Document:

ASSIGNMENT OF OIL AND GAS LEASES, OPERATING
                         RIGHTS AND RECORD TITLE,
                       CONVEYANCE AND BILL OF SALE

STATE OF COLORADO )
                  )SS.
COUNTY OF DENVER  )

KNOW ALL MEN BY THESE PRESENTS:

     THAT INFINITY OIL & GAS, INC., having an address at 730 17th Street,
Suite 250, Denver, Colorado 80202, hereinafter referred to as "Assignor", in
consideration of Ten Dollars ($10.00) and other good and valuable
consideration to it in hand paid, the receipt of which is hereby acknowledged,
does hereby grant, convey, sell, assign and transfer unto INFINITY OIL & GAS
OF WYOMING, INC., having an address at 211 West 14th, Chanute, Kansas 66720,
hereinafter referred to as "Assignee", all of Assignor's right, title and
interest in and to various Operating Rights and Record Title in Leases for Oil
and Gas from the BLM, as described on Exhibit "A" attached, ("the Leases"),
and any and all those associated rights to earn oil and gas leases and
contracts lying in Sublette, Wyoming, as evidenced and described in that
Letter Agreement between Assignor and Freeman Investments dated August 30,
1999 (Exhibit "B") attached hereto and made a part hereof, together with the
rights incident and appurtenant thereto, or used or obtained in connection
with said oil and gas leases, contracts, and lands.

     This Assignment is subject to all of the terms and the express and
implied covenants and conditions of Letter Agreement between Assignor and
Freeman Investments dated August 30, 1999 (Exhibit "B").

     This Assignment is made without warranty, either express or implied, but
is made with full transfer and subrogation of rights and actions of warranty
that Assignor may have as to the interest assigned.

     The Assignee shall hold Assignor harmless, and defend Assignor, against
any and all claims arising from, or in conjunction with Assignees interests
in, and ownership of, the Agreement, Leases and Lands.

     This Assignment is subject to that Participation Agreement by and between
the parties dated January 28, 1999 and effective December 1.

     TO HAVE AND TO HOLD unto Assignee, its successors and assigns subject to
the provisions hereof.

     EXECUTED this 16th day of March, 2000 and effective March 1, 2000.

ATTEST:                               INFINITY OIL & GAS, INC.

By:/s/ Steve Reynolds                 By:/s/ J. Timothy Button

ATTEST:                               INFINITY OIL & GAS OF WYOMING, INC.

By:/s/ Jeffrey L. Dale                By:/s/ Stanton E. Ross

<PAGE>

                               ACKNOWLEDGEMENT

STATE OF ___________)
                    )SS.
COUNTY OF _________ )

     On this 7th day of June, A.D., 2000, before me, the undersigned, a Notary
Public in and for the county and state aforesaid, personally appeared J.
Timothy Button to me known to be the identical person who signed the name of
the maker thereof to the within and foregoing instrument as its President and
acknowledged to me that he executed the same as his free and voluntary act and
deed, and as the free and voluntary act and deed of said corporation, for the
uses and purposes therein set forth.

     Given under my hand and seal the day and year last above written.

My commission expires: January 31, 2003    /s/ Zoe E. Stitzer, Notary Public

<PAGE>

                                  EXHIBIT "A"

                                  Page 1 of 1

Attached to that ASSIGNMENT OF OIL AND GAS LEASES, OPERATING RIGHTS AND RECORD
TITLE, CONVEYANCE AND BILL OF SALE by and between Infinity Oil & Gas, Inc. and
Infinity Oil & Gas of Wyoming, Inc. dated March 16, 2000 and lying in Sublette
County, Wyoming

THE "LEASES'
WYW-136852
Township 29 North, Range 114 West

Section 1:     Lots 1-4, S/2NW, N/2SW
Section 2:     SWNE, SWNW, NESE, Lots 1-4
Section 11:    SWNE, W/2, SE
Section 12:    NWSW, S/2S/2
Section 13:    All
Section 14:    All
containing 2458.69 acres, more or less

WYW-136857
Township 30 North, Range 114 West
Section 27:    S/2N/2, N/2SW, SE
containing 400 acres, more or less

WYW-136855
Township 30 North, Range 114 West
Section 6:     Lots 1-7, S/2NE, SENW, E/2SW, SE
Section 7:     E/2SW, N/2SE
Section 17:    SW
Section 19:    SWNE, NWSE
Section 20:    N/2SW
Section 22:    S/2
Section 23:    S/2SW, SWSE
Section 27:    N/2N/2
Section 30:    Lots 3, 4, SENE, E/2SW
Containing 1916.43

All lying in Sublette County, WyomingA.A.P.L. FORM 610 - 1989

                        MODEL FORM OPERATING AGREEMENT

                             OPERATING AGREEMENT

                                    DATED

                              December 1, 1999

OPERATOR  Verde Oil Company, a Texas corporation

CONTRACT AREA  The East Half of the Southwest Quarter (E 1/2SW 1/4) of Section
29, Township 26 South, Range 20 East of the Sixth P.M.

COUNTY OR PARISH OF ALLEN, STATE OF KANSAS

COPYRIGHT 1989   ALL RIGHTS RESERVED
AMERICAN ASSOCIATION OF PETROLEUM
LANDMEN, 4100 FOSSIL CREEK BLVD.
FORT WORTH, TEXAS, 76137, APPROVED FORM.

A.A.P.L. NO. 610   1989

<PAGE>

                             TABLE OF CONTENTS

Article                            Title                             Page

   I.   DEFINITIONS.................................................. 1
  II.   EXHIBITS .................................................... 1
 III.   INTERESTS OF PARTIES ........................................ 2
        A.  OIL AND GAS INTERESTS: .................................. 2
        B.  INTERESTS OF PARTIES IN COSTS AND PRODUCTION: ........... 2
        C.  SUBSEQUENTLY CREATED INTERESTS:.......................... 2
  IV.   TITLES ...................................................... 2
        A.  TITLE EXAMINATION:....................................... 2
        B.  LOSS OR FAILURE OF TITLE:................................ 3
            1.  Losses............................................... 3
   V.   OPERATOR .................................................... 4
        A.  DESIGNATION AND RESPONSIBILITIES OF OPERATOR: ........... 4
        B.  RESIGNATION OR REMOVAL OF OPERATOR AND SELECTION
            OF SUCCESSOR: ........................................... 4
            1.  Resignation or Removal of Operator .................. 4
            2.  Selection of Successor Operator ..................... 4
            3.  Effect of Bankruptcy ................................ 4
        C.  EMPLOYEES AND CONTRACTORS:............................... 4
        D.  RIGHTS AND DUTIES OF OPERATOR: .......................... 4
            1.  Competitive Rates and Use of Affiliates ............. 4
            2.  Discharge of Joint Account Obligations .............. 4
            3.  Protection from Liens ............................... 4
            4.  Custody of Funds .................................... 5
            5.  Access to Contract Area and Records ................. 5
            6.  Filing and Furnishing Governmental Reports .......... 5
            7.  Drilling and Testing Operations ..................... 5
            8.  Cost Estimates ...................................... 5
            9.  Insurance ........................................... 5
  VI.   DRILLING AND DEVELOPMENT .................................... 5
        B.  SUBSEQUENT OPERATIONS: .................................. 5
            1.  Proposed Operations ................................. 5
            2.  Operations by Less Than All Parties ................. 6
            3.  Stand-By Costs ...................................... 7
            4.  Deepening ........................................... 8
            5.  Sidetracking ........................................ 8
            6.  Order of Preference of Operations ................... 8
            7.  Conformity to Spacing Pattern ....................... 9
            8.  Paying Wells ........................................ 9
        C.  COMPLETION OF WELLS; REWORKING AND PLUGGING BACK: ....... 9
            1.  Completion .......................................... 9
            2.  Rework, Recomplete or Plug Back ..................... 9
        D.  OTHER OPERATIONS: ....................................... 9
        E.  ABANDONMENT OF WELLS: ................................... 9
            1.  Abandonment of Dry Holes ............................ 9
            2.  Abandonment of Wells That Have Produced .............10
            3.  Abandonment of Non-Consent Operations ...............10
        F.  TERMINATION OF OPERATIONS: ..............................10
        G.  TAKING PRODUCTION IN KIND: ..............................10
            (Option 2) No Gas Balancing Agreement ...................11
 VII.   EXPENDITURES AND LIABILITY OF PARTIES .......................11
        A.  LIABILITY OF PARTIES: ...................................11
        B.  LIENS AND SECURITY INTERESTS: ...........................12
        C.  ADVANCES: ...............................................12
        D.  DEFAULTS AND REMEDIES: ..................................12
            1.  Suspension of Rights ................................13
            2.  Suit for Damages ....................................13

            3.  Deemed Non-Consent ..................................13
            4.  Advance Payment .....................................13
            5.  Costs and Attorneys' Fees ...........................13
        E.  RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES: ...13
        F.  TAXES: ..................................................13
VIII.   ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST ............14
        A.  SURRENDER OF LEASES: ....................................14
        B.  RENEWAL OR EXTENSION OF LEASES: .........................14
        C.  ACREAGE OR CASH CONTRIBUTIONS: ..........................14

                                       i
<PAGE>

                               TABLE OF CONTENTS

        D.  ASSIGNMENT; MAINTENANCE OF UNIFORM INTEREST: ............15
        E.  WAIVER OF RIGHTS TO PARTITION: ..........................15
  IX.   INTERNAL REVENUE CODE ELECTION ..............................15
   X.   CLAIMS AND LAWSUITS .........................................15
  XI.   FORCE MAJEURE ...............................................16
 XII.   NOTICES .....................................................16
XIII.   TERM OF AGREEMENT............................................16
 XIV.   COMPLIANCE WITH LAWS AND REGULATIONS.........................16
        A.  LAWS, REGULATIONS AND ORDERS:............................16
        B.  GOVERNING LAW:...........................................16
        C.  REGULATORY AGENCIES:.....................................16
 XV.    MISCELLANEOUS ...............................................17
        A.  EXECUTION: ..............................................17
        B.  SUCCESSORS AND ASSIGNS: .................................17
        C.  COUNTERPARTS: ...........................................17
        D.  SEVERABILITY ............................................17
XVI.    OTHER PROVISIONS ............................................17
        A.  Collection of Proceeds and Payment of Expenses:..........17
        B.  Acquisition Cost ........................................17
        C.  Drilling Commitment .....................................17
        D.  Payout Defined ..........................................17

                                      ii
<PAGE>

                              OPERATING AGREEMENT

     THIS AGREEMENT, entered into by and between Verde Oil Company, a Texas
corporation, hereinafter designated and referred to as "Operator," and the
signatory party or parties other than Operator, sometimes hereinafter referred
to individually as "Non-Operator," and collectively as "Non-Operators."

                                    WITNESSETH:

     WHEREAS, the parties to this agreement are owners of Oil and Gas Leases
and/or Oil and Gas Interests in the land identified in Exhibit "A," and the
parties hereto have reached an agreement to explore and develop these Leases
and/or Oil and Gas Interests for the production of Oil and Gas to the extent
and as hereinafter provided,

     NOW, THEREFORE, it is agreed as follows:

                                   ARTICLE I.

                                  DEFINITIONS

     As used in this agreement, the following words and terms shall have the
meanings here ascribed to them:

     A.  The term "AFE" shall mean an Authority for Expenditure prepared by a
party to this agreement for the purpose of estimating the costs to be incurred
in conducting an operation hereunder.

     B.  The term "Completion" or "Complete" shall mean a single operation
intended to complete a well as a producer of Oil and Gas in one or more Zones,
including, but not limited to, the setting of production casing, perforating,
well stimulation and production testing conducted in such operation.

     C.  The term "Contract Area" shall mean all of the lands, Oil and Gas
Leases and/or Oil and Gas Interests intended to be developed and operated for
Oil and Gas purposes under this agreement.  Such lands, Oil and Gas Leases and
Oil and Gas Interests are described in Exhibit "A."

     D.  The term "Deepen" shall mean a single operation whereby a well is
drilled to an objective Zone below the deepest Zone in which the well was
previously drilled, or below the Deepest Zone proposed in the associated AFE,
whichever is the lesser.

     E.  The terms "Drilling Party" and "Consenting Party" shall mean a party
who agrees to join in and pay its share of the cost of any operation conducted
under the provisions of this agreement.

     F.  The term "Drilling Unit" shall mean the area fixed for the drilling
of one well by order or rule of any state or federal body having authority.
If a Drilling Unit is not fixed by any such rule or order, a Drilling Unit
shall be the drilling unit as established by the pattern of drilling in the
Contract Area unless fixed by express agreement of the Drilling Parties.

     G.  The term "Drillsite" shall mean the Oil and Gas Lease or Oil and Gas
Interest on which a proposed well is to be located.

     I.  The term "Non-Consent Well" shall mean a well in which less than all
parties have conducted an operation as provided in Article VI.B.2.

     J.  The terms "Non-Drilling Party" and "Non-Consenting Party" shall mean
a party who elects not to participate in a proposed operation.

