Document:

<PAGE>

                                                                 Exhibit 10.6(a)

                               CREDIT AGREEMENT

                             $6,000,000 TERM LOAN

                                     AMONG

                              INDIAN OIL COMPANY
                                  AS BORROWER

                              CIBOLA CORPORATION
                                 AS GUARANTOR

                                      AND

                                 MIDFIRST BANK
                                   AS LENDER

                                March 31, 1999
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
Section        Heading                                                                 Page
-------        -------                                                                 ----
<S>                                                                                    <C>
SECTION 1.     DEFINITIONS  ...........................................................   1

               1.1   Certain Defined Terms.............................................   1
               1.2   Accounting Terms and Determinations...............................   8
               1.3   Other Definitional Provisions.....................................   8
               1.4   Calculations and Determinations...................................   9

SECTION 2.     AMOUNT AND TERMS OF LOANS; NOTES........................................   9

               2.1   Loan..............................................................   9
               2.2   Interest; Payments of Principal and Interest.......................  9
               2.3   Fee...............................................................   9
               2.4   Optional Prepayments..............................................   9
               2.5   Manner and Time of Payments.......................................   9
               2.6   Capital Adequacy..................................................  10
               2.7   Maximum Lawful Interest Rate......................................  10

SECTION 3      CONDITIONS PRECEDENT....................................................  11

               3.1   Deliveries........................................................  11
               3.2   Commitment Fee....................................................  13
               3.3   Other Loan........................................................  13
               3.4   Representations and Warranties....................................  13
               3.5   No Default........................................................  13
               3.6   Performance.......................................................  13

SECTION 4      BORROWER'S AND GUARANTOR'S REPRESENTATIONS AND WARRANTIES...............  13

               4.1   Organization, Powers and Qualification............................  13
               4.2   Subsidiaries......................................................  13
               4.3   Authorization of Borrowing; Binding Obligation....................  14
               4.4   No Conflict.......................................................  14
               4.5   Governmental Consents.............................................  14
               4.6   Financial Statements..............................................  14
               4.7   Title to Properties; Liens........................................  15
               4.8   Litigation........................................................  15
               4.9   Adverse Facts.....................................................  15
               4.10  Payment of Taxes..................................................  15
               4.11  Governmental Regulation...........................................  15
               4.12  Environmental Regulations.........................................  16
               4.13  Use of Proceeds; Margin Stock.....................................  16
               4.14  ERISA.............................................................  16
               4.15  Licenses; Reports; Etc............................................  16
               4.16  Casualties........................................................  16
               4.17  Solvency..........................................................  16
               4.18  Disclosure........................................................  17
               4.19  No Default........................................................  17
</TABLE>
<PAGE>

<TABLE>
<S>                                                                                      <C>
SECTION 5      AFFIRMATIVE COVENANTS...................................................  17

               5.1   Payment and Performance...........................................  17
               5.2   Financial Statements and Other Reports............................  17
               5.3   Corporate Existence, Capital Stock, Etc...........................  18
               5.4   Payment of Trade Debt, Taxes, Etc.................................  19
               5.5   Maintenance of Properties; Insurance..............................  19
               5.6   Inspection........................................................  19
               5.7   Compliance With Laws, Etc.........................................  19
               5.8   Other Loan........................................................  20
               5.9   Brokerage Account Value...........................................  20
               5.10  Deposits to Brokerage Accounts....................................  20

SECTION 6      NEGATIVE COVENANTS......................................................  20

               6.1   Limitation on Debt................................................  20
               6.2   Limitation on Liens...............................................  21
               6.3   Dividends.........................................................  21
               6.4   Limitation on Investments.........................................  21
               6.5   Limitation on Debt of Others......................................  21
               6.6   Affiliate Transactions............................................  21
               6.7   Limitation on Sale of Properties..................................  21
               6.8   Fiscal Year and Accounting Method.................................  21
               6.9   Liquidation, Mergers and Consolidations...........................  21
               6.10  Other Loan Documents..............................................  22

SECTION 7      EVENTS OF DEFAULT; REMEDIES.............................................  22

               7.1   Events of Default.................................................  22
               7.2   Remedies Upon Event of Default....................................  24
               7.3   Application of Proceeds...........................................  25

SECTION 8      MISCELLANEOUS...........................................................  25

               8.1   Amendments........................................................  25
               8.2   Expenses..........................................................  25
               8.3   Indemnity.........................................................  26
               8.4   Entire Agreement..................................................  27
               8.5   Independence of Covenants.........................................  27
               8.6   Set-Off...........................................................  27
               8.7   Notices...........................................................  28
               8.8   Survival of Warranties and Agreements.............................  28
               8.9   Failure or Indulgence Not Waiver; Remedies Cumulative.............  28
               8.10  Severability......................................................  28
               8.11  Headings..........................................................  28
               8.12  Applicable Law....................................................  28
               8.13  Submission to Jurisdiction; Venue; Waiver of Jury Trial...........  29
</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<S>                                                                                      <C>
               8.14  Successors and Assigns; Transferees of Note.......................  29
               8.15  Counterparts; Effectiveness.......................................  29
               8.16  Restatement of Existing Credit Agreement..........................  29
</TABLE>

SIGNATURE PAGES

EXHIBITS

               1.1(a) Guaranty

               1.1(b) Individual Pledge Agreement

               1.1(c) Pledgor Guaranty

               1.1(d) Account Pledge Agreement

               1.1(e) Form of Control Agreement

               2.1    Form of Note

               5.2(a) Form of Compliance Certificate

SCHEDULES

               4.2  Subsidiaries

               4.8  Litigation

                                     -iii-
<PAGE>

                               CREDIT AGREEMENT
                               ----------------

          THIS CREDIT AGREEMENT is dated as of March 31, 1999, and entered into
by and among INDIAN OIL COMPANY, an Oklahoma corporation ("Borrower"), CIBOLA
CORPORATION, a Wyoming corporation ("Guarantor") and MIDFIRST BANK ("Lender")
with respect to the following facts:

          A.   Borrower and Guarantor have requested that Lender make financing
available to Borrower for the purpose of refinancing a portion of the cost of
acquiring a package of oil and gas properties from Sonat Exploration Company
having a total purchase price of $31,707,067.

          B.   Each of Borrower and Guarantor expects to derive benefit,
directly or indirectly, from such financing.

          C.   Lender is currently extending credit to Borrower pursuant to the
Existing Credit Agreement (as defined in Section  8.16) and is prepared to
                                         -------------
extend the credit requested on the terms and conditions of this Agreement.

          D.   The parties desire to amend and restate in its entirety the
Existing Credit Agreement.

          Accordingly, the parties agree as follows:

SECTION 1.  DEFINITIONS

          1.1  Certain Defined Terms.  The following terms used in this
               ---------------------
Agreement shall have the following meanings:

          "Account Pledge Agreement" means that certain Pledge and Security
           ------------------------
Agreement previously executed by Guarantor and the other Persons named therein
(the "Account Pledgor") in favor of Lender granting to Lender a security
interest in the brokerage accounts, investment property and other property
described therein (the "Brokerage Accounts"), a copy of which is attached hereto
as Exhibit 1.1(d).
   --------------

          "Affiliate" means, with respect to any Person, any other Person
           ---------
directly or indirectly controlling (including all directors and officers of such
Person), controlled by, or under direct or indirect common control with, that
Person, and any other Person in which such Person's direct or indirect equity
interest is 5% or more of the total outstanding equity interests of such Person.

          "Agreement" means this Credit Agreement dated as of the date first
           ---------
above written, as it may be amended from time to time.

          "Authorized Officer" means, with respect to any act to be performed or
           ------------------
duty to be discharged by or on behalf of any
<PAGE>

Person who is not an individual, any officer, agent or representative thereof
who is at the time in question authorized to perform such act or discharge such
duty on behalf of such Person.

          "Base Rate" means the per annum rate of interest identified as the
           ---------
prime rate in the "Money Rates" section of The Wall Street Journal.  If more
than one prime rate is published in the "Money Rates" section of The Wall Street
Journal, the Base Rate shall be the highest rate.  If such prime rate changes
after the date hereof, the Base Rate shall be automatically increased or
decreased, as the case may be, without notice to Borrower from time to time as
of the effective date of each change in such prime rate.  If The Wall Street
Journal ceases publishing a prime rate or materially changes the criteria
therefor, as reasonably determined by Lender, "Base Rate" shall mean the rate of
interest from time to time publicly announced by Chase Manhattan Bank, or its
successor, as its prime rate.

          "Business Day" means a day on which commercial banks are open for
           ------------
business with the public in Oklahoma City, Oklahoma.

          "Capital Lease", as applied to any Person, means any lease of any
           -------------
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.

          "Capitalized Lease Obligation" means any rental obligation which,
           ----------------------------
under GAAP, would be required to be capitalized on the books of Borrower and its
Subsidiaries, taken at the amount thereof accounted for as indebtedness (net of
interest expense) in accordance with such principles.

          "Cash Flow" means an amount equal to (i) Net Income plus (ii)
           ---------
Depreciation and interest expense deducted in determining Net Income minus (iii)
Dividends, each for the applicable period.

          "Closing Date" means March __, 1999, or such other date as mutually
           ------------
agreed to by the parties.

