BELCO OIL & GAS CORP, 10-Q, 1996-05-15

BELCO OIL & GAS CORP
10-Q, 1996-05-15
CRUDE PETROLEUM & NATURAL GAS

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<PAGE> 1

________________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

______________

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996

COMMISSION FILE NUMBER 1-12634

______________

BELCO OIL & GAS CORP.
(Exact name of registrant as specified in its charter)

Nevada 13-3869719
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)

767 Fifth Avenue
New York, New York 10153
(Address of principal executive offices) (Zip code)

(212) 644-2200
(Registrant's telephone number, including area code)
______________

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
----- -----

AS OF MARCH 31, 1996, THERE WERE 31,572,300 SHARES OF THE REGISTRANT'S
COMMON STOCK, PAR VALUE $.01 PER SHARE, OUTSTANDING.

________________________________________________________________________________
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE

PART I
FINANCIAL INFORMATION
<S> <C> <C>

ITEM 1. FINANCIAL STATEMENTS:
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1996
AND DECEMBER 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 2

CONDENSED CONSOLIDATED CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE MONTHS
ENDED MARCH 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 4

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . 5

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 9

PART II
OTHER INFORMATION

<S> <C> <C>
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ITEM 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS . . . . . . . . . . . . . . . . . . . . . . . 18

ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ITEM 6. EXHIBITS AND REPORTS ON 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

</TABLE>

<PAGE> 3

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

BELCO OIL & GAS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>

ASSETS
------

CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 84,034 $ 1,556
Accounts receivable, oil and gas . . . . . . . . . . . . . . . . . 17,673 16,979
Advances to oil and gas operators . . . . . . . . . . . . . . . . . . -- 45
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . -- 401
---------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . 101,707 18,981
---------- ---------
PROPERTY AND EQUIPMENT:
Oil and gas properties at cost based on full cost accounting --
Proved oil and gas properties . . . . . . . . . . . . . . . . . . . . 164,981 152,081
Unproved oil and gas properties . . . . . . . . . . . . . . . . . . . 31,284 19,927
Less -- Accumulated depreciation, depletion and amortization . . . . (55,261) (45,771)
----------- ---------
Net property and equipment . . . . . . . . . . . . . . . . . . . 141,004 126,237
--------- ---------

OTHER ASSETS 443 332
---------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 243,154 $145,550
========== =========

LIABILITIES AND EQUITY
----------------------

CURRENT LIABILITIES:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . $ 12,213 $ 8,440
Distribution payable . . . . . . . . . . . . . . . . . . . . . . . . . -- 10,095
---------- ---------
Total current liabilities . . . . . . . . . . . . . . . . . . . 12,213 18,535
---------- ---------
LONG-TERM DEBT -- 22,000

DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 29,900 --

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 10,000,000 shares authorized;
none issued or outstanding . . . . . . . . . . . . . . . . . . . . . -- --
Common stock ($.01 par value, 120,000,000 shares authorized;
31,572,300 shares issued and outstanding at March 31, 1996) . . . . 315 --
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 186,352 --
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,492
Combined equity of predecessor entities . . . . . . . . . . . . . . . . . -- 105,849
Unearned compensation . . . . . . . . . . . . . . . . . . . . . . . . . . (1,373) --
Less -- Notes receivable for equity interest . . . . . . . . . . . . . . (745) (834)
----------- ---------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 201,041 105,015
---------- ---------
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . $ 243,154 $ 145,550
========== =========
</TABLE>

The accompanying notes are an integral part of these condensed
financial statements.

-1-

<PAGE> 4

BELCO OIL & GAS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
---------- ----------
<S> <C> <C>
REVENUES:
Oil and gas sales . . . . . . . . . . . . . . . . . . . . . $ 28,605 $ 15,687
Interest and other . . . . . . . . . . . . . . . . . . . . 5 14
-------- --------
Total revenues . . . . . . . . . . . . . . . . . . . 28,610 15,701
-------- --------

COSTS AND EXPENSES:
Oil and gas operating expenses . . . . . . . . . . . . . . 1,752 1,178
Depreciation, depletion and amortization . . . . . . . . . 9,490 5,387
General and administrative . . . . . . . . . . . . . . . . 876 505
-------- --------
Total costs and expenses . . . . . . . . . . . . . . 12,118 7,070
-------- --------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . 16,492 8,631
-------- --------

PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . (a) 29,900 0
-------- --------

NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . (a) ($13,408) $ 8,631
======== ========

PRO FORMA NET INCOME
Income before income taxes . . . . . . . . . . . . . . . . $16,492 $ 8,631
Pro forma provision for income taxes . . . . . . . . . . . 5,426 2,848
-------- --------
Pro forma net income . . . . . . . . . . . . . . . . $11,066 $ 5,783
======== ========
PRO FORMA NET INCOME PER COMMON SHARE . . . . . . . . . . . . $ 0.44 $ 0.23
======== ========

WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES . . . . . . . . . . . . . . . . . 25,424 25,000
====== ======

</TABLE>

(a) Includes a one-time non-cash deferred tax charge of $29.9 million
recognized as a result of the Combination consummated on March 29,
1996 in connection with the Company's Initial Public Offering and
discussed in the Belco Oil & Gas Corp. Prospectus dated March 25,
1996. Historical loss per share, including the deferred tax charge,
was $0.53 for the quarter ended March 31, 1996. The pro forma amounts
present the Company as if a taxable corporation for all periods and
presents the shares issued in connection with the Combination as
outstanding for all periods.

The accompanying notes are an integral part of these condensed
financial statements.

-2-

<PAGE> 5

BELCO OIL & GAS CORP.
CONDENSED CONSOLIDATED CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
Notes
Receivable
Common Stock Additional Combined for
------------------- Paid-in Unearned Retained Predecessor Equity
Shares Amount Capital Compensation Earnings Equity Interest Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

BALANCE, December 31, 1995 -- $ -- $ -- $ -- $ -- $ 105,849 $ (834) $105,015
------ --------- --------- ------------ --------- ----------- -------- --------

Exchange combination 25,000 250 71,929 -- -- (72,179) -- --

Public stock offering,
net of costs of $10.4
million 6,500 65 113,050 -- -- -- -- 113,115

Restricted stock issued 72 -- 1,373 (1,373) -- -- -- --

Repayment of employee
notes receivable -- -- -- -- -- -- 89 89

Distributions to
predecessor owners -- -- -- -- -- (3,770) -- (3,770)

Net Income (loss) (a) -- -- -- -- 16,492 (29,900) -- (13,408)

------ --------- --------- ------------ --------- ----------- -------- --------
BALANCE, March 31, 1996 31,572 $ 315 $ 186,352 $ (1,373) $ 16,492 $ -- $ (745) $201,041
====== ========= ========= ============ ========= =========== ======== ========
</TABLE>

(a) Including one-time deferred tax charge of $29.9 million upon becoming
a taxable corporation on March 29, 1996.

The accompanying notes are an integral part of these condensed financial
statements.

-3-

<PAGE> 6

BELCO OIL & GAS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
--------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ (13,408) $ 8,631
Adjustments to reconcile net income (loss) to net operating cash
inflows --
Depreciation, depletion and amortization . . . . . . . . . . . . 9,490 5,387
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 29,900 --
Changes in operating assets and liabilities --
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . (694) 3,464

Other current assets . . . . . . . . . . . . . . . . . . . . . 401 66
--------- --------
Net operating cash inflows . . . . . . . . . . . . . . . . . 25,689 17,548
CASH FLOWS FROM INVESTING ACTIVITIES:
Exploration and development expenditures . . . . . . . . . . . . . (24,257) (15,727)
Changes in accounts payable and accrued liabilities for oil
and gas expenditures . . . . . . . . . . . . . . . . . . . . . . 3,773 3,707
Change in advances to oil and gas operators . . . . . . . . . . . . 45 --
Changes in other assets . . . . . . . . . . . . . . . . . . . . . . (111) (102)
--------- --------
Net investing cash outflows . . . . . . . . . . . . . . . . (20,550) (12,122)

CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . 13,300 --
Long-term debt repayments . . . . . . . . . . . . . . . . . . . . . (35,300) (2,100)
Net proceeds from public offering . . . . . . . . . . . . . . . . . 113,115 --
Equity contributions . . . . . . . . . . . . . . . . . . . . . . . -- 469
Equity distributions . . . . . . . . . . . . . . . . . . . . . . . (13,865) (5,815)
Employee loans, net . . . . . . . . . . . . . . . . . . . . . . . . 89 (416)
--------- --------
Net financing cash inflows (outflows) . . . . . . . . . . . 77,339 (7,862)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . 82,478 (2,436)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . 1,556 6,951
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . 84,034 4,515

</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

-4-
<PAGE> 7

BELCO OIL & GAS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ACCOUNTING POLICIES: The financial statements included
herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission and reflect all adjustments which are, in
the opinion of management, necessary to present a fair
statement of the results for the interim periods, on a basis
consistent with the annual audited financial statements. All
such adjustments are of a normal recurring nature. The
results of operations for the interim period are not
necessarily indicative of the results to be expected for an
entire year. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such
rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented
not misleading. These financial statements should be read in
conjunction with the Company's Form S-1 Registration
Statement dated March 25, 1996 which includes financial
statements and notes thereto.

NOTE 2 - ORGANIZATION AND PRINCIPLES OF COMBINATION: The Company was
organized as a Nevada corporation in January of 1996 in
connection with the combination of assets (the "Combination")
consisting of ownership interests (the "Combined Assets") in
certain entities and direct interests in oil and gas
properties and certain hedge transactions owned by members of
the Robert A. Belfer family and by employees of the
predecessors and entities related thereto (the
"Combination"). The Company and the owners of the Combined
Assets entered into an Exchange and Subscription Agreement
and Plan of Reorganization dated as of January 1, 1996 (the
"Exchange Agreement") that provided for the issuance by the
Company of an aggregate of 25,000,000 shares of common stock
to such owners in exchange for the Combined Assets on March
29, 1996, the date the Offering closed. The owners of the
Combined Assets received shares of common stock proportionate
to the value of the Combined Assets underlying their
ownership interests in the predecessors and the direct
interests.

The Combination was accounted for as a reorganization of
entities under common control because of the common control
of the stockholders of the Nevada corporation and by virtue
of their direct ownership of the entities and interests
exchanged. Accordingly, the net assets acquired in the
Combination have been recorded at the historical cost basis
of the affiliated predecessor owners.

On March 29, 1996, the Company completed its initial public
offering (the "Offering") issuing 6.5 million shares at $19
per share. Net proceeds totaled $113.1 million after
Offering costs of $10.4 million.

-5-

<PAGE> 8

NOTE 3 - PRO FORMA NET INCOME PER SHARE: Pro forma net income per
share is based on the weighted average number of shares of
common stock outstanding. The computation assumes that the
Company was incorporated during the periods presented and
presents the shares issued in connection with the Combination
as outstanding for all periods. The effects of common stock
equivalent shares (stock options) and restricted stock were
not material and not dilutive for the three months ended
March 31, 1996.

NOTE 4 - INCOME TAXES:

The earnings of the Company have not been subject to
corporate income taxes as the Company, prior to the
Combination, was a combination of non-taxpaying entities,
including Subchapter S, limited liability corporations,
partnership and joint venture entities and individual
interests. Accordingly, taxable earnings have been directly
taxable to the individual owners through the date of the
Combination. As a result of the Combination consummated on
March 29, 1996, the Company became a taxpaying entity and
recorded, in the first quarter of 1996, a $29.9 million
one-time, non-cash charge to earnings to establish a deferred
tax liability (discussed further below). The historical
provision for income taxes for the quarter ended March 31,
1996 only includes the one-time charge. The pro forma
provision for income taxes reflected in the Condensed
Consolidated Statements of Operations for the three-month
periods ended March 31, 1996 and 1995 have been presented to
reflect the Company's income taxes under the assumption that
the Company was a taxpaying entity since its inception.

Under the liability method specified by Statement of
Financial Accounting Standards No. 109, deferred taxes are
determined based on the estimated future tax effect of
differences between the financial statement and tax basis of
assets and liabilities given the provisions of enacted tax
laws. At March 31, 1996, the estimated tax basis of the
Company's net assets is approximately $85 million below the
recorded financial statement amounts. The difference relates
primarily to deductions of oil and gas property costs for tax
purposes in excess of the deductions for financial reporting
purposes. The related tax basis amounts at March 31, 1996,
have been estimated. Such amounts will be adjusted once the
respective March 29, 1996 income tax returns are finalized.

Although the effective date of the Exchange Agreement is
January 1, 1996, each owner of the Combined Assets will be
required under existing federal income tax rules and
regulations to include in its taxable income, for all periods
ending on the date of or prior to the completion of the
Combination (March 29, 1996), its allocable portion of the
taxable income attributable to the Combined Assets and will
be entitled to all tax benefits related to the Combined
Assets through the completion of the Combination on March 29,
1996.

The differences between the statutory federal income taxes
and the Company's pro forma effective taxes is summarized as
follows (in thousands):

-6-

<PAGE> 9

<TABLE>
<CAPTION>
MARCH 31,
---------------------------
1996 1995
---- ----
<S> <C> <C>

Statutory federal income taxes . . . . . . . . $ 5,772 $ 3,021
State income tax, net of federal benefit . . . 20 22

Excess percentage depletion . . . . . . . . . . (141) (42)

Section 29 tax credits . . . . . . . . . . . . (225) (153)
---------- ----------

Pro forma provision for income taxes . . . . . $ 5,426 $ 2,848
========= =========
</TABLE>

NOTE 5 - COMMODITY PRICE RISK MANAGEMENT ACTIVITIES:

The Company periodically enters into commodity hedging
transactions such as swaps and options in order to hedge
against a downturn of oil and gas prices. Gains and losses
related to qualifying hedges of the Company's oil and gas
production are deferred and recognized as a component of oil
and gas sales as the associated production occurs. Reference
is made to the December 31, 1995 financial statements of
Belco Oil & Gas Corp. and affiliated entities included in the
Form S-1 effective March 25, 1996 for a more thorough
discussion of the Company's commodity hedging activities.

The Company uses the mark-to-market method of accounting for
instruments that do not qualify for hedge accounting. Under
mark-to-market accounting, those contracts which do not
qualify for hedge accounting are reflected at market value
with resulting unrealized gains and losses recorded as assets
and liabilities in the consolidated balance sheet ($860,000
reflected in accounts payable at March 31, 1996). Under such
method, changes in the market value of outstanding financial
instruments are recognized as gain or loss (included in
revenues) in the period of change. The Company had no
significant financial instruments that would have required
mark-to-market accounting as of December 31, 1995.

For the three months ended March 31, 1996 and 1995, the
Company had net gains of $1.8 and $2.6 million, respectively,
related to its price risk management activities. Included in
the 1996 amount is a mark-to-market gain of $240,000 on
contracts with notional volumes of 14,085 MMBTUs for the
remainder of 1996 and 1997.

NOTE 6 - STOCK INCENTIVE PLAN:

On March 25, 1996 the Company adopted its planned Stock
Incentive Plan for which 2,250,000 shares of common stock
have been reserved for issuance pursuant to such plan.
During the quarter ended March 31, 1996, 332,000 stock
options were granted to

-7-

<PAGE> 10

employees with an exercise price equal to the fair market
value on the date of grant (the $19.00 Offering price). The
Company accounts for employee stock-based compensation using
the intrinsic value method prescribed by Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees". Accordingly, stock options granted at
fair market value on the date of grant will have no effect on
the Company's results of operations.

On March 25, 1996, the Company also issued 72,300 shares of
restricted stock to employees, without payment to the
Company, under the Stock Incentive Plan. The restrictions on
disposition lapse 20% each year and non-vested shares must be
forfeited in the event employment ceases. The value of the
restricted stock on the date of grant, totaling $1.4 million
based upon the Offering price, has been recorded as an equity
issuance and deferred compensation (presented as a reduction
of equity). The deferred compensation will be charged to
earnings over the vesting period.

-8-

<PAGE> 11

PART I - FINANCIAL INFORMATION

ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Since its inception in April 1992, the Company has grown rapidly
through farm-ins, acreage acquisitions and participation agreements.
The Company's participation in exploration and development activities
in the Moxa Arch Trend of Wyoming and in the Austin Chalk Trend in the Giddings
Field of Texas are principally responsible for the substantial expansion of
production, revenues and reserves since the Company's inception.
The Company was organized as a Nevada corporation in January 1996 in
connection with the combination (the "Combination") of ownership interests (the
"Combined Assets") in certain entities (the "Predecessors") and direct
interests in oil and gas properties and certain hedge transactions (the "Direct
Interests") owned by members of the Robert A. Belfer family and by employees of
the Predecessors and entities related thereto. The Company and the owners of
the Combined Assets entered into an Exchange and Subscription Agreement and
Plan of Reorganization, dated as of January 1, 1996 (the "Exchange Agreement"),
that provided for the issuance by the Company of an aggregate of 25 million
shares of Common Stock to such owners in exchange for the Combined Assets on
March 29, 1996, the date the Offering closed. The owners of the Combined
Assets received shares of Common Stock proportionate to the value of the
Combined Assets underlying their ownership interests in the Predecessors and
the Direct Interests.

<PAGE> 12

Pursuant to the Exchange Agreement, the owners of the Combined Assets
received all revenues attributable to production and are responsible for all
incurred expenses related to the Combined Assets for all periods prior to
January 1, 1996. Effective with the Combination (which was contemporaneous
with the closing of the Offering), the Company is entitled to receive all
revenues and is responsible for all expenses related to the Combined Assets on
and after January 1, 1996.
From inception through 1995, the Predecessors were not required to pay
federal income taxes due to their status as either a partnership, individual
owner or Subchapter S corporation, which are "pass-through" entities that are
not subject to federal income taxation; instead, taxes relating to the Combined
Assets for such periods were required to be paid by the owners of the
Predecessors and the Direct Interests.
Although the effective date of the Exchange Agreement is January 1,
1996, each owner of the Combined Assets will be required to include in its
taxable income, for all periods ending on the date of or prior to the
completion of the Combination, its allocable portion of the taxable income
attributable to the Combined Assets and will be entitled to all tax benefits
attributable to the Combined Assets through completion of the Combination.
The Company's revenue, profitability and future rate of growth are
substantially dependent upon prevailing prices for natural gas, oil and
condensate. These prices are dependent upon numerous factors beyond the
Company's control, such as economic, political and regulatory developments and
competition from other sources of energy. The energy markets have historically
been very volatile, and there can be no assurance that oil and gas prices will
not be subject to wide fluctuations in the future. A substantial or

<PAGE> 13

extended decline in oil and gas prices could have a material adverse effect on
the Company's financial position, results of operation and access to capital,
as well as the quantities of oil and gas reserves that the Company may
economically produce. The Company markets its oil with other working interest
owners on spot price contracts and typically receives a premium compared to the
price posted for such crude oil. Natural gas produced is sold under contracts
that primarily reflect spot market conditions for their particular area.
Approximately 91% of the Company's revenues are related to the sale of natural
gas.
From time to time, the Company has utilized commodity swaps and
options and other commodity price risk management transactions for a portion of
its oil and gas production to achieve a more predictable cash flow and to
reduce its exposure to price fluctuations. The Company accounts for these
transactions as hedging activities or using mark-to-market accounting for those
contracts which do not qualify for hedge accounting. The Company has various
gas and oil price risk management contracts in place with respect to a
substantial portion of its estimated production for 1996 and with respect to
lesser portions of its estimated production for 1997 and 1998. The Company
expects from time to time to either add or reduce the amount of price risk
management contracts that it has in place.

11
<PAGE> 14

The following table sets forth certain operations data of the Company
for the periods presented:

<TABLE>
<CAPTION>
THREE MONTHS ENDED VARIANCES
MARCH 31,

1996 1995 AMOUNT %
-----------------------------------------------------
<S> <C> <C> <C> <C>
Oil and Gas Sales (1) (in thousands) . . . . . . . . . . . . . . . $ 28,605 $ 15,687 $ 12,738 82%

Weighted Average Sales Prices (Unhedged):
Oil (per Bbl) . . . . . . . . . . . . . . . . . . . . . . . . . $ 18.26 $ 17.52 $ 0.74 4%
Gas (per Mcf) . . . . . . . . . . . . . . . . . . . . . . . . . 1.74 1.33 0.41 31%

Net Production Data:
Oil (MBbl) . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 225 (3) -1%
Gas (MMcf) . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,266 7,064 6,202 88%
Gas equivalent (MMcfe) . . . . . . . . . . . . . . . . . . . . . 14,601 8,417 6,183 73%

Data per Mcfe:
Oil and gas sales revenues (1) . . . . . . . . . . . . . . . . . $ 1.96 $ 1.86 $ 0.10 5%
Oil and gas operating expenses . . . . . . . . . . . . . . . . . (.12) (.14) 0.02 -14%
General and administrative . . . . . . . . . . . . . . . . . . . (.06) (.06) -- --
Depreciation, depletion and amortization . . . . . . . . . . . . (.65) (.64) (0.01) 2%
----------- ---------- ----------- ------
Pre-tax operating profit . . . . . . . . . . . . . . . . . . . . $ 1.13 $ 1.02 $ 0.11 11%
=========== ========== =========== ======
</TABLE>

(1) Oil and gas sales for the quarters ended March 31, 1996 and 1995
included $1,778,000 and $2,642,000, respectively, related to price
risk management activities.