     K.  The term "Oil and Gas" shall mean oil, gas, casinghead gas, gas
condensate, and/or all other liquid or gaseous hydrocarbons and other
marketable substances produced therewith, unless an intent to limit the
inclusiveness of this term is specifically stated.

     L.  The term "Oil and Gas Interests" or "Interests" shall mean unleased
fee and mineral interests in Oil and Gas in tracts of land lying within the
Contract Area which are owned by parties to this agreement.

     M.  The terms "Oil and Gas Lease," "Lease" and "Leasehold" shall mean the
oil and gas leases or interests therein covering tracts of land lying within
the Contract Area which are owned by the parties to this agreement.

     N.  The term "Plug Back" shall mean a single operation whereby a deeper
Zone is abandoned in order to attempt a Completion in a shallower Zone.

     O.  The term "Recompletion" or "Recomplete" shall mean an operation
whereby a Completion in one Zone is abandoned in order to attempt a Completion
in a different Zone within the existing wellbore.

     P.  The term "Rework" shall mean an operation conducted in the wellbore
of a well after it is Completed to secure, restore, or improve production in a
Zone which is currently open to production in the wellbore.  Such operations
include, but are not limited to, well stimulation operations but exclude any
routine repair or maintenance work or drilling, Sidetracking, Deepening,
Completing, Recompleting, or Plugging Back of a well.

     Q.  The term "Sidetrack" shall mean the directional control and
intentional deviation of a well from vertical so as to change the bottom hole
location unless done to straighten the hole or drill around junk in the hole
to overcome other mechanical difficulties.

     R.  The term "Zone" shall mean a stratum of earth containing or thought
to contain a common accumulation of Oil and Gas separately producible from any
other common accumulation of Oil and Gas.

     Unless the context otherwise clearly indicates, words used in the
singular include the plural, the word "person" includes natural and artificial
persons, the plural includes the singular, and any gender includes the
masculine, feminine, and neuter.

                                  ARTICLE II.

                                   EXHIBITS

     The following exhibits, as indicated below and attached hereto, are
incorporated in and made a part hereof:

     X  A. Exhibit "A," shall include the following information:

           (1) Description of lands subject to this agreement,
           (2) Restrictions, if any, as to depths, formations, or substances,

           (3) Parties to agreement with addresses and telephone numbers for
notice purposes,
           (4) Percentages or fractional interests of parties to this
agreement,
           (5) Oil and Gas Leases and/or Oil and Gas Interests subject to this
agreement,
           (6) Burdens on production.
     X  B. Exhibit "B," Form of Lease.
     X  C. Exhibit "C," Accounting Procedure.
     X  D. Exhibit "D," Insurance.

<PAGE>

     If any provision of any exhibit, is inconsistent with any provision
contained in the body of this agreement, the provisions in the body of this
agreement shall prevail.

                                 ARTICLE III.

                              INTERESTS OF PARTIES
A.  Oil and Gas Interests:

     If any party owns an Oil and Gas Interest in the Contract Area, that
Interest shall be treated for all purposes of this agreement and during the
term hereof as if it were covered by the form of Oil and Gas Lease attached
hereto as Exhibit "B," and the owner thereof shall be deemed to own both
royalty interest in such lease and the interest of the lessee thereunder.

B.  Interests of Parties in Costs and Production:

     Unless changed by other provisions, all costs and liabilities incurred in
operations under this agreement shall be borne and paid, and all equipment and
materials acquired in operations on the Contract Area shall be owned, by the
parties as their interests are set forth in Exhibit "A."  In the same manner,
the parties shall also own all production of Oil and Gas from the Contract
Area subject, however, to the payment of royalties and other burdens on
production as described hereafter.

     Regardless of which party has contributed any Oil and Gas Lease or Oil
and Gas Interest on which royalty or other burdens may be payable and except
as otherwise expressly provided in this agreement, each party shall pay or
deliver, or cause to be paid or delivered, all burdens on its share of the
production from the Contract Area up to, but not in excess of, Twenty Percent
(20%) and shall indemnify, defend and hold the other parties free from any
liability therefor.  Except as otherwise expressly provided in this agreement,
if any party has contributed hereto any Lease or Interest which is burdened
with any royalty, overriding royalty, production payment or other burden on
production in excess of the amounts stipulated above, such party so burdened
shall assume and alone bear all such excess obligations and shall indemnify,
defend and hold the other parties hereto harmless from any and all claims
attributable to such excess burden.  However, so long as the Drilling Unit for
the productive Zone(s) is identical with the Contract Area, each party shall
pay or deliver, or cause to be paid or delivered, all burdens on production
from the Contract Area due under the terms of the Oil and Gas Lease(s) which
such party has contributed to this agreement, and shall indemnify, defend and
hold the other parties free from any liability therefor.

     No party shall ever be responsible, on a price basis higher than the
price received by such party, to any other party's lessor or royalty owner,
and if such other party's lessor or royalty owner should demand and receive
settlement on a higher price basis, the party contributing the affected Lease
shall bear the additional royalty burden attributable to such higher price.

     Nothing contained in this Article III.B. shall be deemed an assignment or
cross-assignment of interests covered hereby, and in the event two or more
parties contribute to this agreement jointly owned Leases, the parties'
undivided interests in said Leaseholds shall be deemed separate leasehold
interests for the purposes of this agreement.

C.  Subsequently Created Interests:

     If any party has contributed hereto a Lease or Interest that is burdened
with an assignment of production given as security for the payment of money,
or if, after the date of this agreement, any party creates an overriding
royalty, production payment, net profits interest, assignment of production or
other burden payable out of production attributable to its working interest
hereunder, such burden shall be deemed a "Subsequently Created Interest."
Further, if any party has contributed hereto a Lease or Interest burdened with
an overriding royalty, production payment, net profits interests, or other
burden payable out of production created prior to the date of this agreement,
and such burden is not shown on Exhibit "A," such burden also shall be deemed
a Subsequently Created Interest to the extent such burden causes the burdens
on such party's Lease or Interest to exceed the amount stipulated in Article
III.B. above.

     The party whose interest is burdened with the Subsequently Created
Interest (the "Burdened Party") shall assume and alone bear, pay and discharge
the Subsequently Created Interest and shall indemnify, defend and hold
harmless the other parties from and against any liability therefor.  Further,
if the Burdened Party fails to pay, when due, its share of expenses chargeable
hereunder, all provisions of Article VII.B. shall be enforceable against the
Subsequently Created Interest in the same manner as they are enforceable
against the working interest of the Burdened Party.  If the Burdened Party is
required under this agreement to assign or relinquish to any other party, or
parties, all or a portion of its working interest and/or the production
attributable thereto, said other party, or parties, shall receive said
assignment and/or production free and clear of said Subsequently Created
Interest, and the Burdened Party shall indemnify, defend and hold harmless
said other party, or parties, from any and all claims and demands for payment
asserted by owners of the Subsequently Created Interest.

                                 ARTICLE IV.

                                   TITLES

A.  Title Examination:

    Upon written request, Title examination shall be made on the Drillsite of
any proposed well prior to commencement of drilling operations and, if a
majority in interest of the Drilling Parties so request or Operator so elects,
title examination shall be made on the entire Drilling Unit, or maximum
anticipated Drilling Unit, of the well.   The opinion will include the
ownership of the working interest, minerals, royalty, overriding royalty and
production payments under the applicable Leases.   Each party contributing
Leases and/or Oil and Gas Interests to be included in the Drillsite or
Drilling Unit, if appropriate, shall furnish to Operator all abstracts
(including federal lease status reports), title opinions, title papers and
curative material in its possession free of charge.  All such information not
in the possession of or made available to Operator by the parties, but
necessary for the examination of the title, shall be obtained by Operator.
Operator shall cause title to be examined by attorneys on its staff or by
outside attorneys.  Copies of all title opinions shall be furnished to each
Drilling Party.  Costs incurred by Operator in procuring abstracts, fees paid
outside attorneys for title examination (including preliminary, supplemental,
shut-in royalty opinions and division order title opinions) and other direct
charges as provided in Exhibit "C" shall be borne by the Drilling Parties in
the proportion that the interest of each Drilling Party bears to the total
interest of all Drilling Parties as such interests appear in Exhibit "A."
Operator shall make no charge for services rendered by its staff attorneys or
other personnel in the performance of the above functions.

     Each party shall be responsible for securing curative matter and pooling
amendments or agreements required in connection with Leases or Oil and Gas
Interests contributed by such party.  Operator shall be responsible for the
preparation and recording of pooling designations or declarations and
communitization agreements as well as the conduct of hearings before
governmental agencies for the securing of spacing or pooling orders or any
other orders necessary or appropriate to the conduct of operations hereunder.
This shall not prevent any party from appearing on its own behalf at such
hearings.  Costs incurred by Operator, including fees paid to outside
attorneys, which are associated with hearings before governmental agencies,
and which costs are necessary and proper for the activities contemplated under
this agreement, shall be direct charges to the joint account and shall not be
covered by the administrative overhead charges as provided in Exhibit "C."

                                    2
<PAGE>

Operator shall make no charge for services rendered by its staff attorneys or
other personnel in the performance of the above functions.

     No well shall be drilled on the Contract Area until after (1) the title
to the Drillsite or Drilling Unit, if appropriate, has been examined as above
provided, and (2) the title has been approved by the examining attorney or
title has been accepted by all of the Drilling Parties in such well.

B.  Loss or Failure of Title:

    3. Losses: All losses of Leases or Interests committed to this agreement,
shall be joint losses and shall be borne by all parties in proportion to their
interests shown on Exhibit "A."  This shall include but not be limited to the
loss of any Lease or Interest through failure to develop or because express or
implied covenants have not been performed (other than performance which
requires only the payment of money), and the loss of any Lease by expiration
at the end of its primary term if it is not renewed or extended.  There shall
be no readjustment of interests in the remaining portion of the Contract Area
on account of any joint loss.

                                    3
<PAGE>

                                 ARTICLE V.

                                 OPERATOR

A.  Designation and Responsibilities of Operator:

    Verde Oil Company, a Texas corporation shall be the Operator of the
Contract Area, and shall conduct  and direct and have full control of all
operations on the Contract Area as permitted and required by, and within the
limits of this agreement.  In its performance of services hereunder for the
Non-Operators, Operator shall be an independent contractor not subject to the
control or direction of the Non-Operators except as to the type of operation
to be undertaken in accordance with the election procedures contained in this
agreement.  Operator shall not be deemed, or hold itself out as, the agent of
the Non-Operators with authority to bind them to any obligation or liability
assumed or incurred by Operator as to any third party.  Operator shall conduct
its activities under this agreement as a reasonable prudent operator, in a
good and workmanlike manner, with due diligence and dispatch, in accordance
with good oilfield practice, and in compliance with applicable law and
regulation, but in no event shall it have any liability as Operator to the
other parties for losses sustained or liabilities incurred except such as may
result from gross negligence or willful misconduct.

B.  Resignation or Removal of Operator and Selection of Successor:

    1. Resignation or Removal of Operator: Operator may resign at any time by
giving written notice thereof to Non-Operators.  If Operator terminates its
legal existence, no longer owns an interest hereunder in the Contract Area, or
is no longer capable of serving as Operator, Operator shall be deemed to have
resigned without any action by Non-Operators, except the selection of a
successor.  Operator may be removed only for good cause by the affirmative
vote of Non-Operators owning a majority interest based on ownership as shown
on Exhibit "A"; such vote shall not be deemed effective until a written notice
has been delivered to the Operator by a Non-Operator detailing the alleged
default and Operator has failed to cure the default within thirty (30) days
from its receipt of the notice or, if the default concerns an operation then
being conducted, within forty-eight (48) hours of its receipt of the notice.
For purposes hereof, "good cause" shall mean not only gross negligence or
willful misconduct but also the material breach of or inability to meet the
standards of operation contained in Article V.A. or material failure or
inability to perform its obligations under this agreement.

     Subject to Article VII.D.1., such resignation or removal shall not become
effective until 7:00 o'clock A.M. on the first day of the calendar month
following the expiration of ninety (90) days after the giving of notice of
resignation by Operator or action by the Non-Operators to remove Operator,
unless a successor Operator has been selected and assumes the duties of
Operator at an earlier date. Operator, after effective date of resignation or
removal, shall be bound by the terms hereof as a Non-Operator.  A change of a
corporate name or structure of Operator or transfer of Operator's interest to
any single subsidiary, parent or successor corporation shall not be the basis
for removal of Operator.

     2.  Selection of Successor Operator: Upon the resignation or removal of
Operator under any provision of this agreement, a successor Operator shall be
selected by the parties.  The successor Operator shall be selected from the
parties owning an interest in the Contract Area at the time such successor
Operator is selected.  The successor Operator shall be selected by the
affirmative vote of two (2) or more parties owning a majority interest based
on ownership as shown on Exhibit "A".  The former Operator shall promptly
deliver to the successor Operator all records and data relating to the
operations conducted by the former Operator to the extent such records and
data are not already in the possession of the successor operator.  Any cost of
obtaining or copying the former Operator's records and data shall be charged
to the joint account.