          "Contractual Obligation", as applied to any Person, means any
           ----------------------
provision of any securities issued by that Person or of any material indenture,
mortgage, deed of trust, contract, lease, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.

          "Control Agreements" means those certain Account Control Agreements to
           ------------------
be executed by the Account Pledgor and the Brokers named therein ("Brokers") in
connection with perfecting

                                      -2-
<PAGE>

the security interests created by the Account Pledge Agreement in the form of
Exhibit 1.1(e).
--------------

          "Controlled Group" means (i) the controlled group of corporations as
           ----------------
defined in Section 1563 of the Internal Revenue Code, or (ii) the group of
trades or businesses under common control as defined in Section 414(c) of the
Internal Revenue Code, of which Borrowers are a part or may become a part.

          "Coral Agreement" means the Agreement and Plan of Merger dated
           ---------------
February 15, 1999, as amended, among Coral Reserves, Inc., Coral Reserves Energy
Corp., Coral Reserves Group, Ltd. and Borrower.

          "Current Assets" means current assets of Borrower and its
           --------------
Subsidiaries, on a combined basis, determined in accordance with GAAP.

          "Current Liabilities" means current liabilities of Borrower and its
           -------------------
Subsidiaries, on a combined basis, determined in accordance with GAAP.

          "Current Maturities" means the current portion payable by Borrower and
           ------------------
its Subsidiaries, on a combined basis, of (i) principal payments on all Funded
Debt, and (ii) the principal portion of lease payments on all Capital Leases.

          "Debt" of any Person means at any date, (a) all indebtedness for
           ----
borrowed money (whether by loan or the issuance and sale of debt securities) or
for the deferred purchase price of property or services (excluding accounts
payable in the ordinary course of business outstanding less than 60 days from
the date of invoice and payments or benefits in the nature of compensation for
services of employees), (b) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property,
(c) all Capitalized Lease Obligations, (d) all guaranties or other contingent
liabilities of any kind (including letter of credit repayment obligations) and
(e) all indebtedness, to the extent it would constitute a liability on a
consolidated balance sheet of the Person prepared in accordance with GAAP.

          "Default" means any of the events specified in Section 7.1, regardless
           -------                                       -----------
of whether there shall have occurred any passage of time or giving of notice or
both that would be necessary in order to constitute such event an Event of
Default.

          "Depreciation" means depreciation, depletion and amortization expenses
           ------------
and other non-cash charges as determined in accordance with GAAP.

                                      -3-
<PAGE>

          "Dividends", in respect of any corporation, means (i) cash
           ---------
distributions or any other distributions on, or in respect of, any class of
capital stock of a corporation, and (ii) any and all funds, cash or other
payments made in respect of the redemption, repurchase or acquisition of such
stock, unless such stock shall be redeemed or acquired through the exchange of
such stock with stock of the same class.

          "Environmental Laws" means federal, state or local laws, rules or
           ------------------
regulations, and any judicial, arbitral or administrative interpretations
thereof, including any judicial, arbitral or administrative order, judgment,
permit, approval, decision or determination pertaining to health, safety or the
environment in effect at the time in question, including the Clean Air Act, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
                                                                       ------
the Federal Water Pollution Control Act, the Occupational Safety and Health Act,
as amended, the Resource Conservation and Recovery Act, the Safe Drinking Water
Act, as amended, the Toxic Substances Control Act, the Superfund Amendment and
Reauthorization Act of 1986, the Hazardous Materials Transportation Act,
comparable state and local laws, and other environmental conservation and
protection laws.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
           -----
amended, together with all regulations issued pursuant thereto.

          "Event of Default" means the conditions and events specified in
           ----------------
Section 7.1.
-----------

          "Financial Statements" means each of Borrower's and Guarantor's
           --------------------
balance sheet, income statement and stockholders' equity statement and statement
of cash flows.

          "Financing Statements" means those certain financing statements
           --------------------
executed by Borrower, Guarantor and Pledgors, as debtors, in favor of Lender, as
secured party.

          "Funded Debt" means any loan or other obligation of Borrower and its
           -----------
Subsidiaries (including indebtedness and obligations of others, with respect to
which Borrower or any Subsidiary has become liable by way of a guaranty)
maturing within a period in excess of one year from the date of determination,
excluding Capitalized Lease Obligations, operating leases, Debt arising out of
this Agreement.

          "GAAP" means generally accepted accounting principles set forth in the
           ----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such

                                      -4-
<PAGE>

other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstance as of the date of
determination.

          "Guaranty" means the Guaranty Agreement executed by the Guarantor, a
           --------
copy of which is attached hereto as Exhibit 1.1(a).
                                    --------------

          "Hazards" means any hazardous substances, solid wastes, asbestos,
           -------
petroleum products or other substances known or suspected to pose a threat to
health or the environment.

          "Individual Pledge Agreement" means that certain Pledge and Security
           ---------------------------
Agreement executed by Richard R. Dunning, Larry D. Hartzog, Michael C. Black and
the other Persons named therein ("Pledgors") in favor of Lender granting to
Lender a security interest in the stock, option to purchase and other property
as therein described, a copy of which is attached hereto as Exhibit 1.1(b).
                                                            --------------

          "Internal Revenue Code" means the Internal Revenue Code of 1986, as
           ---------------------
amended to the date hereof and from time to time hereafter.

          "Investment" means, as applied to any Person, any direct or indirect
           ----------
purchase or other acquisition by such Person of stock or other securities of any
other Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other Person, and any other item which would be classified as
an "investment" on a balance sheet of such Person prepared in accordance with
GAAP.

          "Late Payment Rate" means three percent (3.0%) per annum plus the Base
           -----------------
Rate then in effect.

          "Licenses" means all licenses, permits, orders, authorizations and
           --------
approvals of any federal, state or local regulatory authority and all contracts,
authorizations, licenses and approvals of any third parties which are necessary
or useful in the conduct of the business of Borrower and Guarantor, as now
conducted or as may be conducted in the future.

          "Lien" means any lien, mortgage, pledge, security interest, charge or
           ----
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest).

          "Loan Documents" means this Agreement, the Note, the Guaranty, the
           --------------
Individual Pledge Agreement, the Pledgor Guaranty, the Account Pledge Agreement,
the Control Agreements, the Financing Statements, and all other agreements,
certificates,

                                      -5-
<PAGE>

legal opinions and other documents, instruments and writings heretofore or
hereafter delivered in connection herewith or therewith (exclusive of commitment
letters, term sheets, and similar documents used in the negotiation hereof).

          "Loan" has the meaning specified in Section 2.1.
           ----                               -----------

          "Margin Stock" has the meaning assigned to that term in Regulation U
           ------------
of the Board of Governors of the Federal Reserve System as in effect from time
to time.

          "Material Adverse Effect" means, relative to any occurrence of
           -----------------------
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) and after taking into
account actual insurance coverage and effective indemnification with respect to
such occurrence, (a) a material adverse effect on the financial condition,
business or operations of Borrower or Guarantor  or (b) any material impairment
upon the collective ability of Borrower or Guarantor to perform its payment or
other obligations hereunder or under the Note and other Loan Documents or the
right of Lender to enforce any of such obligations or any of its remedies under
the Loan Documents.

          "Maturity Date" means March 1, 2000.
           -------------

          "Net Income" means net profit or loss after taxes of Borrower and its
           ----------
Subsidiaries, on a combined basis, determined in accordance with GAAP, minus any
gain from the non-cash write-ups of assets or any other extraordinary gains (to
the extent that such items are included in the determination of net income).

          "Net Worth" means, with respect to Borrower and its Subsidiaries, on a
           ---------
combined basis, the sum of stockholders' or partners' equity, as shown on a
balance sheet, and "Tangible Net Worth" means Net Worth minus the sum of (i) any
                    ------------------
surplus resulting from any write-up of assets, (ii) goodwill, (iii) treasury
stock, (iv) patents, trademarks, service marks, trade names, and copyrights,
plus (v) other intangible assets.

          "Note" has the meaning specified in Section 2.1.
           ----                               -----------

          "Obligations" means all obligations of every nature of Guarantor or
           -----------
Borrower from time to time owed to Lender under the Loan Documents.

          "Other Loan" means the loan to Borrower from Bank One, Oklahoma, N.A.
           ----------
in the principal amount of $20,000,000, with an initial availability of
$20,000,000, to be secured by the oil and gas properties of Borrower (the
"Mortgaged Properties").

                                      -6-
<PAGE>

          "Other Loan Documents" means the Loan Agreement, Promissory Note,
           --------------------
Mortgages and all other documents executed by Borrower, Guarantor and any other
Person in connection with the Other Loan.

          "PBGC" means the Pension Benefit Guaranty Corporation, and any
           ----
successor to all or any of its functions under ERISA.

          "Permitted Liens" means: (i) pledges or deposits made to secure
           ---------------
payment of worker's compensation insurance (or to participate in any fund in
connection with worker's compensation insurance), unemployment insurance,
pensions or social security programs, (ii) Liens imposed by mandatory provisions
of law such as for materialmen's, mechanics', warehousemen's and other like
Liens arising in the ordinary course of business, securing Debt whose payment is
not yet due, (iii) Liens for taxes, assessments and governmental charges or
levies imposed upon a Person or upon such Person's income or profits or
property, if the same are not yet due and payable or if the same are being
contested in good faith and as to which adequate cash reserves have been
provided, (iv) encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, provided that such items do not
impair the use of such property for the purposes intended, and none of which is
violated by existing or proposed structures or land use, (v) Liens created
pursuant to this Agreement or any other Loan Document in favor of Lender, or
(vi) Liens on the oil and gas properties of Borrower which are permitted by the
Other Loan Documents.

