Document:

<PAGE>   1
                                  EXHIBIT 10.27

                        SETTLEMENT AND RELEASE AGREEMENT

         THIS SETTLEMENT AND RELEASE AGREEMENT ("Agreement") is made and entered
into as of the 11th day of May, 2001, by and among Alexander E. Benton ("Alex"),
Pamela Nicole Benton ("Nikki"), and Benton Oil and Gas Company, a Delaware
corporation (the "Company").

                                 R E C I T A L S

         A. On or about the dates set forth below, the Company loaned Alex the
sums set forth opposite the respective dates:

<TABLE>
<CAPTION>
    ------------------------------------------------------------------------------------------------------------
         DATE            AMOUNT                DATE          AMOUNT                 DATE           AMOUNT
    ----------------------------------     -------------------------------      --------------------------------
<S>                       <C>                   <C>            <C>                    <C>            <C>
            1/1/97        $409.256.28           3/18/98        325,000.00             6/10/98        229,000.00
    ----------------------------------     -------------------------------      --------------------------------
           6/27/97         538,046.87           4/13/98        140,000.00             6/15/98        293,000.00
    ----------------------------------     -------------------------------      --------------------------------
          12/19/97         535,000.00           5/14/98        110,000.00             7/29/98         42,000.00
    ----------------------------------     -------------------------------      --------------------------------
          12/29/97         300,000.00            6/1/98        184,000.00             8/28/98        830,400.00
    ----------------------------------     -------------------------------      --------------------------------
           3/17/98         153,300.73           6/10/98        116,000.00            10/15/98        400,000.00
    ------------------------------------------------------------------------------------------------------------
</TABLE>

         B. Each of the loans referenced above in Recital A (collectively, the
"Loans") is evidenced by a written promissory note dated the respective dates
set forth above, which are in the respective principal face amounts set forth
above (collectively, the "Old Notes").

         C. On or about November 30, 1998, for valuable consideration, Alex
made, executed, and delivered to the Company the following promissory notes: a
promissory note dated November 30, 1998, in the principal face amount of
$601,753.64; and a promissory note dated November 30, 1998, in the principal
face amount of $5,598,246.36 (collectively, the "New Notes"). The New Notes
represented a renewal of existing, outstanding indebtedness.

         D. In order to secure the repayment of the Loans and Alex's payment and
performance obligations under the New Notes, Alex granted the Company a security
interest in the collateral that is more particularly described in that certain
Security Agreement dated as of November 30, 1998, which Alex executed and
delivered to the Company (the "1998 Security Agreement").

         E. On July 20, 1999, Alex commenced a bankruptcy case by filing a
voluntary chapter 11 petition under the United States Bankruptcy Code, 11 U.S.C.
Section Section 101 et seq. (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Central District of California, Santa Barbara Division
(the "Bankruptcy Court"), under Case No. ND 99-12779-RR (the "Bankruptcy Case").

         F. On or about February 17, 2000, Alex and the Company entered into a
Consulting Agreement, pursuant to which the Company retained Alex as an
independent contractor to perform certain services for the Company (the
"Consulting Agreement").

         G. On February 25, 2000, the Company filed its Proof of Claim (the
"Company's Proof of Claim") in the Bankruptcy Case.

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         H. On February 29, 2000, Nikki filed her Proof of Claim ("Nikki's Proof
of Claim") in the Bankruptcy Case.

         I. On April 7, 2000, Alex filed an objection to Nikki's Proof of Claim
("Alex's Objection"). On April 25, 2000, the Company filed a joinder in Alex's
Objection (the "Company's Joinder").

         J. The parties to this Agreement wish to settle and resolve certain
disputes and controversies between and/or among them in the manner set forth in
this Agreement.

         NOW THEREFORE, intending to be legally bound, and in consideration of
the recitals set forth above, the covenants and agreements hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties to this Agreement, Alex, Nikki, and
the Company agree as follows:

         1. RECITALS. The Recitals set forth above are incorporated into and are
made a part of this Agreement.

         2. LIQUIDATION OF CERTAIN NON-EXEMPT ASSETS; NET PROCEEDS. In
consideration of the Company's and Nikki's agreement to enter into the
transactions contemplated in this Agreement, Alex agrees to liquidate promptly
(or cause the prompt liquidation of) all of the non-exempt assets in Alex's
bankruptcy estate, with the exception of those assets set forth on the attached
EXHIBIT A. From the Net Proceeds of the liquidation of those assets, Alex will
promptly pay (or cause to be paid): first, all chapter 11 administrative and
other chapter 11 expenses (including those of the Office of the U.S. Trustee) in
such respective amounts as the Bankruptcy Court directs; second, all of the
claims of the secured creditors listed on the attached EXHIBIT B, in the
respective amounts set forth therein; third, all of the claims of the general
unsecured creditors listed on the attached EXHIBIT C, in the respective amounts
set forth therein; and fourth, the balance of the Net Proceeds to the Company
(the "Company's Share of Net Proceeds"). (As used in this Agreement, the term
"Net Proceeds" means the proceeds of sale minus ordinary and necessary costs of
sale.)

            2.1. RESTRICTED ACCOUNTS. In consideration of the Company's
agreement to enter into the transactions contemplated in this Agreement, Alex
covenants and agrees that after the payment of all allowed claims and
administrative expenses as set forth above in section 2, and except for the
proceeds from the sale of Alex's 1997 Land Rover, all sums remaining in any
restricted or other account over which the Bankruptcy Court has jurisdiction, or
from which withdrawals can be made only with Bankruptcy Court approval, will be
paid to the Company in reduction of the outstanding balance of the sums due
under the Loans. Alex covenants and agrees further that any plan of
reorganization that he proposes in his Bankruptcy Case will include a provision
incorporating the terms of this section 2.1.

         3. TERMINATION OF CONSULTING AGREEMENT. Alex and the Company mutually
agree that: (a) the Consulting Agreement will be terminated as of the date of
this Agreement, and for purposes of the Consulting Agreement, the termination
will be deemed to have occurred under either section 6(a) or 6(b)(ii) of the
Consulting Agreement; (b) except as set forth in the following subsection (c),
Alex freely, knowingly, and voluntarily waives any and all of his rights and the
Company's obligations to him under section 3 ("Consulting Fees and Expenses") of
the Consulting Agreement, including but not limited to his right to receive
consulting fees for the months of March, April, and May, 2001; (c)
simultaneously with the execution and delivery of this Agreement by all of the
parties to this Agreement, the Company will cause a final consulting fee payment
of $36,000 to be made to Alex by delivering to Nikki (at Alex's express request)
a regular check in the amount of $36,000 which is made payable to Nikki's order;
and

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(d) Alex freely, knowingly, and voluntarily waives any and all of his rights
and the Company's obligations to him under section 5 ("Right of First Refusal")
of the Consulting Agreement.

