AMENDED AND RESTATED CREDIT AGREEMENT
                                      
    THIS AMENDED AND RESTATED CREDIT AGREEMENT is made and
entered into as of February 6, 1995, by and between PANTERRA
PETROLEUM, a Montana general partnership ("Borrower"), and FIRST
INTERSTATE BANK OF DENVER, N.A., a national banking association
(the "Bank").

                                  RECITALS
                                      
    A. Borrower and NationsBank of Texas, N.A. ("NBT") entered
into a First Restated Credit Agreement dated as of September 14,
1993, as amended (the "Prior Credit Agreement"), in order to set
forth the terms upon which NBT would make a loan to Borrower and
by which the loan would be governed. NBT has assigned its rights
under the Prior Credit Agreement to the Bank.

    B. Borrower and the Bank wish to enter into this Amended and
Restated Credit Agreement in order to amend and restate in their
entirety the terms and provisions of the Prior Credit Agreement
and to provide for the terms upon which the Bank will refinance
the balance of the loan outstanding under the Prior Credit
Agreement and will make additional advances to Borrower and by
which the new loan will be governed. 

    C. The new loan will be secured by encumbrances on certain of
Borrower's oil and gas properties. 

    IN CONSIDERATION of the following covenants, Borrower and the
Bank agree as follows:

                                 ARTICLE I
                                      
                      DEFINITIONS AND ACCOUNTING TERMS
                                      
    Section 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

    "Advance" means any advance made to Borrower pursuant to
Section 2.01 hereof.

    "Agreement" means this Amended and Restated Credit Agreement,
as the same may be amended from time to time.

    "Amortization Period" means the time period commencing on the
day after the Conversion Date and ending on the fifth anniversary
of the Conversion Date.

    "Borrowing Base" means, at any time, the aggregate loan value
of the Oil and Gas Properties, as determined in accordance with
the provisions of Section 3.03 below; provided that the Borrowing
Base for the time period from the date of this Agreement through
June 30, 1995 shall be $18,500,000, unless Borrower and the Bank
hereafter mutually agree upon a different amount or unless the
Borrowing Base is redetermined or reduced pursuant to Section
3.03 below prior to such date.

    "Business Day" means any day other than a Saturday, Sunday or
legal holiday in the State of Colorado on which banks are not
required to be open for business in Denver, Colorado. Any
Business Day in any way relating to any Fixed Rate Portion (such
as the day on which an Interest Period begins or ends) must also
be a day on which, in the judgment of the Bank, significant
transactions in dollars are carried out in the interbank
eurocurrency market.

    "Collateral" means any and all oil or gas properties, oil or
gas interests and related assets and properties covered by any of
the Collateral Documents.

    "Collateral Documents" means the deeds of trust, mortgages,
chattel mortgages, assignments of proceeds, security agreements,
financing statements, pledge agreements, assignments of and/or
amendments to any of the foregoing and other instruments in form
and substance satisfactory to the Bank executed by Borrower as
provided in Section 5.01, granting to and perfecting in favor of
the Bank first and prior liens on or security interests in any
portion of the Oil and Gas Properties required by the Bank to be
covered thereby. 

    "Commitment Amount" means, at any time, the lesser of: (a) 
the Borrowing Base, or (b)(1) during the Revolving Period,
$20,000,000, or (2) during the Amortization Period, the principal
balance of all outstanding Advances as of the close of business
on the Conversion Date, plus the face amount of all Letters of
Credit outstanding as of the close of business on the Conversion
Date, minus the aggregate amount of all principal payments
required to be made on the Loan pursuant to the terms of Sections
2.04(a) and/or 3.02 below prior to the date as of which the
determination of the "Commitment Amount" is being made.

    "Conversion Date" means: (a) February 6, 1997, or (b) such
earlier date as may be elected by Borrower pursuant to Section
3.03 below.

    "Current Ratio" means, at any time and from time to time, the
ratio of: (a) Borrower's current assets; to (b) Borrower's
current liabilities (excluding current maturities of the Loan),
all determined in accordance with generally accepted accounting
principles consistently applied. 

    "Debt" means (a) indebtedness for borrowed money or for the
deferred purchase price of property or services; (b) obligations
as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles,
regarded as capital leases; (c) obligations under direct or
indirect guarantees in respect of, and obligations (contingent or
otherwise) to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in
clause (a) or (b) above; and (d) liabilities in respect of
unfunded vested benefits under plans covered by Title IV of
ERISA.  

    "Deductible Lease Expenses" means, for any calendar month,
the following costs and expenses, to the extent such costs and
expenses are actually paid by Borrower in respect of the Oil and
Gas Properties (and not reimbursed to Borrower by others owning
interests in said properties) during that calendar month: (a)
costs (other than depreciation, depletion or amortization costs)
incurred to operate and maintain, or, to the extent not a capital
cost, to work over, wells and related equipment and facilities,
including applicable operating costs of support equipment and
facilities, incurred pursuant to a joint operating agreement
(excluding delay rentals); (b) all royalty payments and other
leasehold burdens payable out of production, except any such
burdens created by, through or under Borrower after January 1,
1995; (c) all severance, ad valorem and similar taxes (excluding
income taxes) assessed against either the proceeds of production
or the value of remaining reserves and related personal property;
and (d) all reasonable out-of-pocket costs incurred to deliver
the product to the purchaser or to make it marketable (including
payment of COPAS overhead but not including capital expenditures
relating to the delivery of the product or making it marketable).
Unless otherwise provided, Deductible Lease Expenses shall not
include expenses associated with any amortization or impairment
of capitalized costs.      

     "Environmental Laws" means any federal, state or local
statute, law, rule, regulation, ordinance, code, policy or rule
of common law now or hereafter in effect and in each case as
amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent,
decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801 et
seq., the Clean Water Act, 33 U.S.C. Sec. 1251 et seq., the Toxic
Substances Control Act, 15 U.S.C. Sec. 2601 et seq., the Clean
Air Act, 42 U.S.C. Sec. 7401 et seq., the Safe Drinking Water
Act, 42 U.S.C. Sec. 300f et seq., the Atomic Energy Act, 42
U.S.C. Sec. 2011 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sec. 136 et seq. and the Occupational
Safety and Health Act, 29 U.S.C. Sec. 651 et seq.

      "ERISA" means the Employee Retirement Income Security Act
of 1974, as now in effect or as hereafter amended from time to
time. 

    "Event of Default" means any of the events described in
Section 8.01 hereof.

    "Eurodollar Rate" means, with respect to each particular
Fixed Rate Portion and the related Interest Period, the rate of
interest per annum (expressed as a percentage) determined by the
Bank, in accordance with its customary practices, to be
representative of the rates at which deposits of U.S. dollars are
offered to the Bank at approximately 9:00 a.m., Denver, Colorado
time, two Business Days prior to the first day of such Interest
Period (by prime banks in the interbank eurocurrency market which
have been selected by the Bank in accordance with its customary
practices) for delivery on the first day of such Interest Period
in an amount equal or comparable to the amount of such Fixed Rate
Portion and for a period of time equal or comparable to the
length of such Interest Period. The Eurodollar Rate determined by
the Bank with respect to a particular Fixed Rate Portion shall be
fixed at such rate for the duration of the associated Interest
Period. If the Bank is unable so to determine the Eurodollar Rate
for any Fixed Rate Portion, Borrower shall be deemed not to have
elected such Fixed Rate Portion.

    "Fixed Rate" means, with respect to each particular Fixed
Rate Portion and the associated Eurodollar Rate and Reserve
Requirement, the rate of interest per annum calculated by the
Bank (rounded upward, if necessary, to the next higher 0.01
percent) determined pursuant to the following formula: 

   Fixed   =        Eurodollar Rate          + Fixed Rate
    Rate       1.00 - Reserve Requirement         Spread

If the Reserve Requirement changes during the Interest Period for
a Fixed Rate Portion, the Bank may, at its option, either change
the Fixed Rate for such Fixed Rate Portion or leave it unchanged
for the duration of such Interest Period.

    "Fixed Rate Portion" means any portion of the outstanding
principal balance of Advances made hereunder which Borrower
designates as such in a Rate Election.

   "Fixed Rate Spread" means: (a) for any and all times through
the Conversion Date, one and one-half percentage points, and (b)
for any and all times after the Conversion Date, one and
three-quarters percentage points. 

    "Gross Revenues" means, for any calendar month: (a) all
proceeds of sales of oil, gas and other products actually
received during that calendar month by Borrower from any of the
Oil and Gas Properties, (b) any and all amounts actually received
during that calendar month by Borrower as compensation or
reimbursement for operating any of the Oil and Gas Properties,
and (c) any and all other amounts actually received during that
calendar month by Borrower that are attributable to any of the
Oil and Gas Properties.  Gross Revenues shall include, without
limitation, all proceeds of sales of oil, gas and other products
received by Borrower in connection with oil and/or gas wells
included in the Oil and Gas Properties, whether drilled before or 
after the date hereof.

    "Guarantors" means St. Mary Land & Exploration Company, a
Delaware corporation, and Nance Petroleum Corporation, a Montana
corporation.

    "Hazardous Materials" means (a) crude oil, petroleum or
petroleum products or natural gas, in each case after the capture
and production thereof and to the extent so defined by an
Environmental Law; (b) asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, and radon gas;
and (c) any substances defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants"
or "pollutants" under any applicable Environmental Law. 

    "Hedging Obligations" means, with respect to Borrower, all
liabilities of Borrower under: (a) interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements and
all other agreements and arrangements designed to protect
Borrower against fluctuations in interest rates, or (b) commodity
hedge, commodity swap, exchange, collar or cap agreements, fixed
price agreements and all other agreements and arrangements
designed to protect Borrower against fluctuations in the price of
oil, gas or other hydrocarbons owned by Borrower.  

    "Interest Period" means, with respect to each particular
Fixed Rate Portion, a period of one, two, three or six months, as
specified in the Rate Election applicable thereto, beginning on
and including the date specified in such Rate Election (which
must be a Business Day) and ending on but not including the date
which corresponds numerically to such beginning date one, two,
three or six months thereafter (or if such month has no
numerically corresponding date, on the last Business Day of such
month); provided that each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next
succeeding Business Day unless such next succeeding Business Day
is the first Business Day of a calendar month, in which case such
Interest Period shall end on the Business Day next preceding such
numerically corresponding day. No Interest Period may be elected
which would end after the Maturity Date.

