1 EXHIBIT 10.1 CRUDE OIL FORWARD SALE CONTRACT

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EXHIBIT 10.1

CRUDE OIL FORWARD SALE CONTRACT

DATED

SEPTEMBER 30, 1997

BETWEEN

CRYSTAL PROPERTIES AND TRADING COMPANY

AND

MAHONIA LIMITED
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TABLE OF CONTENTS

ARTICLE I - INTERPRETATION
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.03 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.04 Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II - SALE AND PURCHASE OF CRUDE OIL
Section 2.01 Sale and Purchase of Crude Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.02 Measurement and Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.03 Delivery of Crude Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.04 Payment of Delivery Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.05 Default Delivery Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.06 Failure of Delivery or Receipt; Transportation and Balancing . . . . . . . . . . . . . . . . 8
Section 2.07 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.08 Possession, Title and Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.09 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.11 No Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE III - REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.02 Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE IV - COVENANTS
Section 4.01 Affirmative Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE V - EVENTS OF DEFAULT AND EARLY TERMINATION
Section 5.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.02 Early Termination by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.03 Calculation of Termination Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VI - EVENTS OF CHANGE AND ACCELERATED TERMINATION
Section 6.01 Events of Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.02 Accelerated Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.03 Payments on Accelerated Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VII - MISCELLANEOUS
Section 7.01 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.02 Interest on Overdue Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.03 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.04 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.05 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.06 Purchaser Not an Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 7.07 Benefit of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.08 Assignment and Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.09 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.10 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.11 No Waivers, Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.12 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.14 Margin Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.15 Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.16 Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Annex 1 Seller's Conditions Precedent

Exhibit A - Form of Opinion of Counsel of Guarantor

CRUDE OIL FORWARD SALE CONTRACT

This CRUDE OIL FORWARD SALE CONTRACT (this "Agreement") is entered
into as of September 30, 1997, between CRYSTAL PROPERTIES AND TRADING COMPANY,
a corporation organized under the laws of the State of Nevada (the "Seller"),
and MAHONIA LIMITED, a company incorporated under the laws of Jersey (the
"Purchaser").

WHEREAS, Seller is proposing to acquire interests in various oil and
natural gas properties located in ▇▇▇▇ County, California, known as the Elk
Hills Naval Petroleum Reserve Numbered 1 (the "Elk Hills Properties"), as well
as other proved producing oil and gas properties located in the United States;
and

WHEREAS, Seller desires to sell and Purchaser desires to purchase
certain quantities of Crude Oil (as hereafter defined) on the terms and
conditions set forth herein;

NOW THEREFORE, in consideration of the respective covenants and
agreements of the parties hereinafter set forth and for good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each of the parties), the parties hereby agree as follows:

ARTICLE I - INTERPRETATION

Section 1.01 Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:

"Accelerated Termination Date" shall have the meaning ascribed thereto
in Section 6.02(b).

"Applicable Instruments" of any Person shall mean the Certificate or
Articles of Incorporation, by-laws and other organizational documents of such
Person and all contracts, indentures, agreements, instruments and documents to
which such Person is a party or by which such Person or any assets of such
Person may be bound or affected.

"Barrel" means one United States barrel (42 United States gallons at
60 degrees Fahrenheit).

"Business Day" means a day, other than a Saturday or a Sunday, on
which commercial banks are not authorized or required to be closed in New York,
New York.

"Confirmation Letter" has the meaning ascribed thereto in Section
2.01.

"Crude Oil" means domestic light "sweet" crude oil meeting the
specifications of the Arco pipeline facilities at Cushing, Oklahoma.

"Deficiency Quantity" means in respect of a particular Delivery Month
the amount by which the Required Delivery Quantity of Crude Oil for that
Delivery Month exceeds the quantity of Crude Oil actually delivered and
received hereunder in respect of such Delivery Month.

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"Delivery Location" means Arco's pipeline facilities at Cushing,
Oklahoma.

"Delivery Month" means each calendar month commencing with the month
of January, 1998, through and including the month of December, 1998.

"Early Termination Date" shall have the meaning ascribed thereto in
Section 5.02.

"Event of Change" shall have the meaning ascribed thereto in Section
6.01.

"Event of Default" shall have the meaning ascribed thereto in Section
5.01.

"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum equal for such day to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received by Purchaser from three Federal funds brokers of
recognized standing selected by Purchaser.

"Force Majeure" shall mean a failure by either party to perform
obligations hereunder, except for the obligation to make payment due hereunder,
to the extent that such failure is caused by war, riots, insurrections, fires,
explosions, sabotage, strikes and other labor or industrial disturbances, acts
of God or the elements, government laws, regulations or requests, disruption or
breakdown of production or transportation facilities, delays of pipeline
carriers in receiving and delivering crude oil tendered, or by any other cause
reasonably beyond the control of such party, but does not include the failure
to perform obligations solely as a result of the fact that to do so will result
in economic loss or hardship to such party.

"Gas Contract Event of Default" shall mean any Event of Default, as
such term is defined in the Gas Forward Sale Contract.

"Gas Forward Sale Contract" shall mean that certain Natural Gas
Forward Sale Contract between Seller and Purchaser of even date herewith.

"Governmental Requirement" shall mean all judgments, orders, writs,
injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules,
franchises, permits, certificates, licenses, authorizations and the like of any
government or any commission, board, court, agency, instrumentality or
political subdivision thereof.

"Guarantor" shall mean Crystal Oil Company, a Louisiana corporation.

"Guaranty Agreement" shall mean that certain Guaranty Agreement dated
of even date herewith by Guarantor, in favor of Purchaser.

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"Margin Agreement" means the Margin Agreement of even date herewith
between Seller and Purchaser, as the same may be modified or amended from time
to time.

"NYMEX" means the New York Mercantile Exchange, Inc. and any successor
thereto by merger, consolidation, or sale of assets.

"Payment Date" shall mean the 20th day of each month (or if such day
is not a Business Day, the next succeeding Business Day, commencing on February
20, 1998.

"Person" shall mean any individual, corporation, company, partnership,
joint venture, trust, unincorporated association, government or any commission,
board, court, agency, instrumentality or political subdivision thereof, any
other entity or any trustee, receiver, custodian or similar official.

"Prepaid Price" shall be the amount set forth in the Confirmation
Letter.

"Reference Dealer" means a leading company in the crude oil marketing
business selected by Purchaser in good faith from among companies whose credit
standings satisfy all the criteria that Purchaser applies generally with
respect to transactions similar to those contemplated by this Agreement.

"Replacement Value" means (i) if Seller is the party which has failed
to perform, the price which Purchaser, acting in good faith and at arm's
length, actually pays, or has contracted to pay, for Crude Oil to replace the
Deficiency Quantity at the agreed Delivery Location plus any additional
transportation and other costs and expenses incurred by Purchaser in connection
with the purchase of such Crude Oil, and (ii) if Purchaser is the party which
has failed to perform, the price which Seller, acting in good faith and at
arm's length, actually receives, or has contracted to receive, for the sale of
the Deficiency Quantity of Crude Oil less any additional transportation and
other costs and expenses incurred by Seller in connection with the sale of such
Crude Oil.

"Required Delivery Quantity" means the number of Barrels of Crude Oil
to be delivered and received during a given Delivery Month pursuant to this
Agreement as agreed upon in the Confirmation Letter.

"Taxes" means all ad valorem, property, occupation, severance,
production, gathering, pipeline, utility, gross production, sales, use, excise,
transaction and any other governmental charges and assessments, other than
taxes based on net income or net worth.

"Termination Date" means either the Accelerated Termination Date or
the Early Termination Date, as the case may be.

"Termination Payment" shall have the meaning given such term in
Section 5.03.

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"United States Dollars", "U.S. Dollars", or "U.S. $" means the lawful
currency of the United States of America in immediately available funds.

"Unpaid Amounts" means, with respect to any Termination Date, the
aggregate of the amounts that became payable (whether or not due) to Purchaser
hereunder prior to the occurrence of such Termination Date and that remain
payable (whether or not due) as at such Termination Date, together with
interest thereon from (and including) the date such amounts became due and
payable to (but excluding) such Termination Date at the U.S. Base Rate.

"U.S. Base Rate" means, at any time, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of: (a) the rate of interest announced
publicly by The Chase Manhattan Bank in New York, New York, from time to time,
as its prime commercial lending rate; or (b) one percent per annum above the
Federal Funds Rate in effect from time to time. In the event there is any
Unpaid Amount, Purchaser will use reasonable efforts to inform Seller of
changes in the U.S. Base Rate promptly upon the occurrence of such changes.

Section 1.02 Headings. The division of this Agreement into Articles and
Sections and the insertion of an index and headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Agreement and not to any particular Article, Section,
paragraph, Schedule or other portion hereof and include any agreement
supplemental hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles, Sections and paragraphs
are to Articles, Sections and paragraphs of this Agreement.

Section 1.03 Number. Words importing the singular number shall include the
plural and vice versa, and words importing the masculine gender shall include
the feminine and neuter genders and vice versa.

Section 1.04 Non-Business Days. Whenever any action to be taken hereunder
shall be stated to be required to be taken or any payment to be made hereunder
shall be stated to be due on a day other than a Business Day, unless otherwise
specifically provided for herein, such payment shall be made or such action
shall be taken on the next succeeding Business Day if the due date was a Sunday
or a NYMEX or New York bank holiday which occurs on a Monday or on the last
preceding Business Day if the due date was a Saturday or a NYMEX or New York
bank holiday other than a Monday, and in the case of the payment of any
monetary amount, the extension or curtailment of time shall be taken into
account for the purposes of computation of interest or fees thereon.

ARTICLE II - SALE AND PURCHASE OF CRUDE OIL

Section 2.01 Sale and Purchase of Crude Oil.

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$35,000,000) the date or dates on which the Prepaid Price shall be paid (which
shall not be later than September 30, 1997), and for each Delivery Month,
Required Delivery Quantity, and the proportion thereof to be delivered and
received at each Delivery Location, each as mutually agreed by Purchaser and
Seller. On the date or dates specified for such purpose in the Confirmation
Letter, Purchaser shall pay to Seller the Prepaid Price by wire transfer of
immediately available funds to such account or accounts as Seller may
designated in writing, provided that the conditions precedent set out in Annex
1 have been satisfied by Seller and no Event of Default or Event of Change
shall have occurred.

(b) In consideration of the payment to Seller of the Prepaid
Price, Seller hereby agrees to sell and deliver, or cause to be delivered to
Purchaser, via in line transfer at the Delivery Location in each Delivery
Month, the Required Delivery Quantity of Crude Oil on the terms and conditions
set forth in this Agreement, and Purchaser hereby agrees to accept delivery of
such Crude Oil. Payment of the Prepaid Price shall constitute payment in full
of the purchase price of the Crude Oil to be delivered hereunder.

(c) Seller has advised Purchaser that Seller intends to satisfy
its obligations under this Agreement from various oil and gas interests that it
anticipates acquiring either through the acquisition of properties, such as the
Elk Hills Properties, or through the future acquisition of Crude Oil that may
be owned or acquired by one or more affiliates of Seller or from third parties.
Seller has further advised Purchaser that if Seller is successful in acquiring
interests in the Elk Hills Properties, its reserves and deliverable volumes of
Crude Oil will increase substantially. In recognition of these facts,
Purchaser and Seller have agreed that the initial Confirmation Letter will
contemplate a delivery schedule without giving effect to Seller's acquisition
of any interests in the Elk Hills Properties or other similar proved oil and
gas properties. Seller has requested, and Purchaser has agreed, that if Seller
acquires or is awarded the bid to acquire oil and gas interests in the Elk
Hills Properties or other similar oil and gas properties, Purchaser and Seller
will, if requested by Seller, negotiate in good faith to amend the Confirmation
Letter to provide for a longer period of time for the delivery of quantities of
Crude Oil under this Agreement; provided that if the acquisition of the Elk
Hills Properties is not consummated by May 30, 1998, the parties will negotiate
in good faith to re-amend the Confirmation Letter to provide for a delivery
schedule of ratable deliveries for the undelivered Crude Oil over the remaining
period of calendar year 1998. Unless otherwise agreed, no additional Prepaid
Price will be due, nor will any portion of the Prepaid Price be repaid to
Purchaser, as a result of such amendment, but the Delivery Month, Delivery
Location(s), Required Delivery Quantity, and the proportion to be delivered at
each Delivery Location shall be modified in a mutually acceptable manner to
give effect to prevailing prices for deliveries of Crude Oil under the modified
delivery schedule. If the Confirmation Letter is amended, all references in
this Agreement to the Confirmation Letter shall, unless otherwise agreed, refer
to the Confirmation Letter as so amended.