RESULTS OF OPERATIONS
FIRST QUARTER 1996 COMPARED TO 1995
REVENUES
During the first quarter of 1996, oil and gas sales revenues increased
$12.9 million, or 82%, to $28.6 million over the prior year comparable period.
The revenue increase is principally the result of newly drilled Giddings Field
well additions in the Navasota River and Independence areas of the

<PAGE> 15

Company's operations and higher average prices realized for both oil and
natural gas. Production volume during the first quarter of 1996 on a Mcfe
basis increased to 14,601 MMcfe representing an increase of 73% over the prior
year comparable period. Natural gas production represented approximately 91%
of total Company production on a Mcfe basis. Daily production for the quarter
increased 73% to 160,000 Mcfe compared to 93,000 Mcfe in the first quarter of
1995.
Marketing activities associated with sales of natural gas and crude
oil also include natural gas and crude oil price swap, option and other
commodity price risk management transactions of natural gas and crude oil and
condensate prices. These transactions added approximately $1.8 and $2.6
million to net operating revenues for the first quarter of 1996 and 1995,
respectively. The average Mcfe price realized for these transactions amounted
to $0.12 and $0.31 per Mcfe for 1996 and 1995, respectively.

COSTS AND EXPENSES
Production and Operating Expenses. Production and operating expenses
increased 49% from $1.18 million for the first quarter of 1995 to $1.75 million
for the comparable period in 1996. On a Mcfe basis, operating costs decreased
14% to $0.12 for the first quarter of 1996, compared to $0.14 for the first
quarter of 1995. The decrease is due mainly to an increase in the number of
highly productive wells in the Giddings Field.
Depreciation, Depletion and Amortization. Depreciation, depletion and
amortization ("DD&A"), for the quarter ended March 31, 1996 increased 76% over
the prior year comparable period, from $5.4 million to $9.5 million, due
primarily to increased production. The Company has used a DD&A rate of $0.65
per Mcfe for the first quarter of 1996 to reflect preliminary results of
drilling deeper wells at a higher average cost per well as compared to $0.64
per Mcfe used in the first quarter of 1995, a 2% increase.

<PAGE> 16

General and Administration Expenses. General and administrative
expense ("G&A") increased 73% in the first quarter of 1996 to $876,000 when
compared to the $505,000 incurred in the first quarter of 1995. The higher G&A
expense for 1996 primarily relates to increases in the number of employees due
to a higher level of overall activity for the Company as well as increases in
employee salaries and benefits.

INCOME BEFORE INCOME TAXES
The Company's income before income taxes for 1996 increased by
approximately $7.9 million, or 91% to $16.5 million from $8.6 million in the
prior year period. Increases in revenues were generated primarily by increases
in production from new well additions in the Giddings Field and higher prices.

INCOME TAXES
In connection with the Combination and Exchange Agreement, the Company
became a taxable corporation and, as a result, was required to record a
one-time, non-cash charge in the amount of $29.9 million to establish a
deferred tax liability on its balance sheet due to the change in the tax status
of the Company.

LIQUIDITY AND CAPITAL RESOURCES

On March 29, 1996, the Company successfully completed an initial
public offering of 6.5 million shares of common stock (the "Offering"). The
Offering provided the Company with approximately $113 million net of offering
expenses. Revolving credit agreement indebtedness in the amount of $35.3
million

<PAGE> 17

was repaid with proceeds from the offering. The remaining proceeds from the
Offering, together with cash flows from operations, will be used to fund
planned capital expenditures, commitments, other working capital requirements
and for general corporate purposes.
Operating cash flow (pre-tax), a measure of performance for
exploration and production companies, is generally derived by adjusting net
income to eliminate the effects of the non-cash depreciation, depletion and
amortization expense and the provision for deferred taxes. Net operating cash
flow (pre-tax) before changes in working capital was approximately $26.0
million for the first quarter of calendar year 1996 and $14.0 million for the
prior year comparable period, an increase of 85%. The cash flow increase is
the result of higher prices realized for production and increases in production
from new well additions, reflecting rapidly expanding operations.
For 1996, the Company has budgeted approximately $130 million for
capital expenditures which amount may be increased or decreased depending on
oil and gas prices, drilling results and other investment opportunities. The
Company is allocating approximately 80% of its budget to development and
exploration projects and approximately 20% to leasehold and seismic acquisition
activities.
In December of 1994, the Company entered into a three-year $25 million
Credit Agreement with The Chase Manhattan Bank, N.A. (the "Credit Facility").
Principal outstanding is due and payable upon maturity in December 1997 with
interest due quarterly. In order to finance future capital requirements during
the first quarter of 1996, the Company increased the Credit Facility and the
Borrowing Base thereunder to $40 million. The Borrowing Base represents the
maximum available amount that may be borrowed under the Credit Facility at any
given time. Since all indebtedness under the Credit Facility was repaid with
proceeds from the Offering, the Company elected to reduce the current Borrowing
Base under the Credit Facility to $15 million on May 1, 1996. The reduction in
the Borrowing Base will permit

<PAGE> 18

the Company to pay a lower commitment fee, which is currently calculated at an
annual rate of 0.25 of 1% of the unused portion of the available Borrowing
Base. The Company may seek to adjust the terms and availability of the Credit
Facility in the future in accordance with its anticipated capital requirements.
The third party investors in the Moxa Programs have the contractual
right on an annual basis through 2004 to require the Company to purchase their
interests in such programs. No investor under the Moxa Programs exercised such
right through the first quarter of 1996. Based upon December 31, 1995 SEC
basis reserve values, the maximum purchase price if all investors exercised the
put would be approximately $40 million. The Company believes its financial
resources will be adequate to purchase these interests should they be tendered.
Certain of the Company's commodity price risk management arrangements
require the Company to deliver cash collateral or other assurances of
performance to the counterparties in the event that the Company's payment
obligations with respect to its commodity price risk management transactions
exceed certain levels. Certain of these transactions may be covered by
guarantees or letters of credit issued under the Credit Facility.
The Company intends to fund its planned capital expenditures,
commitments and working capital requirements through cash flows from
operations, from the proceeds of the Offering and to the extent necessary,
borrowings under the Credit Facility. If there are changes in oil and gas
prices, however, that correspondingly affect cash flows and the Borrowing Base
under the Credit Facility, the Company has the discretion and ability to adjust
its capital budget. The Company believes it will have sufficient capital
resources and liquidity to fund its capital expenditures and meet its financial
obligations as they come due.

<PAGE> 19

COMMODITY PRICE RISK MANAGEMENT TRANSACTIONS

With the objective of achieving more predictable revenues and cash
flows and reducing the exposure to fluctuations in natural gas and oil prices,
the Company has entered into price risk management transactions of various
kinds with respect to both gas and oil. While the use of certain of these
price risk management arrangements limits the downside risk of adverse price
movements, it may also limit future revenues from favorable price movements.
The Company has entered into price risk management transactions with respect to
a substantial portion of its estimated production for 1996 and with respect to
lesser portions of its estimated production for 1997 and 1998. The Company
continues to evaluate whether to enter into additional price risk management
transactions for 1996 and future years. In addition, the Company may determine
from time to time to unwind its then existing price risk management positions.

ENVIRONMENTAL MATTERS

The Company's operations are subject to various federal, state and
local laws and regulations relating to the protection of the environment, which
have become increasingly stringent. The Company believes its current
operations are in material compliance with current environmental laws and
regulations. There are no environmental claims pending or, to the Company's
knowledge, threatened against the Company. There can be no assurance, however,
that current regulatory requirements will not change, currently unforeseen
environmental incidents will not occur or past noncompliance with environmental
laws will not be discovered on the Company's properties.

<PAGE> 20

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS NONE

ITEM 2 - CHANGES IN SECURITIES NONE

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES NONE

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS NONE

ITEM 5 - OTHER INFORMATION

The Company's 1996 Nonemployee Directors Stock Option Plan (the
"Plan") provides that, as of the date of the annual meeting of stockholders in
each year that the Plan is in effect, each Nonemployee Director on such date
shall be granted an Option for 3,000 shares of the Company's Common Stock with
an exercise price equal to the mean of the high and low sales price of such
Common Stock on the New York Stock Exchange on the date of grant. Since the
initial public offering of the Company closed on March 29, 1996, the Company
will hold its first annual stockholders meeting in 1997. In order to further
the purposes of the Plan, the Company has granted to each Nonemployee Director
an Option for 3,000 shares of Common Stock on April 24, 1996, the date of the
initial meeting of the Board of Directors, subject to (a) stockholder approval
of such grant at the 1997 annual stockholder meeting and (b) such other
requirements as may be necessary to exempt the Options and the exercise thereof
from the requirements of Section 16(b) of the Securities Exchange act of 1934,
as amended.

<PAGE> 21

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS. The following exhibits are filed as part of this report:

Exhibit No.
- - -----------

3.(ii) AMENDED AND RESTATED BYLAWS OF BELCO OIL & GAS CORP.
DATED FEBRUARY 5, 1996

10.1 AMENDMENT NO. 1 TO THE CREDIT AGREEMENT DATED AS OF
JANUARY 25, 1996 BETWEEN BELCO ENERGY L.P., A DELAWARE
CORPORATION AND THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), A NATIONAL BANKING ASSOCIATION

10.2 AMENDMENT NO. 2 TO THE CREDIT AGREEMENT DATED AS OF
MARCH 1, 1996 BETWEEN BELCO ENERGY L.P., A DELAWARE CORPORATION
AND THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), A NATIONAL
BANKING ASSOCIATION

10.3 AMENDMENT NO. 3 TO THE CREDIT AGREEMENT DATED
AS OF MARCH 29, 1996 BETWEEN BELCO ENERGY L.P., A DELAWARE
CORPORATION AND THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), A NATIONAL BANKING ASSOCIATION (WITH EXHIBITS)

11.1 COMPUTATION OF EARNINGS PER SHARE

27 FINANCIAL DATA SCHEDULES

(B) REPORTS ON FORM 8-K:

NONE.

<PAGE> 22

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

BELCO OIL & GAS CORP.,
A NEVADA CORPORATION
(REGISTRANT)

Date 5/14/96 /s/ LAWRENCE D. BELFER
------------------------------ ------------------------------
Laurence D. Belfer,
Executive Vice President and
Chief Operating Officer

Date 5/14/96 /s/ DOMINICK J. GOLIO
------------------------------ ------------------------------
Dominick J. Golio,
Vice President - Finance and
Chief Financial Officer

<PAGE> 23
INDEX TO EXHIBITS

3.(ii) AMENDED AND RESTATED BYLAWS OF BELCO OIL & GAS CORP.
DATED FEBRUARY 5, 1996

11.1 COMPUTATION OF EARNINGS PER SHARE

27 FINANCIAL DATA SCHEDULES

<PAGE> 1
Ex - 3(ii)

AMENDED AND RESTATED
BYLAWS

BELCO OIL & GAS CORP.

A Nevada Corporation

Date of Adoption: January 12, 1996
Date of Amendment: February 5, 1996

<PAGE> 2

TABLE OF CONTENTS

ARTICLE 1 IDENTIFICATION................................................ 1
Section 1.01. Name.............................................. 1
Section 1.02. Registered Office and Resident Agent ............. 1
Section 1.03. Other Offices..................................... 1
Section 1.04. Seal.............................................. 1
Section 1.05. Fiscal Year....................................... 1

ARTICLE 2 CAPITAL STOCK................................................. 1
Section 2.01. Consideration for Shares.......................... 1
Section 2.02. Certificates Representing Shares.................. 1
Section 2.03. Transfer of Stock................................. 2
Section 2.04. Regulations....................................... 2

ARTICLE 3 THE SHAREHOLDERS ............................................. 2
Section 3.01. Place of Shareholder Meetings..................... 2
Section 3.02. Annual Shareholder Meeting........................ 2
Section 3.03. Special Shareholder Meetings...................... 2
Section 3.04. Business at Annual Meetings....................... 2
Section 3.05. Notice of Shareholder Meetings.................... 3
Section 3.06. Shareholder Quorum ............................... 3
Section 3.07. Adjourned Shareholder Meetings.................... 4
Section 3.08. Entry of Notice................................... 4
Section 3.09. Voting............................................ 4
Section 3.10. Consent of Absentees.............................. 4
Section 3.11. Action Without Meeting ........................... 5
Section 3.12. Proxies........................................... 5
Section 3.13. Definition of "Shareholder"....................... 5

ARTICLE 4 THE BOARD OF DIRECTORS ....................................... 5
Section 4.01. Number; Term; Election............................ 5
Section 4.02. Nominations....................................... 5
Section 4.03. Vacancies......................................... 7
Section 4.04. Annual Meeting.................................... 7
Section 4.05. Regular Meetings ................................. 8
Section 4.06. Other Meetings.................................... 8
Section 4.07. Notice of Adjourned Meetings...................... 8
Section 4.08. Entry of Notice................................... 8
Section 4.09. Waiver of Notice.................................. 8
Section 4.10. Quorum............................................ 8
Section 4.11. Participation in Meetings by Telephone............ 9

i
<PAGE> 3

Section 4.12. Adjournment....................................... 9
Section 4.13. Action Without Meeting............................ 9
Section 4.14. Fees and Compensation............................. 9
Section 4.15. Limitation of Liability........................... 9
Section 4.16. Indemnification; Advancement of Expenses.......... 9
Section 4.17. Indemnification of Employees and Agents...........10
Section 4.18. Insurance.........................................10
Section 4.19. Powers of Directors...............................10
Section 4.20. Committees........................................10
Section 4.21. Presumption of Assent.............................11

ARTICLE 5 THE OFFICERS..................................................11
Section 5.01. Officers..........................................11
Section 5.02. Election..........................................11
Section 5.03. Subordinate Officers..............................11
Section 5.04. Removal and Resignation...........................11
Section 5.05. Vacancies.........................................12
Section 5.06. Chairman of the Board.............................12
Section 5.07. Chief Executive Officer ..........................12
Section 5.08. President.........................................12
Section 5.09. Vice Presidents...................................12
Section 5.10. Secretary.........................................13
Section 5.11. Assistant Secretaries.............................13
Section 5.12. Treasurer.........................................13
Section 5.13. Assistant Treasurers..............................13
Section 5.14. Corporate Bank Accounts...........................13
Section 5.15. Action with Respect to Securities of
Other Corporations...............................14
Section 5.16. Transfers of Authority............................14

ARTICLE 6 MISCELLANEOUS.................................................14
Section 6.01. Record Date and Closing Stock Books...............14
Section 6.02. Stock List........................................14
Section 6.03. Checks, Drafts, etc. .............................15
Section 6.04. Contracts, etc., How Executed.....................15
Section 6.05. Lost, Stolen, Destroyed or Mutilated
Certificates.....................................15
Section 6.06. Facsimile Signatures..............................15
Section 6.07. Reliance upon Books, Reports and Records..........15
Section 6.08. Inspection of Bylaws..............................16

ARTICLE 7 AMENDMENTS....................................................16
Section 7.01. Power of Shareholders.............................16
Section 7.02. Power of Directors................................16

ii
<PAGE> 4

AMENDED AND RESTATED
BYLAWS
OF
BELCO OIL & GAS CORP.
A NEVADA CORPORATION
(EFFECTIVE FEBRUARY 5, 1996)

ARTICLE 1
IDENTIFICATION

Section 1.01. Name. The name of the Corporation is Belco Oil & Gas
Corp.

Section 1.02. Registered Office and Resident Agent. The address of
the registered office of the Corporation is Suite 1600, One East First Street,
Reno, Nevada. The name of the resident agent at such address is The
Corporation Trust Company of Nevada.

Section 1.03. Other Offices. The principal business office of the
Corporation shall be established by the Board of Directors and branch or
subordinate offices may be established by the Board of Directors.

Section 1.04. Seal. The seal of the Corporation will be circular in
form and mounted upon a metal die, suitable for impressing the same upon paper.
The use of the seal is not necessary on any corporate document and its use or
nonuse shall not in any way affect the legality of the document.

Section 1.05. Fiscal Year. The fiscal year of the Corporation will
be determined by resolution of the Board of Directors.

ARTICLE 2
CAPITAL STOCK

Section 2.01. Consideration for Shares. The capital stock may be
issued for such consideration as shall be fixed from time to time by the Board
of Directors. Treasury shares may be disposed of by the Corporation for such
consideration as may be fixed from time to time by the Board of Directors.

Section 2.02 Certificates Representing Shares. Each holder of the
capital stock of the Corporation is entitled to a certificate in such form as
may be required by applicable law signed by the Chairman of the board, chief
Executive Officer, president or a Vice President, and the Secretary (or an
Assistant Secretary) or the Treasurer (or an Assistant Treasurer), certifying
the number of shares owned by the shareholder in the Corporation.

<PAGE> 5

In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any certificate or
certificates shall cease to be an officer or officers of the Corporation,
whether because of death, resignation or otherwise, before the certificate or
certificates shall have been delivered by the Corporation, the certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed the certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be an officer or officers of the Corporation.

Section 2.03. Transfer of Stock. Transfers of stock shall be made
only upon the transfer books of the Corporation kept in an office of the
Corporation or by transfer agents designated to transfer shares of the stock of
the Corporation.

Section 2.04. Regulations. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.

ARTICLE 3
THE SHAREHOLDERS

Section 3.01. Place of Shareholder Meetings. Meetings of the
shareholders of the Corporation shall be held at the principal executive
offices of the Corporation, or at such other place as may be designated by the
Board of Directors.

Section 3.02. Annual Shareholder Meeting. The annual meeting of the
shareholders shall be held on such date and at such time as the Board of
Directors shall fix for the purposes of electing directors and transacting such
other business as may properly be brought before the meeting.

Section 3.03. Special Shareholder Meetings. Subject to any
restrictions or limitations expressed in the Articles of Incorporation, special
meetings of the shareholders for any proper purpose or purposes may be called
at any time by the Chairman of the Board (if any), the President, a majority of
the Board of Directors or a majority of the Executive Committee of the Board of
Directors (if any) and shall be called by the Chairman of the Board (if any) or
President upon the written request of the holder or holders of 20% or more of
the issued and outstanding capital stock of the Corporation entitled to vote at
the proposed special meeting; special meetings of the shareholders may not be
called by any other person or persons. Only business within the proper purpose
or purposes described in the notice (or waiver thereof) required by these
Bylaws may be conducted at a special meeting of the shareholders.

Section 3.04. Business at Annual Meetings. Except as otherwise
provided by law (including but not limited to Rule 14a-8 of the Securities
Exchange Act of 1934, as amended, or any successor provision thereto) or in
these Bylaws, the business that shall be conducted at any

2
<PAGE> 6

annual meeting of the shareholders shall (a) have been specified in the written
notice of the meeting (or any supplement thereto) given by the Corporation, (b)
be brought before the meeting at the direction of the Board of Directors or the
presiding officer of the meeting, or (c) have been specified in a written
notice given to the Secretary of the Corporation by or on behalf of any
shareholder who shall have been a shareholder of record on the record date for
such meeting and who shall continue to be entitled to vote thereat (the
"Shareholders Notice"), in accordance with all of the following requirements:

(1) Each Shareholder Notice must be delivered to, or mailed
and received at, the principal executive offices of the corporation
not less than ninety (90) days prior to the anniversary date of the
immediately preceding annual meeting.

(2) Each such Shareholder Notice must set forth each of the
following:

(a) the name and address of the shareholder who
intends to bring the business before the meeting;

(b) the general nature of the business which he or
she seeks to bring before the meeting; and

(c) a representation that the shareholder is a
holder of record of the stock of the Corporation entitled to
vote at such meeting and intends to appear in person or by
proxy at the meeting to bring the business specified in the
notice before the meeting.

The presiding officer of the meeting may, in his or her sole
discretion, refuse to acknowledge any business proposed by a shareholder not
made in compliance with the foregoing procedure.

Section 3.05. Notice of Shareholder Meetings. Written notice stating
the place, day and hour of a shareholders' meeting must be delivered not less
than ten (10) days, nor more than sixty (60) days before the date of the
meeting, either personally, or by mail, or by other means of written
communication, charges prepaid, by or at the direction of the Chairman of the
Board, Chief Executive Officer, President, Secretary, or the officer or persons
calling the meeting, to each registered shareholder entitled to vote at the
meeting. If mailed, the notice shall be considered to be delivered when
deposited in the United States mail addressed to the shareholder at the
shareholder's address as it appears on the stock transfer books of the
Corporation, with postage prepaid. If a shareholder gives no address, notice
shall be deemed to have been given to the shareholder if sent by mail or other
written communication addressed to the place where the Corporation's registered
office is located, or if published at least once in some newspaper of general
circulation in the county in which the Corporation's registered office is
located. Waiver by a shareholder in writing of notice of a meeting is
equivalent to giving notice. Attendance by

3
<PAGE> 7

a shareholder, without objection to the notice, whether in person or by proxy,
at a meeting is a waiver of notice of the meeting.

Section 3.06. Shareholder Quorum. A majority of the shares entitled
to vote, represented in person or by proxy, is a quorum at a shareholders'
meeting, unless or except to the extent that the presence of a larger number
may be required by law. Where separate vote by a class or classes is required,
a majority of the shares of such class or classes present in person or
represented by proxy shall constitute a quorum entitled to take action with
respect to that vote on that matter. The shareholders present at a duly
organized meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.

Section 3.07. Adjourned Shareholder Meetings. Any shareholders'
meeting, whether annual or special, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the shares, the
holders of which are either present in person or represented by proxy, but in
the absence of a quorum no other business may be transacted at any
shareholders' meeting.