    "Letter of Credit" means a standby letter of credit requested
by Borrower and issued by the Bank pursuant to Article II below. 

    "Loan" means the funds advanced to Borrower by the Bank
hereunder (including without limitation the refinancing of the
remaining balance of the loan made pursuant to the Prior Credit
Agreement) and the Letters of Credit issued by the Bank at the
request of Borrower as provided herein.


    "Loan Documents" shall mean this Agreement, the Note, the
guaranty agreements executed by Guarantors, Letters of Credit,
applications for Letters of Credit, the Collateral Documents and
any other documents executed by any Obligated Person pursuant
hereto.

    "Maturity Date" means the earlier of: (a) the fifth
anniversary of the Conversion Date, or (b) such date on which the
Loan is payable in full by reason of the occurrence of an Event
of Default, as established pursuant to Section 8.01 below.      

    "Minimum Payment" means: (a) with respect to any Payment Date
during the Revolving Period and the first Payment Date during the
Amortization Period, the amount of interest accrued through such
Payment Date; (b) with respect to the next 12 Payment Dates
during the Amortization Period: (1) 2.00 percent of the sum of
the outstanding principal balance of all Advances as of the close
of business on the Conversion Date, plus (2) the amount of
interest accrued through such Payment Date; (c) with respect to
the next 12 Payment Dates during the Amortization Period: (1)
1.75 percent of the sum of the outstanding principal balance of
all Advances as of the close of business on the Conversion Date,
plus (2) the amount of interest accrued through such Payment
Date; (d) with respect to the next 12 Payment Dates during the
Amortization Period: (1) 1.6 percent of the sum of the
outstanding principal balance of all Advances as of the close of
business on the Conversion Date, plus (2) the amount of interest
accrued  through such Payment Date; (e) with respect to the next 
12 Payment Dates during the Amortization Period: (1) 1.5 percent
of the sum of the outstanding principal balance of all Advances
as of the close of business on the Conversion Date, plus (2) the
amount of interest accrued through such Payment Date; (f) with
respect to the next 11 Payment Dates during the Amortization
Period: (1) 1.4 percent of the sum of the outstanding principal
balance of all Advances as of the close of business on the
Conversion Date, plus (2) the amount of interest accrued through
such Payment Date; and (g) with respect to the Maturity Date, the
outstanding principal balance of the Loan plus interest accrued
through the Maturity Date.

    "Net General and Administrative Expenses" means, for any
Quarter, the excess of: (a) Borrower's general and administrative
expenses, determined in accordance with generally accepted
accounting principles, for such Quarter, over (b) the amount
received by Borrower as reimbursement of overhead expenses
incurred by Borrower during such Quarter under operating
agreements naming Borrower as operator. 

    "Net Revenues" means, for any calendar month, Gross Revenues
for that calendar month less Deductible Lease Expenses for that
calendar month.

    "Note" means the Promissory Note of even date herewith, made
by Borrower, payable to the order of the Bank, in the form of
Exhibit A attached hereto and made a part hereof, which Note
shall evidence the Loan.

    "Obligated Persons" means Borrower and Guarantors.

    "Oil and Gas Properties" means from time to time, all oil
and/or gas properties, pipelines, gathering systems, gas plants
and related interests owned by Borrower.

    "Payment Date" means the last Business Day of each month,
commencing February 28, 1995.

    Permitted Investment" means:

    (a) Any evidence of indebtedness issued or guaranteed by the
United States Government, maturing not more than one year after
the date of acquisition by Borrower; or

    (b) Commercial paper, maturing not more than nine months from
the date of issuance thereof, which is issued by: (i) a
corporation (other than an affiliate of Borrower) organized under
the laws of any state of the United States or of the District of
Columbia and rated A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service, Inc., or (ii) the Bank or its parent
company; or 

      (c) Any certificate of deposit, maturing not more than one
year from the date of issuance thereof, which is issued by a
commercial banking institution that is a member of the Federal
Reserve System and has a combined capital and surplus and
undivided profits of not less than U.S. $500,000,000; or

      (d) Any repurchase agreement entered into with a commercial
banking institution that is a member of the Federal Reserve
System and has a combined capital and surplus and undivided
profits of not less than U.S. $500,000,000, which: (i) is secured
by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) above, and (ii)
has a market value at the time such repurchase agreement is
entered into of not less than 100 percent of the repurchase
obligation of such commercial banking institution thereunder; or  

   (e) Any deposit account at a commercial banking institution
that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than U.S.
$500,000,000; or

   (f) Hedging Obligations of Borrower; or

   (g) Any investment involving the exploration, development,
drilling or re-working of Borrower's oil and/or gas properties or
the acquisition of additional oil and/or gas properties by
Borrower;


    (h) Any other investment owned by Borrower as of the date of
this Agreement, so long as Borrower does not increase such
investment after the date hereof. 

    "Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint
stock company, trust, unincorporated association, joint venture
or other entity, or a foreign state or political subdivision
thereof or any agency of such state or subdivision.  

    "Prime Rate" means an index rate which the Bank establishes
and quotes from time to time for pricing certain of its loans.
Information on the index rate currently in effect is announced
publicly and can be obtained by contacting the Bank. The Bank's
Prime Rate is not necessarily the lowest rate charged to
customers of the Bank, and the Bank may make loans at, above or
below this stated index rate. 

    "Prime Rate Portion" means any portion of the unpaid
principal balance of the Loan which is not a Fixed Rate Portion.
"Prime Rate Spread" means: (a) for any and all times through the
Conversion Date, zero; and (b) for any and all times after the
Conversion Date, one-quarter of one percentage point.

    "Prior Credit Agreement" means the agreement described in
Recital A above.

    "Quarter" shall mean each three-month period ending on any
March 31, June 30, September 30 or December 31 during the term
hereof.

    "Rate Election" has the meaning given such term in Section
2.09 below.

    "Reserve Requirement" means, on any day with respect to each
particular Fixed Rate Portion, the maximum reserve requirement,
as determined by the Bank (including without limitation any
basic, emergency, supplemental, marginal or similar reserves),
expressed as a decimal and rounded to the next higher 0.0001,
which would then apply to the Bank under Regulation D with
respect to "Eurocurrency liabilities" (as such term is defined in
Regulation D) equal in amount to such Fixed Rate Portion, were
the Bank to have any such "Eurocurrency liabilities". If such
reserve requirement shall change after the date hereof, the
Reserve Requirement shall be automatically increased or
decreased, as the case may be, from time to time as of the
effective time of each such change in such reserve requirement.

    "Revolving Period" means the time period from the date of
this Agreement through the Conversion Date. 

    "Subordinated Debt" means the indebtedness and other
obligations of Borrower to any third party, to the extent that
the rights of any such third party to enforce the indebtedness
and other obligations of Borrower thereunder have been
subordinated to the rights of the Bank hereunder or in connection
herewith by subordination agreements executed by the holders of
the Subordinated Debt and satisfactory in form and substance to
the Bank.

    "Working Capital" means: (a) the aggregate current assets of
Borrower, minus (b) the aggregate current liabilities of Borrower
(excluding current maturities of the Loan), all determined in
accordance with generally accepted accounting principles
consistently applied.  

    "Year" means the calendar year.

     Section 1.02. Computation of Time Periods. In this
Agreement, in the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each means "to but
excluding" and the word "through" means "to and including."

    Section 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred
to in Section 6.01(f) below.


                                ARTICLE II

                       AMOUNT AND TERMS OF THE LOAN

     Section 2.01. The Loan. (a) Subject to the terms and
conditions hereof, the Bank agrees to: (1) make advances to
Borrower from time to time at the request of Borrower upon at
least one Business Day's notice to the Bank from Borrower; and
(2) issue Letters of Credit from time to time requested upon
written notice to the Bank from Borrower no later than five days
prior to the requested date of issuance of each such Letter of
Credit; provided that the Bank shall not have any obligation to:
(A) make any Advance (except Advances made pursuant to Section
2.01(c) below) or issue any new Letter of Credit after the
Conversion Date; (B) make any Advance in an amount less than
$50,000; (c) make any Advance or issue or renew any Letter of
Credit, if, after the making of such Advance or the issuance or
renewal of such Letter of Credit, the aggregate amount of all
Advances outstanding hereunder plus the face amount of all
Letters of Credit outstanding hereunder would exceed the
Commitment Amount; or (D) issue or renew a Letter of Credit which
does not expire prior to the Maturity Date. Within the limitation
of the Commitment Amount and subject to the other terms and
provisions hereof, Borrower may borrow, repay and reborrow
hereunder.

    (b) Each request by Borrower for the issuance of a Letter of
Credit shall be in the form of Exhibit D attached hereto and made
a part hereof, sent by Borrower to the Bank, and accompanied by
an application for issuance of a letter of credit on the Bank's
then-standard form, duly executed by Borrower.

    (c) Each payment by the Bank under or in connection with a
Letter of Credit shall be deemed to be an Advance bearing
interest from the date of such payment, shall be entitled to all
benefits of the Collateral Documents and shall be subject to all
terms of this Agreement and any and all other applicable Loan
Documents.

     (d) Subject to the satisfaction (or waiver by the Bank) of
all of the conditions precedent to the initial Advance, as more
fully set forth in Article IV below, Borrower shall be deemed to
have requested, and the Bank shall be deemed to have made, the
initial Advance on February 6, 1995, in an amount equal to the
entire balance of principal, interest, fees and other amounts
outstanding in connection with the Prior Credit Agreement.      


     Section 2.02. Conditions. Notwithstanding any other
provision of this Agreement, the Bank shall not be required to
make the initial Advance or any subsequent Advance hereunder or
to issue any Letter of Credit hereunder if the conditions
precedent to the making of the Loan specified in Article IV
hereof have not been satisfied. 