     3.  Effect of Bankruptcy: If Operator becomes insolvent, bankrupt or is
placed in receivership, it shall be deemed to have resigned without any action
by Non-Operators, except the selection of a successor.  If a petition for
relief under the federal bankruptcy laws is filed by or against Operator, and
the removal of Operator is prevented by the federal bankruptcy court, all
Non-Operators and Operator shall comprise an interim operating committee to
serve until Operator has elected to reject or assume this agreement pursuant
to the Bankruptcy Code, and an election to reject this agreement by Operator
as a debtor in possession, or by a trustee in bankruptcy, shall be deemed a
resignation as Operator without any action by Non-Operators, except the
selection of a successor.  During the period of time the operating committee
controls operations, all actions shall require the approval of two (2) or more
parties owning a majority interest based on ownership as shown on Exhibit "A."
In the event there are only two (2) parties to this agreement, during the
period of time the operating committee controls operations, a third party
acceptable to Operator, Non-Operator and the federal bankruptcy court shall be
selected as a member of the operating committee, and all actions shall require
the approval of two (2) members of the operating committee without regard for
their interest in the Contract Area based on Exhibit "A."

C.   Employees and Contractors:

     The number of employees or contractors used by Operator in conducting
operations hereunder, their selection, and the hours of labor and the
compensation for services performed shall be determined Operator, and all such
employees or contractors shall be the employees or contractors of Operator.

D.   Rights and Duties of Operator:

     1. Competitive Rates and Use of Affiliates: All wells drilled on the
Contract Area shall be drilled on a competitive contract basis at the usual
rates prevailing in the area.  If it so desires, Operator may employ its own
tools and equipment in the drilling of wells, but its charges therefor shall
not exceed the prevailing rates in the area and the rate of such charges shall
be agreed upon by the parties in writing before drilling operations are
commenced, and such work shall be performed by Operator under the same terms
and conditions as are customary and usual in the area in contracts of
independent contractors who are doing work of a similar nature.  All work
performed or materials supplied by affiliates or related parties of Operator
shall be performed or supplied at competitive rates, pursuant to written
agreement, and in accordance with customs and standards prevailing in  the
industry.

     2. Discharge of Joint Account Obligations: Except as herein otherwise
specifically provided, Operator shall promptly pay and discharge expenses
incurred in the development and operation of the Contract Area pursuant to
this agreement and shall charge each of the parties hereto with their
respective proportionate shares upon the expense basis provided in Exhibit
"C."  Operator shall keep an accurate record of the joint account hereunder,
showing expenses incurred and charges and credits made and received.

     3. Protection from Liens: Operator shall pay, or cause to be paid, as and
when they become due and payable, all accounts of contractors and suppliers
and wages and salaries for services rendered or performed, and for materials
supplied on, to or in respect of the Contract Area or any operations for the
joint account thereof, and shall keep the Contract Area free from

                                    4
<PAGE>

liens and encumbrances resulting therefrom except for those resulting from a
bona fide dispute as to services rendered or materials supplied.

     4. Custody of Funds: Operator shall hold for the account of the
Non-Operators any funds of the Non-Operators advanced or paid to the Operator,
either for the conduct of operations hereunder or as a result of the sale of
production from the Contract Area, and such funds shall remain the funds of
the Non-Operators on whose account they are advanced or paid until used for
their intended purpose or otherwise delivered to the Non-Operators or applied
toward the payment of debts as provided in Article VII.B.  Nothing in this
paragraph shall be construed to establish a fiduciary relationship between
Operator and Non-Operators for any purpose other than to account for
Non-Operator funds as herein specifically provided.  Nothing in this paragraph
shall require the maintenance by Operator of separate accounts for the funds
of Non-Operators unless the parties otherwise specifically agree.

     5. Access to Contract Area and Records: Operator shall, except as
otherwise provided herein, permit each Non-Operator or its duly authorized
representative, at the Non-Operator's sole risk and cost, full and free access
at all reasonable times to all operations of every kind and character being
conducted for the joint account on the Contract Area and to the records of
operations conducted thereon or production therefrom, including Operator's
books and records relating thereto.  Such access rights shall not be exercised
in a manner interfering with Operator's conduct of an operation hereunder and
shall not obligate Operator to furnish any geologic or geophysical data of an
interpretive nature unless the cost of preparation of such interpretive data
was charged to the joint account.  Operator will furnish to each Non-Operator
upon request copies of any and all reports and information obtained by
Operator in connection with production and related items, including, without
limitation, meter and chart reports, production purchaser statements, run
tickets and monthly gauge reports, but excluding purchase contracts and
pricing information to the extent not applicable to the production of the
Non-Operator seeking the information.  Any audit of Operator's records
relating to amounts expended and the appropriateness of such expenditures
shall be conducted in accordance with the audit protocol specified in Exhibit
"C."

     6. Filing and Furnishing Governmental Reports: Operator will file, and
upon written request promptly furnish copies to each requesting Non-Operator
not in default of its payment obligations, all operational notices, reports or
applications required to be filed by local, State, Federal or Indian agencies
or authorities having jurisdiction over operations hereunder.  Each
Non-Operator shall provide to Operator on a timely basis all information
necessary to Operator to make such filings.

     7. Drilling and Testing Operations: The following provisions shall apply
to each well drilled hereunder, including but not limited to the Initial Well:

     (a) Operator will promptly advise Non-Operators of the date on which the
well is spudded, or the date on which drilling operations are commenced.

     (b) Operator will send to Non-Operators such reports, test results and
notices regarding the progress of operations on  the well as the Non-Operators
shall reasonably request, including, but not limited to, daily drilling
reports, completion reports, and well logs.

     (c) Operator shall adequately test all Zones encountered which may
reasonably be expected to be capable of producing Oil and Gas in paying
quantities as a result of examination of the electric log or any other logs or
cores or tests conducted hereunder.

     8. Cost Estimates: Upon request of any Consenting Party, Operator shall
furnish estimates of current and cumulative costs incurred for the joint
account at reasonable intervals during the conduct of any operation pursuant
to this agreement.  Operator shall not be held liable for errors in such
estimates so long as the estimates are made in good faith.

     9. Insurance: At all times while operations are conducted hereunder,
Operator shall comply with the workers compensation law of the state where the
operations are being conducted; provided, however, that Operator may be a
self-insurer for liability under said compensation laws in which event the
only charge that shall be made to the joint account shall be as provided in
Exhibit "C."  Operator shall also carry or provide insurance for the benefit
of the joint account of the parties as outlined in Exhibit "D" attached hereto
and made a part hereof.  Operator shall require all contractors engaged in
work on or for the Contract Area to comply with the workers compensation law
of the state where the operations are being conducted and to maintain such
other insurance as Operator may require.

     In the event automobile liability insurance is specified in said Exhibit
"D," or subsequently receives the approval of the parties, no direct charge
shall be made by Operator for premiums paid for such insurance for Operator's
automotive equipment.

                                  ARTICLE VI.

                           DRILLING AND DEVELOPMENT

(See Article XVI. (C.))

B.  Subsequent Operations:

     1.  Proposed Operations: If any party hereto should desire to drill any
well on the Contract Area other than the Initial Well, or if any party should
desire to Rework, Sidetrack, Deepen, Recomplete or Plug Back a dry hole or a
well no longer capable of producing in paying quantities in which such party
has not otherwise relinquished its interest in the proposed objective Zone
under this agreement, the party desiring to drill, Rework, Sidetrack, Deepen,
Recomplete or Plug Back such a well shall give written notice of the proposed
operation to the parties who have not otherwise relinquished their interest in
such objective Zone

                                     5

<PAGE>

under this agreement and to all other parties in the case of a proposal for
Sidetracking or Deepening, specifying the work to be performed, the location,
proposed depth, objective Zone and the estimated cost of the operation.  The
parties to whom such a notice is delivered shall have thirty (30) days after
receipt of the notice within which to notify the party proposing to do the
work whether they elect to participate in the cost of the proposed operation.
If a drilling rig is on location, notice of a proposal to Rework, Sidetrack,
Recomplete, Plug Back or Deepen may be given by telephone and the response
period shall be limited to forty-eight (48) hours, exclusive of Saturday,
Sunday and legal holidays.  Failure of a party to whom such notice is
delivered to reply within the period above fixed shall constitute an election
by that party not to participate in the cost of the proposed operation. Any
proposal by a party to conduct an operation conflicting with the operation
initially proposed shall be delivered to all parties within the time and in
the manner provided in Article VI.B.6.

     If all parties to whom such notice is delivered elect to participate in
such a proposed operation, the parties shall be contractually committed to
participate therein provided such operations are commenced within the time
period hereafter set forth, and Operator shall, no later than ninety (90) days
after expiration of the notice period of thirty (30) days (or as promptly as
practicable after the expiration of the forty-eight (48) hour period when a
drilling rig is on location, as the case may be), actually commence the
proposed operation and thereafter complete it with due diligence at the risk
and expense of the parties participating therein; provided, however, said
commencement date may be extended upon written notice of same by Operator to
the other parties, for a period of up to thirty (30) additional days if, in
the sole opinion of Operator, such additional time is reasonably necessary to
obtain permits from governmental authorities, surface rights (including
rights-of-way) or appropriate drilling equipment, or to complete title
examination or curative matter required for title approval or acceptance.  If
the actual operation has not been commenced within the time provided
(including any extension thereof as specifically permitted herein or in the
force majeure provisions of Article XI) and if any party hereto still desires
to conduct said operation, written notice proposing same must be resubmitted
to the other parties in accordance herewith as if no prior proposal had been
made.  Those parties that did not participate in the drilling of a well for
which a proposal to Deepen or Sidetrack is made hereunder shall, if such
parties desire to participate in the proposed Deepening or Sidetracking
operation, reimburse the Drilling Parties in accordance with Article VI.B.4.
in the event of a Deepening operation and in accordance with Article VI.B.5.
in the event of a Sidetracking operation.

     2.  Operations by Less Than All Parties:

         (a) Determination of Participation.  If any party to whom such notice
is delivered as provided in Article VI.B.1. or VI.C.1. (Option No. 2) elects
not to participate in the proposed operation, then, in order to be entitled to
the benefits of this Article, the party or parties giving the notice and such
other parties as shall elect to participate in the operation shall, no later
than ninety (90) days after the expiration of the notice period of thirty (30)
days (or as promptly as practicable after the expiration of the forty-eight
(48) hour period when a drilling rig is on location, as the case may be)
actually commence the proposed operation and complete it with due diligence.
Operator shall perform all work for the account of the Consenting Parties;
provided, however, if no drilling rig or other equipment is on location, and
if Operator is a Non-Consenting Party, the Consenting Parties shall either:
(i) request Operator to perform the work required by such proposed operation
for the account of the Consenting Parties, or (ii) designate one of the
Consenting Parties as Operator to perform such work.  The rights and duties
granted to and imposed upon the Operator under this agreement are granted to
and imposed upon the party designated as Operator for an operation in which
the original Operator is a Non-Consenting Party.  Consenting Parties, when
conducting operations on the Contract Area pursuant to this Article VI.B.2.,
shall comply with all terms and conditions of this agreement.

     If less than all parties approve any proposed operation, the proposing
party, immediately after the expiration of the applicable notice period, shall
advise all Parties of the total interest of the parties approving such
operation and its recommendation as to whether the Consenting Parties should
proceed with the operation as proposed.  Each Consenting Party, within
forty-eight (48) hours (exclusive of Saturday, Sunday, and legal holidays)
after delivery of such notice, shall advise the proposing party of its desire
to (i) limit participation to such party's interest as shown on Exhibit "A" or
(ii) carry only its proportionate part (determined by dividing such party's
interest in the Contract Area by the interests of all Consenting Parties in
the Contract Area) of Non-Consenting Parties' interests, or (iii) carry its
proportionate part (determined as provided in (ii)) of Non-Consenting Parties'
interests together with all or a portion of its proportionate part of any
Non-Consenting Parties' interests that any Consenting Party did not elect to
take.  Any interest of Non-Consenting Parties that is not carried by a
Consenting Party shall be deemed to be carried by the party proposing the
operation if such party does not withdraw its proposal.  Failure to advise the
proposing party within the time required shall be deemed an election under
(i). In the event a drilling rig is on location, notice may be given by
telephone, and the time permitted for such a response shall not exceed a total
of forty-eight (48) hours (exclusive of Saturday, Sunday and legal holidays).
The proposing party, at its election, may withdraw such proposal if there is
less than 100% participation and shall notify all parties of such decision
within ten (10) days, or within twenty-four (24) hours if a drilling rig is on
location, following expiration of the applicable response period. If 100%
subscription to the proposed operation is obtained, the proposing party shall
promptly notify the Consenting Parties of their proportionate interests in the
operation and the party serving as Operator shall commence such operation
within the period provided in Article VI.B.1., subject to the same extension
right as provided therein.