          "Person" means and includes natural persons, corporations, limited
           ------
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, estates, banks,
trust companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof.

          "Plan" means an employee benefit plan or other plan maintained by
           ----
either Borrower for employees of such Borrower and covered by Title IV of ERISA,
or subject to the minimum funding standards under Section 412 of the Internal
Revenue Code.

          "Pledgor Guaranty" means the Guaranty executed by the Pledgors, a copy
           ----------------
of which is attached hereto as Exhibit 1.1(c).
                               --------------

          "Production Payment" means that certain production payment granted by
           ------------------
Borrower to Coral Reserves, Inc. and Coral Reserves Energy Corp. dated February
15, 1999.

          "Regulation D" means Regulation D of the Board of Governors of the
           ------------
Federal Reserve System as in effect from time to

                                      -7-
<PAGE>

time.

          "Regulation U" means Regulation U of the Board of Governors of the
           ------------
Federal Reserve System, as in effect from time to time.

          "Regulation X" means Regulation X of the Board of Governors of the
           ------------
Federal Reserve System, as in effect from time to time.

          "Reportable Event" has the meaning specified in Title IV of ERISA.
           ----------------

          "Short Term Debt" means any loan or other obligation for borrowed
           ---------------
money of Borrower (including indebtedness and obligations of others with respect
to which Borrower or its Subsidiary has become liable by way of a Guaranty)
maturing within one year of the date of determination (including without
limitation outstanding balances under revolving credit facilities and committed
lines of credit, current maturities of Funded Debt and current maturities of
Capitalized Lease Obligations).

          "Subsidiary" means, as to any Person, (a) any corporation a sufficient
           ----------
quantity of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person, directly or
indirectly through Subsidiaries, and (b) any partnership, association, joint
venture or other entity in which such Person, directly or indirectly through
Subsidiaries, has a greater than 10% equity interest at the time.

          "Tangible Assets" means the tangible assets of Borrower and its
           ---------------
Subsidiaries, on a combined basis, determined in accordance with GAAP.

          "Total Liabilities" means at any time all obligations of Borrower and
           -----------------
its Subsidiaries, determined on a combined basis, which in accordance with GAAP
should be classified as liabilities on a combined balance sheet prepared in
accordance with GAAP, and which in any event shall include (without
duplication): (i) all debt, obligations and liabilities guaranteed (directly or
indirectly), and all debt, obligations and liabilities secured by any Lien upon
any property owned by Borrower or any Subsidiary, even though it has not assumed
or become liable for the payment of the same; and (ii) Capital Leases.

          1.2  Accounting Terms and Determinations.  Unless otherwise specified
               -----------------------------------
herein, all accounting terms used herein shall

                                      -8-
<PAGE>

be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP as in effect from time to time, applied on a basis
consistent with the most recent audited consolidated financial statements of
Borrower delivered to Lender.

          1.3  Other Definitional Provisions.  References to "Sections" and
               -----------------------------
"subsections" shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided.  Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.

          1.4  Calculations and Determinations.  All calculations under the Loan
               -------------------------------
Documents of interest and fees shall be on the basis of actual days elapsed
(including the first day but excluding the last) and a year of 360 days.  Each
determination by Lender of amounts to be paid under Section 2.7 or any other
                                                    -----------
matters which are to be determined hereunder by Lender (such as any Base Rate or
Business Day) shall, in the absence of error, be conclusive and binding.

SECTION 2.   AMOUNT AND TERMS OF LOANS; NOTES

          2.1  Loan.  Subject to the terms and conditions hereof, Lender agrees
               ----
to make a term loan to Borrower in the amount of $6,000,000 (the "Loan").  The
obligation of Borrower to repay the Loan shall be evidenced by a promissory note
(herein called the "Note") made by Borrower payable to the order of Lender in
the form of Exhibit 2.1.
            -----------

          2.2  Interest; Payments of Principal and Interest.  The Loan
               --------------------------------------------
(exclusive of any past due principal or interest) shall bear interest on each
day at the Base Rate in effect on such day.  All past due principal and interest
on the Loan shall bear interest on each day outstanding at the Late Payment Rate
in effect on such day, and such interest shall be due and payable immediately as
it accrues.  Accrued interest on the Loan shall be payable on March 31, 1999 and
thereafter monthly on the last day of each month until the Maturity Date, at
which time all remaining accrued but unpaid interest and all principal shall be
due and payable.

          2.3  Fee.  In consideration of Lender's commitment to make the Loan,
               ---
Borrower will pay to Lender a commitment fee in the amount of $15,000 on the
Closing Date.

          2.4  Optional Prepayments.  Borrower may, upon concurrent notice to
               --------------------
Lender, from time to time and without premium or penalty, prepay the Loan, in
whole or in part, so long as all partial prepayments of principal concurrently
paid on the Loan are

                                      -9-
<PAGE>

in increments of $100,000. Any prepayment of the Loan shall be applied first to
the payment of accrued and unpaid interest and then to the outstanding principal
of the Loan. Any prepayments on the Loan shall not be readvanced.

          2.5  Manner and Time of Payments.  Borrower will make each payment
               ---------------------------
which it owes under the Loan Documents to Lender without defense, set off or
counterclaim not later than 11:00 a.m. Oklahoma City time, on the date such
payment becomes due and payable, in lawful money of the United States of America
and in immediately available funds.  If any money of Borrower is on deposit with
Lender on the date such payment is due, Borrower hereby instructs Lender, and
Lender hereby agrees, as long as no Default or Event of Default has occurred and
is continuing, to apply such money, to the extent of the amount owed, to the
payment which is due, and to advise Borrower via fax of the amount so applied.
Any payment received by Lender after such time will be deemed to have been made
on the next following Business Day.  Should any such payment become due and
payable on a day other than a Business Day, the maturity of such payment shall
be extended to the next succeeding Business Day, and, in the case of a payment
of principal or past due interest, interest shall accrue and be payable thereon
for the period of such extension as provided in the Loan Document under which
such payment is due.  Each payment under a Loan Document shall be due and
payable at Lender's offices at 501 West I-44 Service Road, Oklahoma City,
Oklahoma 73118.

          2.6  Capital Adequacy.  Borrower covenants and agrees that, subject to
               ----------------
Section 2.7, if at any time after the date hereof, and from time to time, Lender
-----------
determines that the adoption or modification of any applicable law, rule or
regulation regarding taxation, increases Lender's required levels of reserves,
deposits, insurance or capital (including any allocation of capital requirements
or conditions), or similar requirements, or  any interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation, administration or compliance of Lender
with any of such requirements, has or would have the effect of (a) increasing
Lender's costs relating to the Loan, or (b) reducing the yield or rate of return
of Lender on the Loan, to a level below that which such Lender could have
achieved but for the adoption or modification of any such requirements, then
Borrower shall, within 15 days of any request by Lender, pay to Lender such
additional amounts as (in Lender's sole judgment, after reasonable computation)
will compensate Lender for such increase in costs or reduction in yield or rate
of return.  No failure by Lender to immediately demand payment of any additional
amounts payable hereunder shall constitute a waiver of Lender's right to demand
payment of such amounts at any subsequent time.  Nothing herein contained shall
be construed or so operate so to require Borrower to pay any interest, fees,
costs or charges not permitted by

                                     -10-
<PAGE>

Section 2.7.
-----------

          2.7  Maximum Lawful Interest Rate.  It is not the intention of Lender
               ----------------------------
or Borrower to violate the laws of any applicable jurisdiction relating to usury
or other restrictions on the maximum lawful interest rate.  The Loan Documents
and all other agreements between Borrower and Lender, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
event shall the interest paid or agreed to be paid to Lender for the use,
forbearance or detention of money loaned, or for the payment or performance of
any covenant or obligation contained herein or in any other Loan Document,
exceed the maximum amount permissible under applicable law.  If from any
circumstances whatsoever fulfillment of any provision hereof or of any other
Loan Document, at the time the performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity.
If from any such circumstances Lender shall ever receive anything of value
deemed interest under applicable law which would exceed interest at the highest
lawful rate, such excessive interest shall be applied to the reduction of the
principal amount owing hereunder, and not to the payment of interest, or if such
excessive interest exceeds any unpaid balance of principal, such excess shall be
refunded to Borrower.  All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, pro rated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the rate of interest on account
of such indebtedness is uniform throughout the term hereof.  This paragraph
shall control every other provision of the Loan Documents and all other
agreements among Lender and Borrower contemplated thereby.

SECTION 3.   CONDITIONS PRECEDENT

          The obligation of Lender to make the Loan is subject to the
satisfaction of all of the following conditions:

          3.1  Deliveries.  Receipt by Lender, on or before the Closing Date, of
               ----------
the following, each in form and substance satisfactory to Lender:

               (a) certified copies of the Certificate or Articles of
Incorporation (as amended), together with a good standing certificate from the
Secretary of State of the state of formation of each of Borrower and Guarantor,
each to be dated as of a recent date prior to the Closing Date.