         4. LIQUIDATION OF STOCK AND STOCK OPTIONS. Alex covenants and agrees
that simultaneously with the execution and delivery of this Agreement by all of
the parties to this Agreement, he will execute and deliver to the Company an
Amended and Restated Pledge Agreement in the form attached hereto as EXHIBIT D,
pursuant to which he ratifies and reaffirms his previous grant to the Company of
a perfected first lien against and security interest in 600,000 shares of the
Company's stock and the stock options that are more particularly described
therein (collectively, the "BNO Stock"). Alex covenants and agrees that at such
times and in such amounts as the Company directs in its sole discretion, he will
exercise his stock options, and he will sell the resulting shares together with
his existing Company stock (in such amounts and at such times as the Company
directs in its sole discretion), with all of the after-tax proceeds going to the
Company. Alex acknowledges and agrees that the Company may effect the sale of
the BNO Stock pursuant to the power of attorney granted by Alex to the Company
in the Amended and Restated Pledge Agreement. The Company acknowledges and
agrees that it will not effect an exercise of the stock options unless the
market price of the stock at the time of the exercise is greater than the
exercise price, the cost of exercise, and any tax attributable to the
transaction. Nikki acknowledges and agrees that for the purposes of this
Agreement, she has no right, title, or interest in or to any of the BNO Stock,
as to which it is not anticipated there will ever be sufficient proceeds from
the sale thereof to satisfy Alex's debt to the Company. Notwithstanding the
foregoing, in the event that there are proceeds from the sale of the BNO Stock
which are in excess of the then-outstanding aggregate indebtedness due to the
Company (and net of income tax which must be paid by Alex), then the Company
will turn over such excess sale proceeds to Alex and/or Nikki, either pursuant
to the express provisions of a writing that is signed by both Alex and Nikki, or
in accordance with the provisions of a final, nonappealable order entered by a
court of competent jurisdiction.

         5. NO DEFENSES TO INDEBTEDNESS. Alex confirms, acknowledges, and agrees
that: (a) as of January 31, 2001, the aggregate outstanding principal balance of
the Loans is $6,209,725.30 (exclusive of accrued interest and attorneys' fees
and expenses); (b) the Company has performed all obligations and duties owed to
Alex as of the date of this Agreement; and (c) as of the date of this Agreement,
Alex has no defenses, set-offs, or counterclaims to the indebtedness evidenced
by the Old Notes or the New Notes or with respect to the performance or
observance by him of any representation, covenant, or other agreement contained
in any of the documents that evidence or secure the Loans.

         6. ALEX'S RELEASE OF THE COMPANY. In consideration of the Company's
agreement to enter into the transactions contemplated in this Agreement, and
except for the Company's obligations to Alex under this Agreement, Alex, for
himself and his heirs, executors, administrators, legal representatives,
successors, and assigns, and all persons claiming by or through them
(collectively, the "Alex Releasors"), hereby releases and discharges the
Company, and each of its subsidiary and affiliated corporations, and their
respective predecessors, successors, and assigns, and each of their respective
directors, officers, employees, attorneys, accountants, consultants, insurers,
representatives, and agents (collectively, the "BNO Releasees"), from and
against any and all actions and causes of action, suits, debts, dues, accounts,
bonds, covenants, contracts, agreements, promises, warranties, guarantees,
representations, judgments, claims, liabilities, obligations, torts, damages,
liens, costs, expenses, and demands whatsoever, at law or in equity, whether
past or present, or known or unknown, or foreseen or unforeseen, or direct or
indirect, or fixed or contingent, or for contribution or indemnity, which
against the BNO Releasees, or any of them, the Alex Releasors, or any of them,
ever had or now have, arising out of, resulting from, or relating in any way
whatsoever to the

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Bankruptcy Case and/or the Loans and/or the Old Notes and/or the New Notes
and/or the 1998 Security Agreement and/or the Company's Proof of Claim and/or
the Consulting Agreement (except for Alex's rights, if any, under section 4 of
the Consulting Agreement) and/or any and all business or other transactions
between Alex and the Company.

          ALEX HEREBY ACKNOWLEDGES AND KNOWINGLY, FREELY AND VOLUNTARILY WAIVES
THE BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES:

                           "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
                  THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
                  THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
                  HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         7. COMPANY'S RELEASE OF ALEX. In consideration of Alex's agreement to
enter into the transactions contemplated in this Agreement, and except for
Alex's obligations to the Company under this Agreement, the Company, for itself
and its successors and assigns (collectively, the "Company Releasors"), hereby
releases and discharges Alex, and his heirs, executors, administrators, legal
representatives, successors, and assigns (collectively, the "Alex Releasees"),
from and against any and all actions and causes of action, suits, debts, dues,
accounts, bonds, covenants, contracts, agreements, promises, warranties,
guarantees, representations, judgments, claims, liabilities, obligations, torts,
damages, liens, costs, expenses, and demands whatsoever, at law or in equity,
whether past or present, or known or unknown, or foreseen or unforeseen, or
direct or indirect, or fixed or contingent, or for contribution or indemnity,
which against the Alex Releasees, or any of them, the Company Releasors, or any
of them, ever had or now have, arising out of, resulting from, or relating in
any way whatsoever to the Loans and/or the Old Notes and/or the New Notes and/or
the 1998 Security Agreement and/or the Company's Proof of Claim.

          THE COMPANY HEREBY ACKNOWLEDGES AND KNOWINGLY, FREELY AND VOLUNTARILY
WAIVES THE BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES:

                           "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
                  THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
                  THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
                  HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         8. NIKKI'S RELEASE OF THE COMPANY. In consideration of Company's
agreement to enter into the transactions contemplated in this Agreement, and
except for the Company's obligations to Nikki under this Agreement, Nikki, for
herself and her heirs, executors, administrators, legal representatives,
successors, and assigns, and all persons claiming by or through them
(collectively, the "Nikki Releasors"), hereby releases and discharges the BNO
Releasees from and against any and all actions and causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts, agreements, promises,
warranties, guarantees, representations, judgments, claims, liabilities,
obligations, torts, damages, liens, costs, expenses, and demands whatsoever, at
law or in equity, whether past or present, or known or unknown, or foreseen or
unforeseen, or direct or indirect, or fixed or contingent, or for contribution
or indemnity, which against the BNO Releasees, or any of them, the Nikki
Releasors, or any of them, ever had or now have, arising out of, resulting from,
or relating in any way whatsoever to the Bankruptcy Case and/or the Loans and/or
the Old Notes and/or the New Notes and/or the 1998 Security Agreement and/or
Company's Proof of Claim and/or Nikki's Proof of Claim and/or Alex's Objection
and/or the Company's Joinder and/or the Consulting Agreement (except for Alex's
rights, if any, under section 4 of the Consulting Agreement) and/or any and all
business or other

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transactions between Alex and the Company.

          NIKKI HEREBY ACKNOWLEDGES AND KNOWINGLY, FREELY AND VOLUNTARILY WAIVES
THE BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES:

                           "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
                  THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
                  THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
                  HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Nothing contained in the foregoing release by Nikki of the BNO Releasees will
affect, modify, add, or delete any rights, entitlements, and/or defenses that
exist between Nikki and Alex with respect to the pending family court case in
which they are the two litigants.