     (b) Relinquishment of Interest for Non-Participation. The entire cost and
risk of conducting such operations shall be borne by the Consenting Parties in
the proportions they have elected to bear same under the terms of the
preceding paragraph.  Consenting Parties shall keep the leasehold estates
involved in such operations free and clear of all liens and encumbrances of
every kind created by or arising from the operations of the Consenting
Parties.  If such an operation results in a dry hole, then subject to Articles
VI.B.6. and VI.E.3., the Consenting Parties shall plug and abandon the well
and restore the surface location at their sole cost, risk and expense;
provided, however, that those Non-Consenting Parties that participated in the
drilling, Deepening or Sidetracking of the well shall remain liable for, and
shall pay, their proportionate shares of the cost of plugging and abandoning
the well and restoring the surface location insofar only as those costs were
not increased by the subsequent operations of the Consenting Parties.  If any
well drilled, Reworked, Sidetracked, Deepened, Recompleted or Plugged Back
under the provisions of this Article results in a well capable of producing
Oil and/or Gas in paying quantities, the Consenting Parties shall Complete and
equip the well to produce at their sole cost and risk, and the well shall then
be turned over to Operator (if the Operator did not conduct the operation) and
shall be operated by it at the expense and for the account of the Consenting
Parties.  Upon commencement of operations for the drilling, Reworking,
Sidetracking, Recompleting, Deepening or Plugging Back of any such well by
Consenting Parties in accordance with the provisions of this Article, each
Non-Consenting Party shall be deemed to have relinquished to Consenting
Parties, and the Consenting Parties shall own and be entitled to receive, in
proportion to their respective interests, all of such Non-Consenting Party's
interest in the well and share of production therefrom or, in the case of a
Reworking, Sidetracking,

                                    6
<PAGE>

Deepening, Recompleting or Plugging Back, or a Completion pursuant to Article
VI.C.1.  Option No. 2, all of such Non-Consenting Party's interest in the
production obtained from the operation in which the Non-Consenting Party did
not elect to participate.  Such relinquishment shall be effective until the
proceeds of the sale of such share, calculated at the well, or market value
thereof if such share is not sold (after deducting applicable ad valorem,
production, severance, and excise taxes, royalty, overriding royalty and other
interests not excepted by Article III.C. payable out of or measured by the
production from such well accruing with respect to such interest until it
reverts), shall equal the total of the following:

     (i)  150% of each such Non-Consenting Party's share of the cost of any
newly acquired surface equipment beyond the wellhead connections (including
but not limited to stock tanks, separators, treaters, pumping equipment and
piping), plus 100% of each such Non-Consenting Party's share of the cost of
operation of the well commencing with first production and continuing until
each such Non-Consenting Party's relinquished interest shall revert to it
under other provisions of this Article, it being agreed that each
Non-Consenting Party's share of such costs and equipment will be that interest
which would have been chargeable to such Non-Consenting Party had it
participated in the well from the beginning of the operations; and

     (ii)  300% of (a) that portion of the costs and expenses of drilling,
Reworking, Sidetracking, Deepening, Plugging Back, testing, Completing, and
Recompleting, after deducting any cash contributions received under Article
VIII.C., and of (b) that portion of the cost of newly acquired equipment in
the well (to and including the wellhead connections), which would have been
chargeable to such Non-Consenting Party if it had participated therein.

     Notwithstanding anything to the contrary in this Article VI.B., if the
well does not reach the deepest objective Zone described in the notice
proposing the well for reasons other than the encountering of granite or
practically impenetrable substance or other condition in the hole rendering
further operations impracticable, Operator shall give notice thereof to each
Non-Consenting Party who submitted or voted for an alternative proposal under
Article VI.B.6. to drill the well to a shallower Zone than the deepest
objective Zone proposed in the notice under which the well was drilled, and
each such Non-Consenting Party shall have the option to participate in the
initial proposed Completion of the well by paying its share of the cost of
drilling the well to its actual depth, calculated in the manner provided in
Article VI.B.4. (a).  If any such Non-Consenting Party does not elect to
participate in the first Completion proposed for such well, the relinquishment
provisions of this Article VI.B.2. (b) shall apply to such party's interest.

     (c) Reworking, Recompleting or Plugging Back. An election not to
participate in the drilling, Sidetracking or Deepening of a well shall be
deemed an election not to participate in any Reworking or Plugging Back
operation proposed in such a well, or portion thereof, to which the initial
non-consent election applied that is conducted at any time prior to full
recovery by the Consenting Parties of the Non-Consenting Party's recoupment
amount.  Similarly, an election not to participate in the Completing or
Recompleting of a well shall be deemed an election not to participate in any
Reworking operation proposed in such a well, or portion thereof, to which the
initial non-consent election applied that is conducted at any time prior to
full recovery by the Consenting Parties of the Non-Consenting Party's
recoupment amount.  Any such Reworking, Recompleting or Plugging Back
operation conducted during the recoupment period shall be deemed part of the
cost of operation of said well and there shall be added to the sums to be
recouped by the Consenting Parties 300% of that portion of the costs of the
Reworking, Recompleting or Plugging Back operation which would have been
chargeable to such Non-Consenting Party had it participated therein.  If such
a Reworking, Recompleting or Plugging Back operation is proposed during such
recoupment period, the provisions of this Article VI.B. shall be applicable as
between said Consenting Parties in said well.

     (d) Recoupment Matters. During the period of time Consenting Parties are
entitled to receive Non-Consenting Party's share of production, or the
proceeds therefrom, Consenting Parties shall be responsible for the payment of
all ad valorem, production, severance, excise, gathering and other taxes, and
all royalty, overriding royalty and other burdens applicable to Non-Consenting
Party's share of production not excepted by Article III.C.

     In the case of any Reworking, Sidetracking, Plugging Back, Recompleting
or Deepening operation, the Consenting Parties shall be permitted to use, free
of cost, all casing, tubing and other equipment in the well, but the ownership
of all such equipment shall remain unchanged; and upon abandonment of a well
after such Reworking, Sidetracking, Plugging Back, Recompleting or Deepening,
the Consenting Parties shall account for all such equipment to the owners
thereof, with each party receiving its proportionate part in kind or in value,
less cost of salvage.

     Within ninety (90) days after the completion of any operation under this
Article, the party conducting the operations for the Consenting Parties shall
furnish each Non-Consenting Party with an inventory of the equipment in and
connected to the well, and an itemized statement of the cost of drilling,
Sidetracking, Deepening, Plugging Back, testing, Completing, Recompleting, and
equipping the well for production; or, at its option, the operating party, in
lieu of an itemized statement of such costs of operation, may submit a
detailed statement of monthly billings.  Each month thereafter, during the
time the Consenting Parties are being reimbursed as provided above, the party
conducting the operations for the Consenting Parties shall furnish the
Non-Consenting Parties with an itemized statement of all costs and liabilities
incurred in the operation of the well, together with a statement of the
quantity of Oil and Gas produced from it and the amount of proceeds realized
from the sale of the well's working interest production during the preceding
month.  In determining the quantity of Oil and Gas produced during any month,
Consenting Parties shall use industry accepted methods such as but not limited
to metering or periodic well tests.  Any amount realized from the sale or
other disposition of equipment newly acquired in connection with any such
operation which would have been owned by a Non-Consenting Party had it
participated therein shall be credited against the total unreturned costs of
the work done and of the equipment purchased in determining when the interest
of such Non-Consenting Party shall revert to it as above provided; and if
there is a credit balance, it shall be paid to such Non-Consenting Party.

     If and when the Consenting Parties recover from a Non-Consenting Party's
relinquished interest the amounts provided for above, the relinquished
interests of such Non-Consenting Party shall automatically revert to it as of
7:00 a.m. on the day following the day on which such recoupment occurs, and,
from and after such reversion, such Non-Consenting Party shall own the same
interest in such well, the material and equipment in or pertaining thereto,
and the production therefrom as such Non-Consenting Party would have been
entitled to had it participated in the drilling, Sidetracking, Reworking,
Deepening, Recompleting or Plugging Back of said well.  Thereafter, such
Non-Consenting Party shall be charged with and shall pay its proportionate
part of the further costs of the operation of said well in accordance with the
terms of this agreement and Exhibit "C" attached hereto.

     3. Stand-By Costs: When a well which has been drilled or Deepened has
reached its authorized depth and all tests have been completed and the results
thereof furnished to the parties, or when operations on the well have been
otherwise terminated pursuant to Article VI.F., stand-by costs incurred
pending response to a party's notice proposing a Reworking,

                                    7
<PAGE>

Sidetracking, Deepening, Recompleting, Plugging Back or Completing operation
in such a well (including the period required under Article VI.B.6. to resolve
competing proposals) shall be charged and borne as part of the drilling or
Deepening operation just completed.  Stand-by costs subsequent to all parties
responding, or expiration of the response time permitted, whichever first
occurs, and prior to agreement as to the participating interests of all
Consenting Parties pursuant to the terms of the second grammatical paragraph
of Article VI.B.2. (a), shall be charged to and borne as part of the proposed
operation, but if the proposal is subsequently withdrawn because of
insufficient participation, such stand-by costs shall be allocated between the
Consenting Parties in the proportion each Consenting Party's interest as shown
on Exhibit "A" bears to the total interest as shown on Exhibit "A" of all
Consenting Parties.

     In the event that notice for a Sidetracking operation is given while the
drilling rig to be utilized is on location, any party may request and receive
up to five (5) additional days after expiration of the forty-eight hour
response period specified in Article VI.B.1. within which to respond by paying
for all stand-by costs and other costs incurred during such extended response
period; Operator may require such party to pay the estimated stand-by time in
advance as a condition to extending the response period.  If more than one
party elects to take such additional time to respond to the notice, standby
costs shall be allocated between the parties taking additional time to respond
on a day-to-day basis in the proportion each electing party's interest as
shown on Exhibit "A" bears to the total interest as shown on Exhibit "A" of
all the electing parties.

     4. Deepening: If less than all parties elect to participate in a
drilling, Sidetracking, or Deepening operation proposed pursuant to Article
VI.B.1., the interest relinquished by the Non-Consenting Parties to the
Consenting Parties under Article VI.B.2. shall relate only and be limited to
the lesser of (i) the total depth actually drilled or (ii) the objective depth
or Zone of which the parties were given notice under Article VI.B.1. ("Initial
Objective").  Such well shall not be Deepened beyond the Initial Objective
without first complying with this Article to afford the Non-Consenting Parties
the opportunity to participate in the Deepening operation.

     In the event any Consenting Party desires to drill or Deepen a
Non-Consent Well to a depth below the Initial Objective, such party shall give
notice thereof, complying with the requirements of Article VI.B.1., to all
parties (including Non-Consenting Parties).  Thereupon, Articles VI.B.1. and
2. shall apply and all parties receiving such notice shall have the right to
participate or not participate in the Deepening of such well pursuant to said
Articles VI.B.1. and 2.  If a Deepening operation is approved pursuant to such
provisions, and if any Non-Consenting Party elects to participate in the
Deepening operation, such Non-Consenting party shall pay or make reimbursement
(as the case may be) of the following costs and expenses.

     (a) If the proposal to Deepen is made prior to the Completion of such
well as a well capable of producing in paying quantities, such Non-Consenting
Party shall pay (or reimburse Consenting Parties for, as the case may be) that
share of costs and expenses incurred in connection with the drilling of said
well from the surface to the Initial Objective which Non-Consenting Party
would have paid had such Non-Consenting Party agreed to participate therein,
plus the Non-Consenting Party's share of the cost of Deepening and of
participating in any further operations on the well in accordance with the
other provisions of this Agreement; provided, however, all costs for testing
and Completion or attempted Completion of the well incurred by Consenting
Parties prior to the point of actual operations to Deepen beyond the Initial
Objective shall be for the sole account of Consenting Parties.

     (b) If the proposal is made for a Non-Consent Well that has been
previously Completed as a well capable of producing in paying quantities, but
is no longer capable of producing in paying quantities, such Non-Consenting
Party shall pay (or reimburse Consenting Parties for, as the case may be) its
proportionate share of all costs of drilling, Completing, and equipping said
well from the surface to the Initial Objective, calculated in the manner
provided in paragraph (a) above, less those costs recouped by the Consenting
Parties from the sale of production from the well.  The Non-Consenting Party
shall also pay its proportionate share of all costs of re-entering said well.
The Non-Consenting Parties' proportionate part (based on the percentage of
such well Non-Consenting Party would have owned had it previously participated
in such Non-Consent Well) of the costs of salvable materials and equipment
remaining in the hole and salvable surface equipment used in connection with
such well shall be determined in accordance with Exhibit "C."  If the
Consenting Parties have recouped the cost of drilling, Completing, and
equipping the well at the time such Deepening operation is conducted, then a
Non-Consenting Party may participate in the Deepening of the well with no
payment for costs incurred prior to re-entering the well for Deepening

     The foregoing shall not imply a right of any Consenting Party to propose
any Deepening for a Non-Consent Well prior to the drilling of such well to its
Initial Objective without the consent of the other Consenting Parties as
provided in Article VI.F.

     5. Sidetracking: Any party having the right to participate in a proposed
Sidetracking operation that does not own an interest in the affected wellbore
at the time of the notice shall, upon electing to participate, tender to the
wellbore owners its proportionate share (equal to its interest in the
Sidetracking operation) of the value of that portion of the existing wellbore
to be utilized as follows:

     (a) If the proposal is for Sidetracking an existing dry hole,
reimbursement shall be on the basis of the actual costs incurred in the
initial drilling of the well down to the depth at which the Sidetracking
operation is initiated.