               (b) certificates of appropriate public officials as to the
existence, good standing and qualification to do

                                     -11-
<PAGE>

business as a foreign corporation of Borrower and Guarantor in each jurisdiction
in which the ownership of its properties or the conduct of its business requires
such qualification.

               (c) this Agreement executed by Borrower and Guarantor.

               (d) the Note, executed by Borrower and payable to the order of
Lender.

               (e) the Individual Pledge Agreement and Financing Statements
executed by Pledgors.

               (f) the stock certificates covered by the Pledge Agreements,
together with Assignments Separate from Certificate covering such stock
certificates executed by Pledgors.

               (g) the Guaranty executed by Guarantor.

               (h) the Pledgor Guaranty executed by Pledgors.

               (i) the Account Pledge Agreement executed by Guarantor and the
other Persons party thereto.

               (j) the Control Agreements executed by the parties thereto.

               (k) an Intercreditor Agreement with Bank One Oklahoma, in form
and substance satisfactory to Lender.

               (l) a Subordination Agreement executed by Pledgors subordinating
the Debt of Borrower to Pledgors to the Loan hereunder, in form and substance
satisfactory to Lender.

               (m) an Intercreditor Agreement with respect to the Production
Payment, in form and substance satisfactory to Lender.

               (n) certificates of an officer and of the secretary or an
assistant secretary of Borrower and of Guarantor, certifying, inter alia (i)
true and complete copies of each of the articles or certificate of
incorporation, as amended and in effect of Borrower and of Guarantor, the
bylaws, as amended and in effect, of Borrower and of Guarantor and the
resolutions adopted by the Board of Directors of Borrower and Guarantor (A)
authorizing the execution, delivery and performance by Borrower and Guarantor of
this Agreement and the other Loan Documents to which each of Borrower and
Guarantor is or will be a party and the Loan to be made hereunder, (B) approving
the forms of the Loan Documents to which each of Borrower and Guarantor is or
will be a party and which will be delivered at or prior to the closing date

                                     -12-
<PAGE>

and (C) authorizing officers of Borrower and Guarantor to execute and deliver
the Loan Documents to which each of Borrower and Guarantor is or will be a party
and any related documents, including any agreement contemplated by this
Agreement, and (ii) the incumbency and specimen signatures of the officers of
Borrower and Guarantor executing any documents on its behalf.

               (o) a certificate from an  Authorized Officer of Borrower and
Guarantor certifying (i) that no Default or Event of Default has occurred and is
continuing and (ii) that Borrower and Guarantor are in compliance with all
covenants contained in Sections 5 and 6 hereof.
                       ----------------

               (p) a favorable, signed opinion addressed to Lender from counsel
to Borrower and Guarantor, in form and substance satisfactory to Lender and its
counsel.

               (q) the payment to Lender of all reasonable fees and expenses
(including the reasonable fees and disbursements of McAfee & Taft) agreed upon
by such parties to be paid on the Closing Date.

               (r) Federal Reserve Forms U-1 executed by Borrower.

          3.2  Commitment Fee.  The commitment fee required by Section 2.3
               --------------                                  -----------
hereof shall have been paid to Lender.

          3.3  Other Loan.  The Other Loan shall have closed and all conditions
               ----------
to funding thereunder shall have been satisfied.

          3.4  Representations and Warranties.  The representations and
               ------------------------------
warranties contained herein and in each of the Loan Documents shall be true,
correct and complete in all material respects on and as of the Closing Date.

          3.5  No Default.  No Default or Event of Default shall exist and be
               ----------
continuing.

          3.6  Performance.  Borrower and Guarantor shall have performed in all
               -----------
material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed by them on or before the Closing Date.

The acceptance of the benefits of the Loan shall constitute a representation and
warranty by Borrower and Guarantor to Lender that all of the conditions
specified in this Section above shall have been satisfied or waived as of that
time.

SECTION 4.  BORROWER'S AND GUARANTOR'S REPRESENTATIONS AND WARRANTIES

                                     -13-
<PAGE>

          In order to induce Lender to enter into this Agreement and to make the
Loan, Borrower and Guarantor represent and warrant to Lender that the statements
in this Section 4 are true, correct and complete:

          4.1  Organization, Powers and Qualification.  Each of Borrower and
               --------------------------------------
Guarantor is a corporation validly existing and in good standing under the laws
of the state of its organization, has all requisite power and authority to own
and operate its properties, to carry on its business as now conducted, to enter
into this Agreement, to issue the Note and the Guaranty, to carry out the
transactions contemplated hereby and thereby and is duly qualified, licensed and
in good standing as a foreign corporation in all jurisdictions in which its
properties or business make such qualification necessary.

          4.2  Subsidiaries.  Schedule 4.2 hereto lists all Subsidiaries of
               ------------   ------------
Borrower, the nature and amount of interest owned therein and the jurisdictions
in which each is qualified to do business.  There are no options or warrants or
other agreements or rights which require any of such Subsidiaries to issue any
additional capital stock or entitle any Person to acquire any capital stock or
other interest of any such Subsidiary.

          4.3  Authorization of Borrowing; Binding Obligation.  The execution,
               ----------------------------------------------
delivery and performance of this Agreement, the issuance, delivery and payment
of the Note and the Guaranty and the execution, delivery and performance of the
Loan Documents have been duly authorized by all necessary corporate action by
Borrower and Guarantor.  This Agreement and the Note, the Guaranty and the other
Loan Documents executed by Borrower and Guarantor are the legally valid and
binding obligations of each of Borrower and Guarantor, enforceable against each
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally.

          4.4  No Conflict.  The execution, delivery and performance by Borrower
               -----------
and Guarantor of this Agreement, the issuance, delivery and payment of the Note
and the Guaranty and the execution, delivery and performance of the Loan
Documents do not and will not (i) violate any provision of law applicable to
Borrower or Guarantor, the Certificate of Incorporation or Bylaws of Borrower or
Guarantor, or any order, judgment or decree of any court or other agency of
government binding on Borrower or Guarantor, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Borrower or Guarantor, (iii) result in or
require the creation or imposition of any Lien upon any of their properties or
assets, or (iv) require any approval of

                                     -14-
<PAGE>

stockholders or any approval or consent of any Person under any Contractual
Obligation of Borrower or Guarantor other than approvals or consents which have
been obtained and disclosed in writing to Lender.

          4.5  Governmental Consents.  The execution, delivery and performance
               ---------------------
by each of Borrower and Guarantor of this Agreement and the issuance, delivery
and payment of the Note and the Guaranty do not and will not require any
registration with, authorization, license, consent or approval of, or notice to,
or other action to, with or by, any Federal, state or other governmental
authority or regulatory body.

          4.6  Financial Statements.  Borrower has furnished to Lender the
               --------------------
unaudited balance sheet, income statement and statement of cash flow for
Borrower as of December 31, 1997, an unaudited balance sheet and income
statement for Borrower as of September 30, 1998 and an unaudited balance sheet
and income statement for Guarantor as of January 31, 1999 (such financials the
"Financials").  The Financials have been prepared in conformity with GAAP
-----------
consistently applied (except as otherwise disclosed in the Financials)
throughout the periods involved and present fairly, in all material respects,
the financial condition of Borrower and Guarantor as of the dates thereof and
the results of their operations for the periods then ended.  No Material Adverse
Effect has occurred in the financial condition of Borrower since September 30,
1998 or Guarantor since November 30, 1998.

          4.7  Title to Properties; Liens.  Borrower has defensible title to its
               --------------------------
oil and gas properties and each of Borrower and Guarantor has good, valid and
legal title to the balance of its properties and assets reflected in the most
recent balance sheets referred to in Section 4.6 except for assets acquired or
                                     -----------
disposed of in the ordinary course of business since the date of such balance
sheets.  Except for Permitted Liens, all such properties and assets are free and
clear of Liens.

          4.8  Litigation.  Except as listed on Schedule 4.8 hereof, no
               ----------                       ------------
proceedings against or affecting Borrower, any Subsidiary, or Guarantor are
pending or, to the knowledge of Borrower or Guarantor, threatened before any
court or governmental agency or department which involve a material risk of
having a Material Adverse Effect.

          4.9  Adverse Facts.  Neither Borrower, any Subsidiary, nor Guarantor
               -------------
is (i) in violation of any applicable law which would have a Material Adverse
Effect, or (ii) subject to or in default with respect to any final judgment,
writ, injunction, decree, rule or regulation of any court or Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which

                                     -15-
<PAGE>

would have a Material Adverse Effect.

          4.10 Payment of Taxes.  All tax returns and reports of Borrower, its
               ----------------
Subsidiaries, and Guarantor required to be filed by them have been timely filed,
either when originally due or within the duly approved extension period (of
which Lender has been notified simultaneously with application therefor), and
all taxes, assessments, fees and other governmental charges upon such Persons
and upon their properties, assets, income and franchises which are due and
payable have been paid when due and payable.  Neither Borrower nor Guarantor
knows of any proposed tax assessment against any of such Persons.