         9. COMPANY'S RELEASE OF NIKKI. In consideration of Nikki's agreement to
enter into the transactions contemplated in this Agreement, and except for
Nikki's obligations to the Company under this Agreement, the Company Releasors
hereby release and discharge Nikki, and her heirs, executors, administrators,
legal representatives, successors, and assigns (collectively, the "Nikki
Releasees"), from and against any and all actions and causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts, agreements, promises,
warranties, guarantees, representations, judgments, claims, liabilities,
obligations, torts, damages, liens, costs, expenses, and demands whatsoever, at
law or in equity, whether past or present, or known or unknown, or foreseen or
unforeseen, or direct or indirect, or fixed or contingent, or for contribution
or indemnity, which against the Nikki Releasees, or any of them, the Company
Releasors, or any of them, ever had or now have, arising out of, resulting from,
or relating in any way whatsoever to the Bankruptcy Case and/or Alex's Objection
and/or the Company's Joinder.

          THE COMPANY HEREBY ACKNOWLEDGES AND KNOWINGLY, FREELY AND VOLUNTARILY
WAIVES THE BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES:

                           "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
                  THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
                  THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
                  HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         10. Upon the conditions set forth in this section 10, Alex will assume
and pay Alex and Nikki's (a) 2000 federal and state income tax liability,
including penalties and interest and (b) all tax liability, including penalties
and interest, arising from all previously filed joint tax returns and indemnify
and hold Nikki free and harmless therefrom. Alex covenants and agrees that his
payment of the tax liabilities described in this section 10 (excluding any and
all capital gains tax liability arising from his sale of the Carpinteria
Property, the payment for which will come from Alex's bankruptcy estate) will
come from his exempt assets or from his share of the Carmel Property's Net
Proceeds (if any), or from his post-petition earnings, and not from his
bankruptcy estate. Alex covenants and agrees further that he will seek to
exclude the maximum allowable amount of gain attributable to the sale of 285
Toro Canyon Road, Carpinteria, California (the "Carpinteria Property") pursuant
to the relevant provisions of the Internal Revenue Code. (As used in this
Agreement, the "Carmel Property" means the premises commonly known and numbered
as 29703 Peter Pan Road, Carmel, California.)

         11. PAYMENT OF PERCENTAGE OF INCOME. If the aggregate of the amounts
paid by Alex to the Company under all of the other sections of this Agreement is
less than the then-outstanding amounts due under the Loans (including principal,
accrued interest, and attorneys' fees and costs) (collectively, the "Loan
Balance"), Alex covenants and agrees that if in any one

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calendar year his income (in whatever form and from whatever source) exceeds
US$2,000,000 (or if in any two-calendar-year rolling period his income (in
whatever form and from whatever source exceeds US$4,000,000), then Alex will pay
to the Company an amount equal to twenty percent (20%) of that amount within
ninety (90) days of the end of the respective period; provided, however, that
the aggregate amount paid by Alex under this section 11 will not exceed the Loan
Balance. Notwithstanding any other term or provision contained in this
Agreement, Alex and the Company acknowledge and agree that Alex's obligations
under this section 11 will terminate at the conclusion of two (2) years
following the entry of an order of the Bankruptcy Court confirming a plan of
reorganization in the Bankruptcy Case.

         12. COVENANT NOT TO SUE. Each of the parties to this Agreement
covenants and agrees that it will not sue, directly or indirectly or
derivatively, any of the other parties to this Agreement, or any of their
subsidiaries or affiliates, or otherwise interfere with any of such other
party's rights. Each of the parties to this Agreement represents and warrants to
each of the other parties to this Agreement that it has not previously assigned,
in whole or in part, to any person or entity, any of its right, title, or
interest in or to any claims or causes of action against any other party to this
Agreement. Each of the parties to this Agreement covenants and agrees further
that all disputes, claims, and controversies between or among them concerning
the interpretation or enforcement of this Agreement, or any other matter arising
out of or relating to this Agreement, will be arbitrated pursuant to the
provisions of section 24 of this Agreement. Notwithstanding the preceding
provisions of this section 12 or any other term or provision contained in this
Agreement, Alex and Nikki acknowledge and agree that there is a pending family
court case in which they are the two litigants, and that litigation will proceed
following the entry of the Order (as that term is defined below in section 21).

         13. SUCCESSORS AND ASSIGNS. This Agreement inures to the benefit of and
binds the parties to this Agreement and their respective successors, assigns,
agents, representatives, heirs, executors, administrators, and all persons
claiming by or through them, and the words "Alex," "Nikki," and "Company,"
whenever occurring in this Agreement, will be deemed to include such respective
successors, assigns, agents, representatives, heirs, executors, administrators,
and all persons claiming by or through them.

         14. TIME.  The parties to this Agreement agree that time is of the
essence with respect to all of the provisions of this Agreement.

         15. COUNTERPART ORIGINALS. This Agreement may be executed in three
counterparts, each of which will be deemed to be an original as against the
party whose "ink original" or facsimile signature appears thereon, and all of
such counterparts will together constitute one and the same instrument. Each
party to this Agreement who delivers a facsimile signature will promptly
thereafter deliver to each of the other parties to this Agreement a counterpart
original of this Agreement bearing an "ink original" signature.

         16. SECTION HEADINGS. The section headings and captions herein are for
convenience of reference only and will not be deemed to limit, impair, or affect
the meaning, interpretation and construction of any of the terms or provisions
of this Agreement.

         17. GENDER; NUMBER. Words used in this Agreement, regardless of the
number or gender specifically used, will be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires.

         18. ADDITIONAL ACTIONS. Each of the parties to this Agreement covenants
and agrees that it will take promptly such additional actions and will execute
such additional documents and

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instruments as are reasonably necessary to effectuate the transactions
contemplated by this Agreement.

         19. NO THIRD PARTY BENEFICIARIES. The rights and benefits of this
Agreement will not inure to the benefit of any party that is not a party to this
Agreement. Nothing contained in this Agreement will be construed to create any
rights, claims, or causes of action in favor of any third party against any
party to this Agreement.

         20. NOTICES. All notices and communications under this Agreement will
be in writing and will be: (a) delivered in person; or (b) sent by fax; or (c)
mailed, postage prepaid, either by certified mail, return receipt requested, or
by overnight express carrier, addressed in each case as follows:

              To Alex:              Mr. Alexander E. Benton
                                    c/o Michaelson, Susi & Michaelson
                                    Attn: Mr. Jay L. Michaelson
                                    7 W. Figueroa St., 2nd Floor
                                    Santa Barbara, CA  93101
                                    Fax: (805) 965-7351

              To Nikki:             Ms. Pamela Nicole Benton
                                    c/o Goldenring & Prosser
                                    Attn: Mr. Peter Goldenring
                                    6050 Seahawk St.
                                    Ventura, CA  93003
                                    Fax: (805) 642-3145

              To Company:           Benton Oil and Gas Company
                                    Attn: General Counsel
                                    6267 Carpinteria Ave., Suite 200
                                    Carpinteria, CA 93013
                                    Fax: (805) 566-5610

All notices sent pursuant to the terms of this section 20 will be deemed
received: (1) if sent by fax during the recipient's regular business hours, on
the day sent if a business day, or if such day is not a business day or if such
fax is sent after the recipient's regular business hours, then on the next
business day; or (2) if sent by overnight, express carrier, on the next business
day immediately following the day sent; or (3) if sent by certified mail, on the
third business day following the day sent. A copy of any notice sent by fax must
be sent by regular mail as well. Each party to this Agreement may change the
name of its representative to whom (and/or the address to which) notices (and/or
courtesy copies of such notices) should be directed, provided that such party
complies with the provisions of this section 20 regarding the methods for
providing such notice.