    Section 2.03. Interest Rates. Borrower shall pay interest on
the outstanding unpaid principal amount of the Loan, from the
date of the initial Advance until all principal amounts hereunder
have been repaid in full, all Letters of Credit have been
cancelled and this Agreement has been terminated, at an interest
rate per annum equal to: (a) up to and including the Maturity
Date: (1) as to the Prime Rate Portion, at a fluctuating annual
rate, adjustable as of the day of any change, equal to the Prime
Rate plus the Prime Rate Spread; and (2) as to each Fixed Rate
Portion, at an annual rate equal to the Fixed Rate for that Fixed
Rate Portion; and (b) from and after the Maturity Date, at the
Prime Rate plus four percentage points, but in no event less than
the Prime Rate in effect on the Maturity Date plus four
percentage points. 

     Section 2.04. Payments and Computations.

    (a) On each Payment Date, Borrower shall make a payment to
the Bank in the amount of the Minimum Payment, subject to
adjustment as otherwise set forth in this Agreement, including
without limitation as described in Section 3.02 below.  

    (b) Borrower shall make each payment hereunder and under the
Note not later than 12:00 noon (Denver, Colorado time) on the day
when due in lawful money of the United States of America to the
Bank at its office at 633 Seventeenth Street, Denver, Colorado
80202 or at any other location designated by the Bank. 

    (c) All computations of interest shall be made by the Bank on
the basis of a year of 365 or 366 days, as applicable, for the
actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest is
payable; provided that, as to any and all Fixed Rate Portions,
computations of interest shall be made by the Bank on the basis
of a year of 360 days and the actual number of days elapsed.

    (d) Except as otherwise provided in this Agreement with
respect to Fixed Rate Portions, should any such payment become
due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business
Day, and, in the case of a payment of principal or past due
interest, interest shall accrue and be payable thereon for the
period of such extension.

    Section 2.05. Termination of Agreement. Borrower shall have
the right at any time and from time to time, upon not less than
three business days' prior written or telegraphic notice to the
Bank, to terminate this Agreement. Upon any termination of this
Agreement, Borrower shall, at the time of such termination,
prepay the Note in full and cause all Letters of Credit to be
terminated. Except as otherwise provided in this Agreement with
respect to Fixed Rate Portions, any such prepayment shall be
without penalty or premium; provided that: (a) if Borrower
terminates this Agreement before February 6, 1996, Borrower
shallpay to the Bank a prepayment penalty in the amount of
$20,000, and (b) if Borrower terminates this Agreement on or
after February 6, 1996 but before February 6, 1997, Borrower
shall pay to the Bank a prepayment penalty in the amount of
$10,000

    Section 2.06. Use of Proceeds. Proceeds of the Loan shall be
used by Borrower exclusively for: (a) the refinancing of the
principal portion of the existing indebtedness of Borrower to
NationsBank of Texas, N.A. pursuant to the Prior Credit
Agreement, in the amount of approximately $14,450,000 plus
interest accrued as of the date of the initial Advance, (b) the
financing of Borrower's working capital requirements and capital
expenditures relating to (including without limitation the
issuance of Letters of Credit in connection with) the
acquisition, exploration and development of oil and gas
properties, and (c) the acquisition (and/or the financing of the
acquisition by existing partners of Borrower) of partnership
interests in Borrower owned by one or more of Borrower's
partners; provided that the aggregate amount of partnership
interests acquired or financed by Borrower shall not exceed
$2,500,000 and, if so required by the Bank, Borrower will enter
into hedges on crude oil and/or natural gas upon terms
satisfactory to the Bank prior to using any of the proceeds of
the Loan for the acquisition (and/or the financing of the
acquisition by existing partners of Borrower) of partnership
interests in Borrower. In no event shall the funds from the Loan
be used directly or indirectly for the purpose of purchasing,
acquiring or carrying any "margin stock" (as defined in
Regulation U promulgated by the Board of Governors of the Federal
Reserve System) or to extend credit to others directly or
indirectly for the purpose of purchasing or carrying any margin
stock.

    Section 2.07. Prepayment of the Loan. (a) During the
Revolving Period, Borrower shall have the right to prepay the
principal amount of the Loan at any time as provided herein;
provided that Borrower will not reduce the unpaid principal
balance of the Loan to an amount less than $10,000. Partial
prepayments shall be in the amount of $50,000 or integral
multiples thereof. Except as set forth in Section 2.05 above or
as set forth elsewhere in this Agreement with respect to Fixed
Rate Portions, each prepayment shall be without premium or
penalty. All prepayments shall first be applied to any and all
accrued interest and unpaid fees and then to unpaid principal.  

    (b) During the Amortization Period, Borrower shall have the
right to prepay the principal amount of the Loan at any time as
provided herein, upon at least two Business Days' prior notice to
the Bank. Partial prepayments shall be in the amount of $50,000
or integral multiples thereof. Except as set forth in Section
2.05 above and except as otherwise provided in this Agreement
with respect to Fixed Rate Portions, each prepayment shall be
without premium or penalty. All prepayments shall first be
applied to any and all accrued interest and unpaid fees and then
to unpaid principal. Prepayments will be applied to installment
payments of principal in the inverse order of approaching
maturities, unless otherwise agreed between Borrower and the
Bank.

    Section 2.08. Fees. (a) Borrower shall pay to the Bank,
within 15 days after the end of: (1) the period beginning on the
date of the initial Advance and ending on March 31, 1995, (2)
each Quarter thereafter through the Quarter prior to the Quarter
in which the Conversion Date occurs, and (3) the period beginning
on the first day of the Quarter in which the Conversion Date
occurs and ending on the Conversion Date, a commitment fee in an
amount equal to: (A) one-quarter of one percentage point per
annum, times (B) the excess of the Commitment Amount over the
aggregate outstanding principal balance of all Advances plus the
face amount of all outstanding Letters of Credit, computed on a
daily basis for such Quarter (or other period) for which such
commitment fee is being paid. 

    (b) Borrower shall pay to the Bank, with respect to each
Letter of Credit a fee in an amount equal to the greater of: (i)
one percent per annum times the face amount of such Letter of
Credit, or (ii) $500.00, which fee shall be payable at the time
of issuance (and again at the time of any renewal) of such Letter
of Credit.

          Section 2.09. Rate Elections. Borrower may from time to
time designate all or any portion of the outstanding principal
balance of all Advances (including any yet-to-be-made Advances
which are to be made prior to or at the beginning of the
designated Interest Period but excluding any portion of such
Advances required to be repaid prior to the end of the designated
Interest Period) as a Fixed Rate Portion; provided that, without
the consent of the Bank, Borrower may make no such election
during the continuance of a Default and Borrower may make such an
election with respect to an already existing Fixed Rate Portion
only if such election will take effect at or after the
termination of the Interest Period applicable to such already
existing Fixed Rate Portion. Each election by Borrower of a Fixed
Rate Portion shall:  

         (a) Be made in writing in the form and substance of the
"Rate Election" attached hereto as Exhibit E, duly completed;

         (b) Specify the amount of the outstanding principal
balance of all Advances which Borrower desires to designate as a
Fixed Rate Portion, the first day of the Interest Period which is
to apply thereto, and the length of such Interest Period; and

          (c) Be received by the Bank not later than 10:00 a.m.,
Denver, Colorado time, on the second Business Day preceding the
first day of the specified Interest Period. 

Each election which meets the requirements of this Section
2.09(herein called a "Rate Election") shall be irrevocable.
Borrower may make no Rate Election which does not specify an
Interest Period complying with the definition of "Interest
Period" in Section 1.01, and the amount of the Fixed Rate Portion
elected in any Rate Election must be an integral multiple of
$100,000. Upon the termination of each Interest Period, the
portion of the Loan theretofore constituting the related Fixed
Rate Portion shall, unless the subject of a new Rate Election
then taking effect, automatically become a part of the Prime Rate
Portion and become subject to all provisions of the Loan
Documents governing the Prime Rate Portion. Borrower shall have
no more than five Fixed Rate Portions in effect at any time.  

          Section 2.10. Increased Cost of Fixed Rate Portions.
If any applicable domestic or foreign law, treaty, rule or
regulation (whether now in effect or hereafter enacted or
promulgated, including Regulation D) or any interpretation or
administration thereof by any governmental authority charged with
the interpretation or administration thereof (whether or not
having the force of law): 

         (a) Shall change the basis of taxation of payments to
the Bank of any principal, interest, or other amounts
attributable to any Fixed Rate Portion or otherwise due under
this Agreement in respect of any Fixed Rate Portion (other than
taxes imposed on the overall net income of the Bank or any
lending office of the Bank by any jurisdiction in which the Bank
or any such lending office is located); or

         (b) Shall change, impose, modify, apply or deem
applicable any reserve, special deposit or similar requirements
in respect of any Fixed Rate Portion (excluding those for which
the Bank is fully compensated pursuant to adjustments made in the
definition of Fixed Rate) or against assets of, deposits with or
for the account of, or Credit extended by, the Bank to the extent
the same relate to a Fixed Rate Portion; or

         (c) Shall impose on the Bank or the interbank
eurocurrency deposit market any other condition affecting any
Fixed Rate Portion, the result of which is to increase the cost
to the Bank of funding or maintaining any Fixed Rate Portion or
to reduce the amount of any sum receivable by the Bank in respect
of any Fixed Rate Portion by an amount deemed by the Bank to be
material;

then: (x) the Bank shall promptly notify Borrower in writing of
the  happening of such event, (y) Borrower shall upon demand pay
to the Bank such additional amount or amounts as will compensate
the Bank for any such event (on an after-tax basis), and (z)
Borrower may elect, by giving to the Bank not less than three
Business Days' notice, to convert all (but not less than all) of
any such Fixed Rate Portion into a part of the Prime Rate
Portion.

    Section 2.11 Availability. If the Bank shall determine (which
determination shall, upon notice thereof to Borrower, be
conclusive and binding on Borrower and the Bank) that: (a) the
introduction of or any change in or in the interpretation of any
law, treaty, rule or regulation makes it unlawful or
impracticable, or any central bank or other governmental
authority asserts that it is unlawful,for the Bank to make,
continue or maintain any Fixed Rate Portion or shall materially
restrict the authority of the Bank to purchase or take offshore
deposits of dollars (i.e., "eurodollars"), or (b) matching
deposits appropriate to fund or maintain any Fixed Rate Portion
are not available to it, or (c) the formula for calculating the
Eurodollar Rate does not fairly reflect the cost to the Bank of
making or maintaining loans based on such rate, then Borrower's
right to elect Fixed Rate Portions shall be suspended to the
extent and for the duration of such illegality, impracticability
or restriction and all Fixed Rate Portions (or portions thereof)
which are then outstanding or are then the subject of any Rate
Election and which cannot lawfully or practicably be maintained
or funded shall immediately become or remain part of the Prime
Rate Portion. Borrower agrees to indemnify the Bank and hold it
harmless against all costs, expenses, claims, penalties,
liabilities and damages which may result from any such change in
law, treaty, rule, regulation, interpretation or administration.  