          4.11 Governmental Regulation.  Neither Borrower nor any Subsidiary nor
               -----------------------
Guarantor is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Investment Company Act of 1940 (as any of
the preceding acts have been amended), or any other law (other than Regulation
X) which regulates the incurring by such Person of Debt, including but not
limited to laws relating to common contract carriers or the sale of electricity,
gas, steam, water, or other public utility services.

          4.12 Environmental Regulations.  Each of Borrower, its Subsidiaries
               -------------------------
and Guarantor is in material compliance with all Environmental Laws applicable
to them.

          4.13 Use of Proceeds; Margin Stock.  The proceeds of the Loan will be
               -----------------------------
used by Borrower solely for acquisition of the Sonat Exploration Company
properties.  None of such proceeds will be used for the purpose of purchasing or
carrying any Margin Stock or for the purpose of reducing or retiring any Debt
which was originally incurred to purchase or carry a Margin Stock or for any
other purpose which might constitute this transaction a "purpose credit" within
the meaning of Regulation U or Regulation X.  Neither Borrower nor Guarantor is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stocks.

          4.14 ERISA.  (a)  No Reportable Event has occurred and is continuing
               -----
with respect to any Plan; (b) PBGC has not instituted proceedings to terminate
any Plan; (c) neither Borrower, Guarantor, any member of the Controlled Group,
or any duly-appointed administrator of a Plan (i) has incurred any liability to
PBGC with respect to any Plan other than for premiums not yet due or payable, or
(ii) has instituted or intends to institute proceedings to terminate any Plan
under Sections 4041 or 4041A of ERISA or withdraw from any Multi-Employer
Pension Plan (as that term is defined in Section 3(37) of ERISA); (d) each Plan
of Borrower has been maintained and funded in all material respects in
accordance with its terms and with all provisions of

                                     -16-
<PAGE>

ERISA applicable thereto; and (e) Borrower has no obligation or unfunded
liability with respect to any post-retirement benefits under any "welfare
benefit plans" (as defined in Section 3(1) of ERISA) other than liability for
continuing health coverage under Part 6 of Subtitle B of Title 1 of ERISA, which
(individually or collectively) could not be unilaterally terminated by Borrower
without incurring any material liability.

          4.15 Licenses; Reports; Etc.  Each of Borrower and Guarantor holds all
               -----------------------
Licenses for present operation of its business except where the failure to hold
such Licenses would not, in the aggregate, have a Material Adverse Effect.
Neither Borrower nor Guarantor is aware of any facts or circumstances which
would prevent such Persons from continuing to hold all Licenses or to renew any
License.

          4.16 Casualties.  Neither the business nor the properties of Borrower,
               ----------
any Subsidiary or Guarantor are currently affected by any environmental hazard,
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or other casualty (whether or not
covered by insurance), which could have a Material Adverse Effect.

          4.17 Solvency.  After giving effect to the Loan hereunder and all
               --------
other Debt, each of Borrower and Guarantor has (a) capital sufficient to carry
on its businesses and transactions, and (b) assets, the fair market value of
which exceeds its liabilities (as reflected on the Financial or on the financial
statements most recently delivered to Lender).

          4.18 Disclosure.  No representation or warranty of Borrower or
               ----------
Guarantor contained in this Agreement or any other document, certificate or
written statement furnished to Lender by or on behalf of Borrower or Guarantor
for use in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.  There is no fact known to Borrower or Guarantor which materially
adversely affects its business, operations, property, assets or condition
(financial or otherwise) which has not been disclosed herein or in such other
documents, certificates and statements furnished to Lender for use in connection
with the transactions contemplated hereby.

          4.19 No Default.  No event has occurred and is continuing which
               ----------
constitutes a Default or Event of Default.

SECTION 5.  AFFIRMATIVE COVENANTS

          Each of Borrower and Guarantor covenants and agrees that, until full
and final payment of the Obligations and the

                                     -17-
<PAGE>

termination of this Agreement, unless Lender shall otherwise give prior written
consent, each of Borrower and Guarantor shall perform or cause to be performed
all covenants in this Section 5.
                      ---------

          5.1  Payment and Performance.  Each of Borrower and Guarantor will pay
               -----------------------
all amounts owed under the Loan Documents in accordance with the terms thereof
and will observe, perform and comply with every covenant, term and condition
expressed or implied in the Loan Documents.

          5.2  Financial Statements and Other Reports.  Each of Borrower and
               --------------------------------------
Guarantor will maintain systems of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP.  Borrower and Guarantor will deliver to
Lender:

               (a) On or before April 30 of each year, financial statements
showing the financial conditions and results of operations of Borrower and its
Subsidiaries as of, and for the fiscal year ended on, the preceding December 31,
accompanied by (i) the opinion, without material qualification, of other
independent certified public accountants selected by Borrower and acceptable to
Lender, based on an audit using generally accepted auditing standards, that the
financial statements were prepared in accordance with GAAP and present fairly
the financial condition and results of operations of Borrower and its
Subsidiaries, and (ii) an Officer's Certificate with respect to such financial
statements in the form of Exhibit 5.2(a) attached hereto.
                          --------------

               (b) Within 45 days after the last day of each calendar quarter,
financial statements prepared in accordance with GAAP showing the financial
conditions of Borrower and Guarantor including a balance sheet and an income
statement.

               (c) On or before April 30 of each year, annual financial
statements of Guarantor prepared by accountants and in form and substance
satisfactory to Lender which will include a balance sheet and statement of
income and will disclose all contingent liabilities.

               (d) Within fifteen (15) days after the last day of each month,
statements from each Broker detailing the content and market value of each
Brokerage Account as of the last day of such month, together with such other
information as Lender might reasonably require.

               (e) Notice, promptly after Borrower or Guarantor knows or has
reason to know of, (i) the existence and status of any litigation with respect
to Borrower or Guaranty which could, in the event of an unfavorable outcome,
have a Material Adverse

                                     -18-
<PAGE>

Effect, (ii) any change in any material fact or circumstance represented or
warranted in this Agreement or in any of the Loan Documents, (iii) a Default or
Event of Default, specifying the nature thereof and what action Borrower or
Guarantor has taken, are taking, or proposes to take with respect thereto, or
(iv) the occurrence of a reportable event (as defined in ERISA) with respect to
any employee benefit plan of Borrower, or the complete or partial withdrawal
from participation in a multiemployer pension plan (as such terms are defined in
ERISA) by Borrower (or the intention of Borrower to do so), or that the PBGC or
Borrower has instituted or will institute proceedings under ERISA to terminate
any such plan or that any event has occurred or condition exists which might
constitute grounds for termination of any such benefit plan under ERISA.

               (f) Promptly upon request therefor by Lender, such information
respecting the business affairs, assets, and liabilities of Borrower or
Guarantor, and such opinions, certifications, projections (with underlying
assumptions) and documents, in addition to those mentioned in this Agreement, as
Lender may reasonably request.

          5.3  Corporate Existence, Capital Stock, Etc.  Each of Borrower and
               ----------------------------------------
Guarantor will at all times preserve and keep in full force and effect its
corporate existence and rights, franchises, Licenses and authorizations material
to its business.  Guarantor will not issue (a) any additional shares of any
class of capital stock in Guarantor, (b) any securities convertible voluntarily
by the holder thereof or automatically on the occurrence or nonoccurrence of any
event or condition into, or exchangeable for, any shares of Guarantor, or (c)
any warrants, options, rights, or other commitments entitling any person to
purchase or otherwise acquire any shares of Guarantor.

          5.4  Payment of Trade Debt, Taxes, Etc.  Each of Borrower and
               ---------------------------------
Guarantor will (i) timely file all required tax returns; (ii) timely pay all
taxes, assessments, and other governmental charges or levies imposed upon it or
upon its income, profits or property; (iii) pay all Debt owed by it on ordinary
trade terms to vendors, suppliers and other Persons providing goods and services
used by it in the ordinary course of business; (iv) pay and discharge when due
all other Debt now or hereafter owed by it; and (v) maintain appropriate
accruals and reserves for all of the foregoing Debt in accordance with GAAP.
Any such Person may, however, delay paying or discharging any such Debt so long
as it is in good faith contesting the validity thereof by appropriate
proceedings and it has set aside on its books adequate reserves therefor to the
extent required by GAAP.

          5.5  Maintenance of Properties; Insurance.  Each of Borrower and
               ------------------------------------
Guarantor will maintain, preserve, protect and keep

                                     -19-
<PAGE>

all property used or useful in the conduct of its business in good condition and
in material compliance with all applicable laws, rules and regulations, and will
from time to time make all repairs, renewals and replacements needed to enable
the business and operations carried on in connection therewith to be promptly
and advantageously conducted at all times. Each of Borrower and Guarantor will
maintain or cause to be maintained insurance with respect to its properties and
business in such amounts, against such risks, in such form and with such
responsible and reputable insurers as shall be usually carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which Borrower and Guarantor operate, satisfactory to Lender from time
to time.

          5.6  Inspection.  Borrower will permit any authorized representatives
               ----------
designated by Lender to visit and inspect any of the properties of Borrower or
Guarantor, including their financial and accounting records, and to make copies
and take extracts therefrom, and to discuss their affairs, finances and accounts
with their officers and independent public accountants, all upon reasonable
notice and at such reasonable times during normal business hours and as often as
may be reasonably requested.