     (b) If the proposal is for Sidetracking a well which has previously
produced, reimbursement shall be on the basis of such party's proportionate
share of drilling and equipping costs incurred in the initial drilling of the
well down to the depth at which the Sidetracking operation is conducted,
calculated in the manner described in Article VI.B.4(b) above.  Such party's
proportionate share of the cost of the well's salvable materials and equipment
down to the depth at which the Sidetracking operation is initiated shall be
determined in accordance with the provisions of Exhibit "C."

     6. Order of Preference of Operations. Except as otherwise specifically
provided in this agreement, if any party desires to propose the conduct of an
operation that conflicts with a proposal that has been made by a party under
this Article VI, such party shall have fifteen (15) days from delivery of the
initial proposal, in the case of a proposal to drill a well or to perform an
operation on a well where no drilling rig is on location, or twenty-four (24)
hours, exclusive of Saturday, Sunday and legal holidays, from delivery of the
initial proposal, if a drilling rig is on location for the well on which such
operation is to be conducted, to deliver to all parties entitled to
participate in the proposed operation such party's alternative proposal, such
alternate proposal to contain the same information required to be included in
the initial proposal.  Each party receiving such proposals shall elect by
delivery of notice to Operator within five (5) days after expiration of the
proposal period, or within twenty-four (24) hours (exclusive of Saturday,
Sunday and legal holidays) if a drilling rig is on location for the well that
is the subject of the proposals, to participate in one of the competing
proposals.  Any party not electing within the time required shall be deemed
not to have voted.  The proposal receiving the vote of parties owning the
largest aggregate percentage interest of the parties voting shall have
priority over all other competing proposals; in the case of a tie vote, the

                                     8
<PAGE>

initial proposal shall prevail. Operator shall deliver notice of such result
to all parties entitled to participate in the operation within five (5) days
after expiration of the election period (or within twenty-four (24) hours,
exclusive of Saturday, Sunday and legal holidays, if a drilling rig is on
location).  Each party shall then have two (2) days (or twenty-four (24) hours
if a rig is on location) from receipt of such notice to elect by delivery of
notice to Operator to participate in such operation or to  relinquish interest
in the affected well pursuant to the provisions of Article VI.B.2.; failure by
a party to deliver notice within such period shall be deemed an election not
to participate in the prevailing proposal.

     7. Conformity to Spacing Pattern. Notwithstanding the provisions of this
Article VI.B.2., it is agreed that no wells shall be proposed to be drilled to
or Completed in or produced from a Zone from which a well located elsewhere on
the Contract Area is producing, unless such well conforms to the then-existing
well spacing pattern for such Zone.

     8. Paying Wells. No party shall conduct any Reworking, Deepening,
Plugging Back, Completion, Recompletion, or Sidetracking operation under this
agreement with respect to any well then capable of producing in paying
quantities except with the consent of all parties that have not relinquished
interests in the well at the time of such operation.

C.  Completion of Wells; Reworking and Plugging Back:

    1. Completion: Without the consent of all parties, no well shall be
drilled, Deepened or Sidetracked, except any well drilled, Deepened or
Sidetracked pursuant to the provisions of Article VI.B.2. of this agreement.
Consent to the drilling, Deepening or Sidetracking shall include:

        X  Option No. 1: All necessary expenditures for the drilling,
Deepening or Sidetracking, testing, Completing and equipping of the well,
including necessary tankage and/or surface facilities.

    2. Rework, Recomplete or Plug Back: No well shall be Reworked, Recompleted
or Plugged Back except a well Reworked, Recompleted, or Plugged Back pursuant
to the provisions of Article VI.B.2. of this agreement.  Consent to the
Reworking, Recompleting or Plugging Back of a well shall include all necessary
expenditures in conducting such operations and Completing and equipping of
said well, including necessary tankage and/or surface facilities.

D.  Other Operations:

     Operator shall not undertake any single project reasonably estimated to
require an expenditure in excess of Twenty Thousand Dollars ($20,000) except
in connection with the drilling, Sidetracking, Reworking, Deepening,
Completing, Recompleting or Plugging Back of a well that has been previously
authorized by or pursuant to this agreement; provided, however, that, in case
of explosion, fire, flood or other sudden emergency, whether of the same or
different nature, Operator may take such steps and incur such expenses as in
its opinion are required to deal with the emergency to safeguard life and
property but Operator, as promptly as possible, shall report the emergency to
the other parties.  If Operator prepares an AFE for its own use, Operator
shall furnish any Non-Operator so requesting an information copy thereof for
any single project costing in excess of Ten Thousand Dollars ($10,000).  Any
party who has not relinquished its interest in a well shall have the right to
propose that Operator perform repair work or undertake the installation of
artificial lift equipment or ancillary production facilities such as salt
water disposal wells or to conduct additional work with respect to a well
drilled hereunder or other similar project (but not including the installation
of gathering lines or other transportation or marketing facilities, the
installation of which shall be governed by separate agreement between the
parties) reasonably estimated to require an expenditure in excess of the
amount first set forth above in this Article VI.D. (except in connection with
an operation required to be proposed under Articles VI.B.1.  which shall be
governed exclusively be those Articles).  Operator shall deliver such proposal
to all parties entitled to participate therein.  If within thirty (30) days
thereof Operator secures the written consent of any party or parties owning at
least 51% of the interests of the parties entitled to participate in such
operation, each party having the right to participate in such project shall be
bound by the terms of such proposal and shall be obligated to pay its
proportionate share of the costs of the proposed project as if it had
consented to such project pursuant to the terms of the proposal.

E.  Abandonment of Wells:

    1.  Abandonment of Dry Holes: Except for any well drilled or Deepened
pursuant to Article VI.B.2., any well which has been drilled or Deepened under
the terms of this agreement and is proposed to be completed as a dry hole
shall not be

                                    9

<PAGE>

plugged and abandoned without the consent of all parties.  Should Operator,
after diligent effort, be unable to contact any party, or should any party
fail to reply within forty-eight (48) hours (exclusive of Saturday, Sunday and
legal holidays) after delivery of notice of the proposal to plug and abandon
such well, such party shall be deemed to have consented to the proposed
abandonment.  All such wells shall be plugged and abandoned in accordance with
applicable regulations and at the cost, risk and expense of the parties who
participated in the cost of drilling or Deepening such well.  Any party who
objects to plugging and abandoning such well by notice delivered to Operator
within forty-eight (48) hours (exclusive of Saturday, Sunday and legal
holidays) after delivery of notice of the proposed plugging shall take over
the well as of the end of such forty-eight (48) hour notice period and conduct
further operations in search of Oil and/or Gas subject to the provisions of
Article VI.B.; failure of such party to provide proof reasonably satisfactory
to Operator of its financial capability to conduct such operations or to take
over the well within such period or thereafter to conduct operations on such
well or plug and abandon such well shall entitle Operator to retain or take
possession of the well and plug and abandon the well.  The party taking over
the well shall indemnify Operator (if Operator is an abandoning party) and the
other abandoning parties against liability for any further operations
conducted on such well except for the costs of plugging and abandoning the
well and restoring the surface, for which the abandoning parties shall remain
proportionately liable.

     2. Abandonment of Wells That Have Produced: Except for any well in which
a Non-Consent operation has been conducted hereunder for which the Consenting
Parties have not been fully reimbursed as herein provided, any well which has
been completed as a producer shall not be plugged and abandoned without the
consent of all parties.  If all parties consent to such abandonment, the well
shall be plugged and abandoned in accordance with applicable regulations and
at the cost, risk and expense of all the parties hereto.  Failure of a party
to reply within sixty (60) days of delivery of notice of proposed abandonment
shall be deemed an election to consent to the proposal.  If, within sixty (60)
days after delivery of notice of the proposed abandonment of any well, all
parties do not agree to the abandonment of such well, those wishing to
continue its operation from the Zone then open to production shall be
obligated to take over the well as of the expiration of the applicable notice
period and shall indemnify Operator (if Operator is an abandoning party) and
the other abandoning parties against liability for any further operations on
the well conducted by such parties.  Failure of such party or parties to
provide proof reasonably satisfactory to Operator of their financial
capability to conduct such operations or to take over the well within the
required period or thereafter to conduct operations on such well shall entitle
operator to retain or take possession of such well and plug and abandon the
well.

     Parties taking over a well as provided herein shall tender to each of the
other parties its proportionate share of the value of the well's salvable
material and equipment, determined in accordance with the provisions of
Exhibit "C," less the estimated cost of salvaging and the estimated cost of
plugging and abandoning and restoring the surface; provided, however, that in
the event the estimated plugging and abandoning and surface restoration costs
and the estimated cost of salvaging are higher than the value of the well's
salvable material and equipment, each of the abandoning parties shall tender
to the parties continuing operations their proportionate shares of the
estimated excess cost.  Each abandoning party shall assign to the
non-abandoning parties, without warranty, express or implied, as to title or
as to quantity, or fitness for use of the equipment and material, all of its
interest in the wellbore of the well and related equipment, together with its
interest in the Leasehold insofar and only insofar as such Leasehold covers
the right to obtain production from that wellbore in the Zone then open to
production.  If the interest of the abandoning party is or includes and Oil
and Gas Interest, such party shall execute and deliver to the non-abandoning
party or parties an oil and gas lease, limited to the wellbore and the Zone
then open to production, for a term of one (1) year and so long thereafter as
Oil and/or Gas is produced from the Zone covered thereby, such lease to be on
the form attached as Exhibit "B."  The assignments or leases so limited shall
encompass the Drilling Unit upon which the well is located. The payments by,
and the assignments or leases to, the assignees shall be in a ratio based upon
the relationship of their respective percentage of participation in the
Contract Area to the aggregate of the percentages of participation in the
Contract Area of all assignees.  There shall be no readjustment of interests
in the remaining portions of the Contract Area.

     Thereafter, abandoning parties shall have no further responsibility,
liability, or interest in the operation of or production from the well in the
Zone then open other than the royalties retained in any lease made under the
terms of this Article.  Upon request, Operator shall continue to operate the
assigned well for the account of the non-abandoning parties at the rates and
charges contemplated by this agreement, plus any additional cost and charges
which may arise as the result of the separate ownership of the assigned well.
Upon proposed abandonment of the producing Zone assigned or leased, the
assignor or lessor shall then have the option to repurchase its prior interest
in the well (using the same valuation formula) and participate in further
operations therein subject to the provisions hereof.

     3. Abandonment of Non-Consent Operations: The provisions of Article
VI.E.1. or VI.E.2. above shall be applicable as between Consenting Parties in
the event of the proposed abandonment of any well excepted from said Articles;
provided, however, no well shall be permanently plugged and abandoned unless
and until all parties having the right to conduct further operations therein
have been notified of the proposed abandonment and afforded the opportunity to
elect to take over the well in accordance with the provisions of this Article
VI.E.; and provided further, that Non-Consenting Parties who own an interest
in a portion of the well shall pay their proportionate shares of abandonment
and surface restoration cost for such well as provided in Article VI.B.2.(b).

F.  Termination of Operations:

     Upon the commencement of an operation for the drilling, Reworking,
Sidetracking, Plugging Back, Deepening, testing, Completion or plugging of a
well, including but not limited to the Initial Well, such operation shall not
be terminated without consent of parties bearing 51% of the costs of such
operation; provided, however, that in the event granite or other practically
impenetrable substance or condition in the hole is encountered which renders
further operations impractical, Operator may discontinue operations and give
notice of such condition in the manner provided in Article VI.B.1, and the
provisions of Article VI.B. or VI.E. shall thereafter apply to such operation,
as appropriate.

G.  Taking Production in Kind:

    X  Option No. 2: No Gas Balancing Agreement:

       Each party shall take in kind or separately dispose of its
proportionate share of all Oil and Gas produced from the Contract Area,
exclusive of production which may be used in development and producing
operations and in  preparing and treating Oil and Gas for marketing purposes
and production unavoidably lost.  Any extra expenditures incurred in the
taking in kind or separate disposition by any party of its proportionate share
of the production shall be borne by such party.  Any party taking its share of
production in kind shall be required to pay for only its proportionate share
of such part of Operator's surface facilities which it uses.

                                     10
<PAGE>

       Each party shall execute such division orders and contracts as may be
necessary for the sale of its interest in production from the Contract Area,
and, except as provided in Article VII.B., shall be entitled to receive
payment directly from the purchaser thereof for its share of all production.

       If any party fails to make the arrangements necessary to take in kind
or separately dispose of its proportionate share of the Oil and/or Gas
produced from the Contract Area, Operator shall have the right, subject to the
revocation at will by the party owning it, but not the obligation, to purchase
such Oil and/or Gas or sell it to others at any time and from time to time,
for the account of the non-taking party.  Any such purchase or sale by
Operator may be terminated by Operator upon at least ten (10) days written
notice to the owner of said production and shall be subject always to the
right of the owner of the production upon at least ten (10) days written
notice to Operator to exercise its right to take in kind, or separately
dispose of, its share of all Oil and/or Gas not previously delivered to a
purchaser; provided, however, that the effective date of any such revocation
may be deferred at Operator's election for a period not to exceed ninety (90)
days if Operator has committed such production to a purchase contract having a
term extending beyond such ten- (10) day period.  Any purchase or sale by
Operator of any other party's share of Oil and/or Gas shall be only for such
reasonable periods of time as are consistent with the minimum needs of the
industry under the particular circumstances, but in no event for a period in
excess of one (1) year.