When any shareholders' meeting, either annual or special, is adjourned
for thirty (30) days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. As to any adjournment of less than thirty
(30) days, it shall not be necessary to give any notice of the time and place
of the adjourned meeting or of the business to be transacted, other than by
announcement at the meeting at which the adjournment is taken.

Section 3.08. Entry of Notice. An entry in the minutes of any
meeting of shareholders, whether annual or special, to the effect that notice
has been duly given shall be conclusive and incontrovertible evidence that due
notice of the meeting was given to all shareholders as required by law and
these Bylaws.

Section 3.09. Voting. Except as otherwise provided by law, only
persons in whose names shares entitled to vote stand on the stock registry of
the Corporation on the day prior to any shareholders' meeting, or, if a record
date for voting purposes is fixed as provided in Article 6, Section 6.01, of
these Bylaws, then on that record date, shall be entitled to vote at the
meeting. Voting shall be by ballots, each of which shall state the
shareholder's name or proxy voting and such other information as may be
required under the procedure established for the meeting. The Corporation may,
and to the extent required by law shall, in advance of any meeting of
shareholders, appoint one or more inspectors to act at the meeting and make
written report thereof. Each vote taken by ballots shall be counted by an
inspector or inspectors appointed by the chairman of the meeting.

Except as otherwise provided by law or by an express provision in the
Articles of Incorporation, or of any Directors' Resolution for a series of
Preferred Stock, each full share is

4
<PAGE> 8

entitled to one vote and, when a quorum is present at the commencement of any
shareholders' meeting, the vote of the holders of a majority of the shares
entitled to vote present, in person or by proxy, shall decide any question
brought before the shareholders' meeting. Fractional shares shall not be
entitled to any voting rights whatsoever.

Section 3.10. Consent of Absentees. The transactions of any
shareholders' meeting, either annual or special and however called and noticed,
shall be as valid as though had at a meeting duly held after regular call and
notice if a quorum be present either in person or by proxy and if, either
before or after the meeting, each of the shareholders entitled to vote, not
present in person or by proxy, signs a written waiver of notice, or a consent
to the holding of the meeting, or an approval of the minutes thereof, all such
waivers, consents or approvals shall be filed with the Secretary or be made a
part of the minutes of the meeting.

Section 3.11. Action Without Meeting. Subject to any restrictions or
limitations expressed in the Articles of Incorporation, any action which, under
applicable provisions of law, may be taken or ratified at a meeting of the
shareholders, may be taken or ratified without a meeting if authorized in
writing by shareholders holding the requisite voting power. In no instance
where action is taken by written consent need a meeting of the shareholders be
called or noticed. The Board of Directors may fix a record date to determine
the shareholders entitled to sign the written consent. If no record date has
been fixed by the Board of Directors, the record date for determining
shareholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by the
Nevada Private Corporation Law, shall be the earliest date that a shareholder
signed the written consent. All written consents shall be filed with the
minutes of the proceeding of the shareholders.

Section 3.12. Proxies. Every person entitled to vote or execute
consents shall have the right to do so either in person or by an agent or
agents authorized by a written proxy executed by the person or by the person's
duly authorized agent and filed with the Secretary of the Corporation;
provided, that no proxy shall be valid after the expiration of eleven (11)
months from the date of its execution unless the person executing it specified
therein the length of time for which the proxy is to continue in force, which
in no event shall exceed seven (7) years from the date of its execution.

Section 3.13. Definition of "Shareholder". As used in these Bylaws,
the term "shareholder", and any term of like import, shall include all persons
entitled to vote the shares held by a shareholder, unless the context in which
the term is used indicates that a different meaning is intended.

ARTICLE 4
THE BOARD OF DIRECTORS

5
<PAGE> 9

Section 4.01. Number; Term; Election. The number of directors shall
be fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exists any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption) but the number shall be not less than one (1) nor more than ten (10).

In the case of any vacancy on the Board of Directors, including a
vacancy created by an increase in the number of directors, the vacancy shall be
filled by election of the Board of Directors with the director so elected to
serve for the remainder of the term of the director being replaced or, in the
case of an additional director, until the next annual meeting of the
shareholders. All directors shall continue in office until the election and
qualification of their respective successors in office. No decrease in the
number of directors shall have the effect of shortening the term of any
incumbent director. Election of directors need not be by written ballot unless
the Bylaws so provide.

Section 4.02. Nominations. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the board of directors at
the annual meeting shall be made by the Board of Directors or, at the direction
of the Board of Directors, may be made by any Nominating Committee or person
appointed by the Board of Directors; nominations may also be made by any
shareholder of the Corporation entitled to vote for the election of directors
at the meeting who complies with the notice procedures set forth in this
Section 4.02. Such nomination, other than those made by or at the direction of
the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice shall
be delivered to or mailed and received at the principal executive office of the
Corporation (i), with respect to an election to be held at an annual meeting of
the shareholders of the Corporation, not less than ninety (90) days prior to
the anniversary date of the immediately preceding annual meeting of
shareholders of the Corporation and (ii), with respect to an election to be
held at a special meeting of shareholders of the Corporation, not later than
the than the earlier of (a) the close of business on the tenth (10th) day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs, or (b) two (2) days
prior to the date of the meeting.

Such shareholder's notice to the Secretary shall set forth

(a) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, each of the
following:

(i) the name, age, business address and residence
address of the person;

(ii) the principal occupation or employment of the
person;

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(iii) the class and number of shares of capital
stock of the Corporation that are beneficially owned by the
person;

(iv) a statement as to the person's citizenship; and

(v) any other information relating to the person
that is required to be disclosed in solicitations for proxies
for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder; and

(b) as to the shareholder giving the notice, each of the
following:

(i) the name and record address of the shareholder
giving the notice;

(ii) the name and record address of the shareholder;
and

(iii) the class, series and number of shares of
capital stock of the Corporation that are beneficially owned
by the shareholder.

The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as director of the Corporation.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth herein.

In connection with any annual meeting, the Chairman of the Board or
the Chief Executive Officer or such officer presiding at the meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure and that the defective
nomination shall be disregarded.

Section 4.03. Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining
Directors though less than a quorum of the Board of Directors was present, or
by a sole remaining Director. A Director elected to fill a vacancy shall be
elected for the unexpired term of the Director's predecessor in office.

A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any Director, or if the
authorized number of Directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders at which any Director or Directors
are elected to elect the full authorized number of Directors to be voted for at
that meeting, or if a vacancy is declared by the Board of Directors for any
reason permitted by law.

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The shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Board of Directors. If the Board of
Directors accepts the resignation of a Director tendered to take effect at a
future time, the Board of Directors shall have power to elect a successor to
take office when the resignation is to become effective.

No reduction of the authorized number of Directors shall have the
effect of removing any Director prior to the expiration of the Director's term
of office.

Section 4.04. Annual Meeting. Immediately after the annual meeting
of the shareholders, at the same place as the meeting of the shareholders or
such other place as may be provided in a notice thereof, the Board of Directors
shall meet each year for the purpose of organization, election of officers, and
consideration of any other business that may properly be brought before the
meeting. No notice of any kind to either old or new members of the Board of
Directors for this annual meeting shall be necessary unless the meeting is to
be held at a place other than the place of the meeting of the shareholders, in
which case notice of the place of the meeting shall be given as provided in
Section 4.06.

Section 4.05. Regular Meetings. Regular meetings of the Board of
Directors shall be held at the times and places within or without the State of
Nevada as may be designated from time to time by resolution of the Board of
Directors or by written consent of all members of the Board of Directors. No
notice of any kind to members of the Board of Directors for these regular
meetings shall be necessary unless the meeting is to be held at a place other
than the principal executive office of the Corporation, in which case notice of
the place of the meeting shall be given as provided in Section 4.06.

Section 4.06. Other Meetings. Other meetings of the Board of
Directors for any purpose or purposes may be held at any time upon call by the
Chairman of the Board, Chief Executive Officer, President or, if any of the
above listed officers is absent or unable or refuses to act, by any Vice
President or by any two (2) Directors. The other meetings may be held at any
place within or without the State of Nevada as may be designated from time to
time by resolution of the Board of Directors or by written consent of all
Directors.

Written notice of the time and place of other meetings shall be given
personally to each Director or sent to each Director by mail (postage prepaid),
facsimile or other form of written communication at least twenty-four (24)
hours prior to the time of the holding of the meeting.

Section 4.07. Notice of Adjourned Meetings. Notice of the time and
place of holding an adjourned meeting need not be given to absent Directors if
the time and place be fixed at the meeting adjourned.

Section 4.08. Entry of Notice. An entry in the minutes of any
special meeting of the Board of Directors to the effect that notice has been
duly given shall be conclusive and

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<PAGE> 12

incontrovertible evidence that due notice of the special meeting was given to
all Directors as required by law and by these Bylaws.

Section 4.09. Waiver of Notice. The transactions of any meeting of
the Board of Directors, however called and noticed or wherever held, shall be
as valid as though had at a meeting duly held after regular call and notice, if
a quorum be present, and if, either before or after the meeting, each of the
Directors not present signs a written waiver of notice or a consent to the
holding of the meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.

Section 4.10. Quorum. A majority of the Directors then in office
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or made
by a majority of the Directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of Directors unless a
greater number or different vote be required by the Articles of Incorporation,
these Bylaws or applicable law.

Section 4.11. Participation in Meetings by Telephone. Members of the
Board of Directors, or of any committee thereof, may participate in any meeting
of the Board of Directors or committee by means of telephone conference or
similar communications by which all persons participating in the meeting can
hear each other and such participation shall constitute presence in person at
such meeting.

Section 4.12. Adjournment. A quorum of the Directors may adjourn any
Directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the Directors present at any
Directors' meeting either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board of Directors.

Section 4.13. Action Without Meeting. Any action required or
permitted to be taken by the Board of Directors under the Articles of
Incorporation, these Bylaws, or under applicable law, may be taken without a
meeting if all members of the Board of Directors shall individually or
collectively consent, in writing, before or after the action, to the action.
Any action by written consent shall have the same force and effect as a
unanimous vote of all Directors. All written consents must be filed with the
Secretary.

Section 4.14. Fees and Compensation. Directors shall not receive any
stated salary for their services as Directors or as members of committees, but,
by resolution of the Board of Directors, a fee or other compensation, with or
without expenses of attendance, may be allowed to Directors for the Director's
services. Nothing herein contained shall be construed to preclude

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<PAGE> 13

any Director from serving the Corporation in any other capacity as an officer,
agent, employee or otherwise, and receiving compensation therefor.

Section 4.15. Limitation of Liability. To the fullest extent
permitted by law, a director shall have no personal liability to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director. Any amendment to or repeal of this Section 4.15 shall not
adversely affect any right or protection of a director of the Corporation for
or with respect to any acts or omissions of such director occurring prior to
such amendment or repeal. In the event that the Nevada Private Corporation
Law is amended, after the filing of the Articles of Incorporation, to authorize
corporate action further eliminating or limiting the personal liability of an
officer or director, then the liability of an officer or director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Nevada Private Corporation Law, as so amended.

Section 4.16. Indemnification; Advancement of Expenses. The
Corporation shall indemnify the officers and directors of the Corporation to
the fullest extent permitted by the Nevada Private Corporation Law as the same
exists or may hereafter be amended.

The Corporation shall pay the expenses incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount if it should be ultimately determined
that he/she is not entitled to be indemnified by the Corporation as authorized
by the Nevada Private Corporation Law.

All rights to indemnification and to the advancement of expenses
granted herein shall be deemed to arise out of a contract between the
Corporation and each person who is entitled to indemnification from the
Corporation and this right may be evidenced by a separate contract between the
Corporation and each indemnified person; and such rights shall be effective in
respect of all actions commenced after the date of the commencement of the
corporate existence of the Corporation, whether arising from acts or omissions
occurring before or after such date.

Any amendment, modification or repeal of any of the provisions in this
Section 4.16 shall not adversely affect any right or protection of an officer
or director of the Corporation for or with respect to any act or omission of
such director occurring prior to such amendment or repeal.

Section 4.17. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent permitted by
the provisions of Section 4.16 of these Bylaws, the Articles of Incorporation
and the Nevada Private Corporations Law.

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Section 4.18. Insurance. The Corporation may purchase and maintain
insurance or make other financial arrangements on behalf of any person who is
entitled to be indemnified against any liability asserted or expense incurred
by such person in connection with any action, whether or not the Corporation
would have the power to indemnify such person against such liability or expense
by law or under the Articles of Incorporation or these Bylaws. Such other
financial arrangements may include, without limitation, the creation of a trust
fund, the establishment of a program of self-insurance, the grant of a security
interest or other lien on any assets of the Corporation, or the establishment
of a letter or credit, guaranty or surety, all to the extent not prohibited by
applicable law. The Corporation's indemnity of any person who is entitled to
indemnification shall be reduced by any amounts such person may collect with
respect to such liability (i) under any policy of insurance purchased and
maintained on his or her behalf by the Corporation or (ii) from any other
entity or enterprise served by such person.

Section 4.19. Powers of Directors. The Board of Directors may,
except as otherwise provided or required by law, exercise all such powers and
do all such acts and things as may be exercised or done by the Corporation.

Section 4.20. Committees. The Board of Directors, by resolution
passed by a majority of the Directors then in office, may from time to time
designate committees of the Board of Directors, including, without limitation,
Executive, Nomination, Audit and Compensation Committees with such lawfully
delegable powers and duties as the Board of Directors may confer, to serve at
the pleasure of the Board of Directors and shall elect one or more directors to
serve on such committees. Except as otherwise provided in these Bylaws or by
resolution of the Board of Directors, each committee may fix its own rules of
procedure and shall hold its meetings as provided by such rules.

Section 4.21. Presumption of Assent. A director of the Corporation
who is present at the meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting, or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by certified or registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right of dissent shall
not apply to a director who voted in favor of such action.

ARTICLE 5
THE OFFICERS

Section 5.01. Officers. The officers of the Corporation shall be a
president, treasurer and secretary. The Corporation may also have, at the
discretion of the Board of Directors, a Chairman of the Board, one or more
vice presidents (any one or more of whom may be designated Executive Vice
President or Senior Vice President), one or more assistant treasurers, one or
more

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assistance secretaries, and such other officers as may be designated from time
to time by the Board of Directors. Any number of offices may be held by the
same person.

Section 5.02. Election. The officers of the Corporation, except
those officers as may be appointed in accordance with the provisions of Section
5.03 or Section 5.05 of this Article, shall be elected annually by the Board of
Directors, and each shall hold office until the officer shall resign or shall
be removed or otherwise disqualified to serve, or the officer's successor shall
be elected and qualified; provided that officers may be elected at any time by
the Board of Directors, or, as permitted by Section 5.03 of this Article,
appointed by the Chairman of the Board, for the purpose of initially filling an
office or filling a newly created or vacant office.

Section 5.03. Subordinate Officers. The Board of Directors may
elect, and may empower the Chairman of the Board or Chief Executive Officer to
appoint, such other officers as the business of the Corporation may require,
each of whom shall hold office for the term, have the authority and perform the
duties as are provided in these Bylaws or as the Board of Directors may from
time to time determine.

Section 5.04. Removal and Resignation. Any officer may, subject to
any contractual arrangements between the officer and the Corporation, be
removed, either with or without cause, by a majority of the Directors in office
at the time, at any regular or special meeting of the Board of Directors, or,
unless otherwise specified by the Board of Directors, by the Chairman of the
Board or any other officer upon whom a general or special power of removal may
be conferred by the Board of Directors.

Any officer may resign at any time by giving written notice to the
Board of Directors or to the Chairman of the Board, President or Secretary of
the Corporation. Any resignation shall take effect at the date of the receipt
of the notice or at any later time specified therein, and, unless otherwise
specified therein, the acceptance of a resignation shall not be necessary to
make it effective.

Section 5.05. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in these Bylaws for regular appointments to that office.

Section 5.06. Chairman of the Board. The Chairman of the Board, if
there be such officer, shall, if present, preside at all meetings of the Board
of Directors and shareholders and exercise and perform such other powers and
duties as may be from time to time assigned to him or her by the Board of
Directors or prescribed by these Bylaws. If there is not a Chief Executive
Officer, the Chairman of the Board shall, in addition, be the Chief Executive
Officer of the Corporation and shall have the powers and duties prescribed in
Section 5.07 of Article 5 of these Bylaws.

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Section 5.07. Chief Executive Officer. The President shall be the
chief executive officer of the Corporation unless the Board of Directors
designates the Chairman of the Board or other officer as the chief executive
officer. Subject to the control of the Board of Directors, the chief executive
officer shall have general executive charge, management and control of the
properties, business and operations of the Corporation with all such powers as
may be reasonably incident to such responsibilities; he may agree upon and
execute all leases, contracts, evidences of indebtedness and other obligations
in the name of the Corporation and may sign all certificates for shares of
capital stock of the Corporation; and he shall have such other powers and
duties as designated in accordance with these Bylaws and as may be assigned to
him from time to time by the Board of Directors.

Section 5.08. President. Unless otherwise determined by the Board of
Directors, the President shall have the authority to agree upon and execute all
leases, contracts, evidences of indebtedness and other obligations in the name
of the Corporation and he shall, in the absence of the Chairman of the Board or
if there be no Chairman of the Board, preside at all meetings of the
shareholders and (if a director) of the Board of Directors; and the President
shall have such other powers and duties as designated in accordance with these
Bylaws and as may be assigned to him from time to time by the Board of
Directors.

Section 5.09. Vice Presidents. Each Vice President shall perform
such duties and have such powers as the Board of Directors may from time to
time prescribe. In addition, in the absence of the Chairman of the Board (if
any) or President, or in the event of their inability or refusal to act, a Vice
President designated by the Board of Directors or, in the absence of such
designation, the Vice President who is present and who is senior in terms of
title (if two or more Vice Presidents are of equal title, then, among them, the
one who is senior in terms of time as a Vice President of the Corporation),
shall perform the duties of the Chairman of the Board (if any) or the
President, as the case may be, and when so acting shall have all the powers of
and be subject to all the restrictions upon the Chairman of the Board (if any)
or the President, as the case may be; provided, however, that such Vice
President shall not preside at meetings of the Board of Directors unless he is
a director.

Section 5.10. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors, committees of directors and of the
shareholders in books provided for such purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the
seal of the Corporation to all contracts of the Corporation and attest thereto;
he may sign with the other appointed officers all certificates for shares of
capital stock of the Corporation; he shall have charge of the certificate
books, transfer books and stock ledgers, and such other books and papers as the
Board of Directors may direct, all of which shall at all reasonable times be
open to inspection by any Director upon application at the office of the
Corporation during business hours; he shall have such other powers and duties
as designated in accordance with these Bylaws and as may be prescribed from
time to time by the Board of Directors; and he shall in general perform all

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acts incident to the office of Secretary, subject to the control of the Chief
Executive Officer and the Board of Directors.

Section 5.11. Assistant Secretaries. Each Assistant Secretary (if
any) shall have the usual powers and duties pertaining to his office, together
with such other powers and duties as designated in accordance with these Bylaws
and as may be prescribed from time to time by the chief executive officer, the
Board of Directors or the Secretary. The Assistant Secretaries shall exercise
the powers of the Secretary during the Secretary's absence or inability or
refusal to act.

Section 5.12. Treasurer. The Treasurer shall have responsibility for
the custody and control of all the funds and securities of the Corporation, and
he shall have such other powers and duties as designated in accordance with
these Bylaws and as may be prescribed from time to time by the Board of
Directors. He shall perform all acts incident to the position of Treasurer,
subject to the control of the chief executive officer and the Board of
Directors; the Treasurer shall, if required by the Board of Directors, give
such bond for the faithful discharge of his duties in such form as the Board of
Directors may require.

Section 5.13. Assistant Treasurers. Each Assistant Treasurer (if
any) shall have the usual powers and duties pertaining to his office, together
with such other powers and duties as designated in accordance with these Bylaws
and as may be prescribed from time to time by the Treasurer, the chief
executive officer or the Board of Directors. The Assistant Treasurers shall
exercise the powers of the Treasurer during the Treasurer's absence or
inability or refusal to act.

Section 5.14. Corporate Bank Accounts. Bank accounts in the name of
the Corporation may be opened without the approval of the Board of Directors if
opened with the consent of both the Chief Executive Officer and the Treasurer.
The Treasurer shall inform the Board of Directors of any bank account opened by
the Chief Executive Officer and the Treasurer pursuant to the authority granted
in this section at the next meeting of the Board of Directors.

Section 5.15. Action with Respect to Securities of Other
Corporations. Unless otherwise determined by the Board of Directors, the
Chairman of the Board, President and Chief Executive Officer shall each have
the power to vote and to otherwise act on behalf of the Corporation, in person
or by proxy, at any meeting of security holders of any other corporation, or
with respect to any action of security holders thereof, in which this
Corporation may hold securities and otherwise to exercise any and all rights
and powers which this Corporation may possess by reason of its ownership of
securities in such other corporation.

Section 5.16. Transfers of Authority. In case of the absence of any
officer of the Corporation, or for any reason that the Board of Directors may
consider sufficient, the Board of Directors may transfer the powers or duties
of that officer to any other officer or to any Director or employee of the
Corporation, provided a majority of the Board of Directors concurs.