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viable and reputable party (a "Replacement Transaction") that would have the
effect of preserving for such party the economic equivalent of any payment
(assuming satisfaction of all conditions precedent) to or from a floating price
payor under a standard International Swaps and Derivatives Association, Inc.
(formerly known as the International Swap Dealers Association, Inc.) Crude Oil
commodity price swap entered into at the effective time of the first amendment
to the Confirmation Letter under this Section 2.01(c) (the "First Amended
Confirmation") with respect to the volume of Crude Oil contemplated to be
delivered at the effective time of the First Amended Confirmation have the
Crude Oil pricing, grade and delivery location used for purposes of the First
Amended Confirmation as the fixed prices for such swap and settlement dates and
notional volumes of Crude Oil that are parallel to the Delivery Months and the
Required Delivery Quantities under the First Amended Confirmation. If the
amount so determined for the Replacement Transaction would be a payment by the
dealer to the floating price payor, such amount shall be paid by Purchaser to
Seller in immediately available funds as the agreed consideration for the
re-amendment to the Confirmation Letter. If the amount so determined for the
Replacement Transaction would be a payment to the dealer by the floating price
payor, such amount shall be paid by Seller to Purchaser as the agreed
consideration for the re-amendment to the Confirmation Letter. The
determination of such amount shall be made on the basis of quotations from
Reference Market-makers (as defined in the International Swaps and Derivatives
Association, Inc., form Master Agreement (Multi-currency--Cross Border, Version
1992)) in a manner substantially similar to that provided for under such form.
In such case, each quotation by a Reference Market-maker will be for an amount,
if any, that would be paid to or by the floating price payor in consideration
of an agreement between such party and the quoting Reference Market-maker to
enter into a Replacement Transaction. If more than three quotations are
provided, the agreed amount will be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values. If
exactly three quotations are provided, the agreed amount will be the quotation
remaining after disregarding the highest and lowest quotations. If more than
one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded.

(d) All payments under this Agreement by Seller or Purchaser shall
be made by wire transfer in immediately available funds to an account
designated by the party entitled to receive such payment, with such designation
to be made at least two business days prior to the date on which this payment
is to be made.

Section 2.02 Measurement and Tests.

(a) All measurements hereunder shall be made from the static tank
gauges on 100 percent tank table basis or by positive displacement meters. All
measurements and tests shall be made in accordance with the latest American
Society for Testing Materials ("ASTM") or American Society of Mechanical
Engineers-American Petroleum Institute ("API") (Petroleum PD Meter Code)
published methods then in effect, whichever apply. Volume and gravity shall be
adjusted to 60 degrees Fahrenheit by the use of Table 6A and 5A of the
Petroleum Measurement Tables ASTM Designation D1250 in their latest revision.
The Crude Oil delivered hereunder shall be marketable and acceptable in the
applicable common or segregated stream of the carrier involved, but not to
exceed 1% sediment and water. Full deduction for all free water and sediment
and water content shall be made according to the API/ASTM Standard Method then
in effect. Either party shall have the right to have a

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representative witness all gauges, tests, and measurements. In the absence of
the other party's representative, such gauges, tests and measurements shall be
deemed to be correct.

(b) Purchaser may have inspections made as to the quality and
quantity of Crude Oil delivered hereunder. If it is discovered that the Crude
Oil supplied by Seller is materially deficient in either quality or quantity,
as determined by a mutually acceptable third party, the cost of the inspection
will be borne by Seller. In all other cases, the cost of the inspection will
be paid by Purchaser.

Section 2.03 Delivery of Crude Oil

(a) Seller agrees to deliver to Purchaser, and Purchaser agrees to
accept delivery from Seller of, in each Delivery Month at the Delivery
Location, the Required Delivery Quantity of Crude Oil required to be delivered
hereunder in such Delivery Month.

(b) Seller and Purchaser shall take such action as shall be
necessary to properly schedule the delivery and receipt of such Crude Oil at
the Delivery Location in each Delivery Month in compliance with applicable
rules and regulations.

(c) Seller shall arrange for its Crude Oil to begin flowing
ratably at the Delivery Location by the first day of the Delivery Month in
accordance with generally accepted pipeline scheduling practices.

Section 2.04 Payment of Delivery Fees. Each party shall be responsible for
the payment of its respective in line transfer fees payable to the owner of the
pipeline facilities, if any, in connection with the delivery of the Crude Oil
at the Delivery Location. Seller shall not be responsible for any insurance,
storage, transportation or other costs in respect of the period after title to
any Crude Oil delivered hereunder has passed to Purchaser in accordance with
Section 2.08 of this Agreement. Except for payment of its in line transfer
fees as provided above, Purchaser shall not be responsible for any insurance,
storage, transportation or other costs in respect of the period prior to the
time title to any Crude Oil delivered hereunder has passed to Purchaser in
accordance with Section 2.08 of this Agreement.

Section 2.05 Default Delivery Location.

(a) Seller is obligated to deliver to Purchaser and Purchaser is
obligated to receive from Seller, at the Delivery Location, the Required
Delivery Quantity of Crude Oil in accordance with the terms and conditions of
this Agreement. If as a result of a Force Majeure, either (i) Seller is
unable, after using all reasonable business efforts, to deliver the Required
Delivery Quantity of Crude Oil to Purchaser at the Delivery Location or (ii)
Purchaser is unable, after using all reasonable business efforts, to receive
the Required Delivery Quantity of Crude Oil from Seller at the Delivery
Location, Seller shall be obligated to deliver and Purchaser shall be obligated
to receive, the relevant Required Delivery Quantity of Crude Oil at a mutually
acceptable comparable delivery location with mutually acceptable adjustments
for quality and location.

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(b) Seller may elect to deliver Crude Oil at an alternate delivery
location other than the Delivery Location, which alternate delivery location
may be mutually agreed upon by the parties from time to time; provided that
Seller has given Purchaser written notice of its election no later than ten
(10) Business Days before the end of the calendar month preceding the Delivery
Month in which it proposes to make delivery at such alternate delivery
location. If there is price differential on a per Barrel basis associated with
the delivery of Crude Oil at such alternate delivery location (in each case as
measured against prevailing prices at the Delivery Location), Purchaser shall
prepare and deliver to Seller, within five (5) Business Days after the end of
the applicable Delivery Month a certificate setting out the calculation of the
price differential on a per Barrel basis accompanied by reasonably available
backup documentation therefor. Any such certificate shall, absent manifest
error, be conclusive evidence of the amount of such price differential. If
Seller owes Purchaser compensation pursuant to this Section 2.05(b), Seller
shall pay Purchaser such amount with five (5) Business Days following its
receipt of Purchaser's certificate. If Purchaser owes Seller compensation
pursuant to this Section 2.05(b), Purchaser shall pay Seller such amount on the
next succeeding Payment Date.

(c) During any Delivery Month, Seller may elect to deliver Crude
Oil in excess of the Required Delivery Quantity for such Delivery Month by
giving Purchaser not less than two (2) Business Day's prior written notice;
provided that Purchaser may decline to accept such excess volumes if it
determines, in its sole discretion, that no readily available market exists for
such excess volumes, that such volumes are too small to be readily marketed or
that it is uneconomical for it to accept such excess volumes. If Purchaser
wishes to decline Seller's election, it shall give Seller written notice within
one (1) Business Day of its receipt of Seller's notice. If Purchaser accepts
Seller's election, the excess volume so delivered shall be allocated on a pro
rata basis to reduce the Required Delivery Quantity for each of the remaining
Delivery Months, commencing on the next succeeding Delivery Month. Purchaser
shall promptly furnish to Seller an amendment to the Confirmation Letter
evidencing such new Required Delivery Quantities.

Section 2.06 Failure of Delivery or Receipt; Transportation and Balancing.

(a) (i) Without prejudice to Articles V and VI, if as a result of
an event of Force Majeure, Seller is unable to meet its delivery obligation in
respect of a Delivery Month at the Delivery Location or at a mutually
satisfactory comparable delivery location or locations (in which case Seller
shall be deemed the "Responsible Party"), then Seller shall pay to Purchaser,
as liquidated damages, the Replacement Value of the Deficiency Quantity of
Crude Oil in respect of that Delivery Month. The Replacement Value shall be
paid to Purchaser no later than the Payment Date next following such Delivery
Month, and Purchaser will accept such payment in lieu of Crude Oil not
delivered in such Delivery Month. Where Seller is unable to meet its
acceptance obligation as aforesaid, Purchaser shall use all reasonable efforts
to minimize the Replacement Value of any Deficiency Quantity. If the
Replacement Value is based on the price Purchaser pays to replace the
Deficiency Quantity, Purchaser shall prepare and deliver to Seller, within five
(5) Business Days after the end of the applicable Delivery Month, a certificate
setting out the calculation of the Replacement Value accompanied by reasonably
available back-up documentation therefor. Any such certificate shall, absent
manifest error, be conclusive evidence of the amount due in respect of the
Replacement Value. Purchaser shall notify Seller as soon as possible of any
anticipated inability to perform all or any portion of its obligations
hereunder.

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(ii) Without prejudice to Article VI, if as a result of an
event of Force Majeure, Purchaser is unable to meet its obligation to accept
delivery in respect of a Delivery Month at the Delivery Location or at a
mutually satisfactory comparable delivery location or locations (in which case
Purchaser shall be deemed the "Responsible Party"), then Seller shall pay to
Purchaser, in lieu of delivery of the Required Delivery Quantity, the
Replacement Value of the Deficiency Quantity of Crude Oil in respect of that
Delivery Month. The Replacement Value shall be paid to Purchaser no later than
the Payment Date next following such Delivery Month, and Purchaser will be
required to accept such payment in lieu of Crude Oil not delivered in such
Delivery Month. Where Purchaser is unable to meet its acceptance obligation as
aforesaid, Seller shall use all reasonable efforts to maximize the Replacement
Value of any Deficiency Quantity. If the Replacement Value is based on the
price Seller receives for the Deficiency Quantity, Seller shall prepare and
deliver to Purchaser, within five (5) Business Days after the end of the
applicable Delivery Month, a certificate setting out the calculation of the
Replacement Value accompanied by reasonably available back-up documentation
therefor. Any such certificate shall, absent manifest error, be conclusive
evidence of the amount due in respect of the Replacement Value. Purchaser
shall notify Seller as soon as possible of any anticipated inability to perform
all or any portion of its obligations hereunder.

(b) In the event that (i) Seller or Seller's transporter
inadvertently delivers more or less than the Required Delivery Quantity for any
Delivery Month, or (ii) Purchaser or Purchaser's transporter inadvertently
receives more or less than the Required Delivery Quantity for any Delivery
Month, such overages or underages shall be corrected or adjusted in cash or
Crude Oil as the parties may agree or in accordance with applicable tariff
provisions, if any; and the Responsible Party will be liable to the other party
for any associated pipeline penalties or cashouts. Each party shall notify the
other as promptly as possible of any changes in its rate of delivery or receipt
of Crude Oil at the Delivery Location and take all reasonable actions necessary
to avoid the incurrence of pipeline penalties and imbalances.

Section 2.07 Exclusive Remedy. It is expressly agreed, except as provided
in Sections 5.02, 5.03, 6.02 and 6.03, that payments made in accordance with
Section 2.06 hereof shall constitute the exclusive remedies available to Seller
and Purchaser for nondelivery or nonacceptance of Crude Oil. To the fullest
extent permitted by applicable law, neither party shall be liable for any
punitive, exemplary, incidental, consequential, indirect or direct (other than
as set forth in Section 2.06) or other damages, in tort, contract or otherwise
in respect thereof.

