement.

         C. The Company desires to retain the Warrant Agent to act on behalf of
the Company and the Warrant Agent is willing to act on behalf of the Company in
connection with the issuance of the Warrants and the other matters provided
herein.

                  NOW, THEREFORE, in consideration of the mutual agreements set
forth herein the parties agree as follows:

         1. Definitions. Wherever used in this Agreement the following terms
will have the meanings indicated:

                  1.1 Affiliate. As to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control of such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                  1.2 Agreement. This Warrant Agreement, as the same may be
amended, modified or supplemented from time to time.

                  1.3 Business Day. A day which in New York, New York, is
neither a legal holiday nor a day on which banking institutions are authorized
by law or regulation to close.

                  1.4 Common Stock. The Company's ordinary shares, par value
$0.001 per share.

                  1.5 Company. Seven Seas Petroleum Inc. and its successors and
assigns.

<PAGE>   6

                  1.6 Company Order. A written request or order signed in the
name of the Company by an authorized officer and delivered to the Warrant Agent.

                  1.7 Convertible Securities. Any stock or securities (directly
or indirectly) convertible into or exchangeable for Common Stock.

                  1.8 Corporate Agency Office. The offices maintained by the
Warrant Agent and identified in accordance with paragraph 9 of this Agreement.

                  1.9 Current Market Price. With respect to any security: (a) if
the security is traded on an organized exchange or market for which sales price
information is updated, the average closing price of the security on the stock
exchange or market where the security is traded or the average last bid prices
as quoted on the applicable exchange or market for the immediately preceding
five (5) trading days; and (b) if the security is not traded on an organized
exchange or market, the price per share of the security as determined in good
faith by the Company's Board of Directors. If such valuation is objected to by
the Holders of over forty percent (40%) of the Warrants within ten (10) days
after notice of such valuation, then the valuation will be made by a reputable
investment bank of national standing selected by the Company, the expense of
which will be paid by the Company.

                  1.10 Effective Registration Statement. A registration
statement filed by the Company which has become effective under the Securities
Act.

                  1.11 Exercise Date. The date the Warrants first become
exercisable, which is the date the Registration Statement becomes effective.

                  1.12 Exercise Price. The purchase price per Warrant Share
payable on exercise of a warrant. The initial exercise price is $1.782995, and
is subject to adjustment as provided in paragraph 5 of this Agreement.

                  1.13 Exchange Act. The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

                  1.14 Expiration Date. June 30, 2008.

                  1.15 Holder. Any Person in whose name any Warrant Certificate
is registered upon the Warrant Register.

                  1.16 Indenture. The Indenture dated as of July 23, 2001, by
and among the Company and U.S. Trust Company of Texas, N.A.

                  1.17 Non-Surviving Combination. Any merger, consolidation or
other business combination by the Company with one or more other entities in a
transaction in which the Company is not the surviving entity or becomes a
wholly-owned subsidiary of another entity.

                  1.18 Note. A 12% Series A Senior Secured Note due 2004 issued
pursuant to the Indenture.

                                      -2-
<PAGE>   7

                  1.19 Options. Any rights or options to subscribe for or
purchase Common Stock or Convertible Securities.

                  1.20 Person. Any individual, corporation (including a business
trust), partnership, joint venture, association, joint-stock company, trust,
estate, limited liability company, unincorporated association, unincorporated
organization, government or agency or political subdivision thereof or any other
entity.

                  1.21 Registrar. U.S. Trust Company of Texas, N.A., and its
successors and assigns.

                  1.22 Registration Statement. A Registration Statement as
contemplated by paragraph 4 of this Agreement.

                  1.23 Rule 144. Rule 144 promulgated under the Securities Act
or any successor rule.

                  1.24 SEC. The Securities and Exchange Commission or any
successor agency thereto.

                  1.25 Securities Act. The Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  1.26 Subsidiary. With respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of equity interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the Subsidiaries of such Person or a combination thereof.

                  1.27 Warrant Agent. The Person named in the preamble hereof or
the successor or successors of such Person appointed in accordance with the
terms hereof.

                  1.28 Warrant Certificates. Those certain warrant certificates
evidencing the Warrants, substantially in the form of Exhibit "A" attached as a
part hereof.

                  1.29 Warrant Register. The warrant register as contemplated by
paragraph 9 of this Agreement.

                  1.30 Warrant Shares. The Common Stock issuable upon exercise
of the Warrants, the number of shares of which is subject to adjustment from
time to time in accordance with paragraph 5.

                  1.31 Warrants. Those warrants issued hereunder to purchase
initially up to an aggregate of 19,619,500 Warrant Shares at the Exercise Price,
subject to adjustment pursuant to paragraph 5 of this Agreement.

                                      -3-
<PAGE>   8

         2. Warrants. The Warrants will be issued as follows:

                  2.1 Issuance of Warrants. Contemporaneously with the issuance
of each Note, the Warrant Agent will issue to the registered owner of the Note
one or more Warrant Certificates evidencing the requisite number of Warrants as
set forth on a list of registered holders of Notes furnished to the Warrant
Agent by the Registrar pursuant to Section 7.12 of the Indenture. Each Warrant
Certificate issued pursuant to this paragraph 2.1 will evidence the number of
Warrants equal to the following: (a) 56.05396; multiplied by (b) the number
obtained by (i) dividing the initial principal balance of the Notes specified as
held by the holder as set forth in the above list by (ii) One Hundred Dollars
($100.00), and (c) rounded to the nearest whole number. Subject to the terms of
this Agreement and the Warrant Certificate, each Warrant evidenced by the
Warrant Certificate will represent the right to purchase one Warrant Share,
subject to adjustment as provided in paragraph 5 of this Agreement.

                  2.2 Form, Denomination and Date of Warrants. Each of the
Warrant Certificates: (a) will be issued in substantially the form of Exhibit
"A" attached as a part hereof; (b) will be numbered, lettered or otherwise
distinguished in such manner as the Company may determine with the approval of
the Warrant Agent; and (c) will be dated as of the date of the authentication of
the Warrant Certificate. To the extent not inconsistent with the terms of this
Agreement, any of the Warrant Certificates may be issued with appropriate
insertions, omissions, substitutions, variations and legends as may be required
to comply with any state or federal law, rule or regulation, the rules of any
securities market in which the Warrants are admitted to trading or to otherwise
conform to general usage. All Warrant Certificates and the underlying Warrants
will be otherwise substantially identical except as to denomination and as
otherwise provided in this Agreement.

                  2.3 Execution and Delivery of Warrant Certificates. The
Warrant Certificates will be executed and delivered as follows:

                           2.3.1 Maximum Number. Warrant Certificates evidencing
Warrants which may be countersigned and delivered under this Agreement are
limited to: (a) Warrant Certificates evidencing Twelve Million Six Hundred
Nineteen Thousand Five Hundred (12,619,500) Warrants as adjusted in accordance
with paragraph 5 of this Agreement; and (b) additional Warrant Certificates
countersigned and delivered on registration, transfer, exchange or in lieu of
previously countersigned Warrant Certificates pursuant to this Agreement.