          5.7  Compliance with Laws, Etc.  Borrower and Guarantor shall comply
               --------------------------
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority, noncompliance with which would cause a Material
Adverse Effect.  Borrower shall immediately notify Lender if any governmental
authority asserts noncompliance by any such Person with any such laws, rules,
regulations or orders.

          5.8  Other Loan.  Borrower and Guarantor will at all times comply in
               ----------
all respects with the terms, conditions and covenants of the Other Loan
Documents.

          5.9  Brokerage Account Value.
               -----------------------

               (a) On the date of execution of this Agreement, the market value
of the Brokerage Accounts (the "Accounts Value") shall be equal to or greater
than $7,200,000.

               (b) Borrower and Guarantor will continuously maintain or cause to
be maintained an Accounts Value to Loan Ratio (the "Ratio") of at least 1.2 to
1, meaning that for each $1.00 of principal outstanding on the Loan, Lender will
have a first priority security interest in Brokerage Accounts having a current
market value of at least $1.20. If the Ratio should ever be less than 1.2 to 1,
Borrower and Guarantor will take such action as might be necessary to restore
the Ratio, including, without limitation, the pledge of additional collateral
acceptable to Lender to secure payment of the Loan, or the principal reduction

                                     -20-
<PAGE>

of the Loan.  The Ratio will be measured by Lender monthly, on the fifteenth
(15th) day of each month.  Borrower and Guarantor will cure any breach of the
Ratio within ten (10) days from the date of the monthly measurement.

          5.10 Deposits to Brokerage Accounts.  Until the Loan has been paid in
               ------------------------------
full, Guarantor will cause all Cash Flow of Guarantor to be deposited in the
Brokerage Accounts covered by the Account Pledge Agreement.

SECTION 6.  NEGATIVE COVENANTS

          Each of Borrower and Guarantor agrees that, until full and final
payment of the Obligations and the termination of this Agreement, unless Lender
shall otherwise give prior written consent:

          6.1  Limitation on Debt.  Guarantor shall not incur, create, contract,
               ------------------
waive, assume, have outstanding, guarantee or otherwise be or become, directly
or indirectly, liable in respect of any Debt, except (i) Debt arising out of
this Agreement, (ii)  Debt in respect of current accounts payable (other than
for borrowed funds or purchase money obligations) accrued and incurred in the
ordinary course of business, provided that all such liabilities, accounts and
claims shall be promptly paid and discharged when due or in conformity with
customary trade terms, and (iii) Debt existing on the date hereof and previously
disclosed in writing to Lender.

          6.2  Limitation on Liens.  Guarantor shall not create, incur, permit
               -------------------
or suffer to exist any Lien upon any of its assets except Permitted Liens, and
the Lien of Williams Energy Services Company (formerly known as Williams Energy
and Derivatives Trading Company) on the Gas Purchase Agreement with CoEnergy
Ventures, Inc. dated July 27, 1990.

          6.3  Dividends.  Guarantor shall not pay or declare any Dividend or
               ---------
set apart any sum of money or assets for payment of Dividends during any fiscal
year.

          6.4  Limitation on Investments.  Guarantor will not, directly or
               -------------------------
indirectly, make or have outstanding any Investments, other than Investments
                                                      ----- ----
consistent with those previously made by Guarantor, which include publicly
traded common and preferred equity securities, publicly traded mutual funds,
U.S. Treasury securities, U.S. government agency bonds, including mortgage
backed securities, and investment grade corporate bonds and commercial paper.

          6.5  Limitation on Debt of Others.  Guarantor shall not guarantee,
               ----------------------------
agree to purchase or repurchase or become liable or

                                     -21-
<PAGE>

remain liable with respect to the Debt of any Person.

          6.6  Affiliate Transactions.  Except for the transaction contemplated
               ----------------------
by the Coral Agreement, neither Borrower, Guarantor nor any Subsidiary will,
directly or indirectly, enter into any transaction (including, but not limited
to, the sale or exchange of property or the rendering of service) with any of
its Affiliates other than in the ordinary course of business and upon fair and
               ----------
reasonable terms no less favorable than Borrower, Guarantor or such Subsidiary
could obtain in an arm's-length transaction with a Person not an Affiliate.
Guarantor will not make loans, advances or other extensions of credit, direct or
indirect, to or for the benefit of Affiliates.

          6.7  Limitation on Sale of Properties.  Guarantor shall not sell,
               --------------------------------
assign, convey, exchange, lease or otherwise dispose of all or any substantial
portion of its properties, rights, assets or business, whether now owned or
hereafter acquired, whether pursuant to a single transaction or a series of
transactions.

          6.8  Fiscal Year and Accounting Method.  Neither Borrower nor
               ---------------------------------
Guarantor shall change its fiscal year or method of accounting except as
required by GAAP.

          6.9  Liquidation, Mergers and Consolidations.  Except for the
               ---------------------------------------
transaction contemplated by the Coral Agreement, Borrower shall not dissolve or
liquidate, or become a party to any merger or consolidation, or acquire by
purchase, lease or otherwise all or substantially all of the assets or capital
stock of any Person.

          6.10 Other Loan Documents.  Borrower shall not violate any of the
               --------------------
negative covenants applicable to it under the Other Loan Documents.

SECTION 7.  EVENTS OF DEFAULT; REMEDIES

          7.1  Events of Default.  An "Event of Default" shall exist if any one
               -----------------
or more of the following events shall occur and be continuing:

               (a) Borrower shall fail to pay within ten (10) days of any due
date the Obligations, or any part thereof, including without limitation any
principal of, or interest on, the Note, any Fee, any Expenses or other payment
under the Loan Documents ("Payment Default"); provided the failure to pay
monthly interest caused by a failure by Borrower to comply with the Cash Flow
Coverage Ratio covenant of the Other Loan Documents shall not constitute an
Event of Default hereunder as long as such failure to comply does not constitute
a Default or Event of Default under any of the Other Loan Documents; or

                                     -22-
<PAGE>

          (b) any representation or warranty made under this Agreement, or any
of the other Loan Documents, or in any certificate or statement furnished or
made to Lender pursuant hereto or in connection herewith or with the
Obligations, shall prove to be untrue or inaccurate in any material respect as
of the date on which such representation or warranty is made; or

          (c) default shall occur in the performance of any of the covenants or
agreements of Borrower or Guarantor contained in this Agreement or in any of the
other Loan Documents and shall continue for thirty (30) days after the earlier
of (i) written notice of such default shall have been given to an Authorized
Officer of Borrower by Lender, or (ii) Borrower has knowledge of such default,
provided no notice or cure period will be permitted for a default in the
performance of the covenants or agreements contained in Section 5.2(e); or
                                                        --------------

          (d) default shall occur in the payment of Debt of Borrower, Guarantor,
or either of them, in the aggregate amount of $50,000 or more (other than the
Obligations); or default shall occur in respect of any note, loan agreement or
credit agreement relating to any such Debt and such default shall continue for
more than the period of grace, if any, specified therein or any such Debt shall
become due before its stated maturity by acceleration of the maturity thereof;
or

          (e) any of the Loan Documents shall cease to be legal, valid and
binding agreements enforceable against the Person executing the same in
accordance with the respective terms thereof or shall in any way be terminated
or become or be declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective remedies, powers or
privileges intended to be created thereby; or

          (f) Borrower, Guarantor or any Subsidiary shall (i) apply for or
consent to the appointment of a receiver, trustee, custodian, intervenor or
liquidator of itself or of all or a substantial part of such Person's assets,
(ii) file a voluntary petition in bankruptcy, admit in writing that such Person
is unable to pay such Person's debts as they become due or generally not pay
such Person's debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking reorganization or
an arrangement with creditors or to take advantage of any bankruptcy or other
laws for the benefit of debtors, (v) file an answer admitting the material
allegations of, or consent to, or default in answering, a petition filed against
such Person in any bankruptcy, reorganization or insolvency proceeding, or (vi)
take corporate action for the purpose of effecting any of the foregoing; or

          (g) an involuntary petition or complaint shall be

                                     -23-
<PAGE>

filed against Borrower, Guarantor or any Subsidiary, seeking bankruptcy or
reorganization or such Person or the appointment of a receiver, custodian,
trustee, intervenor or liquidator of such Person, or all or substantially all of
such Person's assets, and such petition or complaint shall not have been
dismissed within sixty (60) days of the filing thereof; or an order, order for
relief, judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or complaint
seeking reorganization of any Borrower or Guarantor or appointing a receiver,
custodian, trustee, intervenor or liquidator of such Person, or of all or
substantially all of such Person's assets; or

          (h) any final judgment(s) for the payment of money in excess of the
sum of $100,000 in the aggregate shall be rendered against Borrower, Guarantor
or any Subsidiary and such judgment or judgments shall not be satisfied or
discharged at least ten (10) days prior to the date on which any of its assets
could be lawfully sold to satisfy such judgment; or