Section 2.08 Possession, Title and Risk. Possession of and title to Crude
Oil delivered pursuant hereto shall pass from Seller to Purchaser at the
Delivery Location when the Crude Oil is accepted by the pipeline for transport
for Purchaser's account and is recorded by the proper metering device. Until
such time, Seller shall be deemed to be in control and possession of, have
title to and be responsible for such Crude Oil and, after such time, Purchaser
shall be deemed to be in control and possession of, have title to and be
responsible for such Crude Oil.

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losses and expenses arising from or out of adverse claims of any and all
Persons in respect of royalties, taxes, license fees or charges thereon which
are applicable before the title passes to Purchaser or which may be levied and
assessed upon Seller in respect of a sale of the Crude Oil to Purchaser.

Section 2.10 Taxes. Seller is liable for and shall pay, cause to be paid
or reimburse Purchaser if Purchaser shall have paid, all Taxes applicable to
the Crude Oil sold hereunder prior to the time title to the Crude Oil has
passed to Purchaser, unless allocated to Purchaser as hereinafter provided.
Purchaser is liable for and shall pay, cause to be paid or reimburse Seller if
Seller shall have paid, all Taxes applicable to the Crude Oil sold hereunder at
or after the time title to the Crude Oil has passed to Purchaser, applicable to
the sale hereunder as a result of any subsequent sale or use of the Crude Oil
by Purchaser, or imposed on or collected from Purchaser by law. Both parties
shall use reasonable efforts to administer this Agreement and implement the
provisions in accordance with their intent to minimize Taxes. Purchaser
represents that it is engaged in the business of reselling the Crude Oil
delivered under this Agreement and Purchaser is purchasing the Crude Oil for
resale to third parties, and accordingly Purchaser is entitled to purchase the
Crude Oil hereunder free of any Taxes. Purchaser shall provide Seller a
certificate of exemption or other reasonably satisfactory evidence of exemption
promptly after execution of this Agreement. For each Delivery Month during the
term of this Agreement, Purchaser shall provide Seller appropriate evidence
that the Required Delivery Quantity of Crude Oil was resold to a third party in
accordance with the sale for resale exemption under applicable state law. Each
party agrees to cooperate with obtaining any exemption from or reduction of Tax
upon request by the other party.

Section 2.11 No Warranty. PURCHASER ACKNOWLEDGES THAT IT HAS ENTERED INTO
THIS AGREEMENT AND IS CONTRACTING FOR THE CRUDE OIL TO BE SUPPLIED BY SELLER
BASED SOLELY UPON THE EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES HEREIN
SET FORTH (including Section 2.02) AND, SUBJECT TO SUCH COVENANTS,
REPRESENTATIONS AND WARRANTIES (including Section 2.02), ACCEPTS SUCH CRUDE OIL
"AS IS, WHERE IS" AND "WITH ALL FAULTS."

ARTICLE III - REPRESENTATIONS AND WARRANTIES

Section 3.01 Representations and Warranties of Seller. Seller represents
and warrants to Purchaser as follows:

(a) Status and Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation and has all requisite power and authority to own its properties, to
conduct its business as conducted at present and to execute, deliver and
perform this Agreement.

(b) Power and Authority. The execution, delivery and performance
by Seller of this Agreement and the consummation of the transactions
contemplated by this Agreement are within Seller's power and authority and have
been duly authorized by all necessary corporate action.

(c) Consents, Approvals, Etc. No authorization, consent or
approval of, or other action by, or notice to or filing with, any governmental
authority, regulatory body or any other Person is

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required for the due authorization, execution, delivery or performance by
Seller of this Agreement, or the consummation of the transactions contemplated
by this Agreement, except those approvals which have been obtained, and those
notices and filings which have been made, copies of all of which have been
delivered to Purchaser.

(d) Execution and Delivery. This Agreement has been duly executed
and delivered to Purchaser by Seller and is the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms
except as the enforceability thereof may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general principles of equity.

(e) Compliance with Laws. Neither the execution, delivery and
performance by Seller of this Agreement nor the consummation of the
transactions contemplated by this Agreement (i) does or will violate any
provision of any Applicable Instrument of Seller or any Governmental
Requirement or (ii) does or will result in or require the creation or
imposition of any lien on any properties, assets or revenues of Seller. Seller
is in compliance in all material respects with the Applicable Instruments of
Seller and all Governmental Requirements applicable to Seller.

(f) Investment Company. Seller is not an "investment company"
subject to regulation under the Investment Company Act of 1940, as amended.

(g) Public Utility Holding Company. Seller is not, or is not
subject to regulation as, a "holding company," a "subsidiary company" of a
"holding company," an "affiliate" of a "holding company," or an affiliate" of a
"subsidiary company" of a "holding company," in each case as such term is
defined in the Public Utility Holding Company Act of 1935, as amended.

(h) Ownership of Crude Oil. The Crude Oil to be delivered by
Seller to Purchaser hereunder shall be delivered to Purchaser with good and
marketable title thereto, free and clear of all liens, encumbrances or any
other adverse claims whatsoever, including royalties and Taxes for which Seller
is responsible under Sections 2.09 and 2.10.

(i) Commercial Purpose. Seller has entered into this transaction
for commercial purposes related to its business and not for speculative
purposes. Seller has the capability, and intends, to make delivery of the
Crude Oil to be delivered hereunder. Seller is selling the Crude Oil in the
ordinary course of business. Seller is also acting as a principal and not as
an agent, understands and acknowledges that Purchaser has been and will be
acting only on an arm's length basis and not as its agent, broker, advisor or
fiduciary in any respect, is relying solely upon its own evaluation of this
Agreement and the transactions contemplated hereby (including the present and
future results, consequences, risks and benefits thereof, whether financial,
accounting, tax, legal or otherwise) and upon advice from its own professional
advisors, understands this Agreement and the transactions contemplated hereby
and the risks associated therewith, has determined that those risks are
appropriate for it, and is willing to assume those risks, and has not relied
and will not be relying upon any evaluation or advice (including any
recommendation, opinion or representation) from Purchaser or its affiliates or
the representatives or advisors of Purchaser or its affiliates.

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Section 3.02 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:

(a) Corporate Status and Authority. Purchaser is a company
incorporated under the laws of and has all necessary corporate power and
authority to carry on its business as now being conducted by it. Purchaser has
full power and authority to enter into this Agreement and to do all acts and
things and execute and deliver all other documents as are required hereunder to
be done, observed or performed by it in accordance with the terms hereof.

(b) Valid Authority. Purchaser has taken all necessary corporate
action to authorize the creation, execution, delivery and performance by it of
this Agreement and for it to observe and perform the provisions of this
Agreement in accordance with its terms.

(c) Validity of Documents and Enforceability. This Agreement
constitutes a valid and legally binding obligation of Purchaser enforceable
against it in accordance with its terms, except as the enforceability thereof
may be limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and by general principles of equity. Neither the execution and
delivery of this Agreement nor compliance with the terms and conditions hereof
by Purchaser (i) will result in a violation of the terms of any Applicable
Instrument of Purchaser or (ii) requires any approval or consent of any
governmental authority or agency having jurisdiction except such as has already
been obtained.

(d) Commercial Purpose. Purchaser has entered into this
transaction for commercial purposes related to its business in conjunction with
its line of business and not for speculative purposes. Purchaser has the
capacity, and intends, to take delivery of the Crude Oil to be delivered
hereunder. Purchaser is acquiring the Crude Oil in the ordinary course of
business.

ARTICLE IV - COVENANTS

Section 4.01 Affirmative Covenants of Seller. Seller covenants and agrees
with Purchaser that so long as any obligation of Seller to deliver Crude Oil or
to make any payment is outstanding hereunder:

(a) Compliance with Laws, etc. Seller will comply with all
Governmental Requirements applicable to the performance of Seller's obligations
hereunder, except where noncompliance therewith would not have a material
adverse effect on Seller. Seller will comply in all material respects with the
Applicable Instruments of Seller.

(b) Notice of Event of Default. Seller shall notify Purchaser of
the occurrence of any event which with the passage of time or the giving of
notice, or both, would be an Event of Default or an Event of Change promptly
after becoming aware of the same.

(c) Qualification. Seller will be duly qualified to do business
as a foreign corporation and will be in good standing under the laws of all
jurisdictions in which the failure to be so qualified could have a material
adverse effect on Seller by or before the first Delivery Month.

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(d) Letter of Credit. If the Confirmation Letter is amended
pursuant to Section 2.01(c), Seller shall provide a letter of credit as
contemplated in that certain letter dated September 26, 1997 among Chase
Securities, Inc., The Chase Manhattan Bank and Guarantor.

ARTICLE V - EVENTS OF DEFAULT AND EARLY TERMINATION

Section 5.01 Events of Default. Each of the following events shall
constitute an "Event of Default" by Seller under this Agreement:

(a) Seller shall (i) fail to deliver the Required Delivery
Quantity of Crude Oil to the Delivery Location in accordance with the terms of
this Agreement and (ii) if such failure is the result of an event of Force
Majeure, fail to make a payment of the Replacement Value in respect thereof in
accordance with the provisions of Section 2.06 and such failure is not remedied
within one (1) Business Day; or

(b) Seller shall fail to pay any amounts due to Purchaser in
accordance with the terms of Section 2.06 of this Agreement and such failure is
not remedied within one (1) Business Day after the Business Day on which such
payment is due; or

(c) Seller shall fail to perform or observe any material term,
covenant or agreement herein contained on its part to be performed or observed
(other than any term, covenant or agreement whose breach or default in
performance is specifically dealt with elsewhere in this Section 5.01) and such
failure shall remain unremedied for twenty-five (25) days after notice thereof
to Seller by Purchaser; or

(d) Seller shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against Seller seeking to adjudicate it as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property, and in the case of any such proceeding instituted against it (but not
yet instituted by it), shall remain undismissed or unstayed for a period of
forty-five (45) days or Seller shall take any corporate action to authorize any
of the actions set forth above in this Section 5.01(d); or

(e) any representation or warranty made by Seller in this
Agreement shall prove to have been incorrect in any material respect when made
or when deemed made; or

(f) Seller shall fail to deliver Margin (as defined in the Margin
Agreement) in accordance with its obligations under the second sentence of
Section 2 of the Margin Agreement and such failure is not remedied within one
(1) Business Day after notice of such failure is given to Seller by Purchaser;
or

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(g) Seller shall fail to perform or observe any term, covenant or
agreement (other than with respect to its obligations under the second sentence
of Section 2 thereof) contained in the Margin Agreement on its part to be
performed or observed and such failure is not remedied within thirty (30) days
notice thereof to Seller by Purchaser; or

(h) an Event of Default under the Guaranty Agreement shall occur
and be continuing or a Gas Contract Event of Default occurs.

Section 5.02 Early Termination by Purchaser. If at any time an Event of
Default has occurred and is continuing, Purchaser may, by not more than five
(5) Business Days notice to Seller specifying the relevant Event of Default,
designate a Business Day not earlier than the Business Day such notice is
effective as an early termination date ("Early Termination Date"); provided,
however, that if an Event of Default pursuant to Section 5.01(d) shall have
occurred, the Early Termination Date shall occur immediately on the occurrence
of such Event of Default without the need for Purchaser to give any prior
notice. Upon the designation or occurrence of an Early Termination Date, the
obligation of Seller to make any further deliveries of Crude Oil to Purchaser
under this Agreement shall terminate and Seller shall pay to Purchaser the
Termination Payment together with any Unpaid Amounts. All amounts payable
under this Section 5.02 shall become due on the Early Termination Date and
shall be payable on the Business Day immediately following delivery by
Purchaser of the statement required pursuant to Section 5.03(c). Such amount
will be paid together with (to the extent permitted by applicable law) interest
thereon (before as well as after judgment) from (and including) the Early
Termination Date to (but excluding) the date such amount is paid, at the rate
specified in Section 7.02. The parties agree that the Termination Payment is a
reasonable pre-estimate of the damages which would be incurred by Purchaser as
a result of an Event of Default and not a penalty.

Section 5.03 Calculation of Termination Payment.