                           2.3.2 Execution. The Warrant Certificates will be
executed on behalf of the Company by an authorized officer of the Company,
either manually or by facsimile signature printed thereon. In addition to the
foregoing, the Warrant Certificates will be countersigned by the Warrant Agent
and will not be valid for any purpose unless so countersigned. After the date of
this Agreement, Warrant Certificates evidencing Warrants may be executed by the
Company and delivered to the Warrant Agent for countersignature. Thereafter on
receipt of a Company Order or at the direction of the Company as set forth in
this Agreement, the Warrant Agent will countersign and deliver such Warrant
Certificates to the Company for delivery or deliver such Warrant Certificate to
the Holder as directed by the Company. The Warrant Agent is further hereby
authorized to countersign and deliver Warrant Certificates as required by this
paragraph 2.3 or by paragraphs 2.2, 3.4, 5 or 9 of this Agreement. If an officer
of the Company whose

                                      -4-
<PAGE>   9

signature is placed on a Warrant Certificates ceases to be an officer before
countersignature and issuance of the Warrant Certificate by the Warrant Agent,
such Warrant Certificate may be countersigned by the Warrant Agent and delivered
with the same force and effect as though such Person were an officer of the
Company on the date of issuance of such Warrant Certificate. In addition at any
time after the date of this Agreement, Warrant Certificates may be signed on
behalf of the Company by an authorized officer as of the actual date of
execution of such Warrant Certificate regardless of whether such Person was an
officer of the Company on the date of the execution of this Agreement.

                  2.4 Transfer and Exchange. The Warrants will be transferable
as follows:

                           2.4.1 Transfer of Warrants. The Holder of a Warrant
may transfer all or part of such Warrant, subject to and in compliance with the
restrictions on transfer set forth in this Agreement and the applicable Warrant
Certificate. On receipt by the Warrant Agent at the Corporate Agency Office of:
(a) the Warrant Certificate, duly endorsed as provided herein for the number of
Warrants to be transferred; (b) written instructions from such Holder directing
the Warrant Agent to authenticate and deliver one or more Warrant Certificates
for the number of Warrants to be transferred; and (c) the identity, address and
tax identification number of each transferee, then the Warrant Agent will cancel
or cause to be canceled such Warrant Certificate and, concurrently therewith,
the Company will execute, and the Warrant Agent will authenticate and deliver,
one or more Warrant Certificates in accordance with the instructions referred to
above.

                           2.4.2 Expenses. No charge will be made to a Holder
for the transfer or exchange of Warrants hereunder. Notwithstanding the
foregoing, the Company may require payment of a sum sufficient to cover any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange of the Warrants.

                           2.4.3 Identification. The Warrant Agent will use
CUSIP numbers in notices of repurchase or exchange as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness or accuracy of such numbers either as printed on the Warrants or as
contained in any notice of repurchase or exchange and that reliance may be
placed only on the other identification numbers printed on the Warrants. The
Company will promptly notify the Warrant Agent of any change in the CUSIP
numbers.

                  2.5 Temporary Securities. Pending the preparation of
definitive Warrants, the Company may execute and the Warrant Agent will
authenticate and deliver temporary Warrants (printed, lithographed, typewritten
or otherwise reproduced, in each case in form satisfactory to the Warrant
Agent). Temporary Warrants will be issuable as registered Warrants, of any
authorized denomination, and substantially in the form of the definitive
Warrants but with such omissions, insertions and variations as may be
appropriate for temporary Warrants, all as may be determined by the Company with
the concurrence of the Warrant Agent. Temporary Warrants may contain such
references to provisions of this Agreement as is appropriate. Every temporary
Warrant will be executed by the Company and be authenticated by the Warrant
Agent upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Warrants. Without unreasonable delay, the Company
will execute and furnish definitive Warrants and thereupon temporary Warrants
may be surrendered in exchange therefor without

                                      -5-
<PAGE>   10

charge at the office of the Warrant Agent in accordance with paragraph 9 of this
Agreement. Until so exchanged, the temporary Warrants will be entitled to the
same benefits under this Agreement as definitive Warrants.

         3. Exercise and Expiration of Warrants. When validly issued and subject
to the provisions of the Warrant Certificate and this Agreement, each Warrant
Certificate will entitle the Holder thereof to acquire from the Company, subject
to the terms hereof (including Exhibit A hereto), for each Warrant evidenced
thereby, one Warrant Share at the Exercise Price, subject to the anti-dilution
adjustments under this Agreement. The Exercise Price and the number of Warrant
Shares to be received on exercise of the Warrants will be adjusted from time to
time as required by paragraph 5 of this Agreement.

                  3.1 Exercise of Warrants. Subject to the terms and conditions
of the Warrant Certificate and this Agreement, and subject to the Registration
Statement being effective and exercise not otherwise being suspended as provided
in paragraph 4 hereof, the Holder of a Warrant Certificate may on any Business
Day from and after the Exercise Date through and including the Expiration Date
exercise all or part of a whole number of the Warrants evidenced by the Warrant
Certificates for the Warrant Shares purchasable thereunder.

                  3.2 Expiration of Warrants. Unless sooner terminated as herein
provided, the Warrants will terminate and become void as of 5:00 p.m., New York
time on the Expiration Date. After Warrants representing fifty-one percent (51%)
or more of the number of Warrants originally issued pursuant to this Agreement
have been exercised, at any time that the closing price of the Company's Common
Stock on the principal stock exchange or market on which the Company's Common
Stock is traded has been not lower than $3.00 for more than twenty (20)
consecutive trading days, the Company may give the remaining Holders written
notice that they must exercise their Warrants within thirty (30) days after the
date of such notice or the Warrants will terminate and become void as of 5:00
p.m., New York time on the thirty-first (31st) day after the date of such
notice. In that event, the Holder may exercise all or any of the Warrants by
delivering to the Warrant Agent at the Corporate Agency Office duly executed
written notice of such Holder's election to exercise Warrants in the form set
forth on the reverse of, or attached to, the Warrant Certificate specifying the
number of Warrants to be exercised and the number of Warrant Shares to be
surrendered in payment of the aggregate Exercise Price for the Warrant Shares to
be delivered to the Holder; and (b) the Warrant Certificate evidencing such
Warrants. For purposes of this paragraph 3.2, each Warrant which is being
surrendered in payment of the aggregate Exercise Price will be attributed a
value equal to: (x) the Current Market Price per share of Common Stock less (y)
the current Exercise Price.

                  3.3 Method of Exercise. Subject to the terms of this
Agreement, including paragraph 4.2 hereof, the Holder may exercise all or any of
the Warrants by delivering to the Warrant Agent at the Corporate Agency Office:
(a) duly executed written notice of such Holder's election to exercise Warrants
in the form set forth on the reverse of, or attached to, the Warrant Certificate
specifying the number of Warrant Shares to be exercised; (b) the Warrant
Certificate evidencing such Warrants; and (c) an amount equal to the aggregate
Exercise Price for the Warrants being exercised by money order, certified check,
bank draft drawn upon a United States bank or wire transfer, rounded to the
nearest tenth of a cent.

                                      -6-
<PAGE>   11

                  3.4 Partial Exercise. If fewer than all the Warrants
represented by a Warrant Certificate are exercised, such Warrant Certificate
will be surrendered and a new Warrant Certificate of the same tenor and for the
number of Warrants which were not exercised will be executed by the Company. The
Warrant Agent will countersign the new Warrant Certificate registered in such
name or names as may be directed in writing by the Holder and deliver the new
Warrant Certificate to the Person or Persons in whose name such new Warrant
Certificate is registered. The Company will supply the Warrant Agent with
Warrant Certificates duly executed on behalf of the Company for such purpose.