         21. PLAN OF REORGANIZATION. This Agreement is subject to the Bankruptcy
Court's entry in the Bankruptcy Case of a final, nonappealable order approving a
plan of reorganization that incorporates the provisions of this Agreement (the
"Order"). Alex agrees that promptly after the execution and delivery of this
Agreement by all of the parties to this Agreement, he will cause his bankruptcy
counsel to file a disclosure statement and proposed plan of reorganization, and
will take such actions as are reasonably necessary and appropriate to obtain the
Order.

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         22. INTEGRATION CLAUSE. This Agreement constitutes the entire agreement
among the parties to this Agreement with respect to the subject matter of this
Agreement, and there are no other terms, obligations, covenants,
representations, statements or conditions except as set forth in this Agreement
(including the Exhibits attached to this Agreement). No change or amendment to
this Agreement will be effective unless it is contained in a document entitled
"Amendment to Settlement and Release Agreement," and is executed by each of the
parties to this Agreement. Failure to insist upon strict compliance with any
term or provision of this Agreement will not be deemed to be a waiver of any
rights under a subsequent act or failure to act. Each of the parties to this
Agreement acknowledges and agrees that in the event of any subsequent
litigation, arbitration proceeding, controversy, or dispute concerning this
Agreement, none of them will be permitted to offer or introduce into evidence
any oral testimony concerning any oral promises or oral agreements between or
among them that relate to the subject matter of this Agreement that are not
included or referred to in this Agreement and that are not evidenced by a
writing entitled "Amendment to Settlement and Release Agreement" which is signed
by each of the parties to this Agreement.

         23. JURY TRIAL WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY KNOWINGLY,
FREELY, AND VOLUNTARILY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF OR RELATING IN ANY WAY WHATSOEVER TO: (A)
THIS AGREEMENT; OR (B) ANY OF THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT;
OR (C) ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR
WRITTEN) OR ACTION OF COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES, OR OTHER
REPRESENTATIVES, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING. ALEX AND NIKKI ACKNOWLEDGE
AND AGREE THAT THIS JURY TRIAL WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
COMPANY TO ENTER INTO THIS AGREEMENT. THIS JURY TRIAL WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS
OF THIS AGREEMENT, AND TO ANY OTHER DOCUMENTS, INSTRUMENTS, OR AGREEMENTS
RELATING TO THIS AGREEMENT OR BEING EXECUTED IN CONNECTION WITH THIS AGREEMENT,
AND ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS OF SUCH
DOCUMENTS, INSTRUMENTS, AND AGREEMENTS. ALEX AND NIKKI REPRESENT AND WARRANT TO
THE COMPANY THAT THEY HAVE REVIEWED THIS JURY TRIAL WAIVER WITH THEIR RESPECTIVE
ATTORNEYS AND THAT THEY HAVE WAIVED THEIR RIGHT TO A JURY TRIAL AFTER CONSULTING
WITH THEIR RESPECTIVE ATTORNEYS.

         24. GOVERNING LAW; ARBITRATION; VENUE; EQUITABLE RELIEF.

             24.1. GOVERNING LAW. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to principles of conflicts of laws. Each party to this Agreement
agrees that all disputes, claims, and controversies between or among the parties
to this Agreement concerning the interpretation or enforcement of this
Agreement, or any other matter arising out of or relating to this Agreement,
will be arbitrated pursuant to the provisions of this section 24.1.

             24.2. INITIATION OF ARBITRATION PROCEEDING. Any party to this
Agreement may initiate an arbitration proceeding by making a written demand for
arbitration and serving a notice of said demand upon the adverse party (or
parties) in the manner provided in this Agreement, and upon the Oxnard regional
office of JAMS. A written response to the demand must be served upon the
initiating party and JAMS within ten (10) days of such adverse party's receipt
of the demand.

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             24.3. SELECTION OF ARBITRATOR. The arbitration will be conducted by
a single arbitrator who is a retired judge associated with the Oxnard regional
office of JAMS. The arbitrator will be selected in accordance with the JAMS
Financial Services Arbitration Rules and Procedures then in effect (the "JAMS
Rules") within fourteen (14) days of the service of the written demand for
arbitration. If the parties to this Agreement cannot so agree upon the selection
of the arbitrator within the fourteen (14) day period, then the arbitration will
be conducted by a single arbitrator who will be a retired judge associated with
the Oxnard regional office of JAMS, and who will be selected by JAMS within five
(5) days of the service of a written request that JAMS select the arbitrator.

             24.4. VENUE. Each party to this Agreement covenants and agrees that
any arbitration proceeding instituted under the provisions of this Agreement
will be conducted in Oxnard, California, through the Oxnard regional office of
JAMS. THE PARTIES TO THIS AGREEMENT ACKNOWLEDGE TO EACH OTHER THAT THE AGREEMENT
TO ABIDE BY THE SPECIFIC PROVISIONS OF THIS SECTION 24.4. IS A MATERIAL
INDUCEMENT TO IT TO ENTER INTO THIS AGREEMENT, AND EACH PARTY IS REASONABLY
RELYING UPON THE OTHER PARTY'S REPRESENTATION TO DO SO.

             24.5. ARBITRATION HEARING AND AWARD. The arbitration hearing will
be conducted within thirty (30) days of the appointment of the arbitrator. The
arbitration will be conducted in accordance with the JAMS Rules. The
arbitrator's award will be conclusive and binding on each of the parties to this
Agreement. The arbitrator's award will provide, among other things, that the
prevailing party in the arbitration is entitled to recover from the adverse
party (or parties) its costs and expenses incurred in connection therewith
including, without limitation, attorneys' fees as determined by the arbitrator,
the costs of the arbitration, and actual out-of-pocket expenses including,
without limitation, expert witness and consultants' fees. Judgment upon the
arbitrator's award may be entered in any court of competent jurisdiction.

             24.6. EQUITABLE RELIEF. The Arbitrator has the authority to grant
any party to this Agreement equitable relief on such terms and conditions as it
deems reasonably necessary or appropriate.

         25. REPRESENTATIONS AND WARRANTIES. Each of the parties to this
Agreement represents and warrants to each of the other parties to this Agreement
that subject to section 21 of this Agreement, it has full power, authority, and
legal right to execute, deliver, and comply with this Agreement and any other
document or instrument relating to this Agreement to be executed by it. All
individual, corporate, or other appropriate actions of each of the parties to
this Agreement that are necessary or appropriate for the execution and delivery
of and compliance with this Agreement and such other documents and instruments
have been taken. Upon its execution and delivery, this Agreement will constitute
the valid and legally binding obligation of each of the parties to this
Agreement, enforceable against each of them in accordance with its terms,
subject only to bankruptcy, insolvency, reorganization, moratorium and other
laws applicable to creditors' rights or the collection of debtors' obligations
generally.