(a) "Termination Payment" shall be the lowest amount determined on
the basis of quotations from at least four Reference Dealers as the amount that
would have been payable on the Termination Date by Purchaser in consideration
of an agreement between Purchaser and the quoting Reference Dealer, and subject
to such documentation evidencing agreement on price as they may in good faith
agree, with the relevant Termination Date as the date of commencement of such
agreement that would have the effect of preserving for Purchaser the equivalent
of the delivery obligations that, but for the occurrence of the relevant
Termination Date, Seller would have been obligated to perform hereunder after
such Termination Date. Purchaser will request each Reference Dealer to provide
its quotation to the extent practicable as of the same time (without regard to
different time zones) on the relevant Termination Date (or, if a Termination
Date is deemed to occur, as of a time as soon thereafter as practicable). The
time as of which such quotations are to be provided will be selected in good
faith by Purchaser.

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without limitation, any damages, losses, or expenses incurred in obtaining,
terminating, liquidating, reestablishing or employing ▇▇▇▇▇▇ or related trading
positions against Purchaser's position hereunder.

(c) On or as soon as reasonably practicable following the
occurrence of a Termination Date, Purchaser will calculate the Termination
Payment and will provide Seller with a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations) and (2) giving
details of the relevant account to which the Termination Payment is payable.
Any such statement shall, absent manifest error, be conclusive evidence of the
amount due in respect of the Termination Payment.

ARTICLE VI - EVENTS OF CHANGE AND ACCELERATED TERMINATION

Section 6.01 Events of Change. Each of the following events shall
constitute an "Event of Change" for the purposes of this Agreement:

(a) the enactment, promulgation, execution or ratification of, or
any change in or amendment to, any regulation or law (or the application or
interpretation of any regulation or law, as determined by a court or regulatory
authority of competent jurisdiction or as determined by the opinion of
independent counsel mutually acceptable to Seller and Purchaser) that occurs
after the date hereof which would result in the imposition of a Tax (other than
an increase in the rate of a general tax on overall income) or of state or
federal government royalties (in excess of those royalties currently in effect)
or of export or price controls in a material amount by any government or taxing
authority upon a party hereto with respect to delivery of, or acceptance of
delivery of, Crude Oil under this Agreement or with respect to any cash payment
made pursuant to Section 2.06 which in any case would materially adversely
affect the net cost to Seller or Purchaser of performing its obligations
hereunder; or

(b) the enactment, promulgation, execution or ratification of, or
any change in or amendment to, any regulation or law (or the application or
interpretation of any regulation or law, as determined by a court or regulatory
authority of competent jurisdiction or as determined by the opinion of
independent counsel mutually acceptable to Seller and Purchaser) that occurs
after the date hereof which would result in the performance of any obligation
of Seller to deliver Crude Oil or Purchaser to accept delivery of Crude Oil
under this Agreement being unlawful; or

(c) any one or more events of Force Majeure that occur and
continue for a consecutive period of longer than ninety (90) days.

Section 6.02 Accelerated Termination. (a) During the continuation of an
Event of Change contemplated by Section 6.01(a), both parties shall make
reasonable efforts to make arrangements to avoid the imposition of any Tax
contemplated by Section 6.01(a); provided that this Section 6.02 shall not
impose on either party any obligation other than to negotiate in good faith to
make such arrangements as will not adversely affect the parties.

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(b) During the continuation of any Event of Change, and if any
arrangement is not, or is not capable of being, made pursuant to Section
6.02(a), then either party may designate an accelerated termination date
("Accelerated Termination Date") upon not less than two (2) and not more than
ten (10) Business Days' notice to the other party. Upon the Accelerated
Termination Date, the parties' obligations hereunder shall terminate, except
for the obligations contained in Section 6.03 and Section 7.02.

Section 6.03 Payments on Accelerated Termination. Upon the designation of
an Accelerated Termination Date, Seller, at the option of Purchaser, shall
either (i) deliver any Crude Oil otherwise deliverable hereunder to Purchaser,
provided that such delivery of Crude Oil by Seller would not then be unlawful
and Seller has the ability to make such delivery and pay any Unpaid Amounts or
(ii) Seller shall pay to Purchaser an amount equal to the Termination Payment
plus any Unpaid Amounts. All amounts payable under this Section 6.03 shall
become due on the Accelerated Termination Date and shall be payable on the
fifth Business Day following delivery by Purchaser of the certificate of
calculation of the Termination Payment contemplated by Section 5.03. Upon the
occurrence of an Accelerated Termination Date, Purchaser may, in its sole
discretion, elect either remedy set forth in this Section 6.03. Such remedies
shall be Purchaser's sole remedy; provided that nothing herein shall affect a
party's obligation to make payments of amounts which were due and owing
(whether or not payable) on or prior to the occurrence of such Accelerated
Termination Date.

ARTICLE VII - MISCELLANEOUS

Section 7.01 Notice. Any demand, notice or communication to be made or
given hereunder shall be in writing and may be made or given by personal
delivery or by transmittal by telecopy, rapifax or other electronic means of
communication addressed to the respective party as follows:

To Seller:

Crystal Properties and Trading Company
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

with copy to:

Fulbright & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇

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To Purchaser:

Mahonia Limited
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇-▇▇▇▇-▇▇▇▇▇▇
Telephone No.: ▇▇-▇▇▇▇-▇▇▇▇▇▇

with copy to:

The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Chase Securities Inc.
▇▇▇ ▇▇▇▇▇▇ -▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇

or to such other address or telecopy number or rapifax number as any party may
from time to time notify the others in accordance with this Section 7.01. Any
demand, notice or certification made or given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof,
or, if made or given by electronic means of communication, on the date of such
transmittal or if such date is not a Business Day, on the first Business Day
following the transmittal thereof.

Section 7.02 Interest on Overdue Amounts. If any monetary amounts payable
under this Agreement are not paid when due, then such overdue amount shall bear
interest for each day until paid in full, payable on demand, both before and
after default, judgment, the Early Termination Date and the Accelerated
Termination Date, at the U.S. Base Rate plus one and one-half percent per annum
on the basis of the actual number of days elapsed and on the basis of a year of
360 days, as the case may be. Such interest shall be determined daily and
compounded monthly in arrears on the last day of each calendar month.

Section 7.03 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of laws that would result in the application
of the laws of another jurisdiction.

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Section 7.04 Severability. In the event that one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any applicable law the validity, legality or enforceability of
the remaining provisions hereof shall not be affected or impaired thereby.
Each of the Sections of this Agreement is hereby declared to be separate and
distinct.

Section 7.05 Currency. Unless otherwise stated, all amounts expressed
herein in terms of money refer to the United States Dollar and all payments to
be made hereunder shall be made in such currency.

Section 7.06 Purchaser Not an Agent. Purchaser acknowledges and confirms
that all purchases of Crude Oil hereunder are being made by it as a principal
and that it is not acting as agent for any other Person in connection with
purchases of Crude Oil hereunder.

Section 7.07 Benefit of the Agreement. This Agreement shall inure to the
benefit of and be binding upon Seller, Purchaser and their respective
successors and assigns.

Section 7.08 Assignment and Transfer. Except as expressly provided in this
Section 7.08, neither party may assign any rights or delegate any obligations
hereunder without the prior written consent of the other party. Without the
consent of Seller, Purchaser may assign this Agreement to any of its direct or
indirect wholly owned subsidiaries, whether now existing or hereafter created
and/or may assign this Agreement to any Person as security for any financing or
hedging provided to Purchaser by such Person and such Person may exercise, upon
default by Purchaser of its agreements with such Person, the rights of
Purchaser hereunder. Upon notice to Seller of any such assignment, Seller
agrees to substitute such assignee or successor corporation for Purchaser
hereunder. Without the consent of Purchaser, Seller may (i) assign this
Agreement to any direct or indirect wholly owned subsidiary of Guarantor or
(ii) merge with any direct or indirect wholly owned subsidiary of Guarantor;
provided, however, that (A) such subsidiary agrees to assume all obligations
under this Agreement and the Margin Agreement, (B) such subsidiary is a
corporation, limited liability company or limited partnership incorporated
under the laws of a state in the United States, (C) no Event of Default would
occur as the result thereof, and (D) the Guaranty Agreement remains in effect.
Upon notice to Purchaser of any such assignment or merger, Purchaser agrees to
substitute such assignee or successor for Seller hereunder.

Section 7.09 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior agreement,
undertaking, declarations, commitments or representations, written or oral, in
respect thereof. There are no unwritten oral agreements among the parties.

Section 7.10 Amendments. This Agreement may not be modified or amended
except by an instrument in writing signed by Purchaser and Seller or by their
respective successors or permitted assigns.

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remedies herein provided are cumulative and not exclusive of any remedies
provided by law except as otherwise expressly provided herein.

Section 7.12 Time of the Essence. Time shall be of the essence of this
Agreement.

Section 7.13 Counterparts. This Agreement may be executed in counterparts,
each of which so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.

Section 7.14 Margin Agreement. Seller's payment obligations under this
Agreement are secured by the Margin Agreement, which Margin Agreement is hereby
incorporated herein for all purposes.

Section 7.15 Intent. The parties intend that this Agreement shall
constitute a purchase and sale of inventoriable goods and a forward contract
within the meaning of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code of 1978,
as amended from time to time.

Section 7.16 Disclosure of Information. In the event that Seller provides
to Purchaser written confidential information belonging to Seller or its
affiliates which has been denominated in writing as "confidential", Purchaser
agrees to thereafter maintain such information in confidence in accordance with
the standards of care and diligence that each utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to
such portions of the information which (i) are in the public domain, (ii)
hereafter become part of the public domain without Purchaser breaching its
obligation of confidence to Seller, (iii) are previously known by Purchaser
from some source other than Seller, (iv) are hereafter developed by Purchaser
without using Seller's information, (v) are hereafter obtained by or available
to Purchaser from a third party who owes no obligation of confidence to Seller
with respect to such information or through any other means other than through
disclosure by Seller, (vi) are disclosed with Seller's consent, (vii) must be
disclosed either pursuant to any Governmental Requirement or to Persons
regulating the activities of Purchaser, or (viii) as may be required by law or
regulation or order of any governmental authority in any judicial, arbitration
or governmental proceeding. Further, Purchaser may disclose any such
information to any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by it in
connection with this Agreement, including without limitation, the enforcement
or exercise of all rights and remedies thereunder; provided, however, that it
imposes on such Person to whom such information is disclosed the same
obligation to maintain the confidentiality of such information as is imposed
upon it hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three (3) years from the date the
information was furnished, unless Seller requests in writing at least 30 days
prior to the expiration of such three year period, that Purchaser maintain the
confidentiality of such information for an additional three year

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period. Seller waives any and all other rights it may have to confidentiality
as against Purchaser arising by contract, agreement, statute or law except as
expressly stated in this Section.

20
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IN WITNESS WHEREOF the Parties hereto have executed this Agreement as
of the date first written above.

CRYSTAL PROPERTIES AND TRADING COMPANY

By:_______________________
▇.▇. ▇▇▇▇▇▇
Vice President

MAHONIA LIMITED

By:_________________________
Name:
Title:

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25

ANNEX 1

TO CRUDE OIL INVENTORY FORWARD SALE CONTRACT

CONDITIONS PRECEDENT

1. The executed Margin Agreement.

2. The executed Guaranty Agreement.

3. An opinion of Fulbright and ▇▇▇▇▇▇▇▇, L.L.P., special counsel to
Seller and Guarantor, in substantially the form set out in Exhibit A;
an opinion of Lionel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Nevada counsel to the Seller.

4 A certificate of the Secretary or an Assistant Secretary of Seller
setting forth (i) resolutions of its Board of Directors with respect
to the authorization of Seller to execute and deliver the Agreement
and the Margin Agreement and to enter into the transactions
contemplated in those documents, (ii) the officers of such Person (y)
who are authorized to sign such agreements and (z) who will, until
replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection
with such agreements and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers, and (iv) the articles
of incorporation and by-laws of Seller, certified as being true and
complete. Purchaser may conclusively rely on such certificate until
it receives notice in writing from Seller to the contrary.