                  3.5 Issuance of Warrant Shares. On surrender of a Warrant
Certificate evidencing Warrants in conformity with the foregoing provisions and
payment of the Exercise Price in respect of the exercise of one or more Warrants
evidenced thereby the Warrant Agent will: (a) deliver to the Company the notice
of exercise received pursuant to paragraph 3.3 of this Agreement; (b) deliver or
deposit all funds received as instructed by the Company; and (c) advise the
Company by telephone at the end of such day of the number of Warrants exercised
and the amount of funds received. On such exercise the Company will as promptly
as practicable, and in any event within five (5) Business Days after receipt by
the Company of written notice of exercise, execute or cause to be executed and
delivered or cause to be delivered to the Holder: (x) a stock certificate or
certificates representing the aggregate number of Warrant Shares purchased
pursuant to such exercise; (y) any new Warrant Certificate under paragraph 3.4
of this Agreement; and (z) any cash payment in lieu of any fractional share(s).
The certificate or certificates so delivered will be, to the extent possible, in
such denomination or denominations as such Holder requests in such notice of
exercise and will be registered or otherwise placed in the name of, and
delivered to, the Holder or such other Person as designated by the Holder in
such notice.

                  3.6 Time of Exercise. A Warrant will be deemed to have been
exercised immediately prior to the close of business on the date on which all
requirements set forth in paragraph 3.3 of this Agreement applicable to such
exercise have been satisfied. Certificate(s) evidencing the Warrant Shares
issued on the exercise of such Warrant will be deemed to have been issued and,
for all purposes of this Agreement, the recipient will be deemed to be and
entitled to all rights of the holder of record of such Warrant Shares as of such
time.

                  3.7 Application of Funds Upon Exercise of Warrants. Any funds
delivered to the Warrant Agent on exercise of any Warrants will be held by the
Warrant Agent in trust for the Company. The Warrant Agent will promptly deliver
and pay to or on the written order of the Company all funds received by it upon
the exercise of any Warrants by bank wire transfer to an account designated by
the Company or as the Warrant Agent otherwise may be directed in writing by the
Company.

                  3.8 Payment of Taxes. The Company will pay any and all taxes
(other than income taxes) and other charges that may be payable in respect of
the issue or delivery of Warrant Shares on exercise of Warrants. The Company
will not be required to pay any tax or other charge imposed as a result of a
transfer in connection with the issue and delivery of any certificates for
Warrant Shares or payment of cash to any Person other than the registered Holder
of the Warrant Certificate surrendered in the exercise of a Warrant. The Warrant
Agent and the Company will not be required to issue or deliver any certificate
or pay any cash until: (a) such

                                      -7-
<PAGE>   12

transfer tax or charge, if any, has been paid or an amount sufficient for the
payment thereof has been delivered to the Warrant Agent or the Company; or (b)
it has been established to the Company's satisfaction that any such transfer tax
or other charge that is or may become due has been paid.

                  3.9 Surrender of Certificates. Any Warrant Certificate
surrendered for exercise will be delivered to the Warrant Agent. All Warrant
Certificates surrendered to the Warrant Agent will be promptly canceled and the
Warrant Agent will deliver a certificate of destruction to the Company, unless
the Company requests otherwise.

                  3.10 Shares Issuable. The number of Warrant Shares issuable
upon exercise of Warrants will be the number of Warrant Shares into which such
Warrants are then exercisable. The number of Warrant Shares "into which each
Warrant is exercisable" initially will be one share, subject to adjustment as
provided in paragraph 5 of this Agreement.

         4. Registration Rights. The Company shall prepare and file with the SEC
a Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Warrant Shares. The Registration
Statement shall be on Form S-3 or another appropriate form permitting
registration of the Warrant Shares for issuance by the Company upon exercise of
the Warrants.

                  4.1 Registration Procedures In connection with the filing of
the Registration Statement, the Company shall:

         (a) Use its best efforts to cause the Registration Statement to become
effective as soon as reasonably practicable after the Warrants are issued and to
keep such Registration Statement continuously effective under the Securities Act
until the earlier of (i) the Expiration Date, or (ii) the date on which all of
the Warrant Shares have been issued;

         (b) Furnish to Holders copies of the prospectus included in such
Registration Statement (including each prospectus supplement), in conformity
with the requirements of the Securities Act.

         (c) Use its reasonable best efforts to register or qualify the Warrant
Shares covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions as determined by the Company's counsel to be
necessary or required, and do such other acts and things as may be required to
enable Holders to exercise the Warrants in the jurisdictions for exercise of the
Warrants owned by Holders.

         (d) Otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC.

         (e) Immediately notify the Holders at any time upon the Company
becoming aware that the prospectus included in the Registration Statement, or as
such prospectus may be amended or supplemented, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading in
light of the circumstances then existing, and promptly prepare and furnish to
Security Holders copies of an amended or supplemental prospectus to the Holders
as may be

                                      -8-
<PAGE>   13

necessary so that, as thereafter delivered upon exercise of the Warrants, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading in the light of the circumstances
then existing. In the event the Company shall give any such notice, the Holders
shall no longer be permitted to exercise the Warrants, and the Exercise Period
shall be extended by the number of days during the period from and including the
date of the giving of such notice to and including the date when Holders shall
have received the copies of such supplemented or amended prospectus.

         (f) Use its best efforts to list such Warrant Shares on the primary
securities exchange or other trading market on which the Common Stock is then
listed, if such Warrant Shares are not already so listed and if such listing is
then permitted under the rules of such exchange or other trading market, and to
provide a transfer agent and registrar for such Warrant Shares covered by such
Registration Statement not later than the effective date of such Registration
Statement.

                  4.2 Suspension of Exercise. In the event that, in the judgment
of the Company, it is advisable to suspend exercise of the Warrants by Holders
because the Company is conducting negotiations for a material business
combination or due to pending material developments or events that have not yet
been publicly disclosed and as to which the Company believes public disclosure
will be prejudicial to the Company, the Company shall deliver notice to the
Holders that exercise has been suspended and, thereafter, the Holders shall not
exercise the Warrants, and the Exercise Period shall cease to run or will not
commence, until Holders have received copies of the supplemented or amended
prospectus provided for in paragraph 4.1(e), or until it is advised in writing
by the Company that the prospectus may be used, and have received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in such prospectus; provided that the duration of such suspension
shall not exceed 90 days. The Company will use its best efforts to ensure that
the use of the prospectus may be resumed, and the Exercise Period will commence,
as promptly as is practicable and, in any event, promptly after the earlier of
(x) public disclosure of such material business combination or pending material
development or event sufficient to permit an Affiliate of the Company to sell
Common Stock or (y) in the judgment of the Company, public disclosure of such
material business combination or material development or event would not be
prejudicial to the Company.

         5. Anti-Dilution Adjustments. In order to prevent dilution of the
rights granted with respect to the Warrants, the Exercise Price is subject to
adjustment from time to time as provided in this paragraph 5, and the number of
Warrant Shares obtainable on the exercise of a Warrant will be subject to
adjustment from time to time as provided in this paragraph 5.