       Any such sale by Operator shall be in a manner commercially reasonable
under the circumstances, but Operator shall have no duty to share any existing
market or transportation arrangement or to obtain a price or transportation
fee equal to that received under any existing market or transportation
arrangement.  The sale or delivery by Operator of a non-taking party's share
of production under the terms of any existing contract of Operator shall not
give the non-taking party any interest in or make the non-taking party a party
to said contract.  No purchase of Oil and Gas and no sale of Gas shall be made
by Operator without first giving the non-taking party ten days written notice
of such intended purchase or sale and the price to be paid or the pricing
basis to be used. Operator shall give notice to all parties of the first sale
of Gas from any well under this Agreement.

       All parties shall give timely written notice to Operator of their Gas
marketing arrangements for the following month, excluding price, and shall
notify Operator immediately in the event of a change in such arrangements.
Operator shall maintain records of all marketing arrangements, and of volumes
actually sold or transported, which records shall be made available to
Non-Operators upon reasonable request.

                                 ARTICLE VII.

                   EXPENDITURES AND LIABILITY OF PARTIES

A.  Liability of Parties:

    The liability of the parties shall be several, not joint or collective.
Each party shall be responsible only for its obligations, and shall be liable
only for its proportionate share of the costs of developing and operating the
Contract Area.  Accordingly, the liens granted among the parties in Article
VII.B. are given to secure only the debts of each severally, and no party
shall have any liability to third parties hereunder to satisfy the default of
any other party in the payment of any expense or obligation hereunder.  It is
not the intention of the parties to create, nor shall this agreement be
construed as creating, a mining or other partnership, joint venture, agency
relationship or association, or to render the parties liable as partners,
co-venturers, or principals.  In their relations with each other under this
agreement, the parties shall not be considered fiduciaries or to have
established a confidential relationship but rather shall be free to act on an
arm's-length basis in accordance with their own respective self-interest,
subject, however, to the obligation of the parties to act in good faith in
their dealings with each other with respect to activities hereunder.

                                      11

<PAGE>

B.  Liens and Security Interests:

    Each party grants to the other parties hereto a lien upon any interest it
now owns or hereafter acquires in Oil and Gas Leases and Oil and Gas Interests
in the Contract Area, and a security interest and/or purchase money security
interest in any interest it now owns or hereafter acquires in the personal
property and fixtures on or used or obtained for use in connection therewith,
to secure performance of all of its obligations under this agreement including
but not limited to payment of expense, interest and fees, the proper
disbursement of all monies paid hereunder, the assignment or relinquishment of
interest in Oil and Gas Leases as required hereunder, and the proper
performance of operations hereunder.  Such lien and security interest granted
by each party hereto shall include such party's leasehold interests, working
interests, operating rights, and royalty and overriding royalty interests in
the Contract Area now owned or hereafter acquired and in lands pooled or
unitized therewith or otherwise becoming subject to this agreement, the Oil
and Gas when extracted therefrom and equipment situated thereon or used or
obtained for use in connection therewith (including, without limitation, all
wells, tools, and tubular goods), and accounts (including, without limitation,
accounts arising from gas imbalances or from the sale of Oil and/or Gas at the
wellhead), contract rights, inventory and general intangibles relating thereto
or arising therefrom, and all proceeds and products of the foregoing.

     To perfect the lien and security agreement provided herein, each party
hereto shall execute and acknowledge the recording supplement and/or any
financing statement prepared and submitted by any party hereto in conjunction
herewith or at any time following execution hereof, and Operator is authorized
to file this agreement or the recording supplement executed herewith as a lien
or mortgage in the applicable real estate records and as a financing statement
with the proper officer under the Uniform Commercial Code in the state in
which the Contract Area is situated and such other states as Operator shall
deem appropriate to perfect the security interest granted hereunder.  Any
party may file this agreement, the recording supplement executed herewith, or
such other documents as it deems necessary as a lien or mortgage in the
applicable real estate records and/or a financing statement with the proper
officer under the Uniform Commercial Code.

     Each party represents and warrants to the other parties hereto that the
lien and security interest granted by such party to the other parties shall be
a first and prior lien, and each party hereby agrees to maintain the priority
of said lien and security interest against all persons acquiring an interest
in Oil and Gas Leases and Interests covered by this agreement by, through or
under such party.  All parties acquiring an interest in Oil and Gas Leases and
Oil and Gas Interests covered by this agreement, whether by assignment,
merger, mortgage, operation of law, or otherwise, shall be deemed to have
taken subject to the lien and security interest granted by this Article VII.B.
as to all obligations attributable to such interest hereunder whether or not
such obligations arise before or after such interest is acquired.

     To the extent that parties have a security interest under the Uniform
Commercial Code of the state in which the Contract Area is situated, they
shall be entitled to exercise the rights and remedies of a secured party under
the Code.  The bringing of a suit and the obtaining of judgment by a party for
the secured indebtedness shall not be deemed an election of remedies or
otherwise affect the lien rights or security interest as security for the
payment thereof.  In addition, upon default by any party in the payment of its
share of expenses, interests or fees, or upon the improper use of funds by the
Operator, the other parties shall have the right, without prejudice to other
rights or remedies, to collect from the purchaser the proceeds from the sale
of such defaulting party's share of Oil and Gas until the amount owed by such
party, plus interest as provided in "Exhibit C," has been received, and shall
have the right to offset the amount owed against the proceeds from the sale of
such defaulting party's share of Oil and Gas.  All purchasers of production
may rely on a notification of default from the non-defaulting party or parties
stating the amount due as a result of the default, and all parties waive any
recourse available against purchasers for releasing production proceeds as
provided in this paragraph.

     If any party fails to pay its share of cost within one hundred twenty
(120) days after rendition of a statement therefor by Operator, the
non-defaulting parties, including Operator, shall upon request by Operator,
pay the unpaid amount in the proportion that the interest of each such party
bears to the interest of all such parties.  The amount paid by each party so
paying its share of the unpaid amount shall be secured by the liens and
security rights described in Article VII.B., and each paying party may
independently pursue any remedy available hereunder or otherwise.

     If any party does not perform all of its obligations hereunder, and the
failure to perform subjects such party to foreclosure or execution proceedings
pursuant to the provisions of this agreement, to the extent allowed by
governing law, the defaulting party waives any available right of redemption
from and after the date of judgment, any required valuation or appraisement of
the mortgaged or secured property prior to sale, any available right to stay
execution or to require a marshaling of assets and any required bond in the
event a receiver is appointed.  In addition, to the extent permitted by
applicable law, each party hereby grants to the other parties a power of sale
as to any property that is subject to the lien and security rights granted
hereunder, such power to be exercised in the manner provided by applicable law
or otherwise in a commercially reasonable manner and upon reasonable notice.

     Each party agrees that the other parties shall be entitled to utilize the
provisions of Oil and Gas lien law or other lien law of any state in which the
Contract Area is situated to enforce the obligations of each party hereunder.
Without limiting the generality of the foregoing, to the extent permitted by
applicable law, Non-Operators agree that Operator may invoke or utilize the
mechanics' or materialmen's lien law of the state in which the Contract Area
is situated in order to secure the payment to Operator of any sum due
hereunder for services performed or materials supplied by Operator.

C.  Advances:

    Operator, at its election, shall have the right from time to time to
demand and receive from one or more of the other parties payment in advance of
their respective shares of the estimated amount of the expense to be incurred
in operations hereunder during the next succeeding month, which right may be
exercised only by submission to each such party of an itemized statement of
such estimated expense, together with an invoice for its share thereof.  Each
such statement and invoice for the payment in advance of estimated expense
shall be submitted on or before the 20th day of the next preceding month. Each
party shall pay to Operator its proportionate share of such estimate within
fifteen (15) days after such estimate and invoice is received.  If any party
fails to pay its share of said estimate within said time, the amount due shall
bear interest as provided in Exhibit "C" until paid.  Proper adjustment shall
be made monthly between advances and actual expense to the end that each party
shall bear and pay its proportionate share of actual expenses incurred, and no
more.

D.  Defaults and Remedies:

    If any party fails to discharge any financial obligation under this
agreement, including without limitation the failure to make any advance under
the preceding Article VII.C. or any other provision of this agreement, within
the period required for such payment hereunder, then in addition to the
remedies provided in Article VII.B. or elsewhere in this agreement, the
remedies specified below shall be applicable.  For purposes of this Article
VII.D., all notices and elections shall be delivered

                                    12
<PAGE>

only by Operator, except that Operator shall deliver any such notice and
election requested by a non-defaulting Non-Operator, and when Operator is the
party in default, the applicable notices and elections can be delivered by any
Non-Operator. Election of any one or more of the following remedies shall not
preclude the subsequent use of any other remedy specified below or otherwise
available to a non-defaulting party.

     1. Suspension of Rights: Any party may deliver to the party in default a
Notice of Default, which shall specify the default, specify the action to be
taken to cure the default, and specify that failure to take such action will
result in the exercise of one or more of the remedies provided in this
Article.  If the default is not cured within thirty (30) days of the delivery
of such Notice of Default, all of the rights of the defaulting party granted
by this agreement may upon notice be suspended until the default is cured,
without prejudice to the right of the non-defaulting party or parties to
continue to enforce the obligations of the defaulting party previously accrued
or thereafter accruing under this agreement.  If Operator is the party in
default, the Non-Operators shall have in addition the right, by vote of
Non-Operators owning a majority in interest in the Contract Area after
excluding the voting interest of Operator, to appoint a new Operator effective
immediately.  The rights of a defaulting party that may be suspended hereunder
at the election of the non-defaulting parties shall include, without
limitation, the right to receive information as to any operation conducted
hereunder during the period of such default, the right to elect to participate
in an operation proposed under Article VI.B. of this agreement, the right to
participate in an operation being conducted under this agreement even if the
party has previously elected to participate in such operation, and the right
to receive proceeds of production from any well subject to this agreement.

     2. Suit for Damages: Non-defaulting parties or Operator for the benefit
of non-defaulting parties may sue (at joint account expense) to collect the
amounts in default, plus interest accruing on the amounts recovered from the
date of default until the date of collection at the rate specified in Exhibit
"C" attached hereto.  Nothing herein shall prevent any party from suing any
defaulting party to collect consequential damages accruing to such party as a
result of the default.

     3. Deemed Non-Consent: The non-defaulting party may deliver a written
Notice of Non-Consent Election to the defaulting party at any time after the
expiration of the thirty-day cure period following delivery of the Notice of
Default, in which event if the billing is for the drilling a new well or the
Plugging Back, Sidetracking, Reworking or Deepening of a well which is to be
or has been plugged as a dry hole, or for the Completion or Recompletion of
any well, the defaulting party will be conclusively deemed to have elected not
to participate in the operation and to be a Non-Consenting Party with respect
thereto under Article VI.B. or VI.C., as the case may be, to the extent of the
costs unpaid by such party, notwithstanding any election to participate
theretofore made.  If election is made to proceed under this provision, then
the non-defaulting parties may not elect to sue for the unpaid amount pursuant
to Article VII.D.2.

     Until the delivery of such Notice of Non-Consent Election to the
defaulting party, such party shall have the right to cure its default by
paying its unpaid share of costs plus interest at the rate set forth in
Exhibit "C," provided, however, such payment shall not prejudice the rights of
the non-defaulting parties to pursue remedies for damages incurred by the non-
defaulting parties as a result of the default.  Any interest relinquished
pursuant to this Article VII.D.3. shall be offered to the non-defaulting
parties in proportion to their interests, and the non-defaulting parties
electing to participate in the ownership of such interest shall be required to
contribute their shares of the defaulted amount upon their election to
participate therein.

     4. Advance Payment: If a default is not cured within thirty (30) days of
the delivery of a Notice of Default, Operator, or Non-Operators if Operator is
the defaulting party, may thereafter require advance payment from the
defaulting party of such defaulting party's anticipated share of any item of
expense for which Operator, or Non-Operators, as the case may be, would be
entitled to reimbursement under any provision of this agreement, whether or
not such expense was the subject of the previous default.  Such right
includes, but is not limited to, the right to require advance payment for the
estimated costs of drilling a well or Completion of a well as to which an
election to participate in drilling or Completion has been made.  If the
defaulting party fails to pay the required advance payment, the non-defaulting
parties may pursue any of the remedies provided in the Article VII.D. or any
other default remedy provided elsewhere in this agreement.  Any excess of
funds advanced remaining when the operation is completed and all costs have
been paid shall be promptly returned to the advancing party.