   Section 2.12. Reimbursable Taxes. Borrower covenants and
agrees that:

    (a) Borrower will indemnify the Bank against, and reimburse
the Bank for, all present and future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed, assessed, levied
or collected on or in respect of this Agreement insofar as it
pertains to a Fixed Rate Portion or any Fixed Rate Portions
(whether or not legally imposed, assessed, levied or collected),
but excluding taxes imposed on or measured by the Bank's net
income or receipts (such non-excluded items being called
"Reimbursable Taxes"). Such indemnification shall be on an
after-tax basis, taking into account any income taxes imposed on
the amounts paid as indemnity.

    (b) All payments by Borrower on account of principal of, and
interest on, the Loan and all other amounts payable by Borrower
to the Bank hereunder shall be made in full without set-off or
counterclaim and shall be made free and clear of and without
deduction or withholding for any Reimbursable Taxes, all of which
shall be for the account of Borrower. In the event that any
withholding or deduction from any payment to be made by Borrower
hereunder is required in respect of any Reimbursable Taxes
pursuant to any applicable law, rule or regulation, Borrower
shall pay on the due date of such payment, by way of additional
interest, such additional amounts as are needed to ensure that 
the amount actually received by the Bank will equal the full
amount the Bank would have received had no such withholding or
deduction been required. If Borrower shall make any deduction or
withholding as aforesaid, Borrower shall within 60 days
thereafter forward to the Bank an official receipt or other
official document evidencing payment of such deduction or
withholding.

    (c) If Borrower is ever required to pay any Reimbursable Tax
with respect to any Fixed Rate Portion, Borrower may elect, by
giving to the Bank not less than three Business Days' notice, to
convert all (but not less than all) of any such Fixed Rate
Portion into a part of the Prime Rate Portion, but such election
shall not diminish Borrower's obligation to pay all Reimbursable
Taxes.

    Section 2.13. Funding Losses. In addition to its other
obligations hereunder, Borrower will indemnify the Bank against,
and reimburse the Bank on demand for, any loss or expense
(including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by the Bank to make, continue or maintain any Fixed Rate Portion
or any Advance) as a result of: (a) any payment or prepayment
(whether authorized or required hereunder or otherwise) of all or
any portion of a Fixed Rate Portion on a date other than the
scheduled last day of the Interest Period applicable thereto; (b)
any payment or prepayment, whether required hereunder or
otherwise, of the Loan made after the delivery, but before the
effective date, of a Rate Election, if such payment or prepayment
prevents such Rate Election from becoming fully effective; (c)
the failure of any Advance to be made or of any Rate Election to
become effective due to any condition precedent not being
satisfied or due to any other action or inaction of any Obligated
Person; or (d) any conversion (whether authorized or required
hereunder or otherwise) of all or any portion of any Fixed Rate
Portion into the Prime Rate Portion or into a different Fixed
Rate Portion on a day other than the day on which the applicable
Interest Period ends.

      Section 2.14. Capital Reimbursement. If either (a) the
introduction or implementation of or the compliance with or any
change in or in the interpretation of any law, rule or
regulation, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any
central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of
capital required or expected to be maintained by the Bank or any
corporation controlling the Bank, then, upon demand by the Bank,
Borrower will pay to the Bank, from time to time as specified by
the Bank, such additional amount or amounts which the Bank shall
determine to be appropriate to compensate the Bank or any
corporation controlling the Bank in light of such circumstances,
to the extent that the Bank reasonably determines that the amount
of any such capital would be increased or the rate of return on
any such capital would be reduced by or in whole or in part based
upon the existence of the Loan or the Bank's commitments under
this Agreement or the existence of the Letters of Credit issued
hereunder. 

                     ARTICLE III
                                      
               OFFSET; INCREASED PAYMENTS
                                      
    Section 3.01. Bank Accounts and Offset. To secure the
repayment of the Loan, Borrower hereby grants to the Bank a
security interest, a lien, and a right of offset, each of which
shall be upon and against: (a) any and all moneys, securities or
other property (and the proceeds therefrom) of Borrower now or
hereafter held or received by or in transit to the Bank from or
for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, (b) any and all
deposits (general or special, time or demand, provisional or
final) of Borrower with the Bank, and (c) any other credits and
claims of Borrower at any time existing against the Bank,
including without limitation claims under certificates of
deposit; provided that the foregoing shall not apply to amounts
which Borrower is holding as trustee for the benefit of any third
party. Upon the occurrence of any Event of Default, the Bank is
hereby authorized to foreclose upon, offset, appropriate, and
apply, at any time and from time to time, without notice to
Borrower, any and all items hereinabove referred to against the
Loan (whether or not the Loan is then due and payable).  

   Section 3.02. Increased Payments. At any time after the
occurrence of an Event of Default, the Bank shall have the right,
in its sole discretion, upon written notice to Borrower, to
require that future monthly payments of principal and interest
made by Borrower pursuant to this Agreement be in an amount equal
to the greatest of: (a) the amount set forth in Section 2.04, (b)
up to 70 percent of Gross Revenues for the calendar month two
months prior to the calendar month in which such payment is due,
or (c) up to 100 percent of Net Revenues for the calendar month
two months prior to the calendar month in which such payment is
due; provided that any such payments shall be in addition to any
amounts payable pursuant to Section 3.03 below.

    Section 3.03. Periodic Reviews and Borrowing Base
Determinations. As of approximately January 1 and July 1 of each
year, commencing July 1, 1995, through the Maturity Date, and at
such other times as the Bank may determine, the Bank will perform
a review of the Oil and Gas Properties and will determine the
Borrowing Base, taking into account such factors as the Bank in
its reasonable discretion deems appropriate. The Bank will give
notice to Borrower (as of approximately 10 days prior to the
effective date of any new determination of the Borrowing Base
pursuant hereto), of the amount of the new Borrowing Base;
provided that Borrower shall have the right, by giving notice to
the Bank, to make an irrevocable election to reduce the Borrowing
Base to an amount less than the amount so determined by the Bank.
If, at the time of any such determination or at any other time,
the then-outstanding principal balance of all Advances plus the 
face amount of all Letters of Credit outstanding hereunder
exceeds the Commitment Amount, Borrower shall, within 30 days of
any such determination: (a) mortgage, by instruments satisfactory
in form and substance to the Bank, sufficient additional
available assets or properties owned by Borrower and satisfactory
to the Bank to induce the Bank to make a re-determination of the
Borrowing Base which causes the Commitment Amount to be increased
by an amount sufficient to eliminate such excess; or (b) prepay
the outstanding principal balance of the Loan in an amount at
least equal to the amount of such excess; or (c) commence (and
thereafter continue) an amortization schedule under which
Borrower repays the Loan in an amount at least equal to the
excess in six equal monthly principal installments on the last
Business Day of each calendar month, which amounts shall be in
addition to the monthly interest payments and any other principal
payments otherwise due, such that the entire excess is paid
within six months; or (d) if the Conversion Date has not yet
occurred, elect to have the Conversion Date occur immediately.
Failure by Borrower to comply with the foregoing shall be deemed
an Event of Default hereunder.                                  

                                ARTICLE IV
                                      
                      CONDITIONS OF LENDING
                                      
    Section 4.01. Conditions Precedent to the Initial Advance.
The obligation of the Bank to make the initial Advance and to
refinance the amount outstanding under the Prior Credit Agreement
is subject to the receipt by the Bank of the following in form,
substance and date satisfactory to the Bank:  

    (a) The Note, duly executed by Borrower;

    (b) A certificate of the general partners of Borrower in the
form of Exhibit B-1 attached hereto and made a part hereof, which
shall contain the names and signatures of the persons entitled to
execute the Loan Documents on behalf of Borrower and which shall
certify to the truth, correctness and completeness of a copy of
the partnership agreement of Borrower and all amendments thereto;

    (c) A certificate of the Secretary of each of the Guarantors
in the form of Exhibit B-2 attached hereto and made a part
hereof, which shall contain the names and signatures of the
officers of the Guarantors entitled to execute the Loan Documents
to which each is a party and which shall certify to the truth,
correctness and completeness of: (1) a copy of the articles of
incorporation of such Guarantor and all amendments thereto; (2) a
copy of the bylaws of such Guarantor and all amendments thereto;
and (3) a copy of the resolutions duly adopted by the Board of
Directors of such Guarantor authorizing such Guarantor to execute
and deliver the Loan Documents to which such Guarantor is a party
and to carry out the transactions contemplated hereby and
thereby; 

    (d) To the extent not heretofore executed and delivered, the
Collateral Documents, duly executed by Borrower, and recorded or
filed by the Bank or at the Bank's direction;

    (e) A compliance certificate in the form of Exhibit C
attached hereto and made a part hereof; 

    (f) Evidence satisfactory to the Bank of Borrower's title to
the properties subject to the Collateral Documents, which title
shall be free and clear of liens, encumbrances and defects,
except for liens and encumbrances in favor of the Bank;

    (g) A guaranty agreement executed and delivered by each
Guarantor, in form and substance satisfactory to the Bank;     

    (h) An opinion of Borrower's counsel in form and
substancesatisfactory to the Bank, relating to authority,
enforceability and other related matters; and 

    (i) Any other documents and instruments which the Bank shall
have reasonably requested including, without limitation:
partnership and corporate documents and records; documents
evidencing governmental authorizations, consents, approvals,
licenses and exemptions; and certificates of public officials and
of officers and representatives of the Obligated Persons and
other persons as to: (1) the accuracy and validity of or
compliance with all representations, warranties and covenants
made by Borrower in this Agreement, (2) the satisfaction of all
conditions contained herein or therein, and (3) all other matters
pertaining hereto. 