5. A certificate of the Secretary or an Assistant Secretary of Guarantor
setting forth (i) resolutions of its board of directors with respect
to the authorization of Guarantor to execute and deliver the Guaranty
Agreement and to enter into the transactions contemplated in those
documents, (ii) the officers of the Guarantor (y) who are authorized
to sign such agreement and (z) who will, until replaced by another
officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving
notices and other communications in connection with such agreement and
the transactions contemplated hereby, (iii) specimen signatures of the
authorized officers, and (iv) the articles or certificate of
incorporation and bylaws of Guarantor, certified as being true and
complete. Purchaser may conclusively rely on such certificate until
it receives notice in writing from Seller to the contrary.

6. An executed security agreement and financing statement granting to the
Purchaser a lien on the agreements evidencing the Hedged Volumes (as
defined in the Margin Agreement).

7. Copy of the agreements evidencing the Hedged Volumes.

Annex 1- i
26

NATURAL GAS FORWARD SALE CONTRACT

DATED

SEPTEMBER 30, 1997

BETWEEN

CRYSTAL PROPERTIES AND TRADING COMPANY

AND

MAHONIA LIMITED

TABLE OF CONTENTS

ARTICLE I - INTERPRETATION
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.03 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.04 Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II - SALE AND PURCHASE OF NATURAL GAS
Section 2.01 Sale and Purchase of Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.02 Measurement and Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.03 Delivery and Receipt of Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.04 Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.05 Delivery Points upon Force Majeure; Alternate Delivery Points. . . . . . . . . . . . . . 7
Section 2.06 Failure of Delivery or Receipt; Transportation and Balancing . . . . . . . . . . . . . . 8
Section 2.07 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.08 Possession, Title and Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.09 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.11 No Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE III - REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.02 Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE IV - COVENANTS
Section 4.01 Affirmative Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE V - EVENTS OF DEFAULT AND EARLY TERMINATION
Section 5.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.02 Early Termination by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.03 Calculation of Termination Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE VI - EVENTS OF CHANGE AND ACCELERATED TERMINATION
Section 6.01 Events of Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.02 Accelerated Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.03 Payments on Accelerated Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE VII - MISCELLANEOUS
Section 7.01 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.02 Interest on Overdue Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.03 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.04 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.05 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.06 Purchaser Not an Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.07 Benefit of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.08 Assignment and Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.09 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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Section 7.10 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.11 No Waivers, Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.12 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.14 Margin Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.15 Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.16 Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Annex 1 Seller's Conditions Precedent

Exhibit A - Form of Opinion of Counsel of Guarantor

ii
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NATURAL GAS FORWARD SALE CONTRACT

This NATURAL GAS INVENTORY FORWARD SALE CONTRACT (this "Agreement") is
entered into as of September 30, 1997 between CRYSTAL PROPERTIES AND TRADING
COMPANY, a corporation organized under the laws of the State of Nevada (the
"Seller"), and MAHONIA LIMITED, a company incorporated under the laws of Jersey
(the "Purchaser").

WHEREAS, Seller is proposing to acquire interests in various oil and natural
gas properties located in ▇▇▇▇ County, California, known as the Elk Hills Naval
Petroleum Reserve Numbered 1 (the "Elk Hills Properties"), as well as other
proved producing oil and gas properties located in the United States; and

WHEREAS, Seller desires to sell and Purchaser desires to purchase certain
quantities of Natural Gas on the terms and conditions set forth herein;

NOW THEREFORE, in consideration of the respective covenants and agreements of
the parties hereinafter set forth and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the
parties, the parties hereby agree as follows:

ARTICLE I - INTERPRETATION

Section 1.01 Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated:

"Accelerated Termination Date" shall have the meaning ascribed thereto in
Section 6.02(b).

"Applicable Instruments" of any Person shall mean the Certificate or Articles
of Incorporation, by-laws and other organizational documents of such Person and
all contracts, indentures, agreements, instruments and documents to which such
Person is a party or by which such Person or any assets of such Person may be
bound or affected.

"Btu" means the amount of energy required to raise the temperature of one
pound of pure water one degree Fahrenheit from 59 degrees Fahrenheit to
60 degrees Fahrenheit.

"Business Day" means a day, other than a Saturday or a Sunday, on which
commercial banks are not authorized or required to be closed in New York, New
York.

"Confirmation Letter" have the meaning ascribed thereto in Section 2.01.

"Deficiency Quantity" means, in respect of a particular Delivery Month, the
amount by which the Required Delivery Quantity of Natural Gas for that Delivery
Month exceeds the quantity of Natural Gas actually delivered and received
hereunder in respect of such Delivery Month.

"Delivery Month" means each calendar month commencing with the month of
January, 1998 through and including the month of December, 1998.

1
30

"Delivery Point" means a delivery point set forth in the Confirmation Letter
(which is currently Transco Pipeline (upstream of Station 65), or if the terms
of Section 2.05(b) are satisfied, any of the following locations: (i) ▇▇▇▇▇ Hub
or (ii) Tennessee Gas Transmission, Zone 1.

"Early Termination Date" shall have the meaning ascribed thereto in Section
5.02.

"Event of Change" shall have the meaning ascribed thereto in Section 6.01.

"Event of Default" shall have the meaning ascribed thereto in Section 5.01.

"Federal Funds Rate" means, for any day, a fluctuating interest rate per
annum equal for such day to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received by Purchaser from three Federal funds brokers of
recognized standing selected by Purchaser.

"Force Majeure" shall mean a failure by either party to perform obligations
hereunder, except for the obligation to make payment due hereunder, to the
extent that such failure is caused by war, riots, insurrections, fires,
explosions, sabotage, strikes and other labor or industrial disturbances, acts
of God or the elements, government laws, regulations or requests, disruption or
breakdown of production or transportation facilities, failures of transporters
in receiving and delivering natural gas tendered, compliance with OFO's or
other similar notice from a transporter, or by any other cause reasonably
beyond the control of such party, but does not include the failure to perform
obligations solely as a result of the fact that to do so will result in
economic loss or hardship to such party.

"Guarantor" shall mean Crystal Oil Company, a Louisiana corporation.

"Guaranty Agreement" shall mean that certain Guaranty Agreement dated of even
date herewith by Guarantor, in favor of Purchaser.

"▇▇▇▇▇ Hub" means the Sabine Pipe Line Company pipeline facilities at Texaco
Inc.'s ▇▇▇▇▇ Gas Processing Plan near Erath, Louisiana.

"Margin Agreement" means the Margin Agreement of even date herewith between
Seller and Purchaser, as the same may be modified or amended from time to time.

"MMBtu" means one million Btus.

"Natural Gas" means a mixture of gaseous hydrocarbons consisting primarily of
methane and meeting the quality standards and specifications required pursuant
to Section 2.02.

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"NYMEX" means the New York Mercantile Exchange, Inc. and any successor
thereto by merger, consolidation, or sale of assets.

"Oil Contract Event of Default" shall mean any Event of Default, as such term
is defined in the Oil Forward Sale Contract.

"Oil Forward Sale Contract" shall mean that certain Crude Oil Forward Sale
Contract between Seller and Purchaser of even date herewith.

"OFO" shall have the meaning given such term in Section 2.06(c).

"Payment Date" shall mean the 20th day of each month (or if such day is not a
Business Day, the next succeeding Business Day) commencing on February 20,
1998.

"Person" shall mean any individual, corporation, company, partnership, joint
venture, trust, unincorporated association, government or any commission,
board, court, agency, instrumentality or political subdivision thereof, any
other entity or any trustee, receiver, custodian or similar official.

"Prepaid Price" shall be the amount set forth in the Confirmation Letter.

"Reference Dealer" means a leading company in the natural gas marketing
business selected by Purchaser in good faith from among companies whose credit
standings satisfy all the criteria that Purchaser applies generally with
respect to transactions similar to those contemplated by this Agreement.

"Replacement Value" means (i) if Seller is the party which has failed to
perform, the price which Purchaser, acting in good faith and at arm's length,
actually pays, or has contracted to pay, for Natural Gas to replace the
Deficiency Quantity at the agreed Delivery Point plus any additional
transportation and other costs and expenses incurred by Purchaser in connection
with the purchase of such Natural Gas, and (ii) if Purchaser is the party which
has failed to perform, the price which Seller, acting in good faith and at
arm's length, actually receives, or has contracted to receive, for the sale of
the Deficiency Quantity at the agreed Delivery Point less any additional
transportation and other costs and expenses incurred by Seller in connection
with the sale of such Natural Gas.

"Required Delivery Quantity" means the amount of MMBtus of Natural Gas to be
delivered and received during a given Delivery Month pursuant to this Agreement
as agreed upon in the Confirmation Letter.

"Taxes" means all ad valorem, property, occupation, severance, production,
gathering, pipeline, utility, gross production, sales, use, excise, transaction
and any other governmental charges and assessments, other than taxes based on
net income or net worth.

"Termination Date" means either the Accelerated Termination Date or the Early
Termination Date, as the case may be.

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"Termination Payment" shall have the meaning given such term in Section 5.03.

"United States Dollars", "U.S. Dollars", or "U.S. $" means the lawful
currency of the United States of America in immediately available funds.

"Unpaid Amounts" means, with respect to any Termination Date, the aggregate
of all amounts that became payable (whether or not due) to Purchaser hereunder
prior to the occurrence of such Termination Date and that remain payable
(whether or not due) as at such Termination Date, together with interest
thereon from (and including) the date such amounts became due and payable to
(but excluding) such Termination Date at the U.S. Base Rate.

"U.S. Base Rate" means, at any time, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall at all times
be equal to the highest of: (a) the rate of interest announced publicly by The
Chase Manhattan Bank in New York, New York, from time to time, as its prime
commercial lending rate; or (b) one percent per annum above the Federal Funds
Rate in effect from time to time. In the event there is any Unpaid Amount,
Purchaser will use reasonable efforts to inform Seller of changes in the U.S.
Base Rate promptly upon the occurrence of such changes.

ARTICLE II - SALE AND PURCHASE OF NATURAL GAS

Section 2.01 Sale and Purchase of Natural Gas.

(a) On or before September 30, 1997, Purchaser and Seller shall agree upon
and execute a letter described in this Section 2.01 (such letter being the
"Confirmation Letter"). The Confirmation Letter shall specify a mutually
acceptable Prepaid Price (which shall be approximately U.S. $35,000,000), the
date or dates on which the Prepaid Price shall be paid, and for each Delivery
Month, the Required Delivery Quantity, and the proportion thereof to be
delivered and received at each

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Delivery Point, each as mutually agreed by Purchaser and Seller. On the date
or dates specified for such purpose in the Confirmation Letter, Purchaser shall
pay to Seller the Prepaid Price by wire transfer of immediately available funds
to such account or accounts as Seller may designated in writing, provided that
the conditions precedent set out in Annex 1 have been satisfied by Seller and
no Event of Default or Event of Change shall have occurred.

(b) In consideration of the payment to Seller of the Prepaid Price, Seller
hereby agrees to sell and deliver, or cause to be delivered, to Purchaser or to
its account in each Delivery Month, at the Delivery Point, the Required
Delivery Quantity of Natural Gas on the terms and conditions set forth in this
Agreement; and Purchaser hereby agrees to accept delivery of such Natural Gas.
Payment of the Prepaid Price on the date or dates set forth in the Confirmation
Letter shall constitute payment in full of the purchase price of all quantities
of Natural Gas to be delivered hereunder.