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ARTICLE 6
MISCELLANEOUS

Section 6.01. Record Date and Closing Stock Books. The Board of
Directors may fix a time in the future, as a record date for the determination
of the shareholders entitled to notice of and to vote at any meeting of
shareholders, or entitled to receive any dividend or distribution, or any
allotment of rights, or to exercise rights in respect to any change, conversion
or exchange of shares. The record date so fixed shall not be more than sixty
(60) days prior to the date of the meeting or event for the purposes of which
it is fixed. When a record date is so fixed, only shareholders of record on
that date shall be entitled to notice of and to vote at the meeting, or to
receive the dividend, distribution or allotment of rights, or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the Corporation after the record date. The Board of Directors may
close the books of the Corporation against transfers of shares during the whole
or any part of the sixty (60) day period.

Section 6.02. Stock List. The officer or agent having charge of the
share transfer records of the Corporation shall prepare and make, at least ten
(10) days prior to each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order for each class of stock, with the address of and
the number of shares held by each, which list, for a period of ten (10) days
prior to such meeting, shall be kept on file at the registered office or
principal place of business of the Corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to inspection by any shareholder during the course of the
meeting. The original share transfer records shall be prima facie evidence as
to the identity of those shareholders entitled to examine such voting list or
transfer records or to vote at any meeting of shareholders. Failure to comply
with the requirements of this Section 6.02 shall not affect the validity of any
action taken at such meeting.

Section 6.03. Checks, Drafts, etc. All checks, drafts, bonds, bills
of exchange, or other orders for payment of money, notes, or other evidences of
indebtedness issued in the name of or payable to the Corporation shall be
signed or endorsed by such person or persons and in such manner as, from time
to time, shall be determined by resolution of the Board of Directors.

Section 6.04. Contracts, etc., How Executed. The Board of Directors,
except otherwise provided in these Bylaws, may authorize any officer or
officers, agent or agents, to enter into any contract or execute any instrument
or document in the name of and on behalf of the Corporation, and the authority
may be general or confined to specific instances. Unless otherwise
specifically determined by the Board of Directors or otherwise required by law,
formal contracts, promissory notes and other evidences of indebtedness, deeds
of trust, mortgages and corporate instruments or documents requiring the
corporate seal, and certificates for shares of stock owned by the Corporation
shall be executed, signed or endorsed by the President (or any Vice President)
and by the Secretary (or any Assistant Secretary) or the Treasurer (or any
Assistant Treasurer). The

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<PAGE> 19

Board of Directors may, however, authorize any one (1) of these officers to
sign any of such instruments, for and on behalf of the Corporation, without
necessity of countersignature; may designate officers or employees of the
Corporation, other than those named above, who may, in the name of the
Corporation, sign such instruments; and may authorize the use of facsimile
signatures for any of such persons. No officer, agent or employee shall have
any power or authority to bind the Corporation by any contract or engagement or
to pledge its credit to render it liable for any purpose or to any amount
except as specifically authorized in these Bylaws or by the Board of Directors
in accordance with these Bylaws.

Section 6.05. Lost, Stolen, Destroyed or Mutilated Certificates. The
Board of Directors may direct a new certificate or certificates to be issued in
place of a certificate or certificates theretofore issued by the Corporation
and alleged to have been lost, stolen, mutilated or destroyed upon the making
of an affidavit of that fact by the person claiming the certificate or
certificates representing shares to be lost, stolen, mutilated or destroyed;
and may, in its discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety, to indemnify the
Corporation and each transfer agent and registrar against any and all losses or
claims which may arise by reason of the issuance of a new certificate in the
place of the one so lost, stolen, mutilated or destroyed.

Section 6.06. Facsimile Signatures. In addition to the provisions
for the use of facsimile signatures specifically authorized elsewhere in these
bylaws, facsimile signatures of any officer or officers of the Corporation may
be used whenever and as authorized by the Board of Directors.

Section 6.07. Reliance upon Books, Reports and Records. A member of
the Board of Directors, or a member of any committee thereof, shall be fully
protected in relying in good faith upon the records of the Corporation and upon
such information, opinions, reports or statements presented to the Corporation
by any of its officers or employees, or committees of the Board of Directors,
or by any other person as to matters the director reasonably believes are
within such other person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Corporation.

Section 6.08. Inspection of Bylaws. The Corporation shall keep in
its registered office for the transaction of business the original or a copy of
the Bylaws as amended or otherwise altered to date, certified by the Secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.

ARTICLE 7
AMENDMENTS

Section 7.01. Power of Shareholders. New Bylaws may be adopted or
these Bylaws may be amended or repealed by the vote or written assent of
shareholders entitled to exercise a

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<PAGE> 20

majority of the voting power of the Corporation, unless a greater number is
required by law, by the Articles of Incorporation or by these Bylaws.

Section 7.02. Power of Directors. Subject to the right of
shareholders as provided in Section 7.01 of this Article 7 to adopt, amend or
repeal these Bylaws, these Bylaws may be adopted, amended, or repealed by the
Board of Directors.

<PAGE> 1
Ex - 10.1

[EXECUTION COUNTERPART]

AMENDMENT NO. 1

AMENDMENT NO. 1 dated as of January 25, 1996, between BELCO
ENERGY L.P., a limited partnership duly organized and validly existing under
the laws of the State of Delaware (the "Borrower") and THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), a national banking association (the "Bank").

The Borrower and the Bank are parties to a Credit Agreement
dated as of December 1, 1994 (as heretofore modified and supplemented and in
effect on the date hereof, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for loans to be made by the Bank to the Borrower
in an aggregate principal amount not exceeding $25,000,000. The Borrower has
requested, and the Bank has agreed, to increase the amount of such loans that
may be made available under the Credit Agreement from $25,000,000 to
$30,000,000 on the terms and conditions hereof. Accordingly, the parties
hereto hereby agree as follows:

Section 1. Definitions. Except as otherwise defined in this
Amendment No. 1, terms defined in the Credit Agreement are used herein as
defined therein.

Section 2. Amendments. Subject to the satisfaction of the
conditions precedent specified in Section 6 below, the Credit Agreement shall
be amended as follows:

A. General. References in the Credit Agreement (including
references to the Credit Agreement as amended hereby) to "this Agreement" (and
indirect references such as "hereunder", "hereby", "herein" and "hereof") shall
be deemed to be references to the Credit Agreement as amended hereby.
References in the Credit Agreement to "the Note" shall be deemed to include
reference to the New Note under and as defined in Section 6(B) hereof.

B. Definitions. Section 1.1 of the Credit Agreement shall be
amended by amending the definition of "Commitment" therein to read as follows:

"Commitment" means Thirty Million U.S. Dollars
($30,000,000.00), as such amount may be reduced or terminated pursuant
to Article VII.

Section 3. Borrowing Base Redetermination. Subject to the
satisfaction of the conditions precedent specified in Section 6 below, the
Borrowing Base shall be set at $30,000,000, subject to further redeterminations
thereof pursuant to the terms and conditions of the Credit Agreement
(including, without limitation, Section 2.2 thereof).

Amendment No. 1
<PAGE> 2
- 2 -

Section 4. Commitment Fee. Notwithstanding that the increase
of the Commitment contemplated by Section 2 hereof shall not become effective
until the satisfaction of the conditions precedent specified in Section 6
hereof, for purposes of calculating the amount of commitment fee payable under
Section 2.6 of the Credit Agreement, the Commitment shall be deemed to have
been so increased immediately upon the execution of this Amendment No. 1 by the
Bank.

Section 5. Representations and Warranties. The Borrower
represents and warrants to the Bank that the representations and warranties set
forth in Article IV of the Credit Agreement and in the Funding Agreement are
true and complete on the date hereof as if made on and as of the date hereof
and as if each reference in said Article IV and in the Funding Agreement to
"this Agreement" and "the Note" included reference to this Amendment No. 1 and
to the New Note.

Section 6. Conditions Precedent. As provided in Sections 2
and 3 above, the amendments to the Credit Agreement set forth in said Section 2
and the redetermination of the Borrowing Base pursuant to said Section 3 shall
each become effective upon the satisfaction of the following conditions
precedent:

A. Execution by All Parties. This Amendment No. 1 shall
have been executed and delivered by each of the parties hereto.

B. New Note. If requested by the Bank, the Borrower shall
have delivered to the Bank, in exchange for the Note heretofore
delivered to the Bank pursuant to Section 3.01(a)(i) of the Credit
Agreement, a new promissory note of the Borrower in substantially the
form of Exhibit C to the Credit Agreement, dated the date hereof,
payable to the Bank in a principal amount equal to its Commitment (as
increased hereby) and otherwise duly completed (the "New Note"), and
the New Note shall constitute the "Note" under the Credit Agreement as
amended hereby.

C. Documents. The Bank shall have received the following
documents, each of which shall be satisfactory to it in form and
substance:

(1) Corporate and Partnership Documents. If
requested by the Bank, certified copies of the charter and
by-laws (or equivalent documents) of each General Partner (or,
in the alternative, a certification to the

Amendment No. 1
<PAGE> 3

- 3 -

effect that none of such documents has been modified since
delivery thereof pursuant to Section 3.01(a) of the Credit
Agreement) and of all partnership and corporate authority for
each General Partner (including, without limitation, board of
director resolutions and evidence of the incumbency of
officers for each General Partner) with respect to the
execution, delivery and performance of this Amendment No. 1
and the Credit Agreement as amended hereby and the Advances
under the Credit Agreement as amended hereby, the New Note and
each other document to be delivered by each General Partner
from time to time in connection with the Credit Agreement as
amended hereby (and the Bank may conclusively rely on such
certificate until it receives notice in writing from each
General Partner to the contrary).

(2) Opinion of Counsel to the Borrower. If
requested by the Bank, an opinion of Vinson & Elkins, counsel
to the Belco Oil & Gas Corp. (and the Belco Oil & Gas Corp.
hereby instructs such counsel to deliver such opinion to the
Bank).

(3) Consents. (i) The consent of Belco G.P. to the
increase in the amount of the Commitment, and acknowledgement
that the New Note shall constitute the "Note", for purposes of
the Funding Agreement; and (ii) the consent of Robert A.
Belfer to the increase in the amount of the Commitment for
purposes of the Title Guaranty, each as evidenced by their
execution of this Amendment No. 1 under the caption "CONSENTS"
on the signature pages hereof.

(4) Other Documents. Such other documents as the
Bank may reasonably request.

(D) Fees and Expenses. The Bank shall have received evidence
satisfactory to it that all fees and expenses that the Borrower shall
have heretofore agreed to pay in connection with this Amendment No. 1
(including, without limitation, the fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to the Bank, in
connection with the negotiation, preparation, execution and delivery
of this Amendment No. 1 and the New Note) shall have been paid.

Section 7. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and

Amendment No. 1
<PAGE> 4

- 4 -

effect. This Amendment No. 1 may be executed in any number of counterparts,
all of which taken together shall constitute one and the same amendatory
instrument and any of the parties hereto may execute this Amendment No. 1 by
signing any such counterpart. This Amendment No. 1 shall be governed by, and
construed in accordance with, the law of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the day and year first
above written.

BELCO ENERGY L.P.

By: BELCO OIL AND GAS CORP.,
a general partner

By: Robert A. Belfer
--------------------------------
President

By: LDB CORP., a general partner

By: Laurence D. Belfer
--------------------------------
President

THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)

By: Andrew Oram
--------------------------------
Vice President

Amendment No. 1
<PAGE> 5

- 5 -

CONSENTS:

The undersigned hereby consents
to the increase in the amount of
the Commitment, and acknowledges
that the New Note shall constitute
the "Note", for purposes of the
Funding Agreement:

BELCO OIL AND GAS CORP.

By: Robert A. Belfer
-----------------------------
President

The undersigned hereby consents
to the increase in the amount of
the Commitment for purposes of
the Title Guaranty:

Robert A. Belfer
- - ---------------------------------
Robert A. Belfer

Amendment No. 1

<PAGE> 1
Ex - 10.2

[EXECUTION COUNTERPART]

AMENDMENT NO. 2

AMENDMENT NO. 2 dated as of March 1, 1996 between BELCO ENERGY L.P., a
limited partnership duly organized and validly existing under the laws of the
State of Delaware (the "Borrower") and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association (the "Bank").

The Borrower and the Bank are parties to a Credit Agreement dated as of
December 1, 1994 (as amended by Amendment No. 1 dated as of January 25, 1996
and as otherwise modified and supplemented and in effect on the date hereof,
the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for loans to be made by the Bank to the Borrower in an aggregate
principal amount not exceeding $30,000,000. The Borrower has requested, and
the Bank has agreed, to increase the amount of such loans that may be made
available during the period prior to August 30, 1996 under the Credit Agreement
from $30,000,000 to $40,000,000 on the terms and conditions hereof.
Accordingly, the parties hereto hereby agree as follows:

Section 1. Definitions. Except as otherwise defined in this Amendment
No. 2, terms defined in the Credit Agreement are used herein as defined
therein.

Section 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Section 6 below, the Credit Agreement shall be amended
as follows:

A. General. References in the Credit Agreement (including references
to the Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder", "hereby", "herein" and "hereof") shall be
deemed to be references to the Credit Agreement as amended hereby. References
in the Credit Agreement to "the Note" shall be deemed to include reference to
the New Note under and as defined in Section 6(B) hereof.

B. Definitions. Section 1.1 of the Credit Agreement shall be amended
by amending the definition of "Commitment" therein to read as follows:

"Commitment" means Forty Million U.S. Dollars ($40,000,000.00), as
such amount may be reduced pursuant to Section 2.1(c) or reduced or
terminated pursuant to Article VII.

C. Commitment Reduction. Section 2.1 of the Credit Agreement shall be
amended by adding thereto a new paragraph (c) reading as follows:

Amendment No. 2

<PAGE> 2

- 2 -

"(c) Commitment Reduction. The Borrower shall have the right, upon
not less than three Business Days' notice to the Bank, to reduce the Bank's
Commitment to Thirty Million U.S. Dollars ($30,000,000), which
reduction would be effective on and as of May 31, 1996. Unless previously
reduced in accordance with the preceding sentence, the Bank's Commitment
shall automatically be reduced to Thirty Million U.S. Dollars
($30,000,000.00) on August 30, 1996. Once terminated or reduced, the
Bank's Commitment may not be reinstated."

D. Repayment. Section 2.5 of the Credit Agreement shall be restated to
read in its entirety as follows:

"2.5 Repayment of Advances. The Borrower shall repay the Bank the
outstanding principal amount of each Advance on the Maturity Date. In
addition, if following any reduction in the Bank's Commitment pursuant to
Section 2.1(c), the aggregate principal amount of the Advances exceeds the
Bank's Commitment as then in effect, the Borrower shall pay Advances in an
aggregate amount equal to such excess."

Section 3. Borrowing Base Redetermination. Subject to the satisfaction
of the conditions precedent specified in Section 6 below, the Borrowing Base
shall be set at $40,000,000, subject to further redeterminations thereof
pursuant to the terms and conditions of the Credit Agreement (including,
without limitation, Section 2.2 thereof).

Section 4. Commitment Fee. Notwithstanding that the increase of the
Commitment contemplated by Section 2 hereof shall not become effective until
the satisfaction of the conditions precedent specified in Section 6 hereof, for
purposes of calculating the amount of commitment fee payable under Section 2.6
of the Credit Agreement, the Commitment shall be deemed to have been so
increased immediately upon the execution of this Amendment No. 2 by the Bank.

Section 5. Representations and Warranties. The Borrower represents and
warrants to the Bank that the representations and warranties set forth in
Article IV of the Credit Agreement and in the Funding Agreement are true and
complete on the date hereof as if made on and as of the date hereof and as if
each reference in said Article IV and in the Funding Agreement to "this
Agreement" and "the Note" included reference to this Amendment No. 2 and to the
New Note.

Amendment No. 2
<PAGE> 3
- 3 -

Section 6. Conditions Precedent. As provided in Sections 2 and 3
above, the amendments to the Credit Agreement set forth in said Section 2 and
the redetermination of the Borrowing Base pursuant to said Section 3 shall each
become effective upon the satisfaction of the following conditions precedent:

A. Execution by All Parties. This Amendment No. 2 shall have been
executed and delivered by each of the parties hereto.

B. New Note. The Borrower shall have delivered to the Bank, in
exchange for the Note heretofore delivered to the Bank pursuant to Section
3.01(a)(i) of the Credit Agreement, a new promissory note of the Borrower
in substantially the form of Exhibit C to the Credit Agreement, dated the
date hereof, payable to the Bank in a principal amount equal to its
Commitment (as increased hereby) and otherwise duly completed (the "New
Note"), and the New Note shall constitute the "Note" under the Credit
Agreement as amended hereby.

C. Documents. The Bank shall have received the following documents,
each of which shall be satisfactory to it in form and substance:

(1) Corporate and Partnership Documents. Certified copies of
the charter and by-laws (or equivalent documents) of each General
Partner (or, in the alternative, a certification to the effect that
none of such documents has been modified since delivery thereof
pursuant to Section 3.01(a) of the Credit Agreement) and of all
partnership and corporate authority for each General Partner
(including, without limitation, board of director resolutions and
evidence of the incumbency of officers for each General Partner) with
respect to the execution, delivery and performance of this Amendment
No. 2 and the Credit Agreement as amended hereby and the Advances under
the Credit Agreement as amended hereby, the New Note and each other
document to be delivered by each General Partner from time to time in
connection with the Credit Agreement as amended hereby (and the Bank
may conclusively rely on such certificate until it receives notice in
writing from each General Partner to the contrary).

Amendment No. 2

<PAGE> 4

- 4 -

(2) Opinion of Counsel to the Borrower. An opinion of Vinson
& Elkins or such other legal counsel to the Belco Oil & Gas Corp.
as may be satisfactory to the Bank (and the Belco Oil & Gas Corp. hereby
instructs such counsel to deliver such opinion to the Bank).

(3) Consents. (i) The consent of Belco G.P. to the increase
in the amount of the Commitment, and acknowledgement that the New
Note shall constitute the "Note", for purposes of the Funding
Agreement; and (ii) the consent of Robert A. Belfer to the increase in
the amount of the Commitment for purposes of the Title Guaranty, each
as evidenced by their execution of this Amendment No. 2 under the
caption "CONSENTS" on the signature pages hereof.

(4) Other Documents. Such other documents as the Bank may
reasonably request.

(D) Fees and Expenses. The Bank shall have received evidence
satisfactory to it that all fees and expenses that the Borrower shall
have heretofore agreed to pay in connection with this Amendment No. 2
(including, without limitation, the fees and expenses of Milbank, Tweed,
Hadley & McCloy, special New York counsel to the Bank, in connection with
the negotiation, preparation, execution and delivery of this Amendment No.
2 and the New Note) shall have been paid.

Section 7. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 2 may be executed in any number of counterparts, all of which taken
together shall constitute one and the same amendatory instrument and any of the
parties hereto may execute this Amendment No. 2 by signing any such
counterpart. This Amendment No. 2 shall be governed by, and construed in
accordance with, the law of the State of New York.

Amendment No. 2
<PAGE> 5

- 5 -

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to be duly executed and delivered as of the day and year first above written.

BELCO ENERGY L.P.

By: BELCO OIL AND GAS CORP.,
a general partner

By: Robert A. Belfer
----------------------------
Title: President

By: LDB CORP., a general partner

By: Laurence D. Belfer
----------------------------
Title: President

THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)

By: Andrew Oram
---------------------------------
Title: Vice President

CONSENTS:

The undersigned hereby consents
to the increase in the amount of
the Commitment, and acknowledges
that the New Note shall constitute
the "Note", for purposes of the
Funding Agreement:

BELCO OIL AND GAS CORP.

By: Robert A. Belfer
-----------------------
Title: President

Amendment No. 2
<PAGE> 6

- 6 -

The undersigned hereby consents
to the increase in the amount of
the Commitment for purposes of
the Title Guaranty:

Robert A. Belfer
- - ------------------------------
Robert A. Belfer

Amendment No. 2

<PAGE> 1
Ex - 10.3

[EXECUTION COPY]

AMENDMENT NO. 3

AMENDMENT NO. 3 dated as of March 29, 1996 between BELCO ENERGY L.P., a
limited partnership duly organized and validly existing under the laws of the
State of Delaware (the "Borrower"), and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association (the "Bank").

The Borrower and the Bank are parties to a Credit Agreement dated as of
December 1, 1994 (as modified and supplemented and in effect on the date
hereof, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for loans to be made by the Bank to the Borrower in an aggregate
principal amount not exceeding, on the date hereof, $40,000,000.

The Borrower has informed the Bank that Belco Oil & Gas Corp., a Nevada
corporation ("Belco Nevada"), is in the process of effecting an initial public
offering (the "IPO") of its common stock. In connection with the planned IPO,
Belco Nevada, Belco Oil & Gas Corp., a Delaware corporation ("Belco Delaware"),
and the Borrower, among other parties, have entered into an Exchange and
Subscription Agreement and Plan of Reorganization (the "Exchange Agreement"),
dated as of January 1, 1996. As set forth in the Exchange Agreement, a series
of exchanges will occur immediately prior to the IPO resulting in, among other
things, (i) BOG Wyoming, Inc., a Wyoming corporation and a direct, wholly owned
subsidiary of Belco Nevada ("Belco Wyoming"), owning all limited partnership
interests in the Borrower, (ii) Belco Nevada owning all of the outstanding
stock of Belco Delaware, (iii) Belco Delaware continuing to own all of general
partnership interests in the Borrower and (iv) certain oil and gas properties
being contributed to the Borrower. The Borrower has requested the Bank to
amend the Credit Agreement to permit the transactions described above and to
amend the Credit Agreement in certain other respects, all on the terms and
conditions herein set forth. Accordingly, the parties hereto hereby agree as
follows:

Section 1. Definitions. Except as otherwise defined in this Amendment
No. 3, terms defined in the Credit Agreement are used herein as defined
therein.