     5. Costs and Attorneys' Fees: In the event any party is required to bring
legal proceedings to enforce any financial obligation of a party hereunder,
the prevailing party in such action shall be entitled to recover all court
costs, costs of collection, and a reasonable attorney's fee, which the lien
provided for herein shall also secure.

E.  Rentals, Shut-in Well Payments and Minimum Royalties:

    Rentals, shut-in well payments and minimum royalties which may be required
under the terms of any lease shall be paid by the party or parties who
subjected such lease to this agreement at its or their expense.  In the event
two or more parties own and have contributed interests in the same lease to
this agreement, such parties may designate one of such parties to make said
payments for and on behalf of all such parties.  Any party may request, and
shall be entitled to receive, proper evidence of all such payments.  In the
event of failure to make proper payment of any rental, shut-in well payment or
minimum royalty through mistake or oversight where such payment is required to
continue the lease in force, any loss which results from such non-payment
shall be borne in accordance with the provisions of Article IV.B. 3.

     Operator shall notify Non-Operators of the anticipated completion of a
shut-in well, or the shutting in or return to production of a producing well,
at least five (5) days (excluding Saturday, Sunday, and legal holidays) prior
to taking such action, or at the earliest opportunity permitted by
circumstances, but assumes no liability for failure to do so.  In the event of
failure by Operator to so notify Non-Operators, the loss of any lease
contributed hereto by Non-Operators for failure to make timely payments of any
shut-in well payment shall be borne jointly by the parties hereto under the
provisions of Article IV.B.3.

F.  Taxes:

    Beginning with the first calendar year after the effective date hereof,
Operator shall render for ad valorem taxation all property subject to this
agreement which by law should be rendered for such taxes, and it shall pay all
such taxes assessed thereon before they become delinquent.  Prior to the
rendition date, each Non-Operator shall furnish Operator information as to
burdens (to include, but not be limited to, royalties, overriding royalties
and production payments) on Leases and Oil and Gas Interests contributed by
such Non-Operator.  If the assessed valuation of any Lease is reduced by
reason of its being subject to outstanding excess royalties, overriding
royalties or production payments, the reduction in ad valorem taxes resulting
therefrom shall inure to the benefit of the owner or owners of such Lease, and
Operator shall adjust the charge to such owner or owners so as to reflect the
benefit of such reduction.  If the ad valorem taxes are based in whole or in
part upon separate valuations of each party's working interest, then
notwithstanding anything to the contrary herein, charges to the joint account
shall be made and paid by the parties hereto in accordance with the tax value
generated by each party's working interest.  Operator shall bill the other
parties for their proportionate shares of all tax payments in the manner
provided in Exhibit "C."

                                    13
<PAGE>

      If Operator considers any tax assessment improper, Operator may, at its
discretion, protest within the time and manner prescribed by law, and
prosecute the protest to a final determination, unless all parties agree to
abandon the protest prior to final determination.  During the pendency of
administrative or judicial proceedings, Operator may elect to pay, under
protest, all such taxes and any interest and penalty.  When any such protested
assessment shall have been finally determined, Operator shall pay the tax for
the joint account, together with any interest and penalty accrued, and the
total cost shall then be assessed against the parties, and be paid by them, as
provided in Exhibit "C."

     Each party shall pay or cause to be paid all production, severance,
excise, gathering and other taxes imposed upon or with respect to the
production or handling of such party's share of Oil and Gas produced under the
terms of this agreement.

                                 ARTICLE VIII.

                ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST

A.  Surrender of Leases:

    The Leases covered by this agreement, insofar as they embrace acreage in
the Contract Area, shall not be surrendered in whole or in part unless all
parties consent thereto.

    However, should any party desire to surrender its interest in any Lease or
in any portion thereof, such party shall give written notice of the proposed
surrender to all parties, and the parties to whom such notice is delivered
shall have thirty (30) days after delivery of the notice within which to
notify the party proposing the surrender whether they elect to consent
thereto.  Failure of a party to whom such notice is delivered to reply within
said 30-day period shall constitute a consent to the surrender of the Leases
described in the notice.  If all parties do not agree or consent thereto, the
party desiring to surrender shall assign, without express or implied warranty
of title, all of its interest in such Lease, or portion thereof, and any well,
material and equipment which may be located thereon and any rights in
production thereafter secured, to the parties not consenting to such
surrender.  If the interest of the assigning party is or includes an Oil and
Gas Interest, the assigning party shall execute and deliver to the party or
parties not consenting to such surrender an oil and gas lease covering such
Oil and Gas Interest for a term of one (1) year and so long thereafter as Oil
and/or Gas is produced from the land covered thereby, such lease to be on the
form attached hereto as Exhibit "B."  Upon such assignment or lease, the
assigning party shall be relieved from all obligations thereafter accruing,
but not theretofore accrued, with respect to the interest assigned or leased
and the operation of any well attributable thereto, and the assigning party
shall have no further interest in the assigned or leased premises and its
equipment and production other than the royalties retained in any lease made
under the terms of this Article.  The party assignee or lessee shall pay to
the party assignor or lessor the reasonable salvage value of the latter's
interest in any well's salvable materials and equipment attributable to the
assigned or leased acreage.  The value of all salvable materials and equipment
shall be determined in accordance with the provisions of Exhibit "C," less the
estimated cost of salvaging and the estimated cost of plugging and abandoning
and restoring the surface.  If such value is less than such costs, then the
party assignor or lessor shall pay to the party assignee or lessee the amount
of such deficit.  If the assignment or lease is in favor of more than one
party, the interest shall be shared by such parties in the proportions that
the interest of each bears to the total interest of all such parties.  If the
interest of the parties to whom the assignment is to be made varies according
to depth, then the interest assigned shall similarly reflect such variances.

     Any assignment, lease or surrender made under this provision shall not
reduce or change the assignor's, lessor's or surrendering party's interest as
it was immediately before the assignment, lease or surrender in the balance of
the Contract Area; and the acreage assigned, leased or surrendered, and
subsequent operations thereon, shall not thereafter be subject to the terms
and provisions of this agreement but shall be deemed subject to an Operating
Agreement in the form of this agreement.

B.  Renewal or Extension of Leases:

    If any party secures a renewal or replacement of an Oil and Gas Lease or
Interest subject to this agreement, then all other parties shall be notified
promptly upon such acquisition or, in the case of a replacement Lease taken
before expiration of an existing Lease, promptly upon expiration of the
existing Lease.  The parties notified shall have the right for a period of
thirty (30) days following delivery of such notice in which to elect to
participate in the ownership of the renewal or replacement Lease, insofar as
such Lease affects lands within the Contract Area, by paying to the party who
acquired it their proportionate shares of the acquisition cost allocated to
that part of such Lease within the Contract Area, which shall be in proportion
to the interest held at that time by the parties in the Contract Area.  Each
party who participates in the purchase of a renewal or replacement Lease shall
be given an assignment of its proportionate interest therein by the acquiring
party.

     If some, but less than all, of the parties elect to participate in the
purchase of a renewal or replacement Lease, it shall be owned by the parties
who elect to participate therein, in a ratio based upon the relationship of
their respective percentage of participation in the Contract Area to the
aggregate of the percentages of participation in the Contract Area of all
parties participating in the purchase of such renewal or replacement Lease.
The acquisition of a renewal or replacement Lease by any or all of the parties
hereto shall not cause a readjustment of the interests of the parties stated
in Exhibit "A," but any renewal or replacement Lease in which less than all
parties elect to participate shall not be subject to this agreement but shall
be deemed subject to a separate Operating Agreement in the form of this
agreement.

     If the interests of the parties in the Contract Area vary according to
depth, then their right to participate proportionately in renewal or
replacement Leases and their right to receive an assignment of interest shall
also reflect such depth variances.

     The provisions of this Article shall apply to renewal or replacement
Leases whether they are for the entire interest covered by the expiring Lease
or cover only a portion of its area or an interest therein.  Any renewal or
replacement Lease taken before the expiration of its predecessor Lease, or
taken or contracted for or becoming effective within six (6) months after the
expiration of the existing Lease, shall be subject to this provision so long
as this agreement is in effect at the time of such acquisition or at the time
the renewal or replacement Lease becomes effective; but any Lease taken or
contracted for more than six (6) months after the expiration of an existing
Lease shall not be deemed a renewal or replacement Lease and shall not be
subject to the provisions of this agreement.

     The provisions in this Article shall also be applicable to extensions of
Oil and Gas Leases.

C.  Acreage or Cash Contributions:

     While this agreement is in force, if any party contracts for a
contribution of cash towards the drilling of a well or any other operation on
the Contract Area, such contribution shall be paid to the party who conducted
the drilling or other operation and shall be applied by it against the cost of
such drilling or other operation.  If the contribution be in the form of
acreage, the party to whom the contribution is made shall promptly tender an
assignment of the acreage, without warranty of title, to the Drilling Parties
in the proportions said Drilling Parties shared the cost of drilling the well.
Such acreage shall become a separate Contract Area and, to  the extent
possible, be governed by provisions identical to this agreement.  Each party
shall promptly notify all other parties of any acreage or cash contributions
it may obtain in support of any well or any other operation on the Contract
Area.  The above provisions shall also be applicable to optional rights to
earn acreage outside the Contract Area which are in support of well drilled
inside Contract Area.

                                    14
<PAGE>

     If any party contracts for any consideration relating to disposition of
such party's share of substances produced hereunder, such consideration shall
not be deemed a contribution as contemplated in this Article VIII.C.

D.  Assignment; Maintenance of Uniform Interest:

     For the purpose of maintaining uniformity of ownership in the Contract
Area in the Oil and Gas Leases, Oil and Gas Interests, wells, equipment and
production covered by this agreement no party shall sell, encumber, transfer
or make other disposition of its interest in the Oil and Gas Leases and Oil
and Gas Interests embraced within the Contract Area or in wells, equipment and
production unless such disposition covers either:

     1.      the entire interest of the party in all Oil and Gas Leases, Oil
and Gas Interests, wells, equipment and production; or

     2.     an equal undivided percent of the party's present interest in all
Oil and Gas Leases, Oil and Gas Interests, wells, equipment and production in
the Contract Area.

     Every sale, encumbrance, transfer or other disposition made by any party
shall be made expressly subject to this agreement and shall be made without
prejudice to the right of the other parties, and any transferee of an
ownership interest in any Oil and Gas Lease or Interest shall be deemed a
party to this agreement as to the interest conveyed from and after the
effective date of the transfer of ownership; provided, however, that the other
parties shall not be required to recognize any such sale, encumbrance,
transfer or other disposition for any purpose hereunder until thirty (30) days
after they have received a copy of the instrument of transfer or other
satisfactory evidence thereof in writing from the transferor or transferee.
No assignment or other disposition of interest by a party shall relieve such
party of obligations previously incurred by such party hereunder with respect
to the interest transferred, including without limitation the obligation of a
party to pay all costs attributable to an operation conducted hereunder in
which such party has agreed to participate prior to making such assignment,
and the lien and security interest granted by Article VII.B. shall continue to
burden the interest transferred to secure payment of any such obligations.

     If, at any time the interest of any party is divided among and owned by
four or more co-owners, Operator, at its discretion, may require such
co-owners to appoint a single trustee or agent with full authority to receive
notices, approve expenditures, receive billings for and approve and pay such
party's share of the joint expenses, and to deal generally with, and with
power to bind, the co-owners of such party's interest within the scope of the
operations embraced in this agreement; however, all such co-owners shall have
the right to enter into and execute all contracts or agreements for the
disposition of their respective shares of the Oil and Gas produced from the
Contract Area and they shall have the right to receive, separately, payment of
the sale proceeds thereof.

E. Waiver of Rights to Partition:

     If permitted by the laws of the state or states in which the property
covered hereby is located, each party hereto owning an undivided interest in
the Contract Area waives any and all rights it may have to partition and have
set aside to it in severalty its undivided interest therein.

                                 ARTICLE IX.

                      INTERNAL REVENUE CODE ELECTION

     If, for federal income tax purposes, this agreement and the operations
hereunder are regarded as a partnership, and if the parties have not otherwise
agreed to form a tax partnership pursuant to Exhibit "G" or other agreement
between them, each party thereby affected elects to be excluded from the
application of all of the provisions of Subchapter "K," Chapter 1, Subtitle
"A," of the Internal Revenue Code of 1986, as amended ("Code"), as permitted
and authorized by Section 761 of the Code and the regulations promulgated
thereunder.  Operator is authorized and directed to execute on behalf of each
party hereby affected such evidence of this election as may be required by the
Secretary of the Treasury of the United States or the Federal Internal Revenue
Service, including specifically, but not by way of limitation, all of the
returns, statements, and the data required by Treasury Regulation SS 1.761.
Should there be any requirement that each party hereby affected give further
evidence of this election, each such party shall execute such documents and
furnish such other evidence as may be required by the Federal Internal Revenue
Service or as may be necessary to evidence this election.  No such party shall
give any notices or take any other action inconsistent with the election made
hereby.  If any present or future income tax laws of the state or states in
which the Contract Area is located or any future income tax laws of the United
States contain provisions similar to those in Subchapter "K," Chapter 1,
Subtitle "A," of the Code, under which an election similar to that provided by
Section 761 of the Code is permitted, each party hereby affected shall make
such election as may be permitted or required by such laws.  In making the
foregoing election, each such party states that the income derived by such
party from operations hereunder can be adequately determined without the
computation of partnership taxable income.