(c) Seller has advised Purchaser that Seller intends to satisfy its
obligations under this Agreement from various oil and gas interests that it
anticipates acquiring either through the acquisition of properties, such as the
Elk Hills Properties, or through the future acquisition of Natural Gas that may
be owned or acquired by one or more affiliates of Seller or from third parties.
Seller has further advised the Purchaser that if Seller is successful in
acquiring interests in the Elk Hills Properties, its reserves and deliverable
volumes of Natural Gas will increase substantially. In recognition of these
facts, Purchaser and Seller have agreed that the initial Confirmation Letter
will contemplate a delivery schedule without giving effect to Seller's
acquisition of any interests in the Elk Hills Properties or other similar
proved oil and gas properties. Seller has requested, and Purchaser has agreed,
that if Seller acquires or is awarded the bid to acquire oil and gas interests
in the Elk Hills Properties or other similar oil and gas properties, Purchaser
and Seller will, if requested by Seller, negotiate in good faith to amend the
Confirmation Letter to provide for a longer period of time for the delivery of
quantities of Natural Gas under this Agreement; provided that if the
acquisition of the Elk Hills Properties is not consummated by May 30, 1998, the
parties will negotiate in good faith to re-amend the Confirmation Letter to
provide for a delivery schedule of ratable deliveries for the undelivered
Natural Gas over the remaining period of calendar year 1998. Unless otherwise
agreed, no additional Prepaid Price will be due, nor will any portion of the
Prepaid Price be repaid to Purchaser, as a result of such amendment, but the
Delivery Month, Delivery Point(s), Required Delivery Quantity, and the
proportion to be delivered at each Delivery Point shall be modified in a
mutually acceptable manner to give effect to prevailing prices for deliveries
of Natural Gas under the modified delivery schedule. If the Confirmation
Letter is amended, all references in this Agreement to the Confirmation Letter
shall, unless otherwise agreed, refer to the Confirmation Letter as so amended.

If Purchaser or Seller are unable to agree on a modification to the
original Confirmation Letter within 30 days of such request, Seller shall
continue to be required to deliver the quantities of Crude Oil when and
contemplated in the initial Confirmation Letter. If the initial Confirmation
Letter has been amended and is then required to be re-amended in accordance
with this Section 2.01(c), then the parties agree to determine in good faith
the amount that would be required to be paid to or by a party at the time of
the effective date of the re-amendment to the Confirmation Letter in
consideration of an agreement by a market dealer to enter into a transaction
with a financially viable and reputable party (a "Replacement Transaction")
that would have the effect of preserving for such party the economic equivalent
of any payment (assuming satisfaction of all conditions precedent) to or from a
floating price payor under a standard International Swaps and Derivatives
Association, Inc. (formerly known as International Swap Dealers Association,
Inc.) Natural Gas commodity price swap entered into at the effective time of
the first amendment to the Confirmation Letter under this Section 2.01(c) (the
"First Amended Confirmation") with respect to the volume of Natural Gas

5
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contemplated to be delivered at the effective time of the First Amended
Confirmation having the Natural Gas pricing and delivery point used for
purposes of the First Amended Confirmation as the fixed prices for such swap
and settlement dates and notional volumes of Natural Gas that are parallel to
the Delivery Months and the Required Delivery Quantities under the First
Amended Confirmation. If the amount so determined for the Replacement
Transaction would be a payment by the dealer to the floating price payor, such
amount shall be paid by Purchaser to Seller in immediately available funds as
the agreed consideration for the re-amendment to the Confirmation Letter. If
the amount so determined for the Replacement Transaction would be a payment to
the dealer by the floating price payor, such amount shall be paid by Seller to
Purchaser as the agreed consideration for the re-amendment to the Confirmation
Letter. The determination of such amount shall be made on the basis of
quotations from Reference Market-makers (as defined in the International Swaps
and Derivatives Association, Inc., form Master Agreement (Multi-
currency--Cross Border, Version 1992)) in a manner substantially similar to
that provided for under such form. In such case, each quotation by a Reference
Market-maker will be for an amount, if any, that would be paid to or by the
floating price payor in consideration of an agreement between such party and
the quoting Reference Market-maker to enter into a Replacement Transaction. If
more than three quotations are provided, the agreed amount will be the
arithmetic mean of the quotations, without regard to the quotations having the
highest and lowest values. If exactly three quotations are provided, the
agreed amount will be the quotation remaining after disregarding the highest
and lowest quotations. If more than one quotation has the same highest value
or lowest value, then one of such quotations shall be disregarded.

(d) All payments under this Agreement by Seller or Purchaser shall be made
by wire transfer in immediately available funds to an account designated by the
party entitled to receive such payment, with such designation to be made at
least two business days prior to the date on which this payment is to be made.

Section 2.02 Measurement and Quality. Natural Gas delivered to a specific
Delivery Point hereunder shall be measured by the operator of the Delivery
Point in accordance with its standard practices. All such Natural Gas shall
meet or exceed the requirements of Purchaser's transporter receiving gas at the
Delivery Point, including, without limitation, requirements of quality,
composition, temperature and pressure.

Section 2.03 Delivery and Receipt of Natural Gas.

(a) Seller agrees to deliver to Purchaser, and Purchaser agrees to accept
delivery from Seller in each Delivery Month at the Delivery Point determined
pursuant to this Agreement, the Required Delivery Quantity of Natural Gas
required to be delivered under the Confirmation Letter in such Delivery Month.

(b) Seller and Purchaser shall take such action as shall be necessary to
properly schedule the delivery and receipt of such Natural Gas at the Delivery
Point in each Delivery Month in compliance with all rules, regulations and
procedures applicable at the Delivery Point.

(c) Each Delivery Month, Seller shall arrange for delivery, and Purchaser
shall arrange for receipt, of Natural Gas to begin at the Delivery Point no
later than the first day of the Delivery Month and to be completed no later
than the last calendar day of the Delivery Month. All deliveries and receipts
shall be at hourly and daily rates that are as uniform as possible over the
course of the Delivery Month in accordance with generally accepted pipeline
scheduling practices.

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Section 2.04 Payment of Fees. Seller shall obtain and pay all costs in
connection with transportation of the Natural Gas to the Delivery Point and
Purchaser shall obtain and pay all costs in connection with transportation of
the Natural Gas from the Delivery Point. Seller shall be responsible for the
payment of all hub fees (whether charged to Seller or Purchaser) payable in
connection with delivery of Natural Gas hereunder at the Delivery Point.
Seller shall not be responsible for any insurance, storage, transportation or
other costs in respect of the period after title to any Natural Gas delivered
hereunder has passed to Purchaser in accordance with Section 2.08 of this
Agreement. Purchaser shall not be responsible for any insurance, storage,
transportation or other costs in respect of the period prior to the time title
to any Natural Gas delivered hereunder has passed to Purchaser in accordance
with Section 2.08 of this Agreement.

Section 2.05 Delivery Points upon Force Majeure; Alternate Delivery Points.

(a) Seller is obligated to deliver to Purchaser and Purchaser is obligated
to receive from Seller, at the Delivery Point, the Required Delivery Quantity
of Natural Gas in accordance with the terms and conditions of this Agreement.
If as the result of a Force Majeure, either (i) Seller is unable, after using
all reasonable business efforts, to deliver the Required Delivery Quantity of
Natural Gas to Purchaser at the Delivery Point in the proportions agreed upon
pursuant to this Agreement or (ii) Purchaser is unable, after using all
reasonable business efforts, to receive the Required Delivery Quantity of
Natural Gas from Seller at the Delivery Point in the proportions agreed upon
pursuant to this Agreement, then Seller shall be obligated to deliver and
Purchaser shall be obligated to receive, the relevant Required Delivery
Quantity of Natural Gas at a mutually acceptable comparable delivery point or
points with mutually acceptable adjustments for quality and location.

(b) Seller may elect to deliver Natural Gas at an alternate delivery point
other than the Delivery Point which alternate delivery point may be any of the
following locations: (i) ▇▇▇▇▇ Hub or (ii) Tennessee Gas Transmission, Zone 1;
provided that Seller has given Purchaser written notice of its election no
later than five (5) Business Days before the end the calendar month preceding
the Delivery Month in which it proposes to make delivery at such alternate
delivery point. If there is transportation cost differential associated with
delivery of such Natural Gas at such alternate delivery point (as measured
against delivery at the Transco Pipeline (upstream of Station 65), Purchaser
shall prepare and deliver to Seller, within five (5) Business Days after the
end of the applicable Delivery Month a certificate setting out the calculation
of the transportation cost differential accompanied by reasonably available
back-up documentation therefor. Any such certificate shall, absent manifest
error, be conclusive evidence of the amount of such transportation cost
differential. If Seller owes Purchaser compensation pursuant to this Section
2.05(b), Seller shall pay Purchaser such amount within five (5) Business Days
following its receipt of Purchaser's certificate. If Purchaser owes Seller
compensation pursuant to this Section 2.05(b), Purchaser shall pay Seller
amount on the next succeeding Payment Date.

(c) During any Delivery Month, Seller may elect to deliver Natural Gas in
excess of the Required Delivery Quantity for such Delivery Month by giving
Purchaser not less than two (2) Business Day's prior written notice; provided
that Purchaser may decline to accept such excess volumes if it determines, in
its sole discretion, that no readily available market exists for such excess
volumes, that such volumes are too small to be readily marketed or that it is
uneconomical for it to accept such excess volumes. If Purchaser wishes to
decline Seller's election, it shall give Seller written notice within one (1)
Business Day of its receipt of Seller's notice. If Purchaser accepts Seller's
election, the excess volume so delivered shall be allocated on a pro rata basis
to reduce the Required Delivery Quantity for each of the remaining Delivery
Months, commencing on the next succeeding

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Delivery Month. Purchaser shall promptly furnish to Seller an amendment to the
Confirmation Letter evidencing such new Required Delivery Quantities.

Section 2.06 Failure of Delivery or Receipt; Transportation and Balancing.

(a) (i) Without prejudice to Articles V and VI, if as a result of an event
of Force Majeure, Seller is unable to meet its delivery obligation in respect
of a Delivery Month at the Delivery Point or at a mutually satisfactory
comparable delivery point or points (in which case Seller shall be deemed the
"Responsible Party"), then Seller shall pay to Purchaser, as liquidated
damages, the Replacement Value of the Deficiency Quantity of Natural Gas in
respect of that Delivery Month. The Replacement Value shall be paid to
Purchaser no later than the Payment Date next following such Delivery Month,
and Purchaser will accept such payment in lieu of Natural Gas not delivered in
such Delivery Month. Where Seller is unable to meet its acceptance obligation
as aforesaid, Purchaser shall use all reasonable efforts to minimize the
Replacement Value of any Deficiency Quantity. If the Replacement Value is
based on the price Purchaser pays to replace the Deficiency Quantity, Purchaser
shall prepare and deliver to Seller, within five (5) Business Days after the
end of the applicable Delivery Month, a certificate setting out the calculation
of the Replacement Value accompanied by reasonably available back-up
documentation therefor. Any such certificate shall, absent manifest error, be
conclusive evidence of the amount due in respect of the Replacement Value.
Purchaser shall notify Seller as soon as possible of any anticipated inability
to perform all or any portion of its obligations hereunder.

(ii) Without prejudice to Article VI, if as a result of an event of Force
Majeure, Purchaser is unable to meet its obligation to accept delivery in
respect of a Delivery Month at the Delivery Point or at a mutually satisfactory
comparable delivery point or points (in which case Purchaser shall be deemed
the "Responsible Party"), then Seller shall pay to Purchaser, in lieu of
delivery of the Required Delivery Quantity, the Replacement Value of the
Deficiency Quantity of Natural Gas in respect of that Delivery Month. The
Replacement Value shall be paid to Purchaser no later than the Payment Date
next following such Delivery Month, and Purchaser will be required to accept
such payment in lieu of Natural Gas not delivered in such Delivery Month.
Where Purchaser is unable to meet its acceptance obligation as aforesaid,
Seller shall use all reasonable efforts to maximize the Replacement Value of
any Deficiency Quantity. If the Replacement Value is based on the price Seller
receives for the Deficiency Quantity, Seller shall prepare and deliver to
Purchaser, within five (5) Business Days after the end of the applicable
Delivery Month, a certificate setting out the calculation of the Replacement
Value accompanied by reasonably available back-up documentation therefor. Any
such certificate shall, absent manifest error, be conclusive evidence of the
amount due in respect of the Replacement Value. Purchaser shall notify Seller
as soon as possible of any anticipated inability to perform all or any portion
of its obligations hereunder.