         26. CONFIDENTIALITY. Alex covenants and agrees that he will protect the
confidential, trade secret, and/or proprietary character of all of the Company's
Confidential Information. Alex further covenants and agrees that he will not,
directly or indirectly, use or disclose any of the Company's Confidential
Information, for so long as it remains proprietary and capable of being
protected as confidential or trade secret information. For the purposes of this
Agreement, "Confidential Information" means, without limitation, all of the
following, irrespective of whether it is or was reduced to writing which Alex
received, had access to, in whole or in part, in connection with his employment
with the Company so long as such Confidential Information remains propriety and
capable of being protected as confidential or trade secret information:

                                       9
<PAGE>   10

             (a) geological and geophysical data and maps, models and
interpretations relating to the Company's assets, fields, production, and/or
wells;

             (b) commercial, contractual, financial reserve, and production data
related to the Company or its production, assets, and/or fields;

             (c) specialized production processes and marketing techniques and
arrangements to enhance or recover oil and gas from the Company's assets,
fields, and/or wells;

             (d) computer software specifically developed for the enhancement of
the production from the company's assets, wells, and/or fields; and

             (e) any other materials and/or information materially related to
the business or activities of the Company which are not generally known to
others engaged in similar businesses or activities.

         27. BENEFIT OF COUNSEL; INFORMED REVIEW. EACH PARTY TO THIS AGREEMENT
ACKNOWLEDGES AND REPRESENTS TO EACH OF THE OTHER PARTIES TO THIS AGREEMENT THAT:
(A) THE PROVISIONS OF THIS AGREEMENT AND THEIR LEGAL EFFECT HAVE BEEN FULLY
EXPLAINED TO IT BY ITS OWN COUNSEL; (B) IT HAS RECEIVED INDEPENDENT LEGAL ADVICE
FROM COUNSEL OF ITS OWN SELECTION; (C) IT FULLY UNDERSTANDS THE FACTS AND HAS
BEEN FULLY INFORMED AS TO ITS LEGAL RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT;
(D) THIS AGREEMENT IS BEING ENTERED INTO AND SIGNED BY IT KNOWINGLY, FREELY, AND
VOLUNTARILY, AFTER HAVING RECEIVED SUCH LEGAL ADVICE AND WITH SUCH KNOWLEDGE;
AND (E) ITS EXECUTION AND DELIVERY OF THIS AGREEMENT IS NOT THE RESULT OF ANY
DURESS OR UNDUE INFLUENCE. BY EXECUTING THIS AGREEMENT, EACH PARTY TO THIS
AGREEMENT ACKNOWLEDGES AND REPRESENTS TO EACH OF THE OTHER PARTIES TO THIS
AGREEMENT THAT IT HAS READ THE ENTIRE AGREEMENT.

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

/S/ Alexander E. Benton            /S/Pamela Nicole Benton
-------------------------          --------------------------------
ALEXANDER E. BENTON                PAMELA NICOLE BENTON

                                   BENTON OIL AND GAS COMPANY

                                   By:  /S/Peter J. Hill
                                       ----------------------------
                                        Peter J. Hill
                                        President and Chief Executive Officer

                                       1

<PAGE>   11

                                    EXHIBIT A

    (NON-EXEMPT ASSETS NOT SUBJECT TO SALE UNDER SECTION 2 OF THE AGREEMENT)

NON-EXEMPT ASSETS TO BE RETAINED BY ALEX, AND AGAINST WHICH THE COMPANY IS NOT
ASSERTING A CLAIM:

-     All household furnishings and antiques

-     All paintings and artwork

-     All jewelry

-     The net sale proceeds of one 1997 Land Rover

-     One 1997 Range Rover

-     Ham radio equipment

-     Limited partnership interest in Hallwood Energy

-     Royalty interest in Colorado George Brown Partnership

-     Maintenance and landscaping equipment

-     The Carmel Property

OTHER NON-EXEMPT ASSETS NOT SUBJECT TO SALE UNDER SECTION 2, BUT AGAINST WHICH
THE COMPANY IS ASSERTING A CLAIM:

-     The BNO Stock

The parties to this Agreement acknowledge and agree that Alex will retain
possession of all of his exempt assets, subject to the outcome of the family
court case presently pending between Alex and Nikki.

<PAGE>   12

                                    EXHIBIT B

                               (SECURED CREDITORS)

----------------------------------------------------------------------------
NAME*                                             AMOUNT DUE (AS OF 1/12/01)
----------------------------------------------------------------------------
Peter M. Dearden                                                 $780,820.19
----------------------------------------------------------------------------
Santa Barbara Bank & Trust Co.                                 $1,635,010.66
----------------------------------------------------------------------------
Santa Barbara County Tax Collector                                $19,123.93
----------------------------------------------------------------------------

* Each of these three secured creditors was paid in full from the proceeds of
the sale of the Carpinteria Property.

<PAGE>   13

                                    EXHIBIT C

                          (GENERAL UNSECURED CREDITORS)

-------------------------------------------------------------------------------
NAME                                         AMOUNT DUE (AS OF 1/12/01)
-------------------------------------------------------------------------------
Citibank Choice                              $11,065.32
-------------------------------------------------------------------------------

<PAGE>   14

                                    EXHIBIT D

                      AMENDED AND RESTATED PLEDGE AGREEMENT
                      -------------------------------------

         THIS AMENDED AND RESTATED PLEDGE AGREEMENT ("Agreement") is made and
entered into as of the 11th day of May, 2001, by and between Alexander E. Benton
("Pledgor") and Benton Oil and Gas Company (the "Pledgee").

                                 R E C I T A L S

          A. Simultaneously with the execution and delivery of this Agreement by
Pledgor and Pledgee, the parties are entering into that certain Settlement and
Release Agreement dated this date (the "Settlement Agreement"), pursuant to
which Pledgee has agreed to ratify, reaffirm, and restate its prior grant to
Pledgee of a first lien against and perfected security interest in the
collateral more specifically described herein. (Unless otherwise defined in this
Agreement, capitalized terms in this Agreement will have the meanings ascribed
to them in the Settlement Agreement.)

          B. Pledgor is executing this Agreement to induce Pledgee to enter into
the transactions contemplated in the Settlement Agreement.

          NOW THEREFORE, intending to be legally bound, and in consideration of
the recitals set forth above, the covenants and agreements hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties to this Agreement, Pledgor and
Pledgee agree as follows:

          1. PLEDGE. In consideration of Pledgee's agreement to enter into the
transactions contemplated in the Settlement Agreement, Pledgor ratifies,
reaffirms, and restates its grant to Pledgee of a perfected first lien and
security interest in: (a) 600,000 shares of the common stock of Borrower,
evidenced by stock certificate number BC 0650, duly endorsed in blank and
delivered to Pledgee simultaneously with Pledgor's execution and delivery of the
1998 Security Agreement; and (b) all unexercised stock options previously issued
by Pledgee to Pledgor (collectively, the "Shares"). Pledgor appoints Pledgee its
attorney-in-fact, and hereby grants to Pledgee an irrevocable power of attorney
coupled with an interest, to arrange for the transfer of the Shares on the books
of Borrower to the name of Pledgee, and to take any and all other actions
necessary or appropriate to effect said transfer. Pledgee will hold the Shares
as security for the payment and performance of all of Pledgee's obligations
under the Loans, the Old Notes, the New Notes, and the Settlement Agreement
(collectively, the "Obligations"), and will not encumber or dispose of the
Shares except in accordance with the provisions of this Agreement. Pledgor
acknowledges and agrees that upon the occurrence of a Liquidity Event (as
defined below), Pledgee's first lien and security interest will continue in all
Proceeds (as defined below) of the Shares. For the purposes of this Agreement,
(a) a "Liquidity Event" means the date when Pledgee sells substantially all of
its assets and business to a third party, sells control of its equity securities
to a third party or parties, or engages in any merger or other reorganization
with a third party whereby the third party or parties acquire control; and (b)
"Proceeds" means: (1) whatever is received upon the sale, exchange, collection,
or other disposition of the Shares; (2) all payments and/or distributions made
with respect to the Shares; and (3) and all cash and noncash proceeds thereof.