          (i) both the following events shall occur: (i) either (x) proceedings
shall have been instituted to terminate, or a notice of termination shall have
been filed with respect to, any Plan (other than a Multi-Employer Pension Plan
as that term is defined in Section 3(37) of ERISA) by Borrower, any member of
the Controlled Group, PBGC or any representative of any thereof, or any such
Plan shall be terminated, in each case under Section 4041 or 4042 of ERISA, or
(y) a Reportable Event, the occurrence of which would cause the imposition of a
Lien under Section 4068 of ERISA, shall have occurred with respect to any Plan
(other than a Multi-Employer Pension Plan as that term is defined in Section
3(37) of ERISA) and be continuing for a period of sixty (60) days; and (ii) the
sum of the estimated liability to PBGC under Section 4062 of ERISA and the
currently payable obligations of such Borrower to fund liabilities (in excess of
amounts required to be paid to satisfy the minimum finding standard of Section
412 of the Code) under the Plan or Plans subject to such event shall exceed ten
percent (10%) of Borrower's Tangible Net Worth at such time; or

          (j) any or all of the following events shall occur with respect to any
Multi-Employer Pension Plan (as that term is defined in Section 3(37) of ERISA)
to which Borrower contributes or contributed on behalf of its employees: (i)
Borrower incurs a withdrawal liability under Section 4201 of ERISA; or (ii) any
such plan is "in reorganization" as that term is defined in Section 4241 of
ERISA; or (iii) any such Plan is terminated under Section 4041A of ERISA and
Agent determines in good faith that the aggregate liability likely to be
incurred by Borrower, as a result of all or any of the events specified in
Subsections (i), (ii) and (iii) above occurring, shall have a

                                     -24-
<PAGE>

material adverse effect; or

               (k) a Material Adverse Change shall occur in the financial
condition of Borrower or Guarantor; or

               (l) a Default or Event of Default shall occur under the Other
Loan; or

               (m) any rescission, abandonment or disclaimer (or commencement of
any action to effect the same) by any party to any of the material contracts of
Guarantor, including all gas purchase and sale contracts, or a default or
failure to perform by any party to any of such contracts.

          7.2  Remedies Upon Event of Default.  If an Event of Default shall
               ------------------------------
have occurred and be continuing, then Lender may exercise any one or more of the
following rights and remedies, and any other remedies provided in any of the
Loan Documents, as Lender in its sole discretion, may deem necessary or
appropriate:

               (a) declare the Obligations, including without limitation the
Note, to be forthwith due and payable, whereupon the same shall forthwith become
due and payable without presentment, demand, protest, notice of default, notice
of acceleration or of intention to accelerate or other notice of any kind, all
of which Borrower hereby expressly waives, anything contained herein or in the
Note to the contrary notwithstanding;

               (b) reduce any claim to judgment;

               (c) exercise any right of offset including Set-Off as provided in

Section 8.6;
-----------

               (d) without notice of default or demand, pursue and enforce any
of Lender's rights and remedies under the Loan Documents, or otherwise provided
under or pursuant to any applicable law or agreement; provided, however, that if
any Event of Default specified in Sections 7.1 (f) or (g) shall occur, the
                                  -----------------------
Obligations, including without limitation the Note, shall thereupon become due
and payable concurrently therewith, without any further action by Lender and
without presentment, demand, protest, notice of default, notice of acceleration
or of intention to accelerate or other notice of any kind, all of which Borrower
hereby expressly waives; and

               (e) exercise any other remedy at law or in equity.

          7.3  Application of Proceeds.  So long as an Event of Default shall
               -----------------------
continue, all money received by Lender (i) from any Guarantor pursuant to the
terms of any Guaranty, (ii) Borrower

                                     -25-
<PAGE>

under any Loan Document or (iii) as a result of the enforcement of the rights
and remedies of Lender under the Loan Documents or otherwise, shall, except as
otherwise required by law, be distributed by Lender as follows:

               (a) first, to payment of the expenses of sale or other
realization of the collateral securing the Obligations and all expenses,
liabilities and advances incurred or made by Lender in connection therewith and
any other unreimbursed expenses for which Lender is to be reimbursed pursuant to
Section 8.2.
-----------

               (b) second, to the payment of accrued unpaid interest on the
                   ------
Obligations,

               (c) third, to the payment of unpaid principal on the Obligations,
                   -----

               (d) fourth to Borrower or as a court of competent jurisdiction
                   ------
may direct.

SECTION 8.  MISCELLANEOUS

          8.1  Amendments.  No amendment or waiver of any provision of this
               ----------
Agreement, the Note or any other Loan Document, nor consent to any departure by
Borrower or Guarantor herefrom or therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrower and Guarantor, as to
amendments, and by Lender in all cases, and then, in any case, such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

          8.2  Expenses.  Whether or not the transactions contemplated hereby
               --------
shall be consummated, Borrower and Guarantor agree to promptly pay (i) all the
actual and reasonable costs and expenses of Lender in the preparation of this
Agreement, the Note, and the other Loan Documents, including the reasonable fees
and out-of-pocket expenses of counsel for Lender, and all the costs of
furnishing all opinions by counsel for Borrower and Guarantor (including without
limitation any opinions requested by Lender as to any legal matters arising
hereunder); (ii) the reasonable fees, expenses and disbursements of outside
counsel to Lender in connection with the administration of this Agreement and
the Note, and the Loan hereunder, and the negotiation, preparation, and
execution of any amendments and waivers hereto; and (iii) after the occurrence
of an Event of Default, all costs and expenses (including reasonable attorneys'
fees and costs of settlement) incurred by Lender in enforcing any Obligations of
or in collecting any payments due from any Person hereunder or under the Note by
reason of such Event of Default or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any

                                     -26-
<PAGE>

insolvency or bankruptcy proceeding.

          8.3  Indemnity.  In addition to the payment of expenses pursuant to
               ---------
Section 8.2, whether or not the transactions contemplated hereby shall be
-----------
consummated, Borrower and Guarantor agree to indemnify, pay and hold Lender and
any transferee of the Note, and the officers, directors, employees and agents of
Lender and such transferees (collectively called the "Indemnitees") harmless
from and against, any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against that Indemnitee, in any manner relating to or
arising out of:  (i) the breach of any representation or warranty of Borrower or
Guarantor set forth in the Loan Documents; (ii) the failure of Borrower or
Guarantor to perform any obligation required to be performed by such Person
pursuant to the Loan Documents; (iii) the presence, disposal, release,
threatened release, removal or production of any hazardous substances, solid
wastes or Hazards which are on, in, from or affecting any portion of the
properties of Borrower; (iv) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such hazardous
substances, solid wastes or Hazards; (v) any lawsuit brought or threatened,
settlement reached, or order by any governmental authority relating to such
hazardous substances, solid wastes or Hazards; (vi) any violation of any
Environmental Laws or demands of any governmental authorities, or violation of
any policies or requirements of Lender which are based upon or in any way
related to such hazardous substances, solid wastes or Hazards, regardless of
whether or not any of the conditions described under any of the foregoing
subsections was or is caused by or within the control of Borrower; and/or (vii)
the use or intended use of the proceeds of the Loan hereunder and any matter
related thereto (the "indemnified liabilities"); provided that Borrower and
Guarantor shall have no obligation to an Indemnitee hereunder with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of that Indemnitee.  To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Borrower and Guarantor shall
contribute the maximum portion which they are permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them.

          8.4  Entire Agreement.  This Agreement constitutes the entire
               ----------------
understanding and agreement of the parties relative to the

                                     -27-
<PAGE>

Loan, and supersedes all previous oral or written understandings and agreements
concerning the Loan.

          8.5  Independence of Covenants.  All covenants hereunder shall be
               -------------------------
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or potential Event of Default if
such action is taken or condition exists.

          8.6  Set-Off.  In addition to any rights now or hereafter granted
               -------
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, Lender is hereby authorized by Borrower and
Guarantor at any time or from time to time, without notice to Borrower,
Guarantor or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured but not including trust accounts) and
any other indebtedness at any time held or owing by Lender to or for the credit
or the account of Borrower or Guarantor or against and on account of the
obligations and liabilities of Borrower and Guarantor to Lender under this
Agreement and the Note, including, but not limited to, all claims of any nature
or description arising out of or connected with this Agreement or the Note,
irrespective of whether or not (a) Lender shall have made any demand hereunder
or (b) Lender shall have declared the principal of and interest on the Loan and
Note and other amounts due hereunder to be due and payable as permitted by
Section 7 and although said obligations and liabilities, or any of them, may be
---------
contingent or unmatured.  Lender acknowledges that the escrow account on deposit
with Lender into which Borrower deposits prepayments for drilling and completion
costs will be treated as a trust account for the purposes of this section.

                                     -28-
<PAGE>

          8.7  Notices.  Unless otherwise specifically provided herein, any
               -------
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed, or sent by United
States mail, Federal Express or other nationally regarded overnight delivery
services.  Any such notice shall be deemed to have been given (whether actually
received or not) when delivered in person, upon transmission by telecopy or
telex, four Business Days after deposit in the United States mail, registered or
certified, with postage prepaid and properly addressed or one Business Day after
deposit with Federal Express or other nationally regarded overnight delivery
service and otherwise when actually received; provided that notices to Lender
shall not be effective until received.  For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as provided
in this section 8.7) shall be as set forth below each party's name on the
        -----------
signature pages hereof.

          8.8  Survival of Warranties and Agreements.  All agreements,
               -------------------------------------
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loan hereunder and the execution
and delivery of the Note.