                  5.1 Issuance of Common Stock. If and whenever on or after the
date of this Agreement the Company issues or sells, or in accordance with
paragraph 5.2 of this Agreement is deemed to have issued or sold, any shares of
Common Stock for a consideration per share less than the Exercise Price in
effect immediately prior to such time, then immediately upon such issue or sale
the Exercise Price will be reduced to the new Exercise Price determined by
dividing:

                                      -9-
<PAGE>   14

                           (a) the sum of (i) the product derived by multiplying
the Exercise Price in effect immediately prior to such issue or sale times the
number of shares of Common Stock deemed outstanding immediately prior to such
issue or sale, plus (ii) the consideration, if any, received by the Company upon
such issue or sale, by

                           (b) the number of shares of Common Stock deemed
outstanding immediately after such issue or sale.

Upon each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable on exercise of a Warrant will be adjusted to the number of
shares determined by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of Warrant Shares acquirable on exercise of a
Warrant immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment.

                  5.2 Effect on Exercise Price of Certain Events. For purposes
of determining the adjusted Exercise Price under paragraph 5.1, the following
will be applicable:

                           5.2.1 Issuance of Rights or Options. If the Company
in any manner grants or sells any Options and the price per share for which
Common Stock is issuable on the exercise of such Options, or on conversion or
exchange of any Convertible Securities issuable on the exercise of such Options,
is less than the Exercise Price in effect immediately prior to the time of the
granting or sale of such Options, then the total maximum number of shares of
Common Stock issuable on the exercise of such Options, or on conversion or
exchange of the total maximum amount of such Convertible Securities issuable on
the exercise of such Options, will be deemed to be outstanding and to have been
issued and sold by the Company at the time of the granting or sale of such
Options for such price per share. For purposes of this paragraph, the "price per
share for which Common Stock is issuable on exercise of such Options or upon
conversion or exchange of such Convertible Securities" is determined by dividing
(a) the total amount, if any, received or receivable by the Company as
consideration for the granting or sale of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company on the
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company on the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (b) the total
maximum number of shares of Common Stock issuable on exercise of such Options or
on the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Exercise Price will
be made upon the actual issuance of such Common Stock or of such Convertible
Securities on the exercise of such Options or upon the actual issuance of Common
Stock on conversion or exchange of such Convertible Securities.

                           5.2.2 Issuance of Convertible Securities. If the
Company in any manner issues or sells any Convertible Securities and the price
per share for which Common Stock is issuable on conversion or exchange thereof
is less than the Exercise Price in effect immediately prior to the time of such
issue or sale, then the maximum number of shares of Common Stock issuable on
conversion or exchange of such Convertible Securities will be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issue or sale of such Convertible Securities for such price per share. For the
purposes of this paragraph, the

                                      -10-
<PAGE>   15

"price per share for which Common Stock is issuable on conversion or exchange
thereof" is determined by dividing (a) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company on the conversion or exchange thereof, by (b) the
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment of the
Exercise Price will be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made on exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to other
provisions of this paragraph 5.2, no further adjustment of the Exercise Price
will be made by reason of such issue or sale.

                           5.2.3 Change in Option Price or Conversion Rate. If
the purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock changes at any time, the Exercise Price in
effect at the time of such change will be adjusted immediately to the Exercise
Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold and the number of shares of Common
Stock issuable hereunder will be correspondingly adjusted. For purposes of this
paragraph 5.2, if the terms of any Option or Convertible Security which was
outstanding as of the date of this Agreement are changed in the manner described
in the immediately preceding sentence, then such Option or Convertible Security
and the Common Stock deemed issuable upon exercise, conversion or exchange
thereof will be deemed to have been issued as of the date of such change.
Notwithstanding the foregoing no such change will at any time cause the Exercise
Price hereunder to be increased.

                           5.2.4 Expired Options and Unexercised Convertible
Securities. On the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect and the number of shares of
Common Stock acquirable hereunder will be adjusted immediately to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. For purposes of this paragraph 5.2, the expiration or termination
of any Option or Convertible Security which was outstanding as of the date of
issuance of this Agreement will not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of this Agreement.

                           5.2.5 Calculation of Consideration Received. If any
Common Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor will be
deemed to be the amount received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for consideration
other than cash, the amount of the consideration other than cash received by the
Company will be the fair value of such consideration, except where such
consideration

                                      -11-
<PAGE>   16

consists of securities, in which case the amount of consideration received by
the Company will be the Current Market Price thereof as of the date of receipt.
In case any Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined at the reasonable discretion of
the board of directors of the Company consistent with the value assigned for
Generally Accepted Accounting Principles purposes. Notice of such determination
will be given to the Warrant Agent and the Holders.

                           5.2.6 Integrated Transactions. In case any Option or
Convertible Security is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Options or Convertible
Security by the parties thereto, the Options or Convertible Security will be
deemed to have been issued for consideration determined at the reasonable
discretion of the board of directors of the Company consistent with the value
assigned for purposes of Generally Accepted Accounting Principles. Notice of
such determination will be given to the Warrant Agent and the Holders.

                           5.2.7 Treasury Shares. The number of shares of Common
Stock outstanding at any given time does not include shares of Common Stock
owned or held by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held will be considered an issue or sale
of Common Stock.

                           5.2.8 Record Date. If the Company takes a record of
the holders of Common Stock for the purpose of entitling them (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold on the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

                  5.3 Stock Splits and Reverse Splits. In the event that the
Company at any time after the date of this Agreement subdivides its outstanding
shares of Common Stock into a greater number of shares (by stock split, stock
dividend, recapitalization or otherwise), the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the
number of Warrant Shares purchasable pursuant to this Warrant immediately prior
to such subdivision will be proportionately increased. Conversely, in the event
that the outstanding shares of Common Stock at any time are combined into a
smaller number of shares (by reverse stock split or otherwise), the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares purchasable upon the exercise of this
Warrant immediately prior to such combination will be proportionately reduced.

                  5.4 Reorganizations and Asset Sales. If any capital
reorganization or reclassification of the capital stock of the Company, or any
consolidation, merger or share exchange of the Company with another Person, or
the sale, transfer or other disposition of all or

                                      -12-
<PAGE>   17

substantially all of its assets to another Person will be effected in such a way
that a holder of Common Stock of the Company will be entitled to receive capital
stock, securities or assets with respect to or in exchange for shares of Common
Stock, then the following provisions will apply:

                           5.4.1 Reorganization or Reclassification. If any
capital reorganization or reclassification of the capital stock of the Company
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock or securities or assets of the Company with respect to or in
exchange for Common Stock, then the Holder of each Warrant then outstanding
shall have the right upon exercise to receive the kind and amount of stock,
securities or asserts receivable upon reorganization or reclassification by a
holder of the number of shares of Common Stock which such Holder would have
received had the Holder exercised the Warrant immediately prior to such
reorganization or reclassification.

                           5.4.2 Consolidation; Merger, Etc. Immediately prior
to the effective time of any consolidation, merger, share exchange, sale,
transfer or other disposition with another Person, the Warrants shall be
cancelled and each holder of Warrants will thereafter have the right to receive,
in lieu of the Warrant Shares immediately theretofore receivable upon the
exercise of the rights represented hereby, such shares of capital stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the number of
Warrant Shares which the Holder would have received had the Holder made a
cashless exercise by surrendering a number of Warrants with an attributed value
equal to (x) the Current Market Price per share of Common Stock less (y) the
current Exercise Price such that the aggregate attributed value of the
surrendered Warrants is equal to the Exercise Price of the remaining Warrants.