Section 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Section 5 below, the Credit Agreement shall be amended
as follows:

A. General. References in the Credit Agreement (including references
to the Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder",

Amendment No. 3
<PAGE> 2

- 2 -

"hereby", "herein" and "hereof") shall be deemed to be references to the Credit
Agreement as amended hereby. References in the Credit Agreement to "the Note"
shall be deemed to include reference to the New Note under and as defined in
Section 5(B) hereof.

B. Article I; Definitions. Section 1.1 of the Credit Agreement
shall be amended by inserting the following definitions in alphabetical order
(or, in the case of any definition for a term that is defined in the Credit
Agreement before giving effect to this Amendment No. 3, by amending and
restating such definition to read as set forth below):

"Amendment No. 3" means Amendment No. 3 hereto dated as of March 29,
1996.

"Amendment No. 3 Effective Date" means the date on which the Bank
shall advise the Borrower that the conditions precedent set forth in Section 5
of Amendment No. 3 shall have been satisfied or waived.

"Applicable Margin" means, for any day and with respect to any
Advance, the following percentages stated below based upon the percentage of
(a) the aggregate outstanding amount of Advances divided by (b) the Borrowing
Base, as of such day:

<TABLE>
<CAPTION>
Applicable Margin Applicable Margin
% Advances/ Base Rate Eurodollar Rate
Borrowing Base Advances Advances
-------------- -------- --------
<S> <C> <C>
> 85% 3/8 of 1% 1-3/4%

> 66-2/3% and 1/4 of 1% 1-5/8%
< 85%
-

> 33-1/3% and 1/8 of 1% 1-1/2%
< 66-2/3%
-

< 33-1/3% 0% 1-3/8%
-
</TABLE>

"Belco Finance" means Belco Finance Co., a Wyoming corporation.

"Belco G.P." means Belco Oil & Gas Corp., a Delaware corporation.

Amendment No. 3

<PAGE> 3

- 3 -

"Belco Nevada" means Belco Oil & Gas Corp., a Nevada corporation.

"Belco Wyoming" means BOG Wyoming, Inc., a Wyoming corporation.

"Commitment" means Forty Million U.S. Dollars ($40,000,000.00), as such
amount may be reduced or terminated pursuant to Article VII.

"Cost-Sharing Agreement" means an Intercompany Services Agreement
between Belco G.P., the Borrower, Belco Nevada, Belco Finance and certain other
Persons in substantially the form of Exhibit H, as the same shall, subject to
Section 6.17, be modified and supplemented and in effect from time to time.

"Credit Documents" means this Agreement, the Note, the Security
Agreement, the Title Guaranty, the Pledge Agreement, the Finance Note, the
Cost-Sharing Agreement and each other agreement, instrument or other document
executed at any time in connection with this Agreement.

"Credit Party" means the Borrower, Belco Finance, Belco G.P., Belco
Wyoming or Belco Nevada.

"Exchange Agreement" means the Exchange and Subscription Agreement and
Plan of Reorganization, dated as of January 1, 1996, between Belco Nevada, Belco
G.P., the Borrower and certain other Persons, as the same shall be modified and
supplemented and in effect from time to time.

"Finance Note" means the subordinated promissory note of the Borrower
dated March 29, 1996 in the original principal amount of $113,000,000, payable
to Belco Finance, as the same shall, subject to Section 6.17, be modified and
supplemented and in effect from time to time.

"Material Adverse Effect" means a material adverse effect on the ability
of a Credit Party to perform any of its obligations under this Agreement, any
Note, any other Credit Document or any Material Contract to which it is a party.

"New Assets" means the oil and gas properties to be contributed to the
Borrower by certain Affiliates of Belco Nevada as contemplated by the Exchange
Agreement.

Amendment No. 3

<PAGE> 4

- 4 -

"Pledge Agreement" means a pledge agreement by Belco Finance in favor of
the Bank in substantially the form of Exhibit I, pursuant to which Belco Finance
pledges to the Bank the Finance Note, as the same shall be modified and
supplemented and in effect from time to time.

"Restricted Payment" means, with respect to any Person:

(a) dividends, partnership distributions or other distributions
(in cash, property or otherwise) on, or payments for the purchase,
redemption or other acquisition of, shares of capital stock of
or partnership interests or other equity interests in such Person, other
than (i) dividends payable in such Person's stock and (ii) payments by
such Person under the Cost-Sharing Agreement; and

(b) Specified Intercompany Payments made by such Person.

"Security Agreement" means a pledge agreement by the partners of the
Borrower in favor of the Bank in substantially the form of Exhibit F pursuant to
which said partners pledge to the Bank 100% of the partnership interests in the
Borrower, as the same shall be modified and supplemented and in effect from time
to time.

"Specified Intercompany Payments" means, for any Person:

(a) payments by such Person of Unallocable Costs under the
Cost-Sharing Agreement; and

(b) payments by such Person under or in respect of the Finance
Note (including, without limitation, principal thereof and interest
thereon).

"Three-Month LIBOR" means, for any calendar quarter, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) reported on the date
two Business Days prior to the first day of such calendar quarter on Telerate
Access Service Page 3750 (British Bankers Association Settlement Rate) as the
London Interbank Offered Rate for Dollar deposits having a term comparable to
such calendar quarter and in an amount of $5,000,000 or more. Three-Month LIBOR
shall be determined on the basis of a 360-day year and actual days (including
the first day but excluding the last) elapsed.

Amendment No. 3

<PAGE> 5

- 5 -

"Title Guaranty" means the Title Guaranty Agreement of Belco Nevada in
favor of the Bank in the form of the attached Exhibit B-1, as the same shall be
modified and supplemented and in effect from time to time.

"Trigger Event" means the making of the first Advance hereunder on or
after the Amendment No. 3 Effective Date.

"Unallocable Costs" means all amounts payable by the Borrower and its
Subsidiaries under the Cost-Sharing Agreement, other than those that are fairly
allocable (as determined by the Borrower reasonably and in good faith) to the
costs of Belco G.P. attributable to its management of the Borrower.

"Voting Stock" shall mean, with reference to any Person, stock of any
class or classes (or equivalent interests), the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of the
directors (or Persons performing similar functions) of such Person, even though
the right so to vote has been suspended by the happening of such a contingency.

C. Article II; Credit Facilities.

1. Commitment Reduction. Section 2.1 of the Credit Agreement
shall be amended by deleting paragraph (c) thereof.

2. Borrowing Base. Section 2.2 of the Credit Agreement shall be
amended:

(x) by adding the following to the end of paragraph (d) thereof:

"The Borrower may from time to time, by not less than two
Business Days' notice to the Bank, which notice shall be irrevocable,
decrease the Borrowing Base (but in any event to not less than
$15,000,000) from the amount then in effect to such lower amount as
the Borrower shall specify in such notice. Such decrease in the
Borrowing Base shall be effective as of the second Business Day
following the Bank's receipt of such notice or on such other day as the
Bank and the Borrower shall agree.";

(y) by amending paragraph (e) thereof to read as follows:

Amendment No. 3

<PAGE> 6

- 6 -

"(e) The Borrower may also request the Bank to redetermine the
Borrowing Base in connection with the Borrower's proposed
acquisition of Oil and Gas Properties after the date hereof (including,
without limitation, its acquisition of New Assets) by providing a
written request to the Bank. In connection with any such request, the
Borrower shall provide the Bank with a reserve report covering the Oil
and Gas Properties to be acquired, in form and substance acceptable to
the Bank in the Bank's sole discretion, prepared by a Qualified
Petroleum Engineer and such other information, including additional data
concerning pricing, quantities of production, costs of production,
purchasers of production and other information and engineering and
geological data, as the Bank may reasonably request. Within 30 days of
receipt of such reserve report and other information, the Bank shall
notify the Borrower if such Oil and Gas Properties will be added to the
Borrowing Base and, if so, the redetermined Borrowing Base; provided
that no New Asset shall be added to the Borrowing Base unless and until
(1) the Bank shall have received an Acceptable Title Opinion with
respect thereto and (2) the Bank shall have received the reserve report
and such other information as the Bank shall have reasonably requested
pursuant to the preceding sentence of this paragraph (e)."; and

(z) by replacing each reference in paragraph (i) thereof to
"Robert A. Belfer" and "the Guarantor" with "Belco Nevada".

3. Repayment. Section 2.5 of the Credit Agreement shall be
amended to read as follows:

"2.5 Repayment of Advances. The Borrower shall repay the Bank
the outstanding principal amount of each Advance on the Maturity Date."

4. Commitment Fees. Section 2.6 of the Credit Agreement shall
be amended to read as follows:

"Section 2.6 Commitment Fees. The Borrower agrees to pay to
the Bank a commitment fee on the average daily amount by which (i) the
Borrowing Base exceeds (ii) the sum of the Bank's outstanding Advances,
from the date of this Agreement until the Maturity Date, at a rate per
annum equal to the Applicable Commitment Fee Rate (as hereinafter
defined) as

Amendment No. 3

<PAGE> 7

- 7 -

in effect from time to time. The commitment fee shall be due
and payable quarterly in arrears on the last day of each March, June,
September and December during the term of this Agreement and on the
Maturity Date. For purposes hereof:

"Applicable Commitment Fee Rate" means:

(a) for any day during the period commencing on the
Amendment No. 3 Effective Date and ending on the day preceding
the occurrence of the Trigger Event, 1/4 of 1%; and

(b) for any day falling on or after the occurrence of the
Trigger Event, the following percentages stated below based upon
the percentage of (i) the aggregate outstanding amount of
Advances divided by (ii) the Borrowing Base, as of such day:

<TABLE>
<CAPTION>
% Advances/ Applicable Commitment
Borrowing Base Fee Rate
-------------- --------
<S> <C> <C>
> 33-1/3% 0.50%
-

< 33-1/3% 0.40%"
</TABLE>

5. Limited Recourse. Section 2.12 of the Credit Agreement shall
be amended by amending the first three sentences thereof to read as follows:

"Notwithstanding anything in this Agreement or any instrument
executed in connection herewith to the contrary, except as
provided in the last sentence of this Section 2.12, Belco G.P. in its
capacity as General Partner of the Borrower shall be liable for the
Obligations to the full extent, but only to the extent of, and the
Bank's recourse against Belco G.P. shall be limited, to the interests of
Belco G.P. in the Borrower. If an Event of Default occurs, any judicial
proceedings brought by the Bank against Belco G.P. shall be limited to
the attachment, execution, writ of process, preservation, enforcement
and foreclosure against the interests of Belco G.P. in the Borrower, and
no attachment, execution, writ, process or legal proceedings shall be
sought, issued or levied upon or against any other assets, properties or
funds of Belco G.P. If the Bank exercises any remedy which it may have
available against the Borrower, no judgment for any deficiency upon the
Note shall be sought or obtained by the Bank against Belco G.P."

Amendment No. 3

<PAGE> 8

- 8 -

D. Article IV; Representations.

1. Existence; Subsidiaries. Section 4.1 of the Credit Agreement
shall be amended by substituting the words "each Credit Party" for the words
"the Borrower and Belco G.P" therein.

2. Power. The first sentence of Section 4.2 of the Credit
Agreement shall be amended to read as follows:

"The execution, delivery and performance by each Credit Party
of the Credit Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby (a) are
within such Credit Party's corporate or partnership powers, as the case
may be, (b) have been duly authorized by all necessary partnership or
corporate action, as the case may be, (c) do not contravene (i) such
Credit Party's certificate or articles of incorporation or by-laws or
partnership agreement, as the case may be, or (ii) any law or any
contractual restriction binding on or affecting such Credit Party and
(d) do not result in or require the creation or imposition of any Lien
prohibited by this Agreement."

3. Authorization and Approvals. The first sentence of Section 4.3
of the Credit Agreement shall be amended to read as follows:

"No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority is required
for the due execution, delivery and performance by any Credit Party of
any of the Credit Documents to which it is a party or the consummation
of the transactions contemplated thereby."

4. Enforceable Obligations. Section 4.4 of the Credit
Agreement shall be amended to read as follows:

"Section 4.4 Enforceable Obligations. Each Credit Document to
which a Credit Party is a party has been duly executed and
delivered by such Credit Party. Each Credit Document is the legal,
valid and binding obligation of each Credit Party party thereto
enforceable against such Credit Party in accordance with its terms,
except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditor's rights generally and by general principles of
equity."

Amendment No. 3

<PAGE> 9

- 9 -

5. Litigation. Section 4.7 of the Credit Agreement shall be
amended to read as follows:

"Section 4.7 Litigation. Set forth on Schedule 4.07 is an
accurate description of all of each Credit Party's pending or,
to the best knowledge of the Borrower or Belco G.P., threatened, actions
and proceedings before any court, Governmental Agency or arbitrator
existing on the date of Amendment No. 3 which could be reasonably
expected to cause a Material Adverse Change. There is no pending or, to
the best knowledge of the Borrower or Belco G.P., threatened action or
proceeding affecting any of the Credit Parties or any of their
respective Subsidiaries before any court, Governmental Agency or
arbitrator, which could reasonably be expected to cause a Material
Adverse Change or which purports to affect the legality, validity,
binding effect or enforceability of this Agreement, any Note or any
other Credit Document."

6. Investment Company Act. Section 4.9 of the Credit Agreement
shall be amended by substituting the phrase "No Credit Party" for the words
"Neither the Borrower, Belco G.P." therein.

7. PUHCA. Section 4.10 of the Credit Agreement shall be amended
by substituting the phrase "No Credit Party" for the words "Neither the
Borrower, Belco G.P." therein.

8. No Defaults, Etc. Section 4.14 of the Credit Agreement shall
be amended by amending the second and third sentences thereof to read as
follows:

"No Credit Party is in default under or with respect to any
contract, agreement, lease or other instrument to which such
Credit Party is a party and which could reasonably be expected to cause
a Material Adverse Change. No Credit Party has received any notice of
default under any material contract, agreement, lease or other
instrument to which such Credit Party is a party which could reasonably
be expected to cause a Material Adverse Change."

9. Compliance with Laws and Documents. Section 4.17 of the Credit
Agreement shall be amended by amending the first sentence thereof to read as
follows:

"No Credit Party is, nor will the execution, delivery and
performance of and compliance with the terms of this Agreement
and the other Credit Documents to which such Credit Party is a party
cause the Borrower to be, in

Amendment No. 3

<PAGE> 10

- 10 -

violation of (i) any Legal Requirement, other than such
violations that could not, individually or collectively, cause a
Material Adverse Change, or (ii) its organizational documents."

10. Solvency. Section 4.20 of the Credit Agreement shall be
amended by substituting "Each Credit Party has" for "The Borrower and Belco G.P.
each have" in the first sentence thereof, by substituting "Each Credit Party's"
for "The Borrower's and Belco G.P.'s" in the second sentence thereof and by
substituting "No Credit Party" for "Neither the Borrower, nor Belco G.P." in the
third sentence thereof.

E. Article V; Affirmative Covenants.

1. Annual Reporting Requirements. Section 5.6(a) of the Credit
Agreement shall be amended by substituting a semicolon for the "and"
immediately preceding clause (ii) thereof and by adding, at the end of said
clause (ii), the following:

"and (iii) consolidated and consolidating statements of income,
retained earnings and cash flows of Belco Nevada and its
Subsidiaries for such fiscal year and the related consolidated and
consolidating balance sheets of Belco Nevada and its Subsidiaries as at
the end of such fiscal year, setting forth in each case in comparative
form the corresponding consolidated and consolidating figures for the
preceding fiscal year, and accompanied (x) in the case of said
consolidated statements and balance sheet of Belco Nevada, by an opinion
thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated
financial statements fairly present the consolidated financial condition
and results of operations of Belco Nevada and its Subsidiaries as at the
end of, and for, such fiscal year in accordance with generally accepted
accounting principles, and a statement of such accountants to the effect
that, in making the examination necessary for their opinion, nothing
came to their attention that caused them to believe that Belco Nevada
was not in compliance with the terms of the Credit Agreement, insofar as
the same relate to accounting matters, and (x) in the case of said
consolidating statements and balance sheets, by a certificate of a
senior financial officer of Belco Nevada, which certificate shall state
that said consolidating financial statements fairly present the
respective individual unconsolidated financial condition and results of
operations of Belco Nevada and of each of its Subsidiaries, in each case
in accordance with

Amendment No. 3

<PAGE> 11

- 11 -

generally accepted accounting principles, consistently applied,
as at the end of, and for, such fiscal year;"

2. Quarterly Reporting Requirements. Section 5.6(b) of the Credit
Agreement shall be amended by substituting a semicolon for the "and"
immediately preceding clause (ii) thereof and by adding, at the end of said
clause (ii), the following:

"and (iii) consolidated and consolidating statements of income,
retained earnings and cash flows of Belco Nevada and its Subsidiaries
for such period and for the period from the beginning of the respective
fiscal year to the end of such period, and the related consolidated and
consolidating balance sheets of Belco Nevada and its Subsidiaries as at
the end of such period, setting forth in each case in comparative form
the corresponding consolidated and consolidating figures for the
corresponding periods in the preceding fiscal year (except that, in the
case of balance sheets, such comparison shall be to the last day of the
prior fiscal year), accompanied by a certificate of a senior financial
officer of Belco Nevada, which certificate shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of Belco Nevada and its
Subsidiaries, and said consolidating financial statements fairly present
the respective individual unconsolidated financial condition and results
of operations of Belco Nevada and of each of its Subsidiaries, in each
case in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such period (subject to
normal year-end audit adjustments);"

3. SEC Reporting, Etc. Section 5.6 of the Credit Agreement shall
be amended by adding new paragraphs (o) and (p) thereof reading as follows:

"(o) SEC Reports, Etc. Promptly upon their becoming available,
copies of all registration statements and regular periodic reports, if
any, that Belco Nevada shall have filed with the Securities and Exchange
Commission (or any governmental agency substituted therefor) or any
national securities exchange.

(p) Shareholder Reports, Etc. Promptly upon the mailing
thereof to the shareholders of Belco Nevada generally, copies of
all financial statements, reports and proxy statements so mailed."

Amendment No. 3

<PAGE> 12

- 12 -

F. Article VI; Negative Covenants.

1. Debt. Section 6.2 of the Credit Agreement shall be amended
by deleting "and" at the end of paragraph (c) thereof, by substituting
"; and" for the period at the end of paragraph (d) thereof and by adding a new
paragraph (e) thereof reading as follows:

"(e) Debt of the Borrower to Belco Finance under the Finance Note."

2. Restricted Payments. Section 6.5 of the Credit Agreement shall
be amended by deleting "and" at the end of paragraph (a) thereof, by deleting
paragraph (b) thereof and by adding the following new paragraphs (b) and (c)
thereto:

"(b) prior to the occurrence of the Trigger Event:

(1) pay accrued Unallocable Costs;

(2) pay interest accrued on the Finance Note in cash at a
rate per annum not exceeding Three-Month LIBOR as in effect from
time to time; and

(3) pay interest accrued on the Finance Note in cash (to the
extent the same is not permitted to be paid pursuant to clause (2)
above) and prepay principal of the Finance Note, provided that the
aggregate amount of Restricted Payments permitted to be made under
this clause (3) shall not exceed $15,000,000; and

(1) the aggregate amount of Specified Intercompany Payments
(after giving effect to the Specified Intercompany Payment(s)
proposed to be made) made during the relevant Payment Test Period
shall not exceed 15% of Adjusted Cash Flow for the relevant Cash
Flow Test Period; and

(2) the aggregate amount of Specified Intercompany Payments
(after giving effect to the Specified Intercompany Payment(s)
proposed to be made) made after the occurrence of the Trigger Event
shall not exceed $13,000,000.

Amendment No. 3

<PAGE> 13

- 13 -

For purposes of this Section 6.5:

"Adjusted Cash Flow" for any period means (a) EBITDA for
such period minus (b) cash interest expense of the
Borrower for such period (to the extent included in determining
EBITDA for such period).

"Cash Flow Test Period" means, as at any date of
determination thereof, the period of four calendar quarters
ending on or most recently ended prior to such date of
determination.

"Payment Test Period" means, as at any date of determination
thereof, the period of four calendar quarters ending on or next
ending after such date of determination."

3. Investments. Section 6.6 of the Credit Agreement
shall be amended by deleting "and" at the end of paragraph (e) thereof, by
substituting "and" for the period at the end of paragraph (f) thereof and by
adding the following paragraph (g) thereto:

"(g) so long as the aggregate amount of Liquid Investments
held by the Company and its Subsidiaries exceeds $25,000,000,
the Company and its Subsidiaries may, prior to the occurrence of the
Trigger Event, acquire and hold other investments ("Other Investments")
constituting:

(x) debt or equity securities of Persons (other than
Affiliates of the Company) whose principal line of business is
in the oil and gas business or another energy or energy-related
line of business; and

(y) preferred stock rated at least BBB- or better by
Standard & Poor's Ratings Services Group and at least
Baa3 or better by Moody's Investors Service, Inc.;

provided that, at any time after the occurrence of the Trigger
Event, neither the Company nor any of its Subsidiaries shall acquire or
hold any Other Investments.