          2. DIVIDENDS. During the term of this Agreement, all dividends and
other amounts received by Pledgee as a result of Pledgor's record ownership of
the Shares will be applied against the outstanding balance of the Loans.

<PAGE>   15

          3. VOTING RIGHTS. During the term of this Agreement, Pledgee will have
the right to vote the Shares on all corporate questions.

          4. REPRESENTATIONS. Pledgor represents and warrants to Pledgee that
except for the first lien against and perfected security interest in the Shares
originally granted to Pledgee in the 1998 Security Agreement, there are no
restrictions on the transfer of any of the Shares, and that Pledgor has the
right to transfer the Shares free of any liens, claims, and/or encumbrances, and
without obtaining the consent of any third party.

          5. ADJUSTMENTS. In the event that during the term of this Agreement
any share dividend, reclassification, readjustment, or other change is declared
or made in the capital structure of Pledgee, all new, substituted, and/or
additional shares or other securities issued by reason of any such change will
be delivered promptly by Pledgor to Pledgee and will be held by Pledgee in the
same manner as the Shares.

          6. WARRANTS AND RIGHTS. In the event that during the term of this
Agreement, subscription warrants or any other rights or options are issued in
connection with the Shares, then the warrants, rights, and options will be
immediately assigned by Pledgee to Pledgor, and if exercised by Pledgor, all new
shares or other securities so acquired by Pledgor will be immediately assigned
to Pledgee to be held in the same manner as the Shares.

          7. PLEDGEE'S DISPOSITION OF SHARES. Pledgor acknowledges and agrees
that at any time after the entry of the Order, Pledgee may exercise immediately
in respect of the Shares, in addition to all other rights and remedies provided
for in this Agreement, the Settlement Agreement, or otherwise available to it,
all of the rights and remedies of a secured party upon default under the
California Uniform Commercial Code and under applicable law. Among other things,
without notice to Pledgor, Pledgee may sell all or any portion of the Shares in
the manner and for the price that Pledgee reasonably determines, without
liability for any diminution in price that may have occurred.

          8. SEVERABILITY. If for any reason one or more of the provisions of
this Agreement or its or their application to any person or circumstance is held
to be invalid, illegal or unenforceable in any respect or to any extent, such
provisions will, nevertheless, remain valid, legal and enforceable in all other
respects and to such extent as may be permissible. In addition, any such
invalidity, illegality or unenforceability will not affect any other provision
hereof, and this Agreement will be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.

          9. SUCCESSORS AND ASSIGNS. This Agreement inures to the benefit of and
binds the parties to this Agreement and their respective successors, assigns,
agents, representatives, and all persons claiming by or through them, and the
words "Pledgor" and "Pledgee," whenever occurring in this Agreement, will be
deemed to include such respective successors, assigns, agents, representatives,
and all persons claiming by or through them. Pledgor acknowledges and agrees
that Pledgee may assign its interest in this Agreement to one of its affiliates
or subsidiaries without the consent of or prior notice to Pledgor.

          10. TIME. The parties to this Agreement agree that time is of the
essence with respect to all of the provisions of this Agreement.

          11. COUNTERPART ORIGINALS. This Agreement may be executed in two
counterparts, each of which will be deemed to be an original as against the
party whose "ink original" or facsimile signature appears thereon, and both of
such counterparts will together constitute one and the same instrument. Each
party to this Agreement who delivers a facsimile signature will

                                       2
<PAGE>   16
promptly thereafter deliver to each of the other parties to this Agreement a
counterpart original of this Agreement bearing an "ink original" signature.

          12. CAPTIONS. The captions or headings of the sections of this
Agreement are for convenience only and will not control or affect the meaning or
construction of any of the terms or provisions of this Agreement.

          13. GENDER; NUMBER. Words used in this Agreement, regardless of the
number or gender specifically used, will be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires.

          14. ADDITIONAL ACTIONS. Each of the parties to this Agreement
covenants and agrees that it will take promptly such additional actions and will
execute such additional documents and instruments as are reasonably necessary to
effectuate the transactions contemplated by this Agreement.

          15. NO THIRD PARTY BENEFICIARIES. The rights and benefits of this
Agreement will not inure to the benefit of any party that is not a party to this
Agreement. Nothing contained in this Agreement will be construed to create any
rights, claims, or causes of action in favor of any third party against any
party to this Agreement.

          16. INTERPRETATION. Each of the parties to this Agreement has been
represented by independent counsel in the preparation and negotiation of this
Agreement, and this Agreement will be construed according to the fair meaning of
its language. The rule of construction to the effect that ambiguities are to be
resolved against the drafting party will not be employed in interpreting this
Agreement.

         17. REPRESENTATIONS AND WARRANTIES. Each of the parties to this
Agreement represents and warrants to the other party to this Agreement that it
has full power, authority and legal right to execute, deliver and comply with
this Agreement and any other document or instrument relating to this Agreement
to be executed by it. All individual, corporate, or other appropriate actions of
each of the parties to this Agreement that are necessary or appropriate for the
execution and delivery of and compliance with this Agreement and such other
documents and instruments have been taken. Upon its execution and delivery, this
Agreement will constitute the valid and legally binding obligation of each of
the parties to this Agreement, enforceable against each of them in accordance
with its terms, subject only to bankruptcy, insolvency, reorganization,
moratorium and other laws applicable to creditors' rights or the collection of
debtors' obligations generally. Pledgor acknowledges that Pledgee has entered
into this Agreement in reliance upon each of the representations and warranties
made by Pledgor which are contained in this Agreement.

          18. INTEGRATION CLAUSE. This Agreement constitutes the entire
agreement between the parties to this Agreement with respect to the subject
matter of this Agreement, and there are no other terms, obligations, covenants,
representations, statements or conditions except as set forth in this Agreement
(and the Settlement Agreement to which a copy of this Agreement is attached as
EXHIBIT D). No change or amendment to this Agreement will be effective unless it
is contained in a document entitled "Amendment to Pledge Agreement," and is
executed by each of the parties to this Agreement. Failure to insist upon strict
compliance with any term or provision of this Agreement will not be deemed to be
a waiver of any rights under a subsequent act or failure to act. Each of the
parties to this Agreement acknowledges and agrees that in the event of any
subsequent litigation, arbitration proceeding, controversy or dispute concerning
this Agreement, neither of them will be permitted to offer or introduce into
evidence any oral testimony concerning any oral promises or oral agreements
between them that relate to the

                                       3
<PAGE>   17

subject matter of this Agreement that are not included or referred to in this
Agreement and that are not evidenced by a writing entitled "Amendment to Pledge
Agreement" which is signed by each of the parties to this Agreement.