                  5.5 Certain Events. If any event occurs of the type
contemplated by the provisions of this paragraph 5 but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's board of directors will make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of the Warrants so as to protect the rights of the holders of the Warrants. No
such adjustment will increase the Exercise Price or decrease the number of
shares of Common Stock obtainable as otherwise determined pursuant to this
paragraph 5.

                  5.6 Notice of Adjustment. Whenever the Exercise Price or the
number of Warrant Shares issuable upon the exercise of the Warrants will be
adjusted as herein provided, or the rights of the holder hereof will change by
reason of other events specified herein, the Company will compute the adjusted
Exercise Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and will prepare an officer's certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts' and calculations upon which such adjustments or
other changes are based. The Company will promptly cause to be mailed to each
Holder copies of such officer's certificate together with a notice stating that
the Exercise Price and the number of Warrant Shares purchasable upon exercise of
the Warrants have been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of Warrant Shares purchasable upon the exercise of the
Warrants.

                                      -13-
<PAGE>   18

                  5.7 Notices to Holders. In case at any time the Company
proposes:

                           5.7.1 to declare any dividend upon its Common Stock
payable in capital stock or make any dividend or other distribution (including
cash dividends) to the holders of its Common Stock;

                           5.7.2 to offer for subscription pro rata to all of
the holders of its Common Stock any additional shares of capital stock of any
class or other rights;

                           5.7.3 to effect any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation, merger
or share exchange of the Company with another Person, or sale, transfer or other
disposition of all or substantially all of its assets; or

                           5.7.4 to effect a voluntary or involuntary
dissolution, liquidation or winding up of the Company, then, in any one or more
of such cases, the Company will give the holder hereof (a) at least 20 days'
(but not more than 90 days') prior written notice of the date on which the books
of the Company will close or a record will be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of such issuance, recapitalization, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
recapitalization, reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
at least 20 days' (but not more than 90 days') prior written notice of the date
when the same will take place. Such notice in accordance with the foregoing
clause (a) will also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock will be
entitled thereto, and such notice in accordance with the foregoing clause (b)
will also specify the date on which the holders of Common Stock will be entitled
to exchange their Common Stock, as the case may be, for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, share exchange, sale, transfer, disposition, dissolution, liquidation or
winding up, as the case may be.

                  5.8 Exceptions to Anti-Dilution Adjustment. Notwithstanding
anything to the contrary contained in this Agreement, there will be no
adjustment in the Exercise Price or the number of Warrant Shares obtainable upon
exercise of the Warrants as a consequence of the issuance by the Company of (a)
any Option, warrant, Convertible Security or other right to acquire Common Stock
outstanding or in effect as of the date of this Agreement and not amended after
the date of this Agreement; (b) any Options, stock purchase rights or other
rights to acquire up to five million three hundred fifty-six thousand eight
hundred eighty-eight (5,356,888) shares of Common Stock on exercise of Options
granted or that may be granted under the Company's compensatory 1995, 1996 and
1997 stock option plans at an exercise price no less than the current market
price on the date of issuance; (c) up to twelve million six hundred nineteen
thousand five hundred (12,619,500) of the warrants to be issued by the Company
to Chesapeake Energy Corporation; or (d) the issuance of shares of Common Stock
as a result of the exercise of any of the foregoing. The number of shares of
Common Stock exempted from the anti-dilution adjustments under foregoing clause
(b) assumes that no such Options have been

                                      -14-
<PAGE>   19

exercised and as a result will be reduced for any Options issued under the
Company's 1995, 1996 and 1997 stock option plans which were exercised prior to
the date of this Agreement.

         6. Loss or Mutilation. Upon: (a) receipt by the Company and the Warrant
Agent of evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and such security or
indemnity as may be required by them to save each of them harmless; and (b)
surrender, in the case of mutilation, of the mutilated Warrant Certificate to
the Warrant Agent and cancellation thereof, then, in the absence of notice to
the Company of the Warrant Agent that the Warrants evidenced thereby have been
acquired by a bona fide purchaser, the Company will execute and on written
request the Warrant Agent will countersign and deliver to the registered Holder
of the lost, stolen, destroyed or mutilated Warrant Certificate, in exchange
therefor or in lieu thereof, a new Warrant Certificate of the same tenor and for
a like aggregate number of Warrants. At the written request of such registered
Holder, the new Warrant Certificate so issued will be retained by the Warrant
Agent as having been surrendered for exercise, in lieu of delivery thereof to
such Holder, and will be deemed for purposes of this Agreement to have been
surrendered for exercise on the date the conditions specified in clauses (a) and
(b) of the preceding sentence were first satisfied. Upon the issuance of any new
Warrant Certificate under this paragraph 6, the Company may require the payment
of a sum sufficient to cover any tax or governmental charge that may be imposed
in relation thereto and other expenses (including the fees and expenses of the
Warrant Agent and of counsel to the Company) in connection therewith. Every new
Warrant Certificate executed and delivered pursuant to this paragraph 6 in lieu
of any lost, stolen or destroyed Warrant Certificate will constitute an
additional contractual obligation of the Company, whether or not the allegedly
lost, stolen or destroyed Warrant Certificate will be at any time enforceable by
anyone, and will be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder. The provisions of this paragraph 6 are exclusive and will
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement of mutilated, lost, stolen or destroyed Warrant Certificates.

         7. Capitalization. As of the date of this Agreement: the Company's
authorized capital stock consists of one hundred fifty million (150,000,000)
shares of Common Stock and fifty million (50,000,000) shares which may be
designated by the board of directors of the Company, none of which have been
designated or issued. As of the date of this Agreement the only shares of
capital stock issued and outstanding, reserved for issuance or committed to be
issued are: (a) thirty-seven million eight hundred thirty-six thousand four
hundred twenty (37,836,420) fully paid and non-assessable shares of Common Stock
duly issued and outstanding; (b) twelve million six hundred nineteen thousand
five hundred (12,619,500) shares of Common Stock reserved for issuance as a
result of the issuance of warrants to Chesapeake Energy Corporation (the
"Chesapeake Warrants"); (c) twelve million six hundred nineteen thousand five
hundred (12,619,500) shares of Common Stock reserved for issuance on exercise of
the Warrants; and (d) five million three hundred fifty-six thousand eight
hundred eighty-eight (5,356,888) shares of Common Stock issuable on exercise of
Options granted or to be granted under the Company's 1995, 1996 and 1997 stock
option plans. The Warrant Shares reserved for issuance represent no less than
twenty percent (20%) of the Company's fully diluted shares of Common Stock which
as of the date of this Agreement includes all of the issued and outstanding
shares of Common Stock, any shares of Common Stock issuable under this
Agreement, the maximum number of shares of Common Stock issuable in connection
with the Chesapeake

                                      -15-
<PAGE>   20

Warrants and any other Options or Convertible Securities, excluding only shares
of Common Stock issuable upon the exercise of Options issued under the Company's
1995, 1996 and 1997 compensatory stock option plans.