    Section 4.02. Additional Conditions Precedent to the
Advances.  The obligation of the Bank to make the initial Advance
and any and all subsequent Advances and to issue any and all
Letters of Credit is subject to the satisfaction of the following
conditions precedent:

    (a) Any and all representations and warranties made by
Borrower or any Guarantor in this Agreement or in any of the
other Loan Documents shall be true on and as of the date of the
requested Advance as if such representations and warranties had
been made on such date;

    (b) There shall not exist on the date of the requested
Advance or the date of issuance of the Letter of Credit any Event
of Default under this Agreement or any event or condition that,
with the giving of notice, the lapse of time, or both, would be
an Event of Default under this Agreement; and 

    (c) Borrower shall have performed and complied with all
agreements and conditions herein required to be performed or
complied with on or prior to the date of the requested Advance or
the date of issuance of the requested Letter of Credit.

                                 ARTICLE V
                            
                                 SECURITY
                             
    Section 5.01. Security. Payment of the Note and all other
obligations of Borrower hereunder shall be secured by liens on
and security interests in the Collateral, as created pursuant to
the Collateral Documents. To the extent the Collateral Documents
have not heretofore been recorded or filed, the Bank will record
or file (or cause to be recorded or filed) the Collateral
Documents at Borrower's expense promptly after execution and
delivery thereof. Borrower agrees that, at any time, at the
Bank's request, Borrower will promptly execute and deliver any
mortgages, deeds of trust, assignments, financing statements or
any other documents as may be necessary to create and perfect
enforceable liens or security interests in favor of the Bank on
any or all of the Oil or Gas Properties owned by Borrower as to
which the Bank requests that such liens and security interests be
created and perfected. 

    Section 5.02. Perfection and Protection of Security Interests
and Liens. Borrower will cause to be delivered to the Bank from
time to time any financing statements, continuation statements,
extension agreements and other documents, properly completed and
executed (and acknowledged when required) by Borrower, in form
and substance satisfactory to the Bank for the purpose of
creating, perfecting or protecting liens, pledges, security
interests and assignments in favor of the Bank in and to any of
the Oil and Gas Properties identified by the Bank.

    Section 5.03. Security Opinions. From time to time during the
term hereof, Borrower will deliver such opinions regarding the
Collateral, from counsel and in form and content reasonably
satisfactory to the Bank, as the Bank may reasonably request,
including without limitation opinions confirming that the nature
and extent of Borrower's title to the Collateral covered by the
Collateral Documents as provided in Section 5.01 (expressly
including the Borrower's working and net revenue interests
therein) conform to the assumptions used by the Bank in
evaluating the Collateral and that, pursuant to the Collateral
Documents, first enforceable liens thereon have been duly created
and perfected in favor of the Bank.

                                ARTICLE VI
                      REPRESENTATIONS AND WARRANTIES

     Section 6.01. Representations and Warranties of Borrower. To
induce the Bank to enter into this Agreement and to make the
Loan, Borrower represents and warrants to the Bank (which
representations and warranties shall survive the delivery of the
Note and shall be deemed to be continuing representations and
warranties until repayment in full of the Note and termination of
this Agreement) that:      

     (a) Existence; Standing. Borrower is a general partnership
duly organized, validly existing and in good standing under the
laws of the State of Montana. St. Mary Land & Exploration Company
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Nance Petroleum
Corporation is a corporation duly organized, validly existing and
in good standing under the laws of the State of Montana.      

     (b) Qualification to Do Business. Each Obligated Person is
duly qualified to do business in each jurisdiction in which a
failure so to qualify would have a material adverse effect on its
business.      

     (c) Due Authorization. The execution, delivery and
performance by Borrower of this Agreement, the Note and the other
Loan Documents to which it is a party are within its powers, have
been duly authorized by all necessary action, and do not
contravene Borrower's organizational documents or any law or any
contractual restriction binding on or affecting Borrower. The
execution, delivery and performance by Guarantors of the Loan
Documents to which each of them is a party are within Guarantors'
powers, have been duly authorized by all necessary corporate
action, and do not contravene Guarantors' organizational
documents or any law or any contractual restriction binding on or
affecting any Guarantor.      

     (d) Approvals. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery
and performance by any Obligated Person of the Loan Documents to
which each is a party.

     (e) Binding Obligations. This Agreement is, and the Note,
the Collateral Documents and all other Loan Documents to which
Borrower is a party, when executed and delivered hereunder, will
be, legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms. The
Loan Documents to which each Guarantor is a party, when executed
and delivered hereunder, will be legal, valid and binding
obligations of such Guarantor, enforceable against such Guarantor
in accordance with their respective terms.      

     (f) Financial Statements. The balance sheets of Borrower and
St. Mary Land & Exploration Company as of June 30, 1994 and of
Nance Petroleum Corporation as of January 1, 1994, and the
related statements of income, retained earnings and cash flows of
Borrower and Guarantors for the fiscal periods then ended, copies
of which have been furnished to the Bank, fairly present the
financial condition of Borrower and Guarantors as at such dates
and the results of the operations of Borrower and Guarantors for
the period ended on such dates, all in accordance with generally
accepted accounting principles consistently applied. Since the
dates of said financial statements, there has been no material
adverse change in the financial condition or operations of
Borrower or Guarantors which has not been disclosed to the Bank
in writing.      

     (g) Use of Proceeds. None of the proceeds of the Loan will
be used to acquire any security in any transaction which is
subject to Sections 13 and 14 of the Securities and Exchange Act
of 1934.      

     (h) Regulation U. No Obligated Person is engaged in the
business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued
by the Board of Governors of the Federal Reserve System), and
none of the proceeds of the Loan will be used to purchase or
carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.      

     (i) Other Obligations. No Obligated Person has with respect
to the Collateral any outstanding indebtedness, obligations,
liabilities (including contingent, indirect and secondary
liabilities and obligations), tax assessments against it, or
unusual forward or long-term commitments, or, with respect to its
other properties which are, in the aggregate, material (defined
as being in excess of $10,000) with respect to the financial
condition of such Obligated Person and, in either case, not shown
in the financial statements referred to in Section 6.01(f) above
or in other writings heretofore delivered by Borrower or such
Obligated Person to the Bank.      

     (j) Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Obligated
Person to the Bank in connection with the negotiation of this
Agreement or in connection with any transaction contemplated
hereby contains any untrue statement of a material fact or omits
to state any material fact known to any Obligated Person
necessary to make the statements contained herein or therein not
misleading as of the date presented. There is no fact known to
any Obligated Person that such Obligated Person has not disclosed
to the Bank in writing which could materially and adversely
affect the properties, business, prospects or condition
(financial or otherwise) of such Obligated Person.      

     (k) No Litigation. Except as heretofore disclosed to the
Bank in writing, there are no actions, suits or legal, equitable,
arbitrative or administrative proceedings pending or, to the
knowledge of Borrower, threatened against any Obligated Person at
law or in equity or before any federal, state, municipal or other
governmental department, commission, body, board, bureau, agency,
or instrumentality, domestic or foreign, and there are no
outstanding judgments, injunctions, writs, rulings or orders by
any court or governmental body against any Obligated Person, any
of their respective partners, shareholders, directors or
officers, which relate to the Collateral, or, with respect to any
Obligated Person generally, which do or may materially and
adversely (defined as being in excess of $10,000) affect any
Obligated Person, their respective ownership or use of any of
their respective assets or properties, their respective
businesses or financial condition or prospects, or the right or
ability of any Obligated Person to enter into any of the Loan
Documents to which it is a party or to consummate the
transactions contemplated hereby or to perform their respective
obligations hereunder or in connection herewith.      

          (1) No ERISA Liability. Borrower has no knowledge of
the occurrence of any event with respect to any ERISA Plan which
could result in a liability of any Obligated Person to the
Pension Benefit Guaranty Corporation, other than the payment of
premiums (but no late payment charge) pursuant to Section 4007 of
ERISA.  

     (m) Title to Properties. Borrower has good and defensible
title to the interests in oil and gas wells, properties and
assets which are subject to the Collateral Documents, free and
clear of all liens, encumbrances, options, charges and
assessments other than those disclosed to the Bank in writing
prior to the actual execution hereof by Borrower, except minor
irregularities and defects of title which are not such as to
cause: (1) Borrower's use or enjoyment of the Collateral to be
diminished, or (2) the marketability of Borrower's title to,the
Collateral to be limited or impaired.      

     (n) Drilling and Operations. To the best of Borrower's
knowledge, except as heretofore disclosed to the Bank in writing,
the oil and gas wells identified in the Collateral Documents have
been drilled and operated in all material respects in accordance
with the terms of relevant leases and agreements and applicable
federal, state and local laws and regulations and are bottomed on
and producing from the drilling and spacing units or blocks
therefor.      

     (o) Environmental Matters. To the best of Borrower's
knowledge, except as previously disclosed by Borrower to the Bank
in writing:                

          (1) The Oil and Gas Properties do not contain, and have
not previously contained, in, on, or under, including, without
limitation, the soil and groundwater thereunder, any Hazardous
Materials which would interfere with the continued operation of
any of the Oil and Gas Properties or impair the fair saleable
value thereof;                

          (2) The Oil and Gas Properties and all operations and
facilities located at the Oil and Gas Properties are in
compliance with all Environmental Laws, and there are no
Hazardous Materials located on, in or under the Oil and Gas
Properties which would interfere with the continued operation of
any of the Oil and Gas Properties or impair the fair saleable
value of any thereof;                

          (3) Borrower has not received any complaint, judgment,
notice of violation, alleged violation, investigation or advisory
action of potential liability or of potential responsibility
regarding environmental protection matters or permit compliance
under the Environmental Laws with regard to the Oil and Gas
Properties, nor is Borrower aware that any governmental authority
is contemplating delivering to Borrower any such notice. Borrower
is not aware of any condition or occurrence on the Oil and Gas
Properties that could form the basis of any complaint, judgment,
notice of violation, alleged violation, investigation or advisory
action of potential liability or of potential responsibility
regarding environmental protection matters or permit compliance
under the Environmental Laws with regard to the Oil and Gas
Properties;

          (4) Hazardous Materials have not been generated, used,
treated, stored, handled, released or disposed of, as defined
under the Environmental Laws, at, on or under any of the Oil and
Gas Properties, nor have any Hazardous Materials been transported
from the Oil and Gas Properties to any other location, nor have
any Hazardous Materials from the Oil and Gas Properties been
used, treated, stored, handled, released or arranged for disposal
of or disposed of at any other location, other than crude oil and
natural gas produced on and transported from the Oil and Gas
Properties and Hazardous Materials customarily used in oil and
gas operations which would not interfere with the continued
operation of any of the Oil and Gas Properties or impair the fair
saleable value of any thereof; and                

          (5) There are no governmental, administrative actions
or judicial proceedings, including private party actions, pending
or contemplated under any Environmental Laws to which Borrower is
or, to Borrower's best knowledge, will be named as a party with
respect to the Oil and Gas Properties, nor are there any consent
decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to any of
the Oil and Gas Properties.  