          8.9  Failure or Indulgence Not Waiver; Remedies Cumulative.  No
               -----------------------------------------------------
failure or delay on the part of Lender in the exercise of any power, right or
privilege hereunder or under the Note or any Loan Documents shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege.  All rights and remedies existing under this
Agreement, the Note or any of the other Loan Documents are cumulative to and not
exclusive of, any rights or remedies otherwise available.

          8.10 Severability.  In case any provision in or obligation under this
               ------------
Agreement, the Note or any of the other Loan Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.

          8.11 Headings.  Section and subsection headings in this Agreement are
               --------
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.

          8.12 Applicable Law.  This Agreement and the other Loan Documents
               --------------
shall be governed by, and shall be construed and

                                     -29-
<PAGE>

enforced in accordance with the laws of the State of Oklahoma.

          8.13 Submission to Jurisdiction; Venue; Waiver of Jury Trial.  TO
               -------------------------------------------------------
INDUCE AGENT AND LENDER TO ENTER INTO THIS AGREEMENT, BORROWER AND GUARANTOR
IRREVOCABLY AGREE THAT, SUBJECT TO LENDER'S SOLE AND ABSOLUTE ELECTION, ALL
SUITS, ACTIONS OR OTHER PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT
OF OR FROM OR RELATED TO THIS AGREEMENT, THE NOTES, THE GUARANTY OR ANY DOCUMENT
EXECUTED IN CONNECTION HEREWITH, SHALL BE SUBJECT TO LITIGATION IN COURTS HAVING
SITUS WITHIN OKLAHOMA CITY, OKLAHOMA.  SUCH PERSONS HEREBY CONSENT AND SUBMIT TO
THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN OKLAHOMA
CITY, OKLAHOMA.

          8.14 Successors and Assigns; Transferees of Note.  This Agreement
               -------------------------------------------
shall be binding upon the parties hereto and their respective successors and
assigns and shall inure to the benefit of the parties hereto and the successors
and transferees of Lender.  The terms and provisions of this Agreement shall
inure to the benefit of any transferee of the Note.  Borrower may not assign or
transfer any of its rights or obligations hereunder.

          8.15 Counterparts; Effectiveness.  This Agreement and any amendments,
               ---------------------------
waivers, consents, or supplements may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.  This Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto and written or telephonic notification of such execution and
authorization of delivery thereof has been received by Borrowers and Lender.

          8.16 Restatement of Existing Credit Agreement.  This Agreement is a
               ----------------------------------------
restatement of the Credit Agreement among Borrower, Guarantor and Lender, dated
December 22, 1997, as amended by First Amendment (the "Existing Credit
Agreement").  This Agreement is an amendment and restatement of the Existing
Credit Agreement in its entirety, provided that, the indebtedness described in
the Existing Credit Agreement, as reduced, shall continue in full force and
effect against all obligors named therein, all collateral described in the
Existing Credit Agreement and in the Individual Pledge Agreement (except as
specifically released) and the Account Pledge Agreement, shall continue in full
force and effect to secure the Obligations, and the Subordination Agreement, the
Guaranty and the Pledgor Guaranty shall continue in full force and effect.  Any
reference to the Credit Agreement in any of such documents shall be deemed a
reference to this Agreement.

                                     -30-
<PAGE>

          WITNESS the due execution hereof by the respective duly authorized
officers or individuals as of the date first written above.

                              INDIAN OIL COMPANY, an Oklahoma corporation

                              By_______________________________
                                 Roger Graham, President

                              Notice Address:
                              9400 North Broadway
                              One Benham Place, Suite 800
                              Oklahoma City, Oklahoma 73114
                              Fax: (405) 475-7777

                                                     ("Borrower")

                              CIBOLA CORPORATION, a Wyoming corporation

                              By_____________________________
                                Michael C. Black, President

                              Notice Address:
                              1131 13th Street, Suite 206
                              Cody, Wyoming 82414

                                                     ("Guarantor")

                              ___________________________________
                              Richard R. Dunning

                              ___________________________________
                              Larry D. Hartzog

                              ___________________________________
                              Michael C. Black

                                     -31-
<PAGE>

                              DUNNING FAMILY LIMITED PARTNERSHIP, an Oklahoma
                              limited partnership

                              By Dunning Management L.L.C., an Oklahoma limited
                                 liability company, General Partner

                                 By_____________________________________
                                   Richard R. Dunning, Manager

                              __________________________________________
                              MICHAEL C. BLACK, Trustee of the Michael C. Black
                              Revocable Trust

                                                            ("Pledgors")

                              MIDFIRST BANK

                              By________________________________________
                                Alan H. Kraft, Senior Vice

                                President

                              Notice Address:

                              501 West I-44 Service Road, Suite 600

                              Oklahoma City, Oklahoma 73118
                              Fax: (405) 879-6155

                                                            ("Lender")

                                     -32-<PAGE>

                                                                 Exhibit 10.6(b)

                      FIRST AMENDMENT TO CREDIT AGREEMENT
                      -----------------------------------

     This First Amendment to Credit Agreement is entered into as of May ____,
1999, by Indian Oil Company ("Borrower"), Cibola Corporation ("Guarantor"),
Richard R. Dunning, Larry D. Hartzog, Michael C. Black, Dunning Family Limited
Partnership, and Michael C. Black, Trustee of the Michael C. Black Revocable
Trust ("Pledgors"), and MidFirst Bank ("Lender"), with respect to the following:

     A.   Lender, Borrower, Guarantor and Pledgors entered into a Credit
Agreement as of March 31, 1999 (the "Agreement") with respect to a certain
extension of credit by Lender to Borrower in the form of a Term Loan in the
principal of $6,000,000 due on March 1, 2000.

     B.   Lender, Borrower, Guarantor and Pledgors have agreed to amend the
Agreement to modify the requirement with respect to the payment of interest on
the Loan prior to the Maturity Date.

     NOW, THEREFORE, in consideration of the recitals and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:

     1.   Section 2.2 of the Loan Agreement is amended to read, in full, as
follows:

          2.2  Interest; Payments of Principal and Interest.  The Loan
               --------------------------------------------
     (exclusive of any past due principal or interest) shall bear interest on
     each day at the Base Rate in effect on such day.  All past due principal
     and past due interest on the Loan shall bear interest on each day
     outstanding at the Late Payment Rate in effect on such day, and such past
     due interest shall be due and payable immediately as it accrues.  Accrued
     and unpaid interest on the Loan shall be payable on the Maturity Date.
     Notwithstanding anything to the contrary herein, Borrower may, but shall
     not be obligated to, make payments from time to time of accrued interest
     hereunder prior to the Maturity Date, but only if (i) such payments would
     not cause Borrower to violate Section 7.2 of the Loan Agreement for the
     Other Loan, or (ii) an event of default under such Loan Agreement has not
     occurred or is not continuing.

     2.   Section 7.1(a) of the Loan Agreement is amended to read, in full, as
follows:

          (a)  Borrower shall fail to pay within ten (10) days of any due date
     the Obligations, or any part thereof, including without limitation any
     principal of, or interest on (subject to Section 2.2, as amended, which
     provides that Borrower is not obligated to make accrued interest payments
     on the Loan prior to the Maturity Date), the Note, any Fee, any Expenses or
     other payment under the Loan Documents ("Payment Default"); or

     3.   Continuation/Ratification.  Except as amended by this First Amendment,
          -------------------------
the Agreement and the Loan Documents, including any guaranties, shall continue
in full force and
<PAGE>

effect and are ratified and confirmed in all respects. Any reference to the
Credit Agreement in any Loan Document shall be deemed a reference to the
Agreement, as amended.

     4.   Representations True, No Default.  The representations and warranties
          --------------------------------
of Borrower and Guarantor contained in the Agreement are true and correct in all
material respects on and as of the date hereof as though made on and as of the
date hereof, except to the extent such representations and warranties relate
solely to an earlier date; and after giving effect to this Amendment, no Default
or Event of Default under the Agreement has occurred and is continuing.

     5.   Execution.  This Amendment has been duly authorized, executed and
          ---------
delivered on behalf of Borrower, Guarantor and each Pledgor.

     6.   Construction.  Capitalized terms used herein and not otherwise defined
          ------------
shall have the same meaning as in the Agreement.

     IN WITNESS WHEREOF, the parties have cause this First Amendment to Credit
Agreement to be duly executed as of the date first set forth above.

                              INDIAN OIL COMPANY,
                              an Oklahoma corporation

                              BY:   _________________________________
                                    _____________________, President

                              CIBOLA CORPORATION,
                              a Wyoming corporation

                              BY:   _________________________________
                                    Michael C. Black, President

                              _______________________________________
                              Richard R. Dunning

                              _______________________________________
                              Larry D. Hartzog

                              _______________________________________
<PAGE>

                              Michael C. Black

                              DUNNING FAMILY LIMITED PARTNERSHIP,
                              an Oklahoma limited partnership

                              BY:   DUNNING MANAGEMENT, L.L.C., an
                                    Oklahoma limited liability company,
                                    General Partner

                                    BY:  ______________________________
                                         Richard R. Dunning, Manager

                              _________________________________________
                              Michael C. Black, Trustee of the Michael C. Black
                              Revocable Trust

                              MIDFIRST BANK

                              BY:   ____________________________________
                                    Alan H. Kraft, Senior Vice President

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