4. Affiliate Transactions. Section 6.8 of the Credit
Agreement shall be amended by deleting "and" at the end of paragraph (i) of the
proviso therein, by deleting the period at the end of paragraph (ii) of the
proviso therein and by adding

Amendment No. 3

<PAGE> 14

- 14 -

new paragraphs (iii) and (iv) to the proviso therein reading as follows:

"(iii) Belco G.P., in its capacity as General Partner of the
Borrower, may cause one or more of the Borrower's operating
accounts to be held in the name of Belco G.P.; and (iv) the Borrower and
its Subsidiaries may enter into, and perform their obligations under,
the Cost-Sharing Agreement."

5. Modification of Documents. Section 6.17 of the Credit
Agreement shall be amended to read as follows:

"Section 6.17 Modification of Documents. Without the prior
consent of the Bank the Company will not consent to any
modification, supplement or waiver of (a) any of the provisions of the
Partnership Agreement (other than the First Amendment thereto delivered
to the Bank pursuant to Amendment No. 3), (b) any agreement, instrument
or other document evidencing or relating to Subordinated Debt, (c) the
Finance Note or (d) the Cost-Sharing Agreement."

6. Finance Note Payments. The Credit Agreement shall be amended
by adding a new Section 6.19 thereof reading as follows:

"Section 6.19 Certain Finance Note Payments. Except as
expressly permitted in Sections 6.5(b) and (c) hereof, the
Borrower will not, nor will it permit any of its Subsidiaries to,
purchase, redeem, retire or otherwise acquire for value, or set apart
any money for a sinking, defeasance or other analogous fund for the
purchase, redemption, retirement or other acquisition of, or make any
voluntary payment or prepayment of the principal of or interest on, or
any other amount owing in respect of, the Finance Note."

G. Article VII; Events of Default.

1. Representations. Section 7.1(b) of the Credit Agreement shall
be amended by substituting "any other Credit Party" for "any Subsidiary of the
Borrower" in clause (iii) thereof.

2. Covenant Breaches. Section 7.1(c) of the Credit Agreement shall
be amended by deleting clause (ii) thereof and adding the following clauses
(ii), (iii), (iv), (v), (vi) and (vii):

Amendment No. 3

<PAGE> 15

- 15 -

"(ii) Belco G.P. or Belco Wyoming shall fail to perform or
observe any of its obligations in the second or third sentence of
Section II.2 of the Security Agreement or in the first sentence of
Section II.4 of the Security Agreement; or (iii) Belco Finance shall fail
to perform or observe any of its obligations in Section 4.02 of the
Pledge Agreement; or (iv) the Borrower or Belco Finance shall fail to
perform or observe any of its obligations in Section 5 or Section 6 of
the Finance Note; or (v) Belco Nevada shall fail to perform any of its
obligations in Section 1.1 of the Title Guaranty; or (vi) Belco G.P.
shall fail to perform or observe any of its obligations in Section 2.2(a)
of the Cost-Sharing Agreement; or (vii) any Credit Party shall fail to
perform or observe any other term or covenant set forth in any of the
Credit Documents to which it is a party if such failure shall remain
unremedied for 30 days after the earlier of written notice of such
default shall have been given to such Person by the Bank or such Person's
actual knowledge of such default;".

2. Cross-Defaults. Section 7.1(d) of the Credit Agreement shall
be amended:

(a) by substituting "a Credit Party or any of Belco G.P.'s
Subsidiaries" for each reference to "Belco G.P. or any of its
Subsidiaries" in clauses (iv) and (vi) thereof; and

(b) by substituting "each Credit Party and each of Belco G.P.'s
Subsidiaries" for "Belco G.P. and its respective Subsidiaries" in
clause (v) thereof.

3. Insolvency; Judgments. Sections 7.1(e) and (f) of the Credit
Agreement shall be amended to read as follows:

"(e) Insolvency. Any Credit Party or any Subsidiary of the
Borrower or of Belco G.P. shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Credit
Party or any such Subsidiary seeking to adjudicate it a bankruptcy or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official

Amendment No. 3

<PAGE> 16

- 16 -

for it or for any substantial part of its property and, in the case of
any such proceeding instituted against a Credit Party or any such
Subsidiary, either such proceeding shall remain undismissed for a period
of 60 days or any of the actions sought in such proceeding shall occur;
or any Credit Party or any Subsidiary of the Borrower or of Belco G.P.
shall take any corporate action to authorize any of the actions set forth
above in this paragraph (e);

(f) Judgments. Any judgment or order for the payment of money
in excess of $75,000.00 shall be rendered against a Credit Party or any
Subsidiary of the Borrower or of Belco G.P. and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment
or order or (ii) there shall be any period of 60 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;"

4. Credit Documents; Control. Sections 7.1(j), (k) and (l) of the
Credit Agreement shall be amended to read as follows:

"(j) Certain Credit Documents. Any provision of the Security
Agreement or the Pledge Agreement shall for any reason cease to be
valid and binding upon any of the Credit Parties party thereto, or any
Credit Party shall so state in writing; or the Liens created by the
Security Agreement or the Pledge Agreement shall at any time not
constitute a valid and perfected Lien on the collateral intended to be
covered thereby (to the extent perfection by filing, registration,
recordation or possession is required herein or therein) in favor of the
Bank, free and clear of all other Liens (other than Liens permitted
hereunder or under such Credit Document); or, except for expiration in
accordance with its terms, the Security Agreement or the Pledge Agreement
shall for whatever reason be terminated or cease to be in full force and
effect;

(k) Title Guaranty. Any provision of the Title Guaranty shall
for any reason cease to be valid and binding on Belco Nevada for
any reason except in accordance with its terms or Belco Nevada shall so
state in writing;

(l) Change of Control. As a result of one or more
transactions after the Amendment No. 3 Effective Date, (i)
Belco Nevada shall own, directly or indirectly, less than 100% of the
issued and outstanding capital stock of

Amendment No. 3

<PAGE> 17

- 17 -

Belco G.P., Belco Wyoming or Belco Finance, or shall own, directly or
indirectly, less than 100% of the ownership interests of the Borrower, or
(ii) Robert A. Belfer, Laurence D. Belfer, the other descendants of
Arthur B. Belfer (father of Robert A. Belfer), the spouses of such
Persons and all trusts for the benefit of any such descendant or spouse
shall, in the aggregate, own, directly or indirectly, less than 66-2/3%
of the Voting Stock of Belco Nevada or less than 51% of the aggregate
equity interests in Belco Nevada, or (iii) Belco G.P. shall not be the
general partner of the Borrower or (iv) the Borrower shall sell, transfer
or convey substantially all of the Borrower's Property; or".

5. Optional Acceleration. Section 7.2 of the Credit Agreement
shall be amended by adding "with respect to the Borrower or Belco G.P."
immediately after the reference to Section 7.1 therein.

6. Automatic Acceleration. Section 7.3 of the Credit Agreement
shall be amended by adding "with respect to the Borrower or Belco G.P."
immediately after the reference to Section 7.1 therein.

H. Exhibits.

1. Title Guaranty; Note; Security Agreement. The Credit
Agreement shall be amended by deleting Exhibits B-1, C and F thereto and
substituting, respectively, Exhibits B-1, C and F hereto therefor.

2. Miscellaneous. The Credit Agreement shall be further
amended by deleting, from the forms of Compliance Certificate, Notice of
Borrowing and Notice of Conversion or Continuation attached to the Credit
Agreement as Exhibits A, D and E, respectively, the signature block for LDB
Corp.

3. Cost-Sharing Agreement; Pledge Agreement. The Credit
Agreement shall be amended by adding Exhibits H and I hereto as Exhibits H and
I, respectively, thereto.

Section 3. Certain Releases. Subject to the satisfaction of
the conditions precedent specified in Section 5 below:

(a) Robert A. Belfer shall be released from all of his
obligations under the Title Guaranty dated as of December 1,

Amendment No. 3

<PAGE> 18

- 18 -

1994 in favor of the Bank (and, upon such release, said Title
Guaranty shall be of no further force and effect); and

(b) Belco G.P. shall be released from all of its obligations
under the Funding Agreement dated as of December 1, 1994 in
favor of the Bank (and, upon such release, said Funding Agreement shall
be of no further force and effect).

Section 4. Representations and Warranties. The Borrower
represents and warrants to the Bank that the representations and
warranties set forth in Article IV of the Credit Agreement are true and
complete on the date hereof as if made on and as of the date hereof and as if
each reference in said Article IV to "this Agreement" and "the Note" included
reference to this Amendment No. 3 and to the New Note.

Section 5. Conditions Precedent. As provided in Sections 2 and 3
above, the amendments to the Credit Agreement set forth in said Section 2 and
the releases set forth in said Section 3 shall each become effective upon the
satisfaction of the following conditions precedent:

A. Execution by All Parties. This Amendment No. 3 shall
have been executed and delivered by each of the parties hereto.

B. New Note. The Borrower shall have delivered to the
Bank, in exchange for the Note heretofore delivered to the Bank
pursuant to Section 6(B) of Amendment No. 2 to the Credit Agreement, a
new promissory note of the Borrower in substantially the form of Exhibit
C to the Credit Agreement (as amended hereby), dated the date hereof,
payable to the Bank in a principal amount equal to its Commitment and
otherwise duly completed (the "New Note"), and the New Note shall
constitute the "Note" under the Credit Agreement as amended hereby.

C. Other Credit Documents. The Bank shall have received
the following documents, each of which shall be satisfactory to it in
form and substance:

(1) Title Guaranty. The Title Guaranty in substantially the
form attached as Exhibit B-1 hereto, duly executed and delivered by
Belco Nevada.

(2) Security Agreement. The Security Agreement in
substantially the form of Exhibit F hereto, duly

Amendment No. 3

<PAGE> 19

- 19 -

executed and delivered by Belco G.P., Belco Wyoming and the Bank. In
addition, Belco G.P. and Belco Wyoming shall have taken such action as
the Bank may reasonably request to record and perfect the pledge of the
ownership interests of the Borrower pledged to the Bank pursuant thereto.

(3) Pledge Agreement. The Pledge Agreement in substantially
the form of Exhibit I hereto, duly executed and delivered by
Belco Finance and the Bank. In addition, Belco Finance shall have taken
such action (including, without limitation, delivering to the Bank the
executed Finance Note) as the Bank may reasonably request to record and
perfect the pledge of the Finance Note pledged to the Bank pursuant
thereto.

D. Equity Offering, Etc. The Bank shall have received the
following, each of which shall be satisfactory to it in form and substance:

(1) Equity Offering. Evidence that Belco Nevada shall have
received net cash consideration (prior to the payment of any
transaction expenses) of not less than $100,000,000 representing
proceeds of the issuance of an aggregate of 5,750,000 shares of common
stock of Belco Nevada.

(2) Capital Contribution to the Belco Finance. Evidence that
Belco Finance shall have received a capital contribution from
Belco Nevada (from the proceeds of the common stock described in
paragraph (1) above) in an amount equal to $113,000,000.

(3) Finance Note, Etc. Evidence that the Borrower shall have
(x) received an inter-company loan from Belco Finance (from the
proceeds of the capital contribution received by Belco Finance from
Belco Nevada described in paragraph (2) above) in a principal amount
equal to $113,000,000, and (y) issued the Finance Note to Belco Finance
to evidence said inter-company loan.

(4) Repayment of Advances. Evidence that the Borrower shall
have repaid (or shall, simultaneously with its receipt of the
proceeds from the issuance of the Finance Note, repay) to the Bank all
Advances owing to the Bank under the Credit Agreement, together with
interest thereon through the date of payment.

Amendment No. 3

<PAGE> 20

- 20 -

E. Other Documents. The Bank shall have received the following
documents, each of which shall be satisfactory to it in form and substance:

(1) Corporate and Partnership Documents. Certified copies of
the charter and by-laws (or equivalent documents) of each Credit Party
and of all partnership and corporate authority for each Credit Party
(including, without limitation, board of director resolutions and
evidence of the incumbency of officers for each Credit Party) with
respect to the execution, delivery and performance of the Credit
Documents to which such Credit Party is a party and each other document
to be delivered by each Credit Party from time to time in connection with
the Credit Documents as amended hereby (and the Bank may conclusively
rely on such certificate until it receives notice in writing from such
Credit Party (or, in the case of the Borrower, from each General Partner)
to the contrary).

(2) Good Standing Certificates. A certificate of good
standing for each Credit Party, dated a recent date, from the
office of the Secretary of State of the jurisdiction of organization of
such Credit Party.

(3) Exchange Agreement Documents, Etc. Certified copies of the
Exchange Agreement and the Partnership Agreement, and each
amendment, modification and other supplement of each thereof, in each
case as in effect on the Amendment No. 3 Effective Date.

(4) Opinion of Counsel to Belco G.P. An opinion of Vinson & Elkins
L.L.P. or such other legal counsel to Belco G.P. as may be satisfactory
to the Bank (and Belco G.P. hereby instructs such counsel to deliver such
opinion to the Bank).

(5) Other Documents. Such other documents as the Bank may
reasonably request.

F. Fees and Expenses. The Bank shall have received evidence
satisfactory to it that all fees and expenses that the Borrower shall have
heretofore agreed to pay in connection with this Amendment No. 3 (including,
without limitation, the fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to the Bank, in connection with the negotiation,
preparation, execution and

Amendment No. 3

<PAGE> 21

- 21 -

delivery of this Amendment No. 3 and the New Note) shall have been paid.

Section 5. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 3 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 3 by signing any such
counterpart. This Amendment No. 3 shall be governed by, and construed in
accordance with, the law of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 3 to be duly executed and delivered as of the day and year first
above written.

BELCO ENERGY L.P.

By: BELCO OIL & GAS CORP., a
Delaware corporation and its
general partner

By: Robert A. Belfer
-------------------------
Title: Robert A. Belfer
President

THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)

By: Andrew Oram
-------------------------------
Title: Vice President

Amendment No. 3

<PAGE> 22
[EXECUTION COPY]

TITLE GUARANTY

This Title Guaranty is dated as of March 29, 1996 ("Agreement") and is
made by Belco Oil & Gas Corp., a Nevada corporation ("Guarantor"), in favor of
The Chase Manhattan Bank, N.A. ("Bank").

INTRODUCTION

This Agreement is given in connection with the Credit Agreement dated as
of December 1, 1994 (as the same may be modified from time to time, the "Credit
Agreement"), among the Belco Energy, L.P., a Delaware limited partnership
("Borrower"), and the Bank. Capitalized terms used herein but not defined
herein shall have the meanings specified by the Credit Agreement. As a
condition precedent to Amendment No. 3 to the Credit Agreement and to the
extension of credit thereunder, the Bank requires the Guarantor to enter into
this Agreement. The Guarantor believes that it will obtain substantial direct
and indirect benefit from the credit extended to the Borrower by the Bank under
the Credit Agreement.

In consideration of the foregoing and for other valuable consideration
received, the Guarantor agrees as follows:

Section 1. Title Guaranty.

1.1 The Guarantor irrevocably agrees to defend, indemnify and hold the
Bank harmless from any damages, losses, expenses and costs, up to but not to
exceed an aggregate amount not to exceed the Title Guarantee Amount (as
hereinafter defined), incurred by the Bank as a result of the failure of the
Borrower from time to time to have the Gross Working Interests and Net Revenue
Interests represented by the Borrower in Section 4.13 of the Credit Agreement
to those Proved Oil and Gas Properties for which the Bank has not received
Acceptable Title Opinions (the "Guaranteed Obligations"). This is a guaranty
of payment and not merely a guaranty of collection, and the Guarantor is liable
as a primary obligor. If any of the Guaranteed Obligations are not punctually
paid when due, the

Title Guaranty
<PAGE> 23

Guarantor shall immediately pay to the Borrower the full amount due.

1.2 This Agreement shall continue to be effective or be reinstated, as
the case may be, if any payment on the Guaranteed Obligations must be refunded
for any reason including any bankruptcy proceeding. It is the intention of the
Guarantor that the Guarantor's obligations hereunder shall not be discharged
except by final payment of the Guaranteed Obligations.

1.3 The term "Title Guarantee Amount" shall initially mean the "Title
Guarantee Amount" as in effect under the Title Guaranty dated as of December 1,
1994 made by Robert A. Belfer in favor of the Bank immediately prior to the
termination and release of said Title Guaranty on the date hereof. The Title
Guarantee Amount shall be (a) increased by the value in the Borrowing Base of
the Proved Oil and Gas Properties set forth in a notice to the Bank from the
Guarantor that the Guarantor elects to so increase the Title Guarantee Amount
by the value of such Proved Oil and Gas Properties and (b) decreased by the
value of a Proved Oil and Gas Property in the Borrowing Base which was not
previously covered by an Acceptable Title Opinion for which the Borrower
provides the Bank an Acceptable Title Opinion covering such Proved Oil and Gas
Property.

1.4 From time to time at the request of the Guarantor the Bank will
notify the Guarantor of the Proved Oil and Gas Properties for which the Bank
has not received Acceptable Title Opinions and the reason why any title opinion
which the Bank has received is not considered to be an Acceptable Title
Opinion.

Section 2. Guaranty Absolute.

2.1 There are no conditions precedent to the enforcement of this
Agreement, except as expressly contained herein. It shall not be necessary for
the Bank, in order to enforce payment by the Guarantor under this Agreement, to
show proof of any default by any of the partners of the Borrower, to exhaust
the Borrower's or the Bank's remedies against any of the partners of the
Borrower, to enforce any support for the payment of the Guaranteed Obligations,
or to enforce any other means of obtaining payment of the Guaranteed
Obligations. The Guarantor

Title Guaranty
<PAGE> 24
waives any rights under Chapter 34 of the Texas Business and Commerce Code
related to the foregoing. Neither the Borrower nor the Bank shall be required
to mitigate damages or take any other action to reduce, collect, or enforce the
Guaranteed Obligations.

2.2 The Guarantor agrees that the Guarantor's obligations under this
Agreement shall not be released, diminished, or impaired by, and waives any
rights which the Guarantor might otherwise have which relate to:

(a) Any lack of validity or enforceability of the Guaranteed
Obligations, the Partnership Agreement, the Credit Documents, or any
other agreement or instrument relating thereto;

(b) Any increase, reduction, extension, or rearrangement of the
Obligations or the Guaranteed Obligations, any amendment, supplement, or
other modification of the Partnership Agreement or the Credit Documents,
or any waiver or consent granted under the Partnership Agreement or the
Credit Documents, including waivers of the payment and performance of the
Obligations or the Guaranteed Obligations;

(d) Any change in the organization or structure of the Borrower or
any other Credit Party, or the insolvency, bankruptcy, liquidation, or
dissolution of the Borrower or any other Credit Party;

(e) The failure to give notice of the occurrence of any of the
events or actions referred to in this Section 2.2, notice of any Default
or Event of Default, notice of intent to demand, notice of demand, notice
of presentment for payment, notice of nonpayment, notice of intent to
protest, notice of protest, notice of grace, notice of dishonor, notice
of intent to accelerate, notice of acceleration, notice of bringing of
suit, notice of sale or

Title Guaranty

<PAGE> 25
foreclosure of any collateral for the Obligations, notice of the Bank's
transfer of the Obligations, notice of the financial condition of or
other circumstances regarding the Borrower or any other Credit Party, or
any other notice of any kind relating to the Obligations or the
Guaranteed Obligations (and the parties intend that the Guarantor shall
not be considered a "Debtor" as defined in Section 9.105 of the Texas
Business and Commerce Code for the purpose of notices required to be
given to a Debtor thereunder, should such section apply); and

(f) Any other action taken or omitted which affects the Obligations
or the Guaranteed Obligations, whether or not such action or omission
prejudices the Guarantor or increases the likelihood that the Guarantor
will be required to pay the Guaranteed Obligations pursuant to the terms
hereof. It is the unambiguous and unequivocal intention of the Guarantor
that the Guarantor shall be obligated to pay the Guaranteed Obligations
when due, notwithstanding any occurrence, circumstance, event, action, or
omission whatsoever, whether or not contemplated, and whether or not
particularly described herein.

Section 3. Subrogation.

3.1 Until the irrevocable payment in full of the Obligations, the
Guarantor shall take no action pursuant to any rights which it may acquire
against the Borrower, including any right of subrogation (including any
statutory rights of subrogation under Section 509 of the Bankruptcy Code, 11
U.S.C. Section 509, or under Chapter 34 of the Texas Business and Commerce
Code), contribution, indemnification, reimbursement, exoneration, or any right
to participate in any claim or remedy of the Bank against the Borrower or the
Bank against any collateral for the Obligations. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, such amount shall be
immediately turned over to the Bank.

Section 4. Representations, Warranties, and Covenants of Guarantor.
The Guarantor represents and warrants to (and with

Title Guaranty

<PAGE> 26

each extension of credit under the Credit Agreement again represents and
warrants to) and agrees with the Bank as follows:

4.1 The execution, delivery, and performance by the Guarantor of this
Agreement and the consummation of the transactions contemplated hereby do not
contravene any law or any contractual restriction binding on or affecting the
Guarantor.

4.2 No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority is required for the due execution,
delivery, and performance by the Guarantor of this Agreement or the
consummation of the transactions contemplated hereby.

4.3 This Agreement has been duly executed and delivered by the Guarantor.
This Agreement is the legal, valid, and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditors' rights
generally and by general principles of equity.

Section 5. Miscellaneous.

5.1 The Guarantor agrees to pay on demand all reasonable out-of-pocket
costs and expenses, if any, of the Bank and the Borrower (including, without
limitation, reasonable counsel fees and expenses) in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement.