                                ARTICLE VII
                           COVENANTS OF BORROWER

     Section 7.01. Affirmative Covenants. So long as the Note or
any other amounts due the Bank hereunder shall remain unpaid or
any Letters of Credit remain outstanding, Borrower will, unless
the Bank shall otherwise consent in writing:      

          (a) Payment and Performance. Pay all amounts due under
the Loan Documents in accordance with the terms thereof and
observe, perform and comply with every covenant, term and
condition therein, express or implied.      

          (b) Books, Financial Statements and Reports. Maintain,
and cause Guarantors to maintain, a standard system of accounting
and furnish or cause to be furnished to the Bank the following
statements and reports at Borrower's expense:

               (1) As soon as available, and in any event within
90 days after the end of each fiscal year of each of Borrower,
Guarantors and any other present or future partner in Borrower,
complete financial statements for each such entity, prepared in
reasonable detail in accordance with generally accepted
accounting principles consistently applied. These financial
statements shall contain balance sheets as of the end of such
fiscal year and statements of earnings, of changes in financial
position, and of changes in stockholders' or members' equity for
such fiscal year, setting forth in comparative form the
corresponding figures for the preceding fiscal year. Borrower's
annual financial statements shall be accompanied by a report of
the chief financial officer of Borrower or an authorized officer
of the managing general partner of Borrower attesting to the
authenticity of such financial statements, showing the
calculation of (and Borrower's compliance with) all applicable
financial covenants, and confirming that there existed no
condition or event, at the end of such fiscal year or at the time
of the report, which constituted an Event of Default, or, if any
such condition or event existed, specifying the nature and period
of existence of any such condition or event. The annual financial
statements of Borrower and St. Mary Land & Exploration Company
shall be audited by, and the annual financial statements of Nance
Petroleum Corporation shall be reviewed by, an independent
certified public accountant acceptable to the Bank (and a copy of
an unqualified audit opinion (or, for Nance Petroleum
Corporation, a report or letter describing the results of its
review) by such certified public accountant shall be delivered to
the Bank with such financial statements).      

               (2) As soon as available, and in any event within
45 days after the end of each Quarter (except the last Quarter of
each Year), complete financial statements for Borrower, prepared
in reasonable detail in accordance with generally accepted
accounting principles consistently applied, and signed by the
chief financial officer of Borrower or an authorized officer of
the managing general partner of Borrower and consisting of at
least a balance sheet as at the close of such Quarter, and
statements of earnings, cash flow, changes in financial position
and changes in stockholders' equity for such Quarter and for the
period from the beginning of the Year to the close of such
Quarter. Borrower's quarterly financial statements shall be
accompanied by a report of the chief financial officer of
Borrower or an authorized officer of the 'managing general
partner of Borrower attesting to the authenticity of such
financial statements, showing the calculation of (and Borrower's
compliance with) all applicable financial covenants, and
confirming that there existed no condition or event, at the end
of such Quarter or at the time of the report, which constituted
an Event of Default, or, if any such condition or event existed,
specifying the nature and period of existence of any such
condition or event.      

               (3) Within 90 days after the end of each Year, an
estimate of the cash flow of Borrower for the then-current Year,
giving details as to anticipated revenues, expenses and cash
receipts and disbursements for such Year.      

               (4)    By November 15 of each Year, commencing
November 15, 1995, an engineering report and economic evaluation
prepared by one or more petroleum engineers chosen by Borrower
and acceptable to the Bank, prepared as of the subsequent
December 31, in form and substance satisfactory to the Bank,
covering all Oil and Gas Properties and setting forth the
estimated proven and producing and proven and nonproducing oil
and gas reserves attributable thereto, and accompanied by
Borrower's projection of the rate of production therefrom for the
life thereof.      

               (5) Within 90 days after the end of each month,
commencing with the month ending October 31, 1994, a production
report for such month on a well-by-well basis indicating, for all
oil or gas properties included in the Collateral or otherwise
owned by Borrower, amounts and types of production sold, the unit
sale price and gross proceeds of such sales, and the amounts of
operating expenses, capital expenditures and other amounts
expended on such properties.      

               (6) Promptly upon their becoming available, copies
of all financial statements, material reports, material notices,
proxy statements and other material information sent by any
Obligated Person to their respective shareholders and all
registration statements, material periodic reports and other
material statements and schedules filed by any Obligated Person
with any securities exchange, the Securities and Exchange
Commission or any similar governmental authority.      

          (c) Other Information and Inspections. Furnish to the
Bank any information which the Bank may from time to time
reasonably request concerning any covenant, provision or
condition of the Loan Documents or any matter in connection with
the business and operations of Borrower. In addition, Borrower
will permit representatives appointed by the Bank, including
independent accountants, agents, attorneys, appraisers and any
other persons, upon prior notice, to visit and inspect during
normal business hours any of the properties of Borrower,
including its books of account, other books and records, and any
facilities or other business assets, and to make copies
therefrom, photocopies thereof and photographs thereof, and to
write down and record any information such representatives
obtain. Borrower shall permit the Bank or its representatives to
investigate and verify the accuracy of the information furnished
to the Bank under or in connection with the Loan Documents and to
discuss all such matters with Borrower's officers, employees and
representatives. Borrower shall cause each of the Guarantors to
furnish to the Bank such information which the Bank may from time
to time reasonably request concerning the business and operations
of such Guarantor, to the extent that such information reasonably
relates to the performance by such Guarantor of its obligations
under any Loan Document.      

          (d) Notice of Material Events. Promptly notify the
Bank: (1) of any material adverse change in the financial
condition of any Obligated Person, (2) of the occurrence of an
Event of Default hereunder, (3) of the occurrence of any
acceleration of the maturity of any indebtedness owed by any
Obligated Person, or of any default under any indenture,
mortgage, agreement, contract or other instrument to which any
Obligated Person is a party or by which any of them is bound, if
such acceleration or default might result in a material adverse
claim (which shall include, without limitation, as to Borrower,
any claim of $100,000 or more and, as to any Guarantor, any claim
of $250,000 or more) asserted against any Obligated Person or
with respect to any of their respective properties, (4) of the
occurrence of a Reportable Event (as such term is defined in
Title IV of ERISA) with respect to any ERISA Plan, and (5) 'of
the filing of any suit or proceeding against any Obligated Person
in which an adverse decision could have a material adverse effect
upon its financial condition or upon its business and operations.
Without limitation, any suit involving a claim of $100,000 or
more against Borrower or $250,000 or more against any Guarantor
(which is not covered by effective insurance) shall be considered
a suit or proceeding in which an adverse decision could have a
material adverse effect upon the financial condition of such
Obligated Person. Borrower will also notify the Bank in writing
at least 30 Business Days prior to the date that any Obligated
Person changes its name or the location of its chief executive
office or principal place of business or the place where it keeps
its books and records concerning the Collateral. Borrower hereby
advises the Bank that the address of Borrower's chief executive
office and principal place of business is as shown in Section
9.02 and that the address of each Guarantor's chief executive
office and principal place of business is as shown in the
guaranty executed by each such Guarantor in connection herewith.  
   (e) Maintenance of Existence and Qualifications. Maintain and
preserve Borrower's existence as a partnership, and Borrower's
rights and franchises which pertain to the Collateral in full
force and effect and qualify to do business, if required, in all
states or jurisdictions in which the Collateral is located. Cause
to be maintained and preserved each Guarantor's existence as a
corporation and each Guarantor's rights and franchises which
pertain to the Collateral in full force and effect and cause each
Guarantor to qualify to do business in all states or
jurisdictions in which a failure so to qualify would have a
material adverse effect on its business.      

          (f) Maintenance of Properties. Preserve, operate and
maintain, or cause to be preserved, operated and maintained, the
Oil and Gas Properties in a good and workmanlike manner as a
prudent operator in accordance with good oil and gas industry
practices; maintain, preserve, protect and keep all property used
or useful in the conduct of Borrower's business with respect to
the Oil and Gas Properties, and cause to be maintained,
preserved, protected and kept, all property used or useful in the
conduct of Borrower's or Guarantors' respective businesses
relating to the Oil and Gas Properties in good condition and in
compliance with all applicable laws, rules and regulations, and
will from time to time make or cause to be made all repairs,
renewals and replacements needed to enable the business and
operations carried on in connection therewith to be promptly and
advantageously conducted at all times; and cause the Oil and Gas
Properties to be kept free and clear of liens, charges, security
interests, encumbrances, adverse claims and title defects of
every character other than: (1) the liens and security interests
created by the Collateral Documents, (2) taxes constituting a
lien but not due and payable, (3) defects or irregularities in
title which are not such as to interfere materially with the
development, operation or value of the Collateral and not such as
to materially affect title thereto, (4) those set forth or
referred to in the Collateral Documents, (5) those being
contested in good faith by Borrower and which do not, in the
judgment of the Bank, jeopardize the Bank's rights in and to the
Collateral, and (6) those consented to in writing by the Bank.    
 (g) Payment of Taxes, Etc. File or cause to be filed all
required tax returns and pay or cause to be paid all taxes and
other governmental charges or levies imposed upon any Obligated
Person or upon any Obligated Person's income, profits or property
before the same shall become in default; and pay or cause to be
paid all lawful claims for labor, materials and supplies which,
if unpaid, might become a lien or charge upon any Obligated
Person's property or any part thereof; and pay and discharge when
due all material debts, accounts, liabilities and charges now or
hereafter owed by any Obligated Person; and maintain, or cause to
be maintained, appropriate accruals and reserves for all such
liabilities in a timely fashion in accordance with generally
accepted accounting principles consistently applied; provided,
however, that Borrower or Guarantors may delay paying or
discharging, or causing to be paid or discharged, any such taxes,
charges, claims or liabilities so long as the validity thereof is
being contested in good faith by appropriate proceedings and
Borrower or Guarantors have set aside on their books adequate
reserves therefor.      