(b) In the event that (i) Seller or Seller's transporter inadvertently
delivers more or less than the Required Delivery Quantity for any Delivery
Month, or (ii) Purchaser or Purchaser's transporter inadvertently receives more
or less than the Required Delivery Quantity for any Delivery Month, such
overages or underages shall be corrected or adjusted in cash or Natural Gas as
the parties may agree or in accordance with applicable tariff provisions; and
the Responsible Party will be liable to the other party for any associated
pipeline penalties or cashouts. Each party shall notify the other as promptly
as possible of any changes in its rate of delivery or receipt of Natural Gas at
the Delivery Point and take all reasonable actions necessary to avoid the
incurrence of pipeline penalties and imbalances.

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(c) Should either party receive an operational flow order ("OFO") or other
order or notice from a transporter requiring action to be taken in connection
with this Agreement or Natural Gas flowing under this Agreement, such party
shall immediately notify the other party of the OFO and promptly provide the
other party a copy of same by facsimile. The parties shall take all actions
required by the OFO within the time prescribed therein. Each party shall
indemnify, defend and hold harmless the other party from any damages or
liability, including, without limitation, all non-compliance penalties and
attorneys' fees, associated with an OFO (i) of which the indemnifying party
failed to give the indemnified party the notice required hereunder or (ii)
under which the indemnifying party failed to take the action required by the
OFO within the time prescribed therein.

(d) If a party is unable to perform any of its obligations to deliver or
receive gas hereunder as a result of an event of Force Majeure, such party
shall give notice and full particulars of such event of Force Majeure to the
other party as soon as reasonably possible and shall take all reasonable
actions necessary to remedy the event of Force Majeure.

Section 2.07 Exclusive Remedy. It is expressly agreed, except as provided in
Sections 5.02, 5.03, 6.02 and 6.03, that payments made in accordance with
Section 2.06 hereof shall constitute the exclusive remedies available to Seller
and Purchaser for nondelivery, nonacceptance, over-delivery or over-acceptance
of Natural Gas. To the fullest extent permitted by applicable law, neither
party shall be liable for any punitive, exemplary, incidental, consequential,
indirect or direct (other than as set forth in Section 2.06) or other damages,
in tort, contract or otherwise in respect thereof.

Section 2.08 Possession, Title and Risk. Possession of and title to Natural
Gas delivered pursuant hereto shall pass from Seller to Purchaser at the
Delivery Points when the Natural Gas is accepted by the pipeline for transport
for Purchaser's account and is recorded by the proper metering device. Until
such time, Seller shall be deemed to be in control and possession of, have
title to and be responsible for such Natural Gas and, after such time,
Purchaser shall be deemed to be in control and possession of, have title to and
be responsible for such Natural Gas.

Section 2.09 Royalties. Seller shall at all times have the obligation to make
settlements for all royalties and payments to mineral and royalty owners and
all other Persons having an ownership interest in the Natural Gas delivered by
Seller to Purchaser hereunder. Seller hereby agrees to indemnify Purchaser and
save it harmless from all suits, actions, debts, accounts, damages, costs,
losses and expenses arising from or out of adverse claims of any and all
Persons in respect of royalties, taxes, license fees or charges thereon which
are applicable before the title passes to Purchaser or which may be levied and
assessed upon Seller in respect of a sale of the Natural Gas to Purchaser.

Section 2.10 Taxes. Seller is liable for and shall pay, cause to be paid or
reimburse Purchaser if Purchaser shall have paid, all Taxes applicable to the
Natural Gas sold hereunder prior to the time title to the Natural Gas has
passed to Purchaser, unless allocated to Purchaser as hereinafter provided.
Purchaser is liable for and shall pay, cause to be paid or reimburse Seller if
Seller shall have paid, all Taxes applicable to the Natural Gas sold hereunder
at or after the time title to the Natural Gas has passed to Purchaser,
applicable to the sale hereunder as a result of any subsequent sale or use of
the Natural Gas by Purchaser, or imposed on or collected from Purchaser by law.
Both parties shall use reasonable efforts to administer this Agreement and
implement the provisions in accordance with their intent to minimize Taxes.
Purchaser represents that it is engaged in the business of reselling the
Natural Gas delivered under this Agreement and Purchaser is purchasing the
Natural Gas for resale to third parties, and accordingly Purchaser is entitled
to purchase the Natural Gas hereunder free of any Taxes. Purchaser shall
provide Seller with a certificate of exemption or other reasonably satisfactory

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evidence of exemption promptly after execution of this Agreement. For each
Delivery Month during the term of this Agreement, Purchaser shall provide
Seller appropriate evidence that the Required Delivery Quantity of Natural Gas
was resold to a third party in accordance with the sale for resale exemption
under applicable state law. Each party agrees to cooperate with obtaining any
exemption from or reduction of Tax upon request by the other party.

Section 2.11 No Warranty. PURCHASER ACKNOWLEDGES THAT IT HAS ENTERED INTO
THIS AGREEMENT AND IS CONTRACTING FOR THE NATURAL GAS TO BE SUPPLIED BY SELLER
BASED SOLELY UPON THE EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES HEREIN
SET FORTH (including Section 2.02) AND, SUBJECT TO SUCH COVENANTS,
REPRESENTATIONS AND WARRANTIES (including Section 2.02), ACCEPTS SUCH NATURAL
GAS "AS IS, WHERE IS" AND "WITH ALL FAULTS."

ARTICLE III - REPRESENTATIONS AND WARRANTIES

Section 3.01 Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:

(a) Status and Authority. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation and has all requisite power and authority to own its properties, to
conduct its business as conducted at present and to execute, deliver and
perform this Agreement.

(b) Power and Authority. The execution, delivery and performance by Seller
of this Agreement and the consummation of the transactions contemplated by this
Agreement are within Seller's power and authority and have been duly authorized
by all necessary corporate action.

(c) Consents, Approvals, Etc.. No authorization, consent or approval of, or
other action by, or notice to or filing with, any governmental authority,
regulatory body or any other Person is required for the due authorization,
execution, delivery or performance by Seller of this Agreement, or the
consummation of the transactions contemplated by this Agreement, except those
approvals which have been obtained, and those notices and filings which have
been made, copies of all of which have been delivered to Purchaser.

(d) Execution and Delivery. This Agreement has been duly executed and
delivered to Purchaser by Seller and is the legal, valid and binding obligation
of Seller enforceable against Seller in accordance with its terms except as the
enforceability thereof may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and by general principles of equity.

(e) Compliance with Laws. Neither the execution, delivery and performance
by Seller of this Agreement nor the consummation of the transactions
contemplated by this Agreement (i) does or will violate any provision of any
Applicable Instrument of Seller or any Governmental Requirement or (ii) does or
will result in or require the creation or imposition of any lien on any
properties, assets or revenues of Seller. Seller is in compliance in all
material respects with the Applicable Instruments of Seller and all
Governmental Requirements applicable to Seller.

(f) Investment Company. Seller is not an "investment company" subject to
regulation under the Investment Company Act of 1940, as amended.

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(g) Public Utility Holding Company. Seller is not, or is not subject to
regulation as, a "holding company," a "subsidiary company" of a "holding
company," an "affiliate" of a "holding company," or an affiliate" of a
"subsidiary company" of a "holding company," in each case as such term is
defined in the Public Utility Holding Company Act of 1935, as amended.

(h) Ownership of Natural Gas. The Natural Gas to be delivered by Seller to
Purchaser hereunder shall be delivered to Purchaser with good and marketable
title thereto, free and clear of all liens, encumbrances or any other adverse
claims whatsoever, including royalties and Taxes for which Seller is
responsible under Sections 2.09 and 2.10.

(i) Commercial Purpose. Seller has entered into this transaction for
commercial purposes related to its business and not for speculative purposes.
Seller has the capability, and intends, to make delivery of the Natural Gas to
be delivered hereunder. Seller is selling the Natural Gas in the ordinary
course of business. Seller is also acting as a principal and not as an agent,
understands and acknowledges that the Purchaser has been and will be acting
only on an arm's length basis and not as its agent, broker, advisor or
fiduciary in any respect, is relying solely upon its own evaluation of this
Agreement and the transactions contemplated hereby (including the present and
future results, consequences, risks and benefits thereof, whether financial,
accounting, tax, legal or otherwise) and upon advice from its own professional
advisors, understands this Agreement and the transactions contemplated hereby
and the risks associated therewith, has determined that those risks are
appropriate for it, and is willing to assume those risks, and has not relied
and will not be relying upon any evaluation or advice (including any
recommendation, opinion or representation) from Purchaser or its affiliates or
the representatives or advisors of Purchaser or its affiliates.

Section 3.02 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:

(a) Corporate Status and Authority. Purchaser is a company incorporated
under the laws of Jersey and has all necessary corporate power and authority to
carry on its business as now being conducted by it. Purchaser has full power
and authority to enter into this Agreement and to do all acts and things and
execute and deliver all other documents as are required hereunder to be done,
observed or performed by it in accordance with the terms hereof.

(b) Valid Authority. Purchaser has taken all necessary corporate action to
authorize the creation, execution, delivery and performance by it of this
Agreement and for it to observe and perform the provisions of this Agreement in
accordance with its terms.

(c) Validity of Documents and Enforceability. This Agreement constitutes a
valid and legally binding obligation of Purchaser enforceable against it in
accordance with its terms, except as the enforceability thereof may be limited
by the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
principles of equity. Neither the execution and delivery of this Agreement nor
compliance with the terms and conditions hereof by Purchaser (i) will result in
a violation of the terms of any Applicable Instrument of Purchaser or (ii)
requires any approval or consent of any governmental authority or agency having
jurisdiction except such as has already been obtained.

(d) Commercial Purpose. Purchaser has entered into this transaction for
commercial purposes related to its business in conjunction with its line of
business and not for speculative purposes.

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Purchaser has the capacity, and intends, to take delivery of the Natural Gas to
be delivered hereunder. Purchaser is acquiring the Natural Gas in the ordinary
course of business.

ARTICLE IV - COVENANTS

Section 4.01 Affirmative Covenants of Seller. Seller covenants and agrees
with Purchaser that so long as any obligation of Seller to deliver Natural Gas
or to make any payment is outstanding hereunder:

(a) Compliance with Laws, etc.. Seller will comply with all Governmental
Requirements applicable to the performance of Seller's obligations hereunder,
except where noncompliance therewith would not have a material adverse effect
on Seller. Seller will comply in all material respects with the Applicable
Instruments of Seller.

(b) Notice of Event of Default. Seller shall notify Purchaser of the
occurrence of any event which with the passage of time or the giving of notice,
or both, would be an Event of Default or an Event of Change promptly after
becoming aware of the same.

(c) Qualification. Seller will be duly qualified to do business as a
foreign corporation and will be in good standing under the laws of all
jurisdictions in which the failure to be so qualified could have a material
adverse effect on Seller by or before the first Delivery Month.

(d) Letter of Credit. If the Confirmation Letter is amended pursuant to
Section 2.01(c), Seller shall provide a letter of credit as contemplated in
that certain letter dated September 26, 1997 among Chase Securities, Inc., The
Chase Manhattan Bank and Guarantor.

ARTICLE V - EVENTS OF DEFAULT AND EARLY TERMINATION

Section 5.01 Events of Default. Each of the following events shall constitute
an "Event of Default" by Seller under this Agreement:

(a) Seller shall (i) fail to deliver the Required Delivery Quantity of
Natural Gas to the Delivery Point in accordance with the terms of this
Agreement, and (ii) if such failure is the result of an event of Force Majeure,
fail to make a payment of the Replacement Value in respect thereof in
accordance with the provisions of Section 2.06(a) and such failure is not
remedied within one (1) Business Day; or

(b) Seller shall fail to pay any amounts due to Purchaser in accordance with
the terms of Section 2.05(b) of this Agreement and such failure is not remedied
within one (1) Business Day after the Business Day on which such payment is
due; or

(c) Seller shall fail to perform or observe any material term, covenant or
agreement herein contained on its part to be performed or observed (other than
any term, covenant or agreement whose breach or default in performance is
specifically dealt with elsewhere in this Section 5.01) and such failure shall
remain unremedied for twenty-five (25) days after notice thereof to Seller by
Purchaser; or

(d) Seller shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make
a general assignment for the benefit of

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creditors; or any proceeding shall be instituted by or against Seller seeking
to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property, and in the case of any such
proceeding instituted against it (but not yet instituted by it), shall remain
undismissed or unstayed for a period of forty-five (45) days or Seller shall
take any corporate action to authorize any of the actions set forth above in
this Section 5.01(d); or

(e) any representation or warranty made by Seller in this Agreement shall
prove to have been incorrect in any material respect when made or when deemed
made; or

(f) Seller shall fail to deliver Margin (as defined in the Margin Agreement)
in accordance with its obligations under the second sentence of Section 2 of
the Margin Agreement and such failure is not remedied within one (1) Business
Day after notice of such failure is given to Seller by Purchaser; or

(g) Seller shall fail to perform or observe any term, covenant or agreement
(other than with respect to its obligations under the second sentence of
Section 2 thereof) contained in the Margin Agreement on its part to be
performed or observed and such failure is not remedied within thirty (30) days
notice thereof to Seller by Purchaser; or

(h) an Event of Default under the Guaranty Agreement shall occur and be
continuing or an Oil Contract Event of Default occurs.