5.2 THE GUARANTOR SHALL INDEMNIFY THE BANK AND EACH AFFILIATE THEREOF AND
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS FROM, AND
DISCHARGE, RELEASE, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, OR DAMAGES WHICH MAY BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST THEM IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THIS AGREEMENT (INCLUDING ANY SUCH
LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE
PERSON BEING INDEMNIFIED'S OWN NEGLIGENCE), BUT EXCLUDING ANY SUCH LOSSES,

Title Guaranty

<PAGE> 27

LIABILITIES, CLAIMS, DAMAGES, OR EXPENSES INCURRED BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.

5.3 This Agreement shall be governed by the laws of the State of New
York. If any provision in this Agreement is held to be unenforceable, such
provision shall be severed and the remaining provisions shall remain in full
force and effect. The Bank's and the Borrower's remedies under this Agreement
shall be cumulative, and no delay in enforcing this Agreement shall act as a
waiver of the Bank's rights hereunder. The provisions of this Agreement may be
waived or amended only in a writing signed by the party against whom
enforcement is sought. The Bank may assign its rights and delegate its duties
under this Agreement. This Agreement may be executed in multiple counterparts
which together shall constitute one and the same agreement. Unless otherwise
specified, all notices provided for in this Agreement shall be in writing,
delivered to the following addresses or to such other address as shall be
designated by one party in writing to the other parties:

to the Bank: The Chase Manhattan Bank, N.A.
One Chase Plaza, Third Floor
New York, New York 10081
Attn: Mr. Andy Oram, Global Petroleum
Fax: (212) 552-1687

and: The Chase Manhattan Bank, N.A.
2 Chase Plaza, Fifth Floor
New York, New York 10081
Attn: Ms. Jackie Reid
Fax: (212) 552-4455

to the Guarantor: Belco Oil & Gas Corp.
767 Fifth Avenue, 46th Floor
New York, New York 10153
telecopier: (212) 644-2230.

Notice sent by telecopy shall be deemed to be given and received when receipt
of such transmission is acknowledged, and delivered notice shall be deemed to
be given and received when receipted

Title Guaranty

<PAGE> 28

for by, or actually received by, an authorized officer of the receiving party.

THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW
YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF
NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURT.
THE GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING. THE GUARANTOR HEREBY AGREES THAT SERVICE OF COPIES
OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH
PROCESS TO THE GUARANTOR AT ITS ADDRESS SPECIFIED IN THIS AGREEMENT. THE
GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT
THE RIGHTS OF THE BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST
THE GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. THE
GUARANTOR HEREBY FURTHER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY ACTION OR PROCEEDING REFERRED TO HEREIN ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.

THE GUARANTOR AND THE BANK HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

Title Guaranty
<PAGE> 29

EXECUTED as of the date first above written.

BELCO OIL & GAS CORP., a Nevada
corporation

By:______________________________
Title:

Title Guaranty

<PAGE> 30

PROMISSORY NOTE

$40,000,000 New York, New York March 29, 1996

For value received, the undersigned Belco Energy L.P., a Delaware limited
partnership ("Borrower"), hereby promises to pay to the order of THE CHASE
MANHATTAN BANK, N.A. ("Bank"), the principal amount of FORTY MILLION AND NO/100
DOLLARS ($40,000,000) or, if less, the aggregate outstanding principal amount
of each Advance (as defined in the Credit Agreement referred to below) made by
the Bank to the Borrower, together with accrued but unpaid interest on the
principal amount of each such Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and at such times, as
are specified in the Credit Agreement.

This Note is the Note referred to in, and is entitled to the benefits of,
and is subject to the terms of, the Credit Agreement dated as of December 1,
1994 (as the same may be modified from time to time, the "Credit Agreement"),
between the Borrower and the Bank. Capitalized terms used herein but not
defined herein shall have the meanings specified by the Credit Agreement. The
Credit Agreement, among other things, (a) provides for the making of Advances
by the Bank to the Borrower from time to time in an aggregate outstanding
amount not to exceed the amount of this Note, the indebtedness of the Borrower
resulting from each such Advance being evidenced by this Note, and (b) contains
provisions for acceleration of the maturity of this Note upon the happening of
certain events stated in the Credit Agreement and for prepayments of principal
prior to the maturity of this Note upon the terms and conditions specified in
the Credit Agreement.

Both principal and interest are payable in lawful money of the United
States of America to the Bank as specified in the Credit Agreement. The Bank
shall record all Advances and payments of principal made under this Note, but
no failure of the Bank to make such recordings shall affect the Borrower's
repayment obligations under this Note.

It is contemplated that because of prepayments there may be times when no
indebtedness is owed under this Note. Notwithstanding such prepayments, this
Note shall remain valid and shall be in force as to Advances made pursuant to
the Credit Agreement after such prepayments.

It is the intention of the Bank and the Borrower to conform strictly to
any applicable usury laws. Accordingly, the terms of the Credit Agreement
relating to the prevention of usury will be strictly followed.

EXECUTED as of the date first above written.

BELCO ENERGY L.P.

By: Belco Oil & Gas Corp., a Delaware corporation and its
General Partner

By:________________________________
Robert A. Belfer
President

Promissory Note

<PAGE> 31
[EXECUTION COPY]

AMENDED AND RESTATED SECURITY AGREEMENT

This Amended and Restated Security Agreement (this "Security Agreement")
is executed and delivered as of March 29, 1996 by each of the undersigned,
being (as of the date hereof) all of the general partners and limited partners
of Belco Energy L.P. (the "Partnership", and each partner is referred to herein
individually as a "Partner" and collectively as the "Partners") to The Chase
Manhattan Bank, N.A. (the "Bank") in connection with Amendment No. 3 dated as
of March 29, 1996 ("Amendment No. 3") to the Credit Agreement dated as of
December 1, 1994, between the Partnership and the Bank (as amended (including
by said Amendment No. 3, the "Credit Agreement"). Capitalized terms used
herein that are not otherwise defined herein shall have the meanings ascribed
to such terms in the Credit Agreement.

Belco Oil & Gas Corp., a Delaware corporation ("Belco Delaware" or "Belco
G.P."); the former partners of the Partnership identified on Annex 1 hereto
under the caption "Released Partners" (each such released partner, the
"Released Partner" and, collectively, the "Released Partners"); and the Bank
are parties to the Security Agreement dated as of December 1, 1994 (as
heretofore modified and supplemented and in effect on the date of this
Agreement, the "Existing Security Agreement") providing, subject to the terms
and conditions thereof, for the pledge by Belco Delaware and each of the
Released Partners to the Bank of all of the "Collateral" referred to therein to
secure the performance and payment of all of the Obligations. Pursuant to the
Exchange Agreement, the Released Partners have assigned all of their limited
partnership interests in the Partnership to Belco Nevada, and Belco Nevada has
assigned all of such interests to BOG Wyoming, Inc., a Wyoming corporation
("Belco Wyoming").

Belco Wyoming wishes to assume the obligations of the Released Partners
under the Existing Security Agreement, Belco Delaware wishes to confirm its
obligations under the Existing Security Agreement, and Belco Delaware and Belco
Wyoming wish to amend the Existing Security Agreement in certain other
respects, all on the terms and conditions set forth herein. Accordingly, the
parties hereto hereby agree that, subject to the satisfaction

Amended and Restated Security Agreement

<PAGE> 32

of the conditions precedent set forth in Section 4 of Amendment No. 3, but
effective as of the date hereof, the Existing Security Agreement shall be
amended and restated as follows:

Section 1. Collateral and Obligations.

To secure the performance and payment of all of the Obligations, each of
the Partners hereby pledges and grants to the Bank (and, without limiting the
foregoing, Belco Delaware hereby confirms its pledge and grant to the Bank
under the Existing Security Agreement of) a security interest in the following
(all such property, proceeds, products, increases, rents, lease payments,
profits, substitutions, replacements, renewals, additions, amendments and
accessions are hereinafter collectively called the "Collateral"):

(a) Each Partner's distributive share of profits, income,
distributions, surplus and cash proceeds received by, or owing to, such
Partner in connection with its interest in the Partnership;

(b) each Partner's distributive share of specific Properties and
assets of the Partnership on dissolution or otherwise;

(c) any and all other rights of every kind and character in and to
the Partnership and under the Partnership Agreement for the Partnership;
and

(d) all proceeds, products, increases, rents, profits,
substitutions, replacements, renewals, additions, amendments and
accessions of, to or for the rights described in clauses (a), (b) or (c),
including without limitation any money, securities, rights to subscribe,
liquidating dividends, cash dividends and other dividends, distributions,
assets and rights which Partner or any other person may hereafter become
entitled to receive on account of securities or partnership interests
pledged hereunder.

Section II. Partners' Representations, Warranties and Agreements.

Amended and Restated Security Agreement

<PAGE> 33

Each Partner hereby represents and warrants to the Bank and agrees that:

1. The address of such Partner's place of business, residence, chief
executive office and office where the Partner keeps its records concerning its
accounts, contract rights and general intangibles, is as set forth beside such
Partner's signature on this Security Agreement. Such Partner shall immediately
notify the Bank of any discontinuance of or change in such address, any change
in the location of its place of business, residence, chief executive office or
office where it keeps such records, and any change in its name. Except as
previously disclosed to the Bank in writing, there has been no change in such
address, no change in the location of its place of business, residence, chief
executive office or office where it keeps such records and no change in such
Partner's name during the four months immediately preceding the date of this
Security Agreement.

2. Each Partner that is a corporation is duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation
and has all requisite power to own its interest in the Partnership. No
financing statement or other writing showing any lien on or security interest
in the Collateral except that of the Bank is or will be outstanding or on file
in any public office. Such Partner has good and marketable title to the
Collateral, subject only to the security interest of the Bank and subject to no
other security interest, encumbrance or restriction whatsoever. Such Partner
has full power and lawful authority to sell and assign the Collateral and to
grant to the Bank a first and prior security interest therein as herein
provided, and such Partner will defend the Collateral against the claims and
demands of all third persons.

3. The Bank shall not be responsible in any way for any depreciation in
the value of the Collateral, nor shall the Bank have any duty or responsibility
whatsoever to take necessary steps to preserve rights against prior parties.
Protest and all demands and notices of any action taken by the Bank under this
Security Agreement, or in connection with any Collateral, except

Amended and Restated Security Agreement

<PAGE> 34

as otherwise provided in this Security Agreement, are hereby waived by such
Partner, and any indulgence of the Bank, substitution for, exchange of or
release of any person liable on the Collateral is hereby assented and consented
to. At all times such Partner shall bear all risk of loss with respect to the
Collateral.

4. Without the prior written consent of the Bank, the Collateral will not
be sold, or otherwise transferred or disposed of by such Partner, or be
subjected to any unpaid charge, including taxes, or to any subsequent interest
of a third person created or suffered by such Partner voluntarily or
involuntarily. Such Partner will do, make, procure, execute and deliver all
acts, things, writings and assurances as the Bank may at any time reasonably
request to protect, assure or enforce its interest, rights and remedies created
by or arising in connection with this Security Agreement, including, without
limitation, the execution of financing statements.

5. The execution, delivery and performance of this Security Agreement and
all other instruments and agreements executed by such Partner are within such
Partner's power and authority, are not in contravention of law or any charter,
bylaws or other incorporation papers, or any indenture, agreement or
undertaking to which such Partner is a party or by which such Partner is bound.
Such Partner is and will remain duly organized and existing under the laws of
the state of its incorporation.

6. Such Partner agrees that in performing any act under this Security
Agreement and any note, guaranty agreement or other obligation secured hereby,
time shall be of the essence and the Bank's acceptance of partial or delinquent
payments, or failure of the Bank to exercise any right or remedy, shall not be
a waiver of any obligation of such Partner or right of the Bank or constitute a
waiver of any similar or dissimilar default subsequently occurring.

Section III. Rights of the Bank.

1. The Bank may, in its discretion, at any time an Event of Default
exists: (i) terminate, on notice to such

Amended and Restated Security Agreement

<PAGE> 35

Partner, such Partner's authority to sell or otherwise transfer any Collateral
as to which such authority has been given; (ii) take control of proceeds and
use cash proceeds to reduce any part of the obligations secured hereby, in such
order as it elects, whether or not due and payable; (iii) bring any action at
law or in equity to protect its interest in the Collateral; and (iv) make
demand for payment of, file suit on, make any compromise or settlement with
respect to, collect, compromise, endorse or otherwise deal with the Collateral
in its own name or the name of such Partner. At anytime an Event of Default
exists, the Bank may exercise all voting rights (and control rights)
appertaining to any of the Collateral.

2. At its option, the Bank may make payments to discharge taxes, liens or
security interests or other encumbrances at any time levied or placed on the
Collateral and take any other action necessary to obtain, preserve, and enforce
the security interest and the rights and remedies granted in this Security
Agreement and maintain and preserve the Collateral. Such payments and any
other expenses incurred by the Bank in taking such action shall become part of
the indebtedness secured by this Security Agreement. Such Partner agrees to
reimburse the Bank on demand for any such payments made or expenses incurred by
the Bank, plus interest thereon at the maximum rate permitted by applicable
law.

3. At any time an Event of Default exists, the Bank may declare all
obligations secured hereby immediately due and payable and shall have the
rights and remedies of a secured party under the Uniform Commercial Code of New
York including without limitation the right to sell, lease or otherwise dispose
of any or all of the Collateral in any manner allowed by such Uniform
Commercial Code. The Bank may require such Partner to assemble the Collateral
and make it available to the Bank at a place to be designated which is
reasonably convenient for both parties; and the Bank shall have the right to
take possession, with or without prior notice to such Partner, of all or any
part of the Collateral. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Bank will send such Partner reasonable notice of the time and place
of any public sale or other

Amended and Restated Security Agreement

<PAGE> 36

disposition thereof or of the time after which any private sale or other
disposition thereof is to be made. The requirement of sending reasonable
notice shall be met if such notice is deposited in the U.S. Mail, postage
prepaid, addressed to such Partner at the address set forth beside such
Partner's signature on this Security Agreement at least ten days before the
time of the sale or disposition. The Collateral may be sold, leased or
otherwise disposed of as an entirety or in such parcels as the Bank may elect,
and it shall not be necessary for the Bank to have actual possession of the
Collateral or to have it present when the sale, lease or other disposition is
made. The Bank may deliver to the purchasers or transferees of the Collateral
a bill of sale or transfer, binding such Partner forever to warrant and defend
title to such Collateral.

4. The Bank may remedy any default and may waive any default without
waiving the requirement that the default be remedied and without waiving any
other default. The remedies of the Bank are cumulative, and the exercise or
partial exercise of any one or more of the remedies provided for herein shall
not be construed as a waiver of any of the other remedies of the Bank. No
delay of the Bank in exercising any power or right shall operate as a waiver
thereof. The Bank's failure to assert a security interest on all or any
portion of the Collateral at any time, does not waive any security interest,
any right of the Bank to assert any security interest or any other right, power
or remedy of the Bank with respect to the Collateral as to which the Bank has
failed to assert a security interest or any other Collateral.

5. This Security Agreement, the Bank's rights hereunder or the
indebtedness hereby secured may not be assigned, except as permitted by the
terms of the Credit Agreement.

6. At any time an Event of Default exists, the Bank may execute, sign,
endorse, transfer or deliver in its own name or in the name of such Partner,
notes, checks, drafts or other instruments for the payment of money and
receipts, certificates of origin, applications for certificates of title or any
other documents necessary to evidence, perfect or realize upon the

Amended and Restated Security Agreement

<PAGE> 37

security interest and obligations created by this Security Agreement.

Section IV. Additional Agreements.

1. The division of this Security Agreement into sections and subsections
has been made for convenience only and shall be given no substantive meaning or
significance whatever in construing the terms and provisions of this Security
Agreement. This Security Agreement shall be governed by and construed in
accordance with the law of the State of New York without giving effect to any
principles of conflicts of laws.

2. If any provision of this Security Agreement is rendered or declared
invalid, illegal or ineffective by reason of any existing or subsequently
enacted legislation or by decree of a court of competent jurisdiction, such
legislation or decree shall not impair, invalidate or nullify the remainder of
the Security Agreement which shall remain in full force and effect.

3. No modification, variation or amendment of or to this Security
Agreement shall be effective unless in writing signed by each Partner and the
Bank.

4. Any notice or demand to a Partner hereunder or in connection herewith
may be given and shall conclusively be deemed and considered to have been given
and received upon the deposit thereof in the U.S. Mail, in writing, duly
stamped and addressed to such Partner at the address set forth beside such
Partner's signature on this Security Agreement, or at such other address as may
be designated to the Bank by such Partner in a writing that is actually
received by the Bank and that is mailed by certified mail, return receipt
requested, to the Bank at One Chase Plaza, New York, New York 10081 or at such
other address as the Bank may designate to such Partner in writing. Actual
notice to such Partner, however given or received, shall always be effective.
Notwithstanding anything contained in this Security Agreement to the contrary,
nothing contained in this Security Agreement or any other document executed in
connection herewith shall be construed as impairing or limiting the right of
the Bank to demand from the

Amended and Restated Security Agreement

<PAGE> 38

Borrower at any time payment in full of any indebtedness secured hereby which
is due and payable on demand.

5. Notwithstanding anything to the contrary contained herein, it is
understood and agreed that the liability of each Partner (except for Belco
G.P.) for the obligations secured hereby is limited to its interest in the
Collateral described herein and no such Partner shall have any other liability
or obligation in connection herewith. The liability of Belco G.P. is limited
as provided in Section 2.12 of the Credit Agreement.

Section V. Release and Termination.

Subject to the execution and delivery hereof by Belco Delaware, Belco
Wyoming and the Bank, and the satisfaction of the other conditions precedent
set forth in Section 4 of Amendment No. 3, but effective as of the date hereof,
the Bank hereby releases all Liens granted to it by the Released Partners under
the Existing Security Agreement.

Amended and Restated Security Agreement

<PAGE> 39

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed and delivered as of the day and year first above written.

BELCO OIL & GAS CORP., a Delaware
corporation

By___________________________
Title:

Address for Notices:

Belco Oil & Gas Corp.
767 Fifth Avenue, 46th Floor
New York, New York 10153
Attention:
Telecopier:

BOG WYOMING, INC.

By___________________________
Title:

Address for Notices:

BOG Wyoming, Inc.
c/o Belco Oil & Gas Corp.
767 Fifth Avenue, 46th Floor
New York, New York 10153
Attention:
Telecopier:

Amended and Restated Security Agreement

<PAGE> 40

THE CHASE MANHATTAN BANK, N.A.

By ________________________
Title:

Amended and Restated Security Agreement

<PAGE> 41

ANNEX 1 to
Security Agreement

RELEASED PARTNERS

Name of Released Partner

GENERAL PARTNER:

LDB Corp.

CLASS A LIMITED PARTNERS:

Robert A. Belfer

Renee E. Belfer

Belco Energy Corp.

CLASS B LIMITED PARTNERS:

Laurence D. Belfer

Elizabeth K. Belfer

Renee E. Belfer and Richard Ruben as Trustees of
the Grantor Trust Agreement dated November 30,
1983 (Grantor Trust)

Laurence D. Belfer as Trustee of the Robert
A. Belfer 1990 Family Trust under the
Trust Agreement dated December 3, 1990
(Belfer Family Trust)

Robert A. Belfer and Renee E. Belfer as
Trustees of the trust f/b/o Rachelle L.
Belfer under the Trust Agreement dated
December 18, 1964 (T-2)

Renee E. Belfer as Trustee of the trust f/b/o

Annex 1

<PAGE> 42

Rachelle L. Belfer under the Trust
Agreement dated March 5, 1976 (T-3)

Robert A. Belfer and Renee E. Belfer as
Trustees of the trust f/b/o Laurence D.
Belfer under the Trust Agreement dated
September 30, 1966 (T-4)

Name of Released Partner

Renee E. Belfer as Trustee of the trust f/b/o
Laurence D. Belfer under the Trust
Agreement dated March 5, 1976 (T-5)

Robert A. Belfer and Renee E. Belfer as
Trustees of the trust f/b/o Elizabeth K.
Belfer under the Trust Agreement dated
December 30, 1971 (T-6)

Renee E. Belfer as Trustee of the trust f/b/o
Elizabeth K. Belfer under the Trust
Agreement dated March 5, 1976 (T-7)

Robert A. Belfer as Trustee of the trust f/b/o
Renee E. Belfer under the Trust
Agreement dated June 29, 1965 (T-8)

Robert A. Belfer as Trustee of the Laurence
D. Belfer Descendant's Trust under the
Will of Arthur B. Belfer (LDB DT)

Robert A. Belfer as Trustee of the Rachelle
B. Malkin Descendant's Trust under the
Will of Arthur B. Belfer (RBM DT)

Robert A. Belfer as Trustee of the Elizabeth
K. Belfer Descendant's Trust under the
Will of Arthur B. Belfer (EKB DT)

CLASS S LIMITED PARTNER:

Saltz Investment Group

Annex 1

<PAGE> 43
INTERCOMPANY SERVICES AGREEMENT

This InterCompany Services Agreement (this "Agreement") executed this
day of March, 1996, but effective as of the Effective Date (hereafter defined)
is entered into between Belco Oil & Gas Corp., a Delaware corporation
("Belco-Delaware"), Belco Energy L.P., a Delaware limited partnership, Belco
Oil & Gas Corp., a Nevada corporation ("Belco-Nevada"), Gin Lane Company, a
Delaware corporation, Belco Finance Co., a Wyoming corporation, BOG Wyoming,
Inc., a Wyoming corporation, and any other direct or indirect subsidiary of
Belco Nevada that becomes a party to this Agreement pursuant to the provisions
of Section 10.1 hereto. The parties hereto other than Belco-Delaware are
collectively referred to herein as the "Affiliates".