          (h) Insurance. Maintain, and cause Guarantors to
maintain, insurance reasonably acceptable to the Bank against
liability on account of damages to persons or property.      

          (i) Books and Records. Maintain, and cause Guarantors
to maintain, complete and accurate books of account and records.  

          (j) Payment of Expenses. Pay all reasonable costs and
expenses of the Bank (including, without limitation as to type of
expense, reasonable attorneys' fees) in connection with: (1) any
and all amendments, modifications, supplements, consents, waivers
or other documents or instruments relating hereto or to any of
the Loan Documents (it being understood that the Bank will pay
for its own legal costs in connection with the preparation,
execution and delivery of this Agreement and the Loan Documents
to be delivered prior to the initial Advance), (2) the filing,
recording, refiling and rerecording of any Collateral Documents
and all amendments, supplements or modifications thereto, and any
and all amendments, supplements or modifications thereto, and any
and all other documents or instruments or further assurances
required to be filed or recorded or refiled or rerecorded by the
terms hereof or of any Collateral Document, (3) the evaluation
and confirmation of Borrower's title to the Collateral as
requested by the Bank, and (4) the enforcement, after the
occurrence of an Event of Default, of the Loan Documents.     
(k) Performance on Borrower's Behalf. If any Obligated Person
fails to pay any taxes, insurance premiums or other amounts
required to be paid under any Loan Documents, the Bank may pay
the same and shall be entitled to immediate reimbursement by
Borrower therefor, and each amount paid shall constitute a part
of Borrower's indebtedness to the Bank, shall be secured by.the
Collateral Documents and shall bear interest from the date such
amount is paid by the Bank until the date such amount is repaid
to the Bank at the Prime Rate plus four percentage points per
annum.

          (l) Compliance with Agreements and Law. Perform all
material obligations required to be performed by any Obligated
Person under the terms of each indenture, mortgage, deed of
trust, security agreement, lease, franchise, agreement, contract
or other instrument or obligation relating to the Collateral to
which any Obligated Person is a party or bywhich any of them or
any of the Collateral is bound, and conduct, and cause to be
conducted, the businesses and affairs of each Obligated Person in
compliance with the laws and regulations applicable thereto
(including but not limited to those relating to ecology,
pollution and environmental matters).      

          (m) Evidence of Compliance. Furnish to the Bank at
Borrower's expense all evidence which the Bank may from time to
time reasonably request, as to the accuracy and validity of or
compliance with all representations, warranties and covenants
made by any Obligated Person in the Loan Documents, the
satisfaction of all conditions contained therein, and all other
matters pertaining thereto.      

          (n) Accounts. Upon request by the Bank, establish or
maintain with, or, promptly after the date hereof, transfer to,
the Bank, all checking and savings accounts of Borrower,
including without limitation the general operating accounts and
payroll accounts of Borrower, and deposit any and all proceeds of
production received by Borrower from the Collateral into one or
more of said accounts.      

          (o) Environmental Laws. Comply with all Environmental
Laws and obtain and comply with and maintain any and all
licenses, approvals, registrations or permits required by the
Environmental Laws.      

          (p) Indemnity. Defend, indemnify and hold harmless the
Bank and its employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of,
or in any way relating to the violation of or noncompliance with
any Environmental Laws applicable to the Oil and Gas Properties
or any other property owned or operated by Borrower, or any
orders, requirements or demands of governmental authorities
related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees,
environmental response and cleanup costs, court costs and
litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct
of the party seeking indemnification therefor.      

          (q) Production Purchasers. Upon request by the Bank,
keep the Bank currently advised of the names and addresses of all
purchasers of production from the Collateral.

          (r) Further Assurances. Do, or cause to be done, such
further acts and execute such further instruments as the Bank may
reasonably determine to be necessary or desirable to carry out
the purposes of this Agreement, and maintain and perfect the
liens and security interests created by the Collateral Documents. 

     Section 7.02. Negative Covenants. So long as the Note and
any other amounts due hereunder shall remain unpaid, Borrower
will not, without the prior written consent of the Bank (which
consent will not be unreasonably withheld):      

          (a) Limitation on Distributions and Redemptions. Except
for loans as described in Section 2.06(c) above and for the
repayment of advances made in the ordinary course of business,
make any distribution or payment (including without limitation
the payment of any salary, bonus or other compensation) to any of
Borrower's partners or in respect of any partnership interest in
Borrower; or directly or indirectly make any capital contribution
to or purchase, redeem, acquire or retire any partnership
interest in Borrower (whether any such interest is now or
hereafter issued, outstanding or created); or cause or permit any
reduction or retirement of the Partnership interests in Borrower;
provided that, at the times when taxes (or estimated taxes) are
payable by the partners of Borrower (up to and including April 15
of the succeeding calendar year), if no Event of Default has
occurred and is continuing (or would result from such
distribution), Borrower may make distributions in an aggregate
amount not greater than the product of: (1) the highest tax rate
payable by a corporation on ordinary taxable income under the tax
laws of the United States and of the State of Montana, the State
of North Dakota or the State of Colorado (whichever state has the
higher tax rate), times (2) the taxable income of Borrower for
the Quarter as to which the distribution is being made (or, if
such taxable income is not known at such time, the then-current
estimate of such taxable income); provided that when the actual
taxable income of Borrower is determined for any Year, Borrower
shall cause the partners of Borrower to repay to Borrower any
excess distributions made by reason of their being based upon the
estimated taxable income of Borrower for the Quarters included in
such Year.      

          (b) Limitation on Indebtedness. Create, incur, assume,
guarantee, endorse, become or be liable in any manner with
respect to, or suffer to exist, any Debt, liability or obligation
(including, without limitation, all Debt and all contingent or
secondary, or direct or indirect, debts, liabilities or
obligations whatsoever), except:      

               (1)    Borrower's indebtedness to the Bank; 

               (2) current debts, obligations and liabilities to
pay vendors, suppliers, and persons providing goods and services
normally required in the ordinary course of business (including
forward sales) and on ordinary trade terms which are not
delinquent or which are being contested in good faith;      

               (3) taxes, assessments and governmental charges or
levies which are not delinquent or which are being contested in
good faith;    
               (4)    contingent liabilities arising out of the
endorsement in the ordinary course of business of negotiable
instruments in the course of collection;  

               (5) Subordinated Debt; and                         
     
               (6) Debt shown on the financial statements of
Borrower dated as of June 30, 1994, as heretofore furnished to
the Bank.      

          (c) Limitation on Liens. Create, assume or permit to
exist any mortgage, deed of trust, pledge, encumbrance, lien or
charge of any kind (including any security interest in or
vendor's lien on property purchased under conditional sales or
other title retention agreements and including any lease in the
nature of a title retention agreement) upon any of the Collateral
or any of Borrower's other assets, except:      

               (1) liens and security interests at any time
existing in favor of the Bank;      

               (2) statutory liens for taxes and other sums which
are not delinquent or which are being contested in good faith;
and

               (3) mechanics' and materialmen's liens with
respect to obligations which are not delinquent or which are
being contested in good faith.      

          (d) Limitation on Combinations. Combine or consolidate
with or into any other entity, or permit any change in the
ownership of Borrower, without the prior written consent of the
Bank, which consent may be conditioned upon satisfaction of such
conditions as the Bank may specify to insure continuing liability
and obligation for payment of the Loan and continued perfection
and priority of the liens and security interests securing the
Loan.      

          (e) Limitation on Sales of Property. Sell, transfer,
lease, exchange, alienate or dispose of any material portion of
the Oil and Gas Properties or any other material assets now or
hereafter owned by Borrower, except sales of oil and gas
production in the ordinary course of business.      

          (f) Fiscal Year. Change the fiscal year currently in
effect for Borrower, which is a calendar year.     

          (g) Working Capital. Permit Borrower's Working Capital
to be less than $1.00 as of the end of any Quarter after the date
hereof.      

          (h) Current Ratio. Permit the Current Ratio of Borrower
to be less than 1.0:1.0 as of the end of any Quarter after the
date hereof.      

          (i) Partners' Capital Accounts. Permit the aggregate
capital accounts of Borrower's partners, determined in accordance
with generally accepted accounting principles, to be less than
$10,000,000 as of the end of any Quarter after the date hereof.   

          (j) Net General and Administrative Expenses. Permit the
Net General and Administrative Expenses of Borrower to exceed
$112,500 for any Quarter after the date hereof.      

          (k) Amendment of Contracts. Amend or permit any
amendment to any contract which releases, qualifies, limits,
makes contingent or otherwise detrimentally affects the rights
and benefits pledged and assigned to or acquired by the Bank
pursuant to any of the Collateral Documents.      

          (l) Limitation on Investments, New Businesses and
Changes in Ownership. (1) Make any expenditure or commitment or
incur any obligation or enter into or engage in any transaction
except in the ordinary course of business; (2) engage directly or
indirectly in any business or conduct any operations except in
connection with or incidental to the present businesses and
operations conducted by Borrower; (3) make any acquisitions of,
capital contributions to, or other investments in, any business
entities; (4) make any significant acquisitions or investments in
any properties other than actual or prospective oil and gas
properties; (5) purchase, acquire, hold or otherwise invest in,
or deposit any money into, any stock, bond, evidence of
indebtedness, deposit account or other security or investment
other than any Permitted Investment; or (6) permit any changes in
the ownership of partnership interests in Borrower by the present
owners thereof, which, in the aggregate, cause either: (A) the
aggregate partnership interests owned by the present owners of
Borrower to decrease by more than ten percentage points from
those in effect on the date hereof; or (B) the partnership
interest owned by any present owner of Borrower to decrease by
more than ten percentage points from that in effect on the date
hereof (such present ownership being St. Mary Land & Exploration
Company - 75.25 percent, and Nance Petroleum Corporation - 24.75
percent).      