         8. Reservation and Authorization of Warrant Shares. The Company will at
all times reserve and keep available, free from preemptive rights, solely for
issue upon the exercise of Warrants such number of its authorized but unissued
Warrant Shares deliverable upon the exercise of Warrants as will be sufficient
to permit the exercise in full of all outstanding Warrants. The Company
covenants that all Warrant Shares will, at all times that Warrants are
exercisable, be duly approved for listing subject to official notice of issuance
on each securities exchange, if any, on which the Common Stock are then listed.
The Company covenants that all Warrant Shares that may be issued on exercise of
Warrants will upon issuance be duly authorized, validly issued and fully paid
and nonassessable and free of preemptive or similar rights. The Company hereby
authorizes and directs its current and future transfer agents for the Common
Stock at all times to reserve stock certificates for such number of authorized
shares as will be requisite for such purpose. The Warrant Agent is hereby
authorized to requisition from time to time from any such transfer agents stock
certificates required to honor outstanding Warrants on exercise thereof in
accordance with the terms of this Agreement, and the Company hereby authorizes
and directs such transfer agents to comply with all such requests of the Warrant
Agent. The Company will supply such transfer agents with duly executed stock
certificates for such purposes.

         9. Warrant Transfer Books. The Warrant Agent will maintain an office in
the United States of America, where Warrant Certificates may be surrendered for
registration of transfer or exchange and where Warrant Certificates may be
surrendered for exercise of Warrants evidenced thereby, which office is located
at 2001 Ross Avenue, Suite 2700, Dallas, Texas, 75201, Attention: John
Stohlmann, on the date of this Agreement. The Warrant Agent will give prompt
written notice to all Holders of any change in the location of such office. The
Warrant Certificates evidencing the Warrants will be issued in registered form
only. The Company will cause to be kept at the office of the Warrant Agent
designated for such purpose the Warrant Register for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates as provided
in this Agreement and subject to such reasonable regulations as the Warrant
Agent may prescribe and such regulations as may be prescribed by law. Subject to
paragraph 2.4 of this Agreement, on surrender for registration of the transfer
of any Warrant Certificate at the Corporate Agency Office, the Company will
execute, and the Warrant Agent will countersign and deliver, in the name of the
designated transferee or transferees, one or more new Warrant Certificates
evidencing a like aggregate number of Warrants. Subject to paragraph 2.4: (a) at
the option of the Holder, Warrant Certificates may be exchanged at the office of
the Warrant Agent on payment of the charges hereinafter provided for other
Warrant Certificates evidencing a like number of Warrants; and (b) whenever any
Warrant Certificates are so surrendered for exchange, the Company will execute
and the Warrant Agent will countersign and deliver Warrant Certificates of the
same tenor and evidencing the same number of Warrants as evidenced by the
Warrant Certificates surrendered by the Holder. All Warrant Certificates issued
on any registration or exchange of Warrant Certificates will be the valid
obligations of the Company, evidencing the same obligations, and entitled to the
same benefits under this Agreement, as the Warrant Certificates surrendered for
such registration of transfer or exchange. Subject to paragraph 2.4 of this
Agreement, every Warrant Certificate surrendered for

                                      -16-
<PAGE>   21

registration of transfer or exchange will (if so required by the Company or the
Warrant Agent) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Warrant Agent, duly
executed by the Holder thereof. The Warrant Agent will, on request of the
Company from time to time, deliver to the Company such reports of registered
ownership of the Warrants and such records of transactions with respect to the
Warrants and the Warrant Shares as the Company may request. The Warrant Agent
will also make available to the Company for inspection by the Company's agents
or employees, from time to time as the Company may request, such original books
and accounts and records maintained by the Warrant Agent in connection with the
issuance and exercise of Warrants hereunder, such inspections to occur at the
Corporate Agency Office during normal business hours. The Warrant Agent will
keep copies of this Agreement and any notices given to Holders hereunder
available for inspection by the Holders during normal business hours at the
Corporate Agency Office. The Company will supply the Warrant Agent from time to
time with such numbers of copies of this Agreement as the Warrant Agent may
request.

         10. Warrant Holders. The Holders will have the following rights and
obligations:

                  10.1 Voting or Dividend Rights. Except as provided in this
Agreement, prior to the exercise of the Warrants: (a) a Holder will not be
entitled to any of the rights of a holder of Common Stock with respect to the
Warrant Shares, including, without limitation, the right to vote at or to
receive any notice of any meetings of stockholders; (b) the consent of any
Holder will not be required with respect to any action or proceeding of the
Company; (c) no Holder, by reason of the ownership or possession of a Warrant or
the Warrant Certificate representing the same, will have any right to receive
any stock dividends of the Company prior to, or for which the relevant record
date preceded, the date of the exercise of such Warrant; and (d) no Holder will
have any right not expressly conferred by this Agreement or the Warrant
Certificate held by such Holder.

                  10.2 Rights of Action. All rights of action against the
Company in respect of this Agreement, except rights of action vested in the
Warrant Agent, are vested in the Holders. A Holder may enforce and may institute
and maintain any suit, action or proceeding against the Company suitable to
enforce, or otherwise in respect of, such Holder's rights to exercise, exchange
or tender for purchase such Holder's Warrants in the manner provided in this
Agreement without the consent of the Company, the Warrant Agent or any other
Holder.

                  10.3 Treatment of Holders. By the acceptance of a Warrant
Certificate each Holder consents and agrees with the Company, the Warrant Agent
and subsequent holders of such Warrant Certificate that, prior to due
presentment of such Warrant Certificate for registration of transfer, the
Company and the Warrant Agent may treat the Person in whose name the Warrant
Certificate is registered as the owner thereof for all purposes and as the
Person entitled to exercise the rights granted under the Warrants, and neither
the Company, the Warrant Agent nor any agent thereof will be affected or bound
by any notice to the contrary.

                  10.4 Communications to Holders. If any Holder notifies the
Warrant Agent in writing that the Holder desires to communicate with other
Holders with respect to its rights under this Agreement or under the Warrants,
the Warrant Agent will provide to such applicant a list of the names and
addresses of all Holders as of the most recent practicable date within five (5)

                                      -17-
<PAGE>   22

Business Days after receipt of such notice and payment to the Warrant Agent by
such Holder of the reasonable expenses of preparing such list. Each Holder by
acceptance of a Warrant Certificate agrees that the Company, the Warrant Agent
and any agent of the foregoing will not be held accountable by reason of the
disclosure of such information in accordance with this paragraph 10.4.