          19. GOVERNING LAW; ARBITRATION. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to principles of conflicts of laws. Each party to this Agreement
agrees that all disputes, claims and controversies among the parties to this
Agreement concerning the interpretation or enforcement of this Agreement, or any
other matter arising out of or relating to this Agreement, will be arbitrated
pursuant to the provisions of the Settlement Agreement.

          20. NOTICES. All notices and communications under this Agreement will
be in writing and will be delivered in accordance with the provisions of the
Settlement Agreement.

         IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement as of the day and year first above written.

                                 BENTON OIL AND GAS COMPANY

/S/Alexander E. Benton           By: /S/Peter J. Hill
----------------------------         ------------------
ALEXANDER E. BENTON                  Peter J. Hill
                                     President and Chief Executive Officer

                                       4<PAGE>   1
                                  EXHIBIT 10.28
                                  -------------

                           BENTON OIL AND GAS COMPANY

                              TERMINATION AGREEMENT

                               AND GENERAL RELEASE

                                      WITH

                                 MICHAEL B. WRAY

         This Agreement is entered into effective May 7, 2001, by and between
BENTON OIL AND GAS COMPANY, a Delaware corporation ("Company") and MICHAEL B.
WRAY, Chairman of the Board of Directors of Benton Oil and Gas Company ("Wray").

         WHEREAS, Wray has been employed by Company and continues to serve as
Chairman of the Board of Directors;

         WHEREAS, Wray has agreed to continue on the Board and serve as Chairman
during a transition period up to and including the 2001 Annual Meeting of
Stockholders of the Company and to consult with Company until December 31, 2001;

         WHEREAS, Wray and Company have agreed on the terms and conditions set
forth in this Agreement.

         NOW THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, agreements and promises set forth herein, and
intending to be legally bound, the parties agree as follows:

         1. TERMINATION OF RELATIONSHIP. Subject to the terms of this Agreement,
Wray agrees to terminate any employment relationship or officer position with
the Company and any of its subsidiaries and affiliates as of May 7, 2001 and not
to stand for reelection as Chairman of the Board to the Company's Board of
Directors after the 2001 Annual Meeting of Stockholders or thereafter. The
preceding shall in no way preclude Wray's standing for reelection or election as
a director of the Company, but shall only preclude his standing for reelection
as Chairman.

         2. PAYMENTS TO WRAY. The Company agrees to continue to pay to Wray on a
bi-weekly basis at the rate of $100,000 per annum until April 27, 2001. On the
later of May 4, 2001, or the expiration of the revocation period referenced in
Section 7 below, the Company shall pay to Wray $100,000. These payments shall be
subject to deduction for requisite income tax withholdings and payroll tax
deductions. These payments represent payment in full of all sums owed or owing
to Wray for his services as an employee and as a director through the 2001
Annual Meeting of Stockholders, as well as additional consideration not
otherwise owed to Wray which is being furnished in exchange for Wray's execution
of this Agreement. The parties agree

                                       9
<PAGE>   2

that there are no other sums due Wray and that after such date no further
payments shall be made to Wray including without limitation any payments made by
the Company related to change of control, relocation, severance or reduction in
force payments; provided, Wray shall receive a one time payment of $100,000 for
his services as a consultant.

         3. STOCK OPTIONS. The Company has granted Wray certain stock options.
All options previously granted to Wray shall vest in their entirety as of the
date of this agreement (Vested Options). The Company, including the Human
Resources Committee of the Board of Directors, has taken any and all action
necessary to allow for Wray's options to vest and to allow Wray to have up to
the applicable ten (10) year period from the date of the grant in each option
agreement to exercise any or all of said Vested Options. Also, the Company and
Wray shall amend the Employee Options Agreement to reflect the vesting and the
extension described in this Section 3. Wray acknowledges that the terms of the
insider trading policy shall remain in effect. The Company agrees to take any
and all further actions necessary or reasonably requested by Wray to reflect the
foregoing, and to confirm Wray's ability to exercise the Vested Options until
the end of the ten-year period referred to, without regard to the termination of
his position as an employee or as Chairman or as a director or as any or all of
the foregoing.

         4. COMMUNICATION. Wray agrees that he will not directly or indirectly
initiate oral or written communications with any Company shareholder, customer,
analyst or broker covering the Company's stock or debt without the prior written
consent of the CEO.

         5. RELEASE OF CLAIMS. AS A MATERIAL INDUCEMENT TO THE COMPANY TO ENTER
INTO THIS AGREEMENT, WRAY AND HIS HEIRS AND ASSIGNS, HEREBY RELEASE THE COMPANY,
AND ITS DIRECTORS, OFFICERS, SHAREHOLDERS, PARTNERS, REPRESENTATIVES, AGENTS,
EMPLOYEES, PREDECESSORS, SUCCESSORS, AFFILIATES, DIVISIONS, SUBSIDIARIES AND
RELATED ENTITIES, FROM ALL CLAIMS OF ANY NATURE WHATSOEVER, FROM THE BEGINNING
OF TIME TO THE DATE OF THE EXECUTION OF THIS AGREEMENT, KNOWN OR UNKNOWN,
SUSPECTED OR UNSUSPECTED, INCLUDING BUT NOT LIMITED TO ALL CLAIMS ARISING OUT
OF, BASED UPON, OR RELATING TO WRAY'S EMPLOYMENT WITH THE COMPANY, OR THE
COMPENSATION FOR THAT EMPLOYMENT.

                  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, WRAY
UNDERSTANDS THAT HE IS RELEASING ALL CLAIMS OF DISCRIMINATION OR HARASSMENT ON
THE BASIS OF RACE, SEX, RELIGION OR NATIONAL ORIGIN UNDER TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, AS AMENDED, OR ON THE BASIS OF AGE UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, OR ON THE BASIS OF
DISABILITY UNDER THE AMERICANS WITH DISABILITIES ACT; ALL CLAIMS OF
DISCRIMINATION OR HARASSMENT UNDER ANY APPLICABLE FEDERAL, STATE OR LOCAL LAW,
INCLUDING THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT; ALL CLAIMS UNDER STATE
CONTRACT OR TORT LAW, SUCH AS WRONGFUL TERMINATION, BREACH OF CONTRACT, BREACH
OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING, DEFAMATION, NEGLIGENT OR
INTENTIONAL INFLICTION OF

                                      -2-
<PAGE>   3

EMOTIONAL DISTRESS, OR FRAUD; ALL CLAIMS UNDER THE CALIFORNIA LABOR CODE, AND
ALL CLAIMS UNDER THE FAIR LABOR STANDARDS ACT, THE EMPLOYEE RETIREMENT
SECURITIES ACT, THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, AND THE FAMILY
AND MEDICAL LEAVE ACT OF 1993.