          (m) Limitation on Credit Extensions. Extend credit,
make advances or make loans to any person or entity other than:
(1) normal and prudent extensions of credit to customers buying
goods and services in the ordinary course of business, which
extensions shall not be for longer periods than those extended by
similar businesses operated in a normal and prudent manner, (2)
business expense advances to employees of Borrower in the
ordinary course of business, (3) other loans in an amount of not
more than $100,000 in the aggregate at any time, (4) loans as
described in Section 2.06(c) above, and (5) advances to partners
of Borrower for payment of income taxes attributable to
Borrower's net income, pending reclassification of such advances
as distributions permitted under Section 7.02(a) above.     

          (n)ERISA Compliance. Permit any plan maintained by it
to: (1) engage in any "prohibited transaction," as such term is
defined in Section 4975 of the Internal Revenue Code of 1986, as
amended, or (2) incur any "accumulated funding deficiency" (as
defined in Section 302 of ERISA, or (3) terminate in a manner
which could result in the imposition of a lien on the property of
Borrower pursuant to Section 4068 of ERISA.      

          (o) Guaranties. Assume, guaranty, endorse or otherwise
be or become directly or contingently liable for, or obligated to
purchase, pay or provide funds for payment of, any obligations or
indebtedness of any other Person, except for amounts not in
excess of $100,000 at any time.

                               ARTICLE VIII
            EVENTS OF DEFAULT AND THEIR EFFECT


     Section 8.01. Events of Default. Each of the following
events shall constitute an Event of Default under this Agreement: 

     (a) Borrower shall fail to pay any principal amount of, or
interest on, the Note within five Business Days of the due
date;or      

     (b) A default shall occur under the terms of any of the Loan
Documents; or      
     
     (c) Any written representation or warranty made by Borrower
herein or in connection with this Agreement shall prove to have
been incorrect in any material respect when made; or

     (d) Borrower shall fail to perform or observe any term,
covenant or obligation set forth in Section 7.01 (o); or Section
7.02(a), (b), (c), (d), (e), (k), (1), (m) or (o) of this
Agreement; or      

     (e) Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its
part to be performed or observed and any such failure shall
remain unremedied for 30 days after written notice thereof shall
have been given to Borrower by the Bank; or      

     (f) Any Obligated Person shall fail to pay any Debt or any
interest or premium thereon when due (whether by scheduled
maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other default under any agreement
or instrument relating to any such Debt, or any other event,
shall occur and shall continue after the acceleration of the
maturity of such Debt; or any such Debt shall be declared to be
due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated
maturity thereof; or      

     (g) Any Obligated Person shall: (1) generally not pay its
debts as such debts became due; or (2) admit in writing its
inability to pay its debts generally, or shall made a general
assignment for the benefit of creditors; or (3) institute any
proceeding seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of itself or its
debts under any law relating to bankruptcy, insolvency,
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 itself or for any substantial part of
its property; or (4) suffer any proceeding to be instituted
against it for the purposes specified in the foregoing clause (3)
which shall continue for more than 60 days without discharge or
dismissal thereof; or (5) take any action to authorize any of the
actions set forth above in this Section 8.01(g); or      

     (h) Any judgment or order for the payment of money in excess
of $100,000 shall be rendered against any Obligated Person and
either: (1) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order, or (2) there shall be
any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect, provided, in either
case, that Borrower or any Guarantor has not made bonding, surety
or other arrangements acceptable to the Bank.

     Section 8.02. Effect of the Occurrence of any Event of
Default. If any Event of Default described in Section 8.01 shall
occur, in addition to any other remedies available at law or in
equity, the Bank may, by notice to Borrower, declare the Loan and
the Note, all interest thereon and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon
the Loan and the Note, all such interest and all such amounts
shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all
of which are hereby expressly waived by Borrower.  

                                ARTICLE IX
                               MISCELLANEOUS


     Section 9.01. Amendments, Etc. No amendment or waiver of any
provision of the Loan Documents, nor consent to any departure by
any Obligated Person therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Bank and
then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.   

     Section 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing in
mail, telegraphic communication or personal delivery,       

     if to Borrower at:  Panterra Petroleum          
                         550 North 31st Street, Suite 500
                         Billings, MT 59101
                         Attn: Robert T. Hanley       

     if to the Bank at:  First Interstate Bank of Denver, N.A.    
                         633 17th Street, 4N 010
                         Denver, CO 80270          
                         Attn: H. Allen Rheem, Jr.  

or, as to each of the parties, at such other address as shall be
designated by such party in a written notice to the other party.
All such notices and communications shall be effective when
received or actually so delivered addressed as aforesaid.         
 Section 9.03. The Bank's Damage Limitation.   The Bank shall not
be liable to any Obligated Person for consequential damages,
whatever the nature of a breach by the Bank in its obligations
relating to the transactions governed or contemplated by this
Agreement.

     Section 9.04. Arbitration. Subject to the provisions of the
next paragraph below, the Bank and Borrower agree to submit to
binding arbitration any and all claims, disputes and   
controversies between or among them (and their respective
employees, officers, directors, attorneys and other agents)
relating to the Loan and its negotiation, execution,
collateralization, administration, repayment, modification,
extension or collection. Such arbitration shall proceed in
Denver, Colorado, shall be governed by Colorado law (including
without limitation the provisions of CRS 13-21-102(5)) and shall
be conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association ("AAA"). Any award
entered in an arbitration, whether on motions or at a hearing,
with or without testimony from witnesses, shall be made by a
written opinion stating the reasons for the award made. The
decision of any arbitration pursuant to this Agreement shall be
made based on Colorado law without reference to any choice of law
rules. Judgment on any award hereunder may be entered in any
court having jurisdiction.      

     Nothing in the preceding paragraph, nor the exercise of any
right to arbitrate thereunder, shall limit the right of any party
hereto: (a) to foreclose against any real or personal property
collateral by the exercise of the power of sale under a deed of
trust, mortgage, or other security agreement or instrument or
applicable law; (b) to exercise self-help remedies such as setoff
or repossession; or (c) to obtain provisional Or ancillary
remedies such as replevin, injunctive relief, attachment or
appointment of a receiver from a court having jurisdiction,
before, during or after the pendency of any arbitration
proceeding. The institution and maintenance of any action for
such judicial relief, or pursuit of provisional or ancillary
remedies, or exercise of self-help remedies shall not constitute
a waiver of the right or obligation of any party to submit any
claim or dispute to arbitration, including those claims or
disputes arising from exercise of any judicial relief, or pursuit
of provisional or ancillary remedies or exercise of self- help
remedies.      

     Arbitration hereunder shall be before a three-person panel
of neutral arbitrators, consisting of one person from each of the
following categories: (1) an attorney who has practiced in the
area of commercial law for at least 10 years or a retired judge
at the Colorado or United States District Court or an appellate
court level: (2) a person with at least 10 years experience in
commercial lending: and (3) a person with at least 5 years
experience in the petroleum industry. The AAA shall submit a list
of persons meeting the criteria outlined above for each category
of arbitrator, and the parties shall select one person from each
category in the manner established by the AAA.

     Section 9.05. Release. Upon full payment and satisfaction of
the Loan and all other amounts due in connection therewith as
provided herein, the parties shall thereupon automatically each
be fully, finally, and forever released and discharged from any
further claim, liability or obligation in connection with the
Loan.      

     Section 9.06. No Waiver; Remedies. No failure on the part of
the Bank to exercise, and no delay in exercising, any right under
the Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise of any right under the Loan
Documents 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.     

     Section 9.07. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of Borrower and the Bank
and their respective successors and assigns, except that Borrower
shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Bank.
The Bank may assign to one or more banks or other entities all or
any part of, or may grant participations to one or more banks or
other entities in or to all or any part of, the Loan and the Note
and, to the extent of any such assignment or participation
(unless otherwise stated therein), the assignee or participant of
such assignment or participation shall have the same rights and
benefits hereunder and under the Note as it would have if it were
the Bank hereunder.      

     Section 9.08. GOVERNING LAW AND SUBMISSION TO JURISDICTION.
THE SUBSTANTIVE LAW OF COLORADO SHALL GOVERN ALL THE TERMS AND
CONDITIONS AND INTERPRETATIONS OF THE LOAN, THIS AGREEMENT, THE
NOTE AND, EXCEPT AS OTHERWISE PROVIDED IN THE LOAN DOCUMENTS, ALL
OTHER LOAN DOCUMENTS.    IN THE EVENT OF LITIGATION CONCERNING
THE LOAN, THIS AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS,
THE PARTIES HERETO AGREE THAT THE EXCLUSIVE VENUE AND PLACE OF
JURISDICTION SHALL BE THE STATE OF COLORADO, CITY AND COUNTY OF
DENVER, INCLUDING THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLORADO. FURTHER, BORROWER CONSENTS TO AND AGREES TO
FILE A GENERAL APPEARANCE IN THE EVENT IT RECEIVES A SERVICE OF
PROCESS.           

     Section 9.09. Relationship to Other Documents.    In the
event any provision hereof is in conflict with any provision of
the Collateral Documents, the provisions hereof shall be
controlling. Upon the refinancing or repayment of any and all
amounts due under or in connection with the Prior Credit
Agreement, the terms and provisions of this Agreement shall
supersede the terms and provisions of the Prior Credit Agreement
in their entirety.

          IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.      


                              PANTERRA PETROLEUM
                              By:  St. Mary Land & Exploration
                                   Company, General Partner
                              /s/ Mark A. Hellerstein
                              By:  Mark A. Hellerstein, President 
                              By:  Nance Petroleum Corporation,
                                   General Partner                
                              /s/ Robert L. Nance
                              By:  Robert L. Nance, President     
                         

                              FIRST INTERSTATE BANK OF DENVER     
                              By:  



ACCEPTED AND CONSENTED TO AS OF THE DATE OF THIS AGREEMENT:  

                              ST. MARY LAND & EXPLORATION COMPANY 
                              /s/ Mark A. Hellerstein
                              By: Mark A. Hellerstein, President  

                              NANCE PETROLEUM CORPORATION         
                              /s/ Robert L. Nance
                              By: Robert L. Nance, President