Section 5.02 Early Termination by Purchaser. If at any time an Event of
Default has occurred and is continuing, Purchaser may, by not more than five
(5) Business Days notice to Seller specifying the relevant Event of Default,
designate a Business Day not earlier than the Business Day such notice is
effective as an early termination date ("Early Termination Date"); provided,
however, that if an Event of Default pursuant to Section 5.01(d) shall have
occurred, the Early Termination Date shall occur immediately on the occurrence
of such Event of Default without the need for Purchaser to give any prior
notice. Upon the designation or occurrence of an Early Termination Date, the
obligation of Seller to make any further deliveries of Natural Gas to Purchaser
under this Agreement shall terminate and Seller shall pay to Purchaser the
Termination Payment together with any Unpaid Amounts. All amounts payable
under this Section 5.02 shall become due on the Early Termination Date and
shall be payable on the Business Day immediately following delivery by
Purchaser of the statement required pursuant to Section 5.03(c). Such amount
will be paid, together with (to the extent permitted by applicable law)
interest thereon (before as well as after judgment) from (and including) the
Early Termination Date to (but excluding) the date such amount is paid, at the
rate specified in Section 7.02. The parties agree that the Termination Payment
is a reasonable pre-estimate of the damages which would be incurred by
Purchaser as a result of an Event of Default and not a penalty.

Section 5.03 Calculation of Termination Payment.

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that would have the effect of preserving for Purchaser the equivalent of the
delivery obligations that, but for the occurrence of the relevant Termination
Date, Seller would have been obligated to perform hereunder after such
Termination Date. Purchaser will request each Reference Dealer to provide its
quotation to the extent practicable as of the same time (without regard to
different time zones) on the relevant Termination Date (or, if a Termination
Date is deemed to occur, as of a time as soon thereafter as practicable). The
time as of which such quotations are to be provided will be selected in good
faith by Purchaser.

(b) If the Termination Payment cannot be determined in accordance with
Section 5.03(a), "Termination Payment" shall be an amount equal to the total
amount required, as determined as of the relevant Early Termination Date by
Purchaser in good faith, to compensate it for its direct actual losses and
costs (including loss of bargain and reasonable legal fees and other
out-of-pocket expenses) that it may incur as a result of the early termination
of Seller's delivery obligations hereunder, including, without limitation, any
damages, losses, or expenses incurred in obtaining, terminating, liquidating,
reestablishing or employing ▇▇▇▇▇▇ or related trading positions against
Purchaser's position hereunder.

(c) On or as soon as reasonably practicable following the occurrence of a
Termination Date, Purchaser will calculate the Termination Payment and will
provide Seller with a statement (1) showing, in reasonable detail, such
calculations (including all relevant quotations) and (2) giving details of the
relevant account to which the Termination Payment is payable. Any such
statement shall, absent manifest error, be conclusive evidence of the amount
due in respect of the Termination Payment.

ARTICLE VI - EVENTS OF CHANGE AND ACCELERATED TERMINATION

Section 6.01 Events of Change. Each of the following events shall constitute
an "Event of Change" for the purposes of this Agreement:

(a) the enactment, promulgation, execution or ratification of, or any change
in or amendment to, any regulation or law (or the application or interpretation
of any regulation or law, as determined by a court or regulatory authority of
competent jurisdiction or as determined by the opinion of independent counsel
mutually acceptable to Seller and Purchaser) that occurs after the date hereof
which would result in the imposition of a Tax (other than an increase in the
rate of a general tax on overall income) or of state or federal government
royalties (in excess of those royalties currently in effect) or of price
controls in a material amount by any government or taxing authority upon a
party hereto with respect to delivery of, or acceptance of delivery of, Natural
Gas under this Agreement or with respect to any cash payment made pursuant to
Section 2.06 which in any case would materially and adversely affect the net
cost to Seller or Purchaser of performing its obligations hereunder; or

(b) the enactment, promulgation, execution or ratification of, or any change
in or amendment to, any regulation or law (or the application or interpretation
of any regulation or law, as determined by a court or regulatory authority of
competent jurisdiction or as determined by the opinion of independent counsel
mutually acceptable to Seller and Purchaser) that occurs after the date hereof
which would result in the performance of any obligation of Seller to deliver
Natural Gas or Purchaser to accept delivery of Natural Gas under this Agreement
being unlawful; or

(c) any one or more events of Force Majeure that occur and continue for a
consecutive period of longer than ninety (90) days.

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Section 6.02 Accelerated Termination.

(a) During the continuation of an Event of Change contemplated by Section
6.01(a), both parties shall make reasonable efforts to make arrangements to
avoid the imposition of any Tax contemplated by Section 6.01(a); provided that
this Section 6.02 shall not impose on either party any obligation other than to
negotiate in good faith to make such arrangements as will not adversely affect
the parties.

(b) During the continuation of any Event of Change, and if any arrangement
is not, or is not capable of being, made pursuant to Section 6.02(a), then
either party may designate an accelerated termination date ("Accelerated
Termination Date") upon not less than two (2) and not more than ten (10)
Business Days' notice to the other party. Upon the Accelerated Termination
Date, the parties' obligations hereunder shall terminate, except for the
obligations contained in Section 6.03 and Section 7.02.

Section 6.03 Payments on Accelerated Termination. Upon the designation of an
Accelerated Termination Date, Seller, at the option of Purchaser, shall either
(i) deliver any Natural Gas otherwise deliverable hereunder to Purchaser,
provided that such delivery of Natural Gas by Seller would not then be unlawful
and Seller has the ability to make such delivery or (ii) Seller shall pay to
Purchaser an amount equal to the Termination Payment plus any Unpaid Amounts.
All amounts payable under this Section 6.03 shall become due on the Accelerated
Termination Date and shall be payable on the fifth (5th) Business Day following
delivery by Purchaser of the certificate of calculation of the Termination
Payment contemplated by Section 5.03. Upon the occurrence of an Accelerated
Termination Date, Purchaser may, in its sole discretion, elect either remedy
set forth in this Section 6.03. Such remedies shall be Purchaser's sole
remedy; provided that nothing herein shall affect a party's obligation to make
payments of amounts which were due and owing (whether or not payable) on or
prior to the occurrence of such Accelerated Termination Date.

ARTICLE VII - MISCELLANEOUS

Section 7.01 Notice. Any demand, notice or communication to be made or given
hereunder shall be in writing and may be made or given by personal delivery or
by transmittal by telecopy, rapifax or other electronic means of communication
addressed to the respective party as follows:

To Seller:

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with copy to:

To Purchaser:

Mahonia Limited
22 Grenville Street
St. Helier
Jersey, Channel Islands JE1 1BL
Attention: ▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇-▇▇▇▇-▇▇▇▇▇▇
Telephone No.: ▇▇-▇▇▇▇-▇▇▇▇▇▇

with copy to:

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Such interest shall be determined daily and compounded monthly in arrears on
the last day of each calendar month.

Section 7.03 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the principles of conflicts of laws that would result in the application of the
laws of a another jurisdiction.

Section 7.05 Currency. All amounts expressed herein or therein in terms of
money refer to the United States Dollar and all payments to be made hereunder
shall be made in such currency.

Section 7.06 Purchaser Not an Agent. Purchaser acknowledges and confirms that
all purchases of Natural Gas hereunder are being made by it as a principal and
that it is not acting as agent for any other Person in connection with
purchases of Natural Gas hereunder.

Section 7.07 Benefit of the Agreement. This Agreement shall inure to the
benefit of and be binding upon Seller, Purchaser and their respective
successors and assigns.

Section 7.10 Amendments. This Agreement may not be modified or amended except
by an instrument in writing signed by Purchaser and Seller or by their
respective successors or permitted assigns.

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Section 7.11 No Waivers, Remedies. No failure to exercise and no delay in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law
except as otherwise expressly provided herein.

Section 7.12 Time of the Essence. Time shall be of the essence of this
Agreement.

Section 7.14 Margin Agreement. Seller's payment obligations under this
Agreement are secured by the Margin Agreement, which Margin Agreement is hereby
incorporated herein for all purposes.

Section 7.15 Intent. The parties intend that this Agreement shall constitute
a purchase and sale of inventoriable goods and a forward contract within the
meaning of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code of 1978, as amended
from time to time.

Section 7.16 Disclosure of Information. In the event that Seller provides to
Purchaser written confidential information belonging to Seller or its
affiliates which has been denominated in writing as "confidential", Purchaser
agrees to thereafter maintain such information in confidence in accordance with
the standards of care and diligence that each utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to
such portions of the information which (i) are in the public domain, (ii)
hereafter become part of the public domain without Purchaser breaching its
obligation of confidence to Seller, (iii) are previously known by Purchaser
from some source other than Seller, (iv) are hereafter developed by Purchaser
without using Seller's information, (v) are hereafter obtained by or available
to Purchaser from a third party who owes no obligation of confidence to Seller
with respect to such information or through any other means other than through
disclosure by Seller, (vi) are disclosed with Seller's consent, (vii) must be
disclosed either pursuant to any Governmental Requirement or to Persons
regulating the activities of Purchaser, or (viii) as may be required by law or
regulation or order of any governmental authority in any judicial, arbitration
or governmental proceeding. Further, Purchaser may disclose any such
information to any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by it in
connection with this Agreement, including without limitation, the enforcement
or exercise of all rights and remedies thereunder; provided, however, that it
imposes on such Person to whom such information is disclosed the same
obligation to maintain the confidentiality of such information as is imposed
upon it hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three (3) years from the date the
information was furnished, unless Seller requests in writing at least 30 days
prior to the expiration of such three year period, that Purchaser maintain the
confidentiality of such information for an additional three year period.
Seller waives any and all other rights it may have to confidentiality as
against Purchaser arising by contract, agreement, statute or law except as
expressly stated in this Section.

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IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the
date first written above.

CRYSTAL PROPERTIES AND TRADING COMPANY

By:
-----------------------------------
▇.▇. ▇▇▇▇▇▇
Vice President

MAHONIA LIMITED

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

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ANNEX 1

TO NATURAL GAS INVENTORY FORWARD SALE CONTRACT

CONDITIONS PRECEDENT

1. The executed Margin Agreement.

2. The executed Guaranty Agreement.

4. A certificate of the Secretary or an Assistant Secretary of Seller
setting forth (i) resolutions of its Board of Directors with respect
to the authorization of Seller to execute and deliver the Agreement
and the Margin Agreement and to enter into the transactions
contemplated in those documents, (ii) the officers of such Person (y)
who are authorized to sign such agreements and (z) who will, until
replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection
with such agreements and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers, and (iv) the articles
of incorporation and by-laws of Seller, certified as being true and
complete. Purchaser may conclusively rely on such certificate until
it receives notice in writing from Seller to the contrary.

6. An executed security agreement and financing statement granting to the
Purchaser a lien on the agreements evidencing the Hedged Volumes (as
defined in the Margin Agreement).

7. Copy of the agreements evidencing the Hedged Volumes.

Annex 1- i

1 EXHIBIT 10.1 CRUDE OIL FORWARD SALE CONTRACT

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