                                   ARTICLE X.

                              CLAIMS AND LAWSUITS

     Operator may settle any single uninsured third party damage claim or suit
arising from operations hereunder if the expenditure does not exceed Ten
Thousand Dollars ($10,000) and if the payment is in complete settlement of
such claim or suit.  If the amount required for settlement exceeds the above
amount, the parties hereto shall assume and take over the further handling of
the claim or suit, unless such authority is delegated to Operator.  All costs
and expenses of handling settling, or otherwise discharging such claim or suit
shall be a the joint expense of the parties participating in the operation
from which the claim or suit arises.  If a claim is made against any party or
if any party is sued on account of any matter arising from operations
hereunder over which such individual has no control because of the rights
given Operator by this agreement, such party shall immediately notify all
other parties, and the claim or suit shall be treated as any other claim or
suit involving operations hereunder. All claims or suits involving title to
any interest subject to this agreement shall be treated as a claim or suit
against all parties hereto.

                                   15

<PAGE>

                                ARTICLE XI.

                               FORCE MAJEURE

    If any party is rendered unable, wholly or in part, by force majeure to
carry out its obligations under this agreement, other than the obligation to
indemnify or make money payments or furnish security, that party shall give to
all other parties prompt written notice of the force majeure with reasonably
full particulars concerning it; thereupon, the obligations of the party giving
the notice, so far as they are affected by the force majeure, shall be
suspended during, but no longer than, the continuance of the force majeure.
The term "force majeure," as here employed, shall mean an act of God, strike,
lockout, or other industrial disturbance, act of the public enemy, war,
blockade, public riot, lightening, fire, storm, flood or other act of nature,
explosion, governmental action, governmental delay, restraint or inaction,
unavailability of equipment, and any other cause, whether of the kind
specifically enumerated above or otherwise, which is not reasonably within the
control of the party claiming suspension.

     The affected party shall use all reasonable diligence to remove the force
majeure situation as quickly as practicable. The requirement that any force
majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes, lockouts, or other labor difficulty by the party
involved, contrary to its wishes; how all such difficulties shall be handled
shall be entirely within the discretion of the party concerned.

                                 ARTICLE XII.

                                   NOTICES

     All notices authorized or required between the parties by any of the
provisions of this agreement, unless otherwise specifically provided, shall be
in writing and delivered in person or by United States mail, courier service,
telegram, telex, telecopier or any other form of facsimile, postage or charges
prepaid, and addressed to such parties at the addresses listed on Exhibit "A."
All telephone or oral notices permitted by this agreement shall be confirmed
immediately thereafter by written notice.  The originating notice given under
any provision hereof shall be deemed delivered only when received by the party
to whom such notice is directed, and the time for such party to deliver any
notice in response thereto shall run from the date the originating notice is
received.  "Receipt" for purposes of this agreement with respect to written
notice delivered hereunder shall be actual delivery of the notice to the
address of the party to be notified specified in accordance with this
agreement, or to the telecopy, facsimile or telex machine of such party.  The
second or any responsive notice shall be deemed delivered when deposited in
the United States mail or at the office of the courier or telegraph service,
or upon transmittal by telex, telecopy or facsimile, or when personally
delivered to the party to be notified, provided, that when response is
required within 24 or 48 hours, such response shall be given orally or by
telephone, telex, telecopy or other facsimile within such period. Each party
shall have the right to change its address at any time, and from time to time,
by giving written notice thereof to all other parties.  If a party is not
available to receive notice orally or by telephone when a party attempts to
deliver a notice required to be delivered within 24 or 48 hours, the notice
may be delivered in writing by any other method specified herein and shall be
deemed delivered in the same manner provided above for any responsive notice.

                                 ARTICLE XIII.

                               TERM OF AGREEMENT

     This agreement shall remain in full force and effect as to the Oil and
Gas Leases and/or Oil and Gas Interests subject hereto for the period of time
selected below; provided, however, no party hereto shall ever be construed as
having any right, title or interest in or to any Lease or Oil and Gas Interest
contributed by any other party beyond the term of this agreement.

     X  Option No. 1: So long as any of the Oil and Gas Leases subject to this
agreement remain or are continued in force as to any part of the Contract
Area, whether by production, extension, renewal or otherwise.

     The termination of this agreement shall not relieve any party hereto from
any expense, liability or other obligation or any remedy therefor which has
accrued or attached prior to the date of such termination.

     Upon termination of this agreement and the satisfaction of all
obligations hereunder, in the event a memorandum of this Operating Agreement
has been filed of record, Operator is authorized to file of record in all
necessary recording offices a notice of termination, and each party hereto
agrees to execute such a notice of termination as to Operator's interest, upon
request of Operator, if Operator has satisfied all its financial obligations.

                                 ARTICLE XIV.

                     COMPLIANCE WITH LAWS AND REGULATIONS

A.  Laws, Regulations and Orders:

     This agreement shall be subject to the applicable laws of the state in
which the Contract Area is located, to the valid rules, regulations, and
orders of any duly constituted regulatory body of said state; and to all other
applicable federal, state, and local laws, ordinances, rules, regulations and
orders.

B.  Governing Law:

     This agreement and all matters pertaining hereto, including but not
limited to matters of performance, non-performance, breach, remedies,
procedures, rights, duties, and interpretation or construction, shall be
governed and determined by the law of the state in which the Contract Area is
located.

C.  Regulatory Agencies:

     Nothing herein contained shall grant, or be construed to grant, Operator
the right or authority to waive or release any rights, privileges, or
obligations which Non-Operators may have under federal or state laws or under
rules, regulations or

                                     16
<PAGE>

orders promulgated under such laws in reference to oil, gas and mineral
operations, including the location, operation, or production of wells, on
tracts offsetting or adjacent to the Contract Area.

     With respect to the operations hereunder, Non-Operators agree to release
Operator from any and all losses, damages, injuries, claims and causes of
action arising out of, incident to or resulting directly or indirectly from
Operator's interpretation or application of rules, rulings, regulations or
orders of the Department of Energy or Federal Energy Regulatory Commission or
predecessor or successor agencies to the extent such interpretation or
application was made in good faith and does not constitute gross negligence.
Each Non-Operator further agrees to reimburse Operator for such Non-Operator's
share of production or any refund, fine, levy or other governmental sanction
that Operator may be required to pay as a result of such an incorrect
interpretation or application, together with interest and penalties thereon
owing by Operator as a result of such incorrect interpretation or application.

                                  ARTICLE XV.

                                 MISCELLANEOUS

A.  Execution:

     This agreement shall be binding upon each Non-Operator when this
agreement or a counterpart thereof has been executed by such Non-Operator and
Operator notwithstanding that this agreement is not then or thereafter
executed by all of the parties to which it is tendered or which are listed on
Exhibit "A" as owning an interest in the Contract Area or which own, in fact,
an interest in the Contract Area.  Operator may, however, by written notice to
all Non-Operators who have become bound by this agreement as aforesaid, given
at any time prior to the actual spud date of the Initial Well but in no event
later than five days prior to the date specified in Article VI.A. for
commencement of the Initial Well, terminate this agreement if Operator in its
sole discretion determines that there is insufficient participation to justify
commencement of drilling operations.  In the event of such a termination by
Operator, all further obligations of the parties hereunder shall cease as of
such termination.  In the event any Non-Operator has advanced or prepaid any
share of drilling or other costs hereunder, all sums so advanced shall be
returned to such Non-Operator without interest.   In the event Operator
proceeds with drilling operations for the Initial Well without the execution
hereof by all persons listed on Exhibit "A" as having a current working
interest in such well, Operator shall indemnify Non-Operators with respect to
all costs incurred for the Initial Well which would have been charged to such
person under this agreement if such person had executed the same and Operator
shall receive all revenues which would have been received by such person under
this agreement if such person had executed the same.

B. Successors and Assigns:

     This agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, devisees, legal
representatives, successors and assigns, and the terms hereof shall be deemed
to run with the Leases or Interests included within the Contract Area.

C. Counterparts:

     This instrument may be executed in any number of counterparts, each of
which shall be considered an original for all purposes.

D.  Severability:

     For the purposes of assuming or rejecting this agreement as an executory
contract pursuant to federal bankruptcy laws, this agreement shall not be
severable, but rather must be assumed or rejected in its entirety, and the
failure of any party to this agreement to comply with all of its financial
obligations provided herein shall be a material default.

                                 ARTICLE XVI.

                               OTHER PROVISIONS

A.  Collection of Proceeds and Payment of Expenses:

   Non-Operator authorizes Operator to collect and receive for Non-Operator's
account, all proceeds from the sale of oil and/or gas attributable to
Non-Operator's interest in wells in the Contract Areas.  Operator is
authorized to deduct from Non-Operator's proceeds all costs, expenses, and
charges incurred under the terms of the Operating Agreement attributable to
the wells in the Contract Area.  On or before the twenty-fifth day of the
month following the receipt of Non-Operator's proceeds, Operator will pay
Non-Operator the remainder of the proceeds received after deducting the
expenses provided for herein

B.  Acquisition Cost:

     Upon execution of this Agreement, Infinity shall pay Verde $150,000.

C.  Drilling Commitment:

     On or before January 31, 2000, Operator will commence and proceed with
the drilling, completing, & equipping of 16 injection wells, 16 oil wells, a
water supply well, and the implementation of a polymer-augmented waterflood on
the Contract Area.  The injection wells and the oil wells shall be drilled to
a depth sufficient to implement a polymer-augmented waterflood in the Tucker
Sand.  The water supply well shall be depth to 100 feet below the base of the
Mississippian but not greater than 1,500 feet.  The costs for these wells and
the polymer-augmented waterflood shall be borne by the parties in accordance
with Exhibit A(4) BPO-WI.

D.  Payout Defined:

     Payout shall be defined as the time at which Infinity recovers the
Acquisition Cost ($150,000) and all costs of drilling, equipping, developing,
and operating costs (including polymer-augmented waterflood costs) paid by
Infinity and incurred on the Contract Area from the revenues received by
Infinity from the Contract Area.

                                      17
<PAGE>

     IN WITNESS WHEREOF, this agreement shall be effective as of the 1st day
of December, 1999.

Stephen P. Ballantyne, who has prepared and circulated this form for
execution, represents and warrants that the form was printed from and, with
the exception(s) listed below, is identical to the AAPL Form 610-1989 Model
Form Operating Agreement, as published in computerized form by Forms
On-A-Disk, Inc. No changes, alterations, or modifications, other than those
made by strikethrough and/or insertion and that are clearly recognizable as
changes in Articles I, II, III, IV, V, VI, VII, VIII, X, XIII, and XVI, have
been made to the form.

ATTEST OR WITNESS:               OPERATOR

                                 VERDE OIL COMPANY

______________________________   By /s/ Stephen P. Ballanyne
______________________________      Stephen P. Ballantyne
                                    Type or print name

                                    Title    President

                                    Date ________________

                                    Tax ID or S.S. No.  74-2365477

                                 NON-OPERATORS

                                 INFINITY, INC.

______________________________   By /s/ Stanton E. Ross
                                    Stanton E. Ross
______________________________      Type or print name

                                    Title    President

                                    Date __________________

                                    Tax ID or S.S. No.  84-1070066

______________________________   By_____________________________

______________________________      Type or print name

                                    Title__________________

                                    Date __________________

                                    Tax ID or S.S. No.  ___________

______________________________   By_____________________________

______________________________      Type or print name

                                    Title__________________

                                    Date __________________

                                    Tax ID or S.S. No.  ___________

______________________________   By_____________________________

______________________________      Type or print name

                                    Title__________________

                                    Date __________________

                                    Tax ID or S.S. No.  ___________

                                    18
<PAGE>

                               ACKNOWLEDGMENTS

     Note: The following forms of acknowledgment are the short forms approved
by the Uniform Law on Notarial Acts.  The validity and effect of these forms
in any state will depend upon the statutes of that state.

Individual acknowledgment:

State of                )
                        ) ss.
County of               )

     This instrument was acknowledged before me on ____________ by _________
_________________________.

(Seal, if any)                         __________________________________

                                       Title (and Rank)__________________

                                       My commission expires:____________

Acknowledgment in representative capacity:

State of Texas          )
                        ) ss.
County of Bexar         )

     This instrument was acknowledged before me on December 9, 1999 by
Stephen P. Ballantyne as President of Verde Oil Company, a Texas corporation.

(Seal, if any)                         /s/ Maryanne B. Camps

                                       Title (and Rank) Notary Public, State
                                                        of Texas

                                       My commission expires: July 18,2001

Acknowledgment in representative capacity:

State of Kansas         )
                        ) ss.
County of Neosho        )

     This instrument was acknowledged before me on ________________ by
Stanton E. Ross as President of Infinity, Inc., a Colorado corporation.

(Seal, if any)                         __________________________________

                                       Title (and Rank)__________________

                                       My commission expires:____________

                                     19

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