         11. Warrant Agent.

                  11.1 Nature of Duties and Responsibilities Assumed. The
Company hereby appoints the Warrant Agent to act as agent of the Company as set
forth in this Agreement. The Warrant Agent hereby accepts the appointment as
agent of the Company and agrees to perform that agency upon the terms and
conditions set forth in this Agreement and in the Warrant Certificates or as the
Company and the Warrant Agent may hereafter agree. The parties agree that the
terms and conditions set forth in the Warrant Certificates are subject to and
governed by this Agreement or any other terms and conditions hereafter agreed to
by the Company and the Warrant Agent. The Warrant Agent will not, by
countersigning Warrant Certificates or by any other act hereunder, be deemed to
make any representations as to validity or authorization of: (a) the Warrants or
the Warrant Certificates (except as to its countersignature thereon); (b) any
securities or other property delivered upon exercise of any Warrant; (c) the
accuracy of the computation of the number, kind or amount of stock or other
securities or other property deliverable upon exercise of any Warrant; or (d)
the correctness of any of the representations of the Company made in any
certifications that the Warrant Agent receives. The Warrant Agent will not at
any time have any duty to calculate or determine whether any facts exist that
may require any adjustments pursuant to paragraph 5 of this Agreement. The
Warrant Agent will not have the duty or responsibility to determine the accuracy
or correctness of any such calculation or the methods employed in making the
same. The Warrant Agent makes no representation and will not be accountable with
respect to the validity or value (or the kind or amount) of any Warrant Shares
or of any securities or property which may at any time be issued or delivered on
the exercise of any Warrant or upon any adjustment pursuant to paragraph 5 of
this Agreement. The Warrant Agent will not be responsible for any failure of the
Company to make any cash payments or to issue, transfer or deliver any Warrant
Shares or stock certificates or other securities or property on the surrender of
any Warrant Certificate for the purpose of exercise or on any adjustment
pursuant to paragraph 5 of this Agreement. The Warrant Agent will not: (x) be
liable for any recital or statement of fact contained herein or in the Warrant
Certificates or for any action taken, offered or omitted by it in good faith on
the belief that any Warrant Certificate or any other documents or any signatures
are genuine or properly authorized; (y) be responsible for any failure by the
Company to comply with any of its covenants and obligations contained in this
Agreement or in the Warrant Certificates; or (z) be liable for any act or
omission in connection with this Agreement except for its own gross negligence,
bad faith or willful misconduct. The Warrant Agent is hereby authorized to
accept and is protected in accepting instruments with respect to the performance
of its duties hereunder by Company Order and to apply to any such officer named
in such Company Order for instructions (which instructions will be promptly
given in writing when requested), and the Warrant Agent will not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
the instructions in any Company Order. The Warrant Agent is hereby authorized to
accept and is protected in accepting, and may rely upon without otherwise
verifying, the list of registered holders and related information furnished by
the Registrar for the purpose of determining those holders who

                                      -18-
<PAGE>   23

are entitled to receive Warrant Certificates, and the Warrant Agent will not be
liable for any action taken or suffered to be taken by it in good faith in
reliance upon such lists and information furnished by the Registrar. The Warrant
Agent may execute and exercise any of the rights and powers hereby vested in it
or perform any duty hereunder either itself or by and through its attorneys,
agents or employees, provided that reasonable care has been exercised in the
selection and in the continued employment of any such attorney, agent or
employee. The Warrant Agent will not be under any obligation or duty to
institute, appear in or defend any action, suit or legal proceeding in respect
of this Agreement, unless first indemnified to its satisfaction, but this
provision will not affect the power of the Warrant Agent to take such action as
the Warrant Agent may consider proper, whether with or without such indemnity.
The Warrant Agent will promptly notify the Company in writing of any claim made
or action, suit or proceeding instituted against it arising out of or in
connection with this Agreement. The Company will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further acts, instruments and assurances as may reasonably be required by
the Warrant Agent in order to enable it to carry out or perform its duties under
this Agreement. The Warrant Agent will act solely as agent of the Company
hereunder and does not assume any obligation or relationship of agency or trust
for or with any of the Holders or any beneficial owners of Warrants. The Warrant
Agent will not be liable except for the failure to perform such duties as
specifically set forth herein or specifically set forth in the Warrant
Certificates, and no implied covenants or obligations will be read into this
Agreement against the Warrant Agent whose duties and obligations will be
determined solely by the express provisions hereof or the express provisions of
the Warrant Certificates.

                  11.2 Right to Consult Counsel. The Warrant Agent may at any
time consult with legal counsel satisfactory to it (who may be legal counsel for
the Company), and the Warrant Agent will incur no liability or responsibility to
the Company or to any Holder for any action taken, suffered or omitted by it in
good faith in accordance with the written opinion or advice of such counsel.

                  11.3 Compensation, Reimbursement and Indemnification. The
Company agrees to pay the Warrant Agent reasonable compensation for the Warrant
Agent's service hereunder as the Company and the Warrant Agent may agree and to
reimburse the Warrant Agent for all reasonable expenses and disbursements
(including reasonable counsel fees and expenses) incurred in connection with the
execution and administration of this Agreement. The Company further agrees to
indemnify the Warrant Agent for and save it harmless against any losses,
liabilities or reasonable expenses arising out of or in connection with the
acceptance and administration of this Agreement, including the reasonable costs,
legal fees and expenses of investigating or defending any claim of such
liability, except that the Company will have no liability hereunder to the
extent that any such loss, liability or expense results from the gross
negligence, bad faith or willful misconduct of the Warrant Agent and the Warrant
Agent's officers, directors, employees and agents.

                  11.4 Warrant Agent May Hold Company Securities. The Warrant
Agent, any countersigning agent and any stockholder, director, officer or
employee of the foregoing may buy, sell or deal in any of the Warrants or other
securities of the Company or its Affiliates, become pecuniarily interested in
transactions in which the Company or its Affiliates may be interested, contract
with or lend money to the Company or its Affiliates or otherwise act as fully

                                      -19-
<PAGE>   24

and freely as though it were not the Warrant Agent. Nothing herein will preclude
the Warrant Agent or any countersigning agent from acting in any other capacity
for the Company or for any other legal entity.

                  11.5 Resignation and Removal; Appointment of Successor. The
Warrant Agent may resign on thirty (30) days prior written notice to the
Company. The Company may remove the Warrant Agent on thirty (30) days prior
written notice. On such resignation or termination the Warrant Agent will be
discharged from all further duties and liabilities under this Agreement (except
liability arising as a result of the Warrant Agent's own gross negligence, bad
faith or willful misconduct). The Warrant Agent will, at the expense of the
Company, cause notice to be given to each Holder of such notice of resignation
or removal. On such resignation or removal, the Company will appoint in writing
a new Warrant Agent. If the Company fails to make such appointment within a
period of thirty (30) calendar days after it has been notified in writing of
such resignation by the resigning Warrant Agent or after such removal, then any
Holder may apply to any court of competent jurisdiction in the United States for
the appointment of a new Warrant Agent. Any new Warrant Agent appointed under
this paragraph will be a corporation doing business under the laws of the United
States or any state thereof in good standing, authorized under such laws to act
as a Warrant Agent, and in the business of acting as transfer agent for publicly
held securities. After acceptance in writing of such appointment in writing, the
new Warrant Agent will be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as the Warrant Agent under
this Agreement, without any further assurance, conveyance, act or deed. However,
if for any reason it will be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same will be done at the
reasonable expense of the Company and will be legally and validly executed and
delivered by the resigning or removed Warrant Agent. No later than the effective
date of any such appointment, the Company will file notice thereof with the
resigning or removed Warrant Agent. Failure to give the notice provided for in
this paragraph 11.5 (or any defect therein), will not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of a new Warrant Agent. Any corporation into which the Warrant Agent or any new
Warrant Agent may be merged, or any corporation resulting from any consolidation
to which the Warrant Agent or any new Warrant Agent is a party, will be a
successor Warrant Agent under this Agreement without any further act, provided
that such corporation would be eligible for appointment as successor to the
Warrant Agent under the provisions of this paragraph 11.5. Any such successor
Warrant Agent will promptly cause notice of its succession as Warrant Agent to
be given to each Holder at such Holder's last address as shown on the Warrant
Register.