         6. WAIVER OF CIVIL CODE SECTION 1542. WRAY UNDERSTANDS AND AGREES THAT,
AS A CONDITION OF THIS AGREEMENT, HE IS WAIVING ANY RIGHTS HE MAY HAVE UNDER
SECTION 1542 OF THE CALIFORNIA CIVIL CODE OR ANY ANALOGOUS LOCAL, STATE,
FEDERAL, OR INTERNATIONAL LAW, STATUTE, RULE, ORDER, OR REGULATION. SECTION 1542
PROVIDES AS FOLLOWS:

                  "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
                  CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
                  TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         WITH FULL AWARENESS AND UNDERSTANDING OF THE ABOVE PROVISION, AND AFTER
HAVING AN OPPORTUNITY TO CONFER WITH INDEPENDENTLY RETAINED LEGAL COUNSEL IF SO
DESIRED, WRAY HEREBY WAIVES ALL RIGHTS WHICH THE ABOVE PROVISION MAY PROVIDE.
WRAY INTENDS THIS RELEASE TO INCLUDE CLAIMS WHICH HE DOES NOT PRESENTLY KNOW OR
SUSPECT TO EXIST AT THIS TIME.

         This Agreement in no way amends or cancels the Indemnification
Agreement between Wray and Company, dated June 15, 1999, and that agreement
remains in full force and effect under the terms thereof.

         7. OPPORTUNITY TO REVIEW AGREEMENT. The Company has advised Wray that
he should consult an attorney before signing this Agreement. Wray has twenty-one
(21) days from the date of this Agreement to consider this Agreement or consult
with an attorney before signing it. Wray has seven (7) days from the date he
signs this Agreement to revoke this Agreement. The Agreement shall become
effective immediately upon the expiration of this seven-day revocation period.

         8. CONSULTATION WITH COUNSEL. Wray represents that he has had an
opportunity to consult with independent legal counsel if he so desires, that he
has thoroughly read and considered all aspects of this Agreement, that he
understands all provisions of this Agreement, and that he is voluntarily
entering into this Agreement.

         9. SUCCESSORS AND ASSIGNS; BINDING AGREEMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns. Wray
acknowledges that this Agreement is personal to him and may not be assigned by
him.

                                      -3-
<PAGE>   4

         10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflict
of law rules thereof.

         11. WAIVER. The waiver by either party hereto of any right hereunder of
any failure to perform or breach by the other party hereto shall not be deemed a
waiver of any other right hereunder or of any other failure or breach by the
other party hereto, whether of the same or a similar nature or otherwise. No
waiver shall be deemed to have occurred unless set forth in writing executed by
or on behalf of the waiving party. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

         12. NOTICES. All notices or communications that are required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally or sent overnight carrier service to
the parties at the following addresses:

             The Company      Benton Oil and Gas Company
                              6267 Carpinteria Avenue, Suite 200
                              Carpinteria, California 93013

             Wray             Michael B. Wray
                              1385 E. Mountain Drive
                              Montecito, California 93108

or to such other address as may be specified in a written notice delivered
personally or sent by overnight courier given by one party to the other party
hereunder.

         13. SEVERABILITY. If for any reason any term or provision of this
Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature. If
for any reason any term or provision containing a restriction set forth herein
is held to cover an area or to be for a length of time which is unreasonable, or
in any other way is construed to be too broad or to any extent invalid, such
term or provision shall not be determined to be null, void and of no effect, but
to the extent the same is or would be valid or enforceable under applicable law,
any court of competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area, time
period and other provisions (not greater than those contained herein) as shall
be valid and enforceable under applicable law.

         14. INTEGRATION CLAUSE. This Agreement constitutes the entire agreement
between the parties to this Agreement with respect to the subject matter of this
Agreement, and there are no other terms, obligations, covenants,
representations, statements or conditions except as set forth in this Agreement.
No change or amendment to this Agreement will be effective unless it is
contained in a writing denominated as an "Amendment to Separation Agreement" and
is signed

                                      -4-
<PAGE>   5

by both of the parties to this Agreement. Failure to insist upon strict
compliance with any term or provision of this Agreement will not be deemed to be
a waiver of any rights under a subsequent act or failure to act. The parties to
this Agreement acknowledge and agree that in the event of any subsequent
litigation, arbitration proceeding, controversy or dispute concerning this
Agreement, neither of the parties to this Agreement will be permitted to offer
or introduce into evidence any oral testimony concerning any oral promises or
oral agreements between them that relate to the subject matter of this Agreement
that are not included or referred to in this Agreement and that are not
evidenced by a writing entitled "Amendment to Separation Agreement" which is
signed by both of the parties to this Agreement.

         15. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original for all purposes but which, together, shall
constitute one and the same instrument.

         16. CONFIDENTIALITY. Wray covenants and agrees that he will protect the
confidential, trade secret, and/or proprietary character of all of the Company's
Confidential Information. Wray further covenants and agrees that he will not,
directly or indirectly, use or disclose any of the Company's Confidential
Information, for so long as it remains proprietary and capable of being
protected as confidential or trade secret information. For the purposes of this
Agreement, "Confidential Information" means, without limitation, all of the
following, irrespective of whether it is or was reduced to writing which Wray
received, had access to, in whole or in part, in connection with his employment
with the Company so long as such Confidential Information remains proprietary,
capable of being protected as confidential or trade secret information, and
actually protected as such:

             (a) geological and geophysical data and maps, models and
interpretations relating to the Company's assets, fields, production and wells;

             (b) commercial, contractual, financial reserve and production data
related to the Company or its production, assets and fields;

             (c) specialized production processes and marketing techniques and
arrangements to enhance or recover oil and gas from the Company's assets, fields
or wells;

             (d) computer software specifically developed for the enhancement of
the production from the Company's assets, wells or fields; and

             (e) any other materials and/or information materially related to
the business or activities of the Company which are not generally known to
others engaged in similar businesses or activities.

         Wray agrees to return to the Company, by the 2001 Company Annual
Meeting of Stockholders, any Company property in his possession, including but
not limited to any Confidential Information not necessary for Wray to carry out
his duties as a Company director.

                                      -5-
<PAGE>   6

         The parties agree and acknowledge that the foregoing shall not prevent
Wray from engaging in transactions in the securities of the Company in any
manner that is consistent with the requirements of the federal securities laws
of the United States. Further, the foregoing shall not operate to prevent Wray
from providing information to the extent reasonably required by legal process,
including discovery requests, subpoenas and the like.

         17. AUTHORIZATIONS. All individuals executing this and other documents
on behalf of the respective parties certify and warrant that they have the
capacity and have been duly authorized to so execute the documents on behalf of
the entity so indicated.

         18. ATTORNEYS' FEES. Wray and the Company further agree that, if any
legal action is brought alleging a breach of this agreement, the prevailing
party shall be entitled to recover all costs and expenses incurred in that
action, including attorneys' fees.

         IN WITNESS WHEREOF, the parties execute this Agreement effective on the
date set forth above.

BENTON OIL AND GAS COMPANY

By: /s/Peter J. Hill                                 May 7, 2001
    -------------------------------         -----------------------------------
      Peter J. Hill                                  Date
      President

/s/Michael B. Wray                                   May 7, 2001
-----------------------------------         -----------------------------------
Michael B. Wray                                      Date

                                      -6-

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