                  11.6 Appointment of Countersigning Agent. The Warrant Agent
may appoint one or more countersigning agents which will be authorized to act on
behalf of the Warrant Agent to countersign Warrant Certificates and Warrant
Certificates so countersigned will be entitled to the benefits of this Agreement
equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder. Wherever reference is made in this Agreement
to the countersignature and delivery of Warrant Certificates by the Warrant
Agent or to Warrant Certificates countersigned by the Warrant Agent, such
reference will be deemed to include countersignature and delivery on behalf of
the Warrant Agent by a countersigning agent and Warrant Certificates
countersigned by a countersigning agent. Each countersigning agent will be
acceptable to the Company and will at the time of appointment be a corporation
doing business under the laws of the United States of America or any state
thereof in good standing,

                                      -20-
<PAGE>   25

authorized under such laws to act as countersigning agent, and have a combined
capital and surplus of not less than $100,000,000.00. The combined capital and
surplus of any such new countersigning agent will be deemed to be the combined
capital and surplus as set forth in the most recent annual report of its
condition published by such countersigning agent prior to its appointment,
provided that such reports are published at least annually pursuant to law or to
the requirements of a federal or state supervising or examining authority. Any
corporation into which a countersigning agent may be merged, or any corporation
resulting from any consolidation to which such countersigning agent is a party,
will be a successor countersigning agent without any further act, provided that
such corporation would be eligible for appointment as a new countersigning agent
under the provisions of this paragraph 11.6, without the execution or filing of
any paper or any further act on the part of the Warrant Agent or the
countersigning agent. Any such successor countersigning agent will promptly
cause notice of its succession as countersigning agent to be given to each
Holder at such Holder's last address as shown on the Warrant Register. The
countersigning agent may resign at any time by giving thirty (30) days prior
written notice thereof to the Warrant Agent and to the Company. The Warrant
Agent may at any time terminate the agency of a countersigning agent by giving
thirty (30) days prior written notice thereof to such countersigning agent and
to the Company. The Warrant Agent agrees to pay to each countersigning agent
from time to time reasonable compensation for its services under this paragraph,
and the Warrant Agent will be entitled to be reimbursed for such payments,
subject to the provisions of paragraph 11.3 this Agreement. Any countersigning
agent will have the same rights and immunities as those of the Warrant Agent set
forth in paragraph 11.1 of this Agreement.

         12. Miscellaneous.

                  12.1 Notices Generally. Any request, notice, direction,
authorization, consent, waiver, demand or other communication permitted or
authorized by this Agreement to be made upon, given or furnished to or filed
with the Company or the Warrant Agent by the other party hereto or by any Holder
will be sufficient for every purpose under this Agreement if in writing
(including telecopy communication) and telecopied or delivered by hand
(including by courier service) as follows:

                  If to the Company:          Seven Seas Petroleum Inc.
                                              5555 San Felipe
                                              Suite 1700
                                              Houston, Texas  77056
                                              Attn: President

                  If to the Warrant Agent:    U.S. Trust Company of Texas, N.A.
                                              2001 Ross Avenue, Suite 2700
                                              Dallas, Texas  75201
                                              Attn:  John Stohlmann

or, in either case, such other address as set forth in a notice delivered in
accordance with this paragraph 12.1. All such communications will, when so
telecopied or delivered by hand, be effective when telecopied with confirmation
of receipt or received by the addressee, respectively. Any person that
telecopies any communication hereunder to any Person will, on the same date as

                                      -21-
<PAGE>   26

such telecopy is transmitted, also send, by first-class mail, postage prepaid
and addressed to such Person as specified above, an original copy of the
communication so transmitted. Where this Agreement provides for notice to
Holders of any event, such notice will be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at the address of such Holder as
it appears in the Warrant Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder will
affect the sufficiency of such notice with respect to other Holders. Where this
Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver will be equivalent of such notice. In case of the
suspension of regular mail service or by reason of any other cause it will be
impracticable to give such notice by mail, then such notification as will be
made by a method approved by the Warrant Agent as one which would be most
reliable under the circumstances for successfully delivering the notice to the
addressees will constitute a sufficient notification for every purpose
hereunder.

                  12.2 APPLICABLE LAW. THIS AGREEMENT, EACH WARRANT CERTIFICATE
ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND ALL RIGHTS ARISING
HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF OKLAHOMA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

                  12.3 Persons Benefitting. This Agreement will be binding upon
and inure to the benefit of the Company, the Warrant Agent, the Holders and
their respective successors and assigns. Nothing in this Agreement is intended
or will be construed to confer upon any Person, other than the Company, the
Warrant Agent and the Holders, any right, remedy or claim under or by reason of
this Agreement or any part hereof. Each holder, by acceptance of a Warrant
Certificate, agrees to all of the terms and provisions of this Agreement
applicable thereto.

                  12.4 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will for all purposes be deemed to be an
original, and all such counterparts will together constitute but one and the
same instrument.

                  12.5 Amendments. The Company and the Warrant Agent may,
without the consent or concurrence of the Holders of the Warrant Certificates,
by supplemental agreement or otherwise, amend this Agreement for the purpose of
making any changes or corrections in this Agreement that: (a) are required to
cure any ambiguity or to correct or supplement any defective or inconsistent
provision or clerical omission or mistake or manifest error herein contained;
(b) add to the covenants and agreements of the Company in this Agreement further
covenants and agreements of the Company thereafter to be observed; or (c)
surrender any rights or powers reserved to or conferred upon the Company in this
Agreement. Notwithstanding the foregoing, in either case such amendment will not
adversely affect the rights or interests of the Holders in any material respect.
This Agreement may otherwise be amended by the Company and the Warrant Agent
only with the consent of the Holders of a majority of the then outstanding

                                      -22-
<PAGE>   27

Warrants. Notwithstanding the foregoing, consent of each Holder of a Warrant
affected will be required for any amendment pursuant to which the Exercise Price
would be increased or the number of Warrant Shares purchasable upon exercise of
Warrants would be decreased (other than pursuant to adjustments provided
herein). The Warrant Agent will join with the Company in the execution and
delivery of any such amendment unless such amendment affects the Warrant Agent's
own rights, duties or immunities hereunder, in which case the Warrant Agent may,
but will not be required to, join in such amendment. Upon execution and delivery
of any amendment pursuant to this paragraph 12.5, such amendment will be
considered a part of this Agreement for all purposes and every Holder of a
Warrant Certificate theretofore or thereafter countersigned and delivered
hereunder will be bound thereby. Promptly after the execution by the Company and
the Warrant Agent of any such amendment, the Company will give notice to the
Holders setting forth in general terms the substance of such amendment. However,
any failure of the Company to mail such notice or any defect therein, will not
in any way impair or affect the validity of any such amendment.

                  12.6 Inspection. The Warrant Agent will cause a copy of this
Agreement to be available at all reasonable times at the Corporate Agency Office
for the Warrant Agent for inspection by the Holder of any Warrant Certificate.
The Warrant Agent may require such Holder to submit his Warrant Certificate for
inspection by the Holder.

                  12.7 Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto as to the subject matter hereof and supersedes
all previous agreements among all or some of the parties hereto with respect
thereto, whether written, oral or otherwise.

                  12.8 Headings. The descriptive headings of the paragraphs of
this Agreement are inserted for convenience and will not control or affect the
meaning or construction of any of the provisions hereof.

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

                         SEVEN SEAS PETROLEUM INC., a Cayman
                         Islands exempted company limited by shares

                         By
                           ---------------------------------------------------
                         Name:
                               -----------------------------------------------
                         Title:
                                ----------------------------------------------

                         U.S. TRUST COMPANY OF TEXAS, N.A.

                         By
                           ---------------------------------------------------
                         Name:
                               -----------------------------------------------
                         Title:
                                ----------------------------------------------

                                      -23-

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