Recitals:

The Affiliates desire to obtain Belco-Delaware's services in connection
with financial and personnel matters. Belco-Delaware is willing to perform
such services on the terms and subject to the conditions hereafter set forth.

Agreements:

Section 1. Definitions.

For the purposes of this Agreement, the following terms shall have the
meanings hereby ascribed:

1.1 The term "Cost Share" shall mean, with respect to any Party, a
fraction the numerator of which is the Gross Revenues received by such Party
during the then current term of this Agreement, and the denominator of which is
the sum of the Gross Revenues received by all of the Parties during such term.
If this Agreement is extended for one or more renewal terms pursuant to the
provisions of Section 4.1, a separate calculation of Cost Shares shall be made
with respect to each renewal term in accordance with the foregoing definition
based upon Gross Revenues received during such renewal term.

1.2 The term "Effective Date" shall mean the date of the closing of the
initial public offering of common stock of Belco-Nevada.

1.3 The term "General and Administrative Expenses" shall mean all
reasonable and appropriate general and administrative

<PAGE> 44
2

overhead costs paid by Belco-Delaware during the current term of this Agreement
in connection with the management of the businesses of the Parties. Such term
shall include, but not be limited to, the following costs:

(i) The salaries and direct and indirect payroll expenses (including
bonuses) of all executives and other employees of Belco-Delaware;

(ii) Rent and associated charges attributable to the operation of
the offices of Belco-Delaware, including office furnishings and
equipment, telephones, utilities, parking, property taxes;

(iii) The cost of all office supplies, including stationery,
drafting materials and other miscellaneous office supplies for the
offices of Belco-Delaware;

(iv) All transportation and travel expenses for employees of
Belco-Delaware, including the expenses of all vehicles used by such
employees, commercial airfares, lodging and dining expenses, car rental
and parking fees; and

(v) Legal, accounting and administrative fees and expenses.

1.4 The term "Gross Revenues" shall mean, with respect to any Party, the
gross revenues of such Party during the applicable period determined in
accordance with generally accepted accounting principles. The Gross Revenues of
Belco-Delaware shall not include any Service Fees or other payments received
hereunder.

1.5 The term "Parties" shall mean Belco-Delaware and the Affiliates.

1.6 The term "Service Fee" is defined in Section 3.1.

1.7 The term "Services" shall mean financial, personnel and other services
performed for the Affiliates pursuant to this Agreement. Such term shall
exclude services furnished to the Affiliates under other agreements.

<PAGE> 45
3

Section 2. Services to be Performed by Belco-Delaware.

2.1 Upon the terms and subject to the conditions and limitations
hereinafter set forth, Belco-Delaware agrees, commencing on the Effective Date,
to perform the Services on behalf of the Affiliates.

2.2 The Services to be performed by Belco-Delaware shall include all
reasonable financial and personnel services requested by an Affiliate,
including without limitation, the following:

(a) Financial Services. Belco-Delaware shall deposit into its
Operating Account funds which Belco-Delaware receives on behalf of any
Affiliate, and Belco-Delaware shall cause such funds to be disbursed from
such account upon the direction of the respective Affiliate.
Belco-Delaware will maintain accurate books and records of the amounts
deposited into and disbursed from such account and will not disburse any
amount from such account on behalf of any Affiliate in excess of the
amount currently held in such account attributable to such Affiliate.

(b) Personnel Services. Belco-Delaware will provide such executive,
managerial, technical and other personnel as are requested by any
Affiliate for the operation of its business.

(c) Books and records. Belco-Delaware will maintain the financial
books and records of each Affiliate. Belco-Delaware will make available
to each Affiliate and its representatives and designees, at
Belco-Delaware's principal office in New York, New York, and at
reasonable times, for examination and transcription, the books of
accounting and all other records maintained by Belco-Delaware relating to
or reflecting the conduct of such Affiliate's business; and
Belco-Delaware will provide to each Affiliate such other information in
Belco-Delaware's possession with respect to each Affiliate's business as
such Affiliate, its representatives or designees may reasonably request.

(d) Notices. Belco-Delaware shall cause all material notices from
third parties received by Belco-Delaware affecting the obligations and
responsibilities of any Affiliate hereunder to be directed or forwarded
to the

<PAGE> 46
4

appropriate Affiliates. Belco-Delaware shall promptly notify the
appropriate Affiliate of any suit, proceeding or action commenced or
taken against such Affiliate or Belco-Delaware which may be related to
such Affiliate's business and will assist in the defense of such suits as
directed by such Affiliate and at the expense of such Affiliate.

(e) Tax Returns. Belco-Delaware shall cause the preparation of all
federal, state and local income, sales, employer's, franchise and other
tax returns required to be filed by each Affiliate and shall deliver such
returns to the appropriate Affiliate for execution and filing by such
Affiliate within the time periods required by law.

(f) Outside Professionals and Consultants; Legal Services.
Belco-Delaware will recommend and coordinate the employment (at the
expense of the Affiliates) of such outside auditors, attorneys, petroleum
engineers, and consultants as Belco-Delaware deems appropriate for the
conduct of the business of the Affiliates.

2.3 Belco-Delaware in its operations under this Agreement is an
independent contractor. Belco-Delaware shall determine the number of its
employees, their selection and the hours of labor and the compensation for
services to be paid them in connection with its operations pursuant to this
Agreement.

2.4 In connection with performing the Services, Belco-Delaware will make
available to the Affiliates such of Belco-Delaware's technical, professional
and other personnel as Belco-Delaware deems necessary to fulfill its
obligations hereunder.

Section 3. Compensation of Belco-Delaware.

3.1 As compensation for the Services during each one year term of this
Agreement, each Affiliate shall pay Belco-Delaware its respective Cost Share
of the General and Administrative Expenses of Belco-Delaware (the "Service
Fee"). The Service Fee shall be due and payable monthly based on estimates
made by Belco-Delaware of the Gross Revenues of each Party for the current term
of this Agreement and the estimated General and Administrative Expenses for
such period. As soon as the actual Gross Revenues of each Party and the actual
General and Administrative Expenses for any term are determined, the Parties

<PAGE> 47
5

will make appropriate adjustments to the payments made for such term. Payment
of the estimated Service Fee by the Affiliates for each month and any
adjustment to any payment previously made shall be due within five (5) days
after receipt of invoice from Belco-Delaware. In no event shall the Service
Fee paid by any Party exceed the maximum amount which such party is permitted
to pay under any credit agreement to which it is a party, but any portion of
any Service Fee that any Party is not permitted to pay pursuant to its credit
agreement shall accrue and be payable if and when permitted under the terms of
the credit agreement.

3.2 All costs and expenses incurred in connection with the initial public
offering of common stock of Belco Oil & Gas Corp., a Nevada corporation, shall
be borne and paid by Belco Energy L.P. notwithstanding anything to the contrary
contained herein.

3.3 Any Service Fees or other amounts payable to Belco-Delaware pursuant
to this Agreement not paid when due shall be subject to a late payment penalty
equal to (i) the prime rate announced from time to time by The Chase Manhattan
Bank, N.A., plus two percent (2%) per annum, or (ii) the maximum lawful
non-usurious rate of interest from time to time, whichever is lower.

Section 4. Term; Termination.

4.1 The initial term of this Agreement shall commence on the Effective
Date and end on December 31, 1996, unless sooner terminated. Thereafter, the
Agreement shall be automatically renewed for successive one-year terms unless
any Party hereto gives the other Parties written notice, not less than thirty
(30) days prior to the end of the then current term, of its intention to
terminate this Agreement with respect to its interest at the end of the then
current term. Any Party may terminate this Agreement with respect to its
interest at any time by notifying the other Parties of its intention to
terminate, in which case the Agreement will terminate with respect to such
Party thirty (30) days after the other Parties' receipt of such notice.

4.2 Termination of this Agreement shall not relieve Party of any
obligation or liability which arose prior to such termination.

<PAGE> 48
6

Section 5. Standard of Conduct; Disclaimers; Indemnification.

5.1 Standard of Conduct. Belco-Delaware (together with its officers,
directors, employees, agents and independent contractors) shall never be held
liable or responsible to any other Party hereto for, nor shall the obligations
of any other Party hereunder to bear liabilities be diminished by, the
negligence of Belco-Delaware or its officers, directors, employees, agents or
independent contractors; provided, however, Belco-Delaware shall be liable to
the Affiliates only for its gross negligence, willful misconduct or bad faith.
In no event shall Belco-Delaware be liable to the Affiliates for any indirect,
special or consequential damages or lost profits resulting from any error in
the performance of the Services or the breach of this Agreement by
Belco-Delaware.

5.2 Disclaimers. Belco-Delaware makes no warranties, express or implied,
with respect to the nature, quantity or quality of the Services to be performed
hereunder.

Section 6. Parties in Interest.

The Parties hereto agree that this Agreement is binding upon and is for
the exclusive benefit of the Parties hereto and their respective successors and
permitted assigns, and confers no rights or remedies upon any person other than
the Parties hereto, their successors and permitted assigns. Without the consent
of the other Parties hereto, the Affiliates and Belco-Delaware may not assign
their rights or obligations under this Agreement to any other person except (i)
to an Affiliate of such Party, or (ii) to a corporation or other entity into
which such assigning Party is merged or to which substantially all of the
assets of assigning Party are transferred.

Section 7. Power of Attorney. Each Affiliate hereby appoints
Belco-Delaware as such Affiliate's attorney-in-fact and agent for the limited
purposes described below. Belco-Delaware shall have the power

(a) to do business with banks or other depositories deemed proper by
Belco-Delaware, and particularly to deposit or endorse all checks,
drafts, bills of exchange, promissory notes, certificates of deposit, and
other securities for

<PAGE> 49
7

money payable or belonging to such Affiliate or under the custody of such
Affiliate, and to collect the proceeds;

(b) to sign checks on all accounts standing in such Affiliate's
names, to withdraw funds from such accounts, and to open accounts;

(d) to invest all sums of money which shall come to Belco-Delaware's
hands as such Affiliate's agent in debt instruments (including
certificates of deposit, demand and time deposits, and commercial paper)
issued by federal, state or local agencies, financial institutions or
major corporations, with maturities of not more than 180 days.

Nothing contained herein shall be construed to authorize Belco-Delaware to
cause any Party to violate any credit agreement to which such Party is a party.

Section 8. Notices.

8.1 Any notice, consent or other communication pursuant to this Agreement
may be given orally (in person or by telephone) or in writing. If given
orally, any such communication must be confirmed in writing in accordance with
the procedures applicable to written communications provided below and, if so
confirmed, shall be deemed to have been duly given when communicated to a
responsible representative of the Party to whom the communication is directed.
If given in writing, such communication shall be deemed to have been duly given
when personally delivered, or at the expiration of two business days after the
time when mailed by United States certified mail, return receipt requested,
postage pre-paid, to the following persons and addresses:

If to Belco-Delaware:
Belco Oil & Gas Corp., a Delaware corporation
767 Fifth Avenue, 46th Floor
New York, New York 10153

If to any of the Affiliates:

<PAGE> 50
8

addressed to the Affiliate
767 Fifth Avenue, 46th Floor
New York, New York 10153

8.2 The addresses to which communications are to be mailed, if mailed, may
be changed by any Party by notice in accordance with this Section 8.

Section 9. Other Agreements. The Parties hereto are parties to other
agreements and instruments between one another and with third parties,
including without limitation, operating agreements, partnership agreements,
service agreements and other agreements and instruments. The terms and
provisions of this Agreement are not intended to amend or revise in any manner
the rights and obligations of the Parties under such other agreements and
instruments.

Section 10. Miscellaneous.

10.1 Additional Parties. Any direct or indirect subsidiary of
Belco-Nevada may become a Party to this Agreement by executing and delivering
to Belco-Delaware an instrument adopting and ratifying all of the terms and
provisions of this Agreement and agreeing to be bound by the terms hereof.

10.2 Non-Waiver. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof or a continuation of
the waiver. Each Party shall be entitled to rely upon one or more provisions
of this Agreement without waiving any right to rely upon any other provision at
the same time or at any other time.

10.3 Headings. The headings of sections and subsections of this Agreement
are merely for convenience of reference, have no substantive significance, and
shall be disregarded in the interpretation of this Agreement.

10.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

10.5 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York.

<PAGE> 51
9

10.6 Relationship. Nothing contained herein shall be deemed to constitute
the Parties hereto as partners or joint venturers. The Parties agree and
stipulate that no Party shall owe any fiduciary duty hereunder to the other
Parties under this Agreement.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed effective as of the Effective Date.

BELCO OIL & GAS CORP., a
Delaware corporation

By: _____________________________________
Name: ___________________________________
Title: __________________________________

BELCO ENERGY L.P., a Delaware
limited partnership

By: _____________________________________
Name: ___________________________________
Title: __________________________________

BELCO OIL & GAS CORP., a Nevada
corporation

By: _____________________________________
Name: ___________________________________
Title: __________________________________

GIN LANE COMPANY, a Delaware
corporation

<PAGE> 52
10

By: _____________________________________
Name: ___________________________________
Title: __________________________________

BELCO FINANCE CO., a Wyoming
corporation

By: _____________________________________
Name: ___________________________________
Title: __________________________________

BOG WYOMING, INC., a Wyoming
corporation

By: _____________________________________
Name: ___________________________________
Title: __________________________________
<PAGE> 53
[EXECUTION COPY]

PLEDGE AGREEMENT

PLEDGE AGREEMENT dated as of March 29, 1996 between BELCO FINANCE CO., a
Wyoming corporation (the "Pledgor"), and THE CHASE MANHATTAN BANK, N.A. (the
"Bank").

Belco Energy, L.P., a Delaware limited partnership and an affiliate of the
Pledgor (the "Borrower"), and the Bank are parties to a Credit Agreement dated
as of December 1, 1994 (as modified and supplemented and in effect from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for loans to be made by the Bank to the Borrower in an aggregate
principal amount not exceeding, on the date hereof, $40,000,000.

On the date hereof, the Pledgor made an intercompany advance to the
Borrower in a principal amount equal to $113,000,000 which advance is evidenced
by a promissory note of the Borrower dated March 29, 1996 payable to the
Pledgor in a like original principal amount (as modified and supplemented and
in effect from time to time, the "Finance Note"). All obligations of the
Borrower to the Pledgor under the Finance Note are, on the terms and conditions
set forth therein, subordinated to the prior payment in full in cash of the
obligations of the Borrower to the Bank under the Credit Agreement and the
other Credit Documents (as defined therein).

To induce the Bank to enter into Amendment No. 3 to the Credit Agreement
and to extend credit thereunder, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Pledgor has
agreed to pledge and grant a security interest in the Collateral (as
hereinafter defined) as security for the Secured Obligations (as so defined).
Accordingly, the parties hereto agree as follows:

Pledge Agreement

<PAGE> 54
2

Section 1. Definitions. Terms defined in the Credit Agreement are used
herein as defined therein. In addition, as used herein:

"Collateral" shall have the meaning ascribed thereto in Section 3
hereof.

"Secured Obligations" shall mean, collectively, (a) the Obligations
and all other amounts whatsoever from time to time owing to the Bank
under the Credit Documents and (b) all obligations of the Pledgor to the
Bank hereunder.

"Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect from time to time in the State of New York.

Section 2. Representations and Warranties. The Pledgor represents and
warrants to the Bank:

(a) Corporate Existence. The Pledgor: (1) is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation; (2) has all requisite corporate power, and has all
material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted; and (3) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify would
(either individually or in the aggregate) have a material adverse effect
on the consolidated financial condition, operations, business or
prospects taken as a whole of the Guarantor and its Subsidiaries.

(b) No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or
result in a breach of, or require any consent under, the charter or
by-laws of the Pledgor, or any applicable law or regulation, or any
order,

Pledge Agreement

<PAGE> 55
3

writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Pledgor or any of its
Subsidiaries is a party or by which any of them is bound or to which any
of them is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any
of the revenues or assets of the Pledgor or any of its Subsidiaries
pursuant to the terms of any such agreement or instrument.

(c) Corporate Action. The Pledgor has all necessary corporate
power and authority to execute, deliver and perform its obligations under
this Agreement; the execution, delivery and performance by the Pledgor of
this Agreement have been duly authorized by all necessary corporate
action on its part; and this Agreement has been duly and validly executed
and delivered by the Pledgor and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms.

(d) Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority
or agency, or any securities exchange are necessary for the execution,
delivery or performance by the Pledgor of this Agreement or for the
validity or enforceability hereof.

(e) Collateral. The Pledgor is the sole beneficial owner of the
Collateral and no Lien exists or will exist upon the Collateral at any
time, except for the pledge and security interest in favor of the Bank
created or provided for herein, which pledge and security interest
constitute a first priority perfected pledge of and security interest in
the Collateral.

Section 3. Pledge. As collateral security for the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations, the Pledgor hereby pledges and grants to the Bank a
security interest in all of the Pledgor's right, title and interest in, to and
under the following property, whether now owned by the Pledgor or

Pledge Agreement

<PAGE> 56
4

hereafter acquired and whether now existing or hereafter coming into existence
(all being collectively referred to herein as "Collateral"):

(a) the Finance Note (including, without limitation, all rights of
the Pledgor to receive payments thereunder and to enforce the same); and

(b) all proceeds of the foregoing.

Section 4. Further Assurances; Remedies. In furtherance of the grant of
the pledge and security interest pursuant to Section 3 hereof, the Pledgor
hereby agrees with the Bank as follows:

4.01 Delivery and Other Perfection. The Pledgor shall:

(a) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the judgment of the Bank) to create,
preserve, perfect or validate the security interest granted pursuant
hereto or to enable the Bank to exercise and enforce its rights hereunder
with respect to such pledge and security interest;

(b) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Bank may reasonably require in order to reflect the
security interests granted by this Agreement; and

(c) permit representatives of the Bank, upon reasonable notice, at
any time during normal business hours to inspect and make abstracts from
its books and records pertaining to the Collateral.

4.02 Other Financing Statements and Liens. The Pledgor shall not create
or suffer to exist any security interest

Pledge Agreement

<PAGE> 57
5

in or other Lien on any of the Collateral except the Liens under this Agreement
in favor of the Bank.

4.03 Collateral.

(1) So long as no Event of Default shall have occurred and be continuing,
the Pledgor shall have the right to exercise all powers of ownership pertaining
to the Collateral for all purposes not inconsistent with the terms of this
Agreement, the Credit Agreement, the Notes or any other instrument or agreement
referred to herein or therein, provided that the Pledgor agrees that it will
not (1) agree to any amendment, supplement or other modification to the Finance
Note or (2) waive any right it may have to payment under the Finance Note.

(2) Unless and until an Event of Default has occurred and is continuing,
the Pledgor shall be entitled to receive and retain free and clear of the Lien
hereby created any cash principal or interest on the Finance Note.

(3) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not the Bank exercises any
available right to declare any Secured Obligation due and payable or seeks or
pursues any other relief or remedy available to it under applicable law or
under this Agreement, the Credit Agreement, the Notes, any other Credit
Document or any other agreement relating to such Secured Obligation, all
distributions on the Collateral shall be paid directly to the Bank and retained
by it as part of the Collateral, subject to the terms of this Agreement, and,
if the Bank shall so request in writing, the Pledgor agrees to execute and
deliver to the Bank appropriate additional distribution and other orders and
documents to that end, provided that if all such Events of Default are cured to
the satisfaction of the Bank, any such distribution theretofore paid to the
Bank shall, upon request of the Pledgor (except to the extent theretofore
applied to the Secured Obligations), be returned by the Bank to the Pledgor.

Pledge Agreement

<PAGE> 58
6

4.04 Events of Default, Etc. During the period during which an Event of
Default shall have occurred and be continuing:

(a) the Bank shall have all of the rights and remedies with respect
to the Collateral of a secured party under the Uniform Commercial Code
(whether or not said Code is in effect in the jurisdiction where the
rights and remedies are asserted) and such additional rights and remedies
to which a secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be asserted,
including, without limitation, the right, to the maximum extent permitted
by law, to exercise all consensual and other powers of ownership
pertaining to the Collateral as if the Bank were the sole and absolute
owner thereof (and the Pledgor agrees to take all such action as may be
appropriate to give effect to such right);

(b) the Bank in its discretion may, in its name or in the name of
the Pledgor or otherwise, demand, sue for, collect or receive any money
or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to
do so; and

(c) the Bank may, upon ten business days' prior written notice to
the Pledgor of the time and place, sell, assign or otherwise dispose of
all or any part of such Collateral, at such place or places as the Bank
deems best, and for cash or for credit or for future delivery (without
thereby assuming any credit risk), at public or private sale, without
demand of performance or notice of intention to effect any such
disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Bank or anyone else may be the purchaser, assignee or recipient of any or
all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind,
including any right or equity of redemption (statutory or otherwise), of
the Pledgor, any such demand, notice and right or equity being

Pledge Agreement

<PAGE> 59
7

hereby expressly waived and released; and the Bank may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed
for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned; and

(d) the Bank may make any reasonable compromise or settlement
deemed desirable with respect to any of the Collateral and may extend the
time of payment, arrange for payment in installments, reduce the rate of
interest on, forgive any amount of principal of or otherwise modify the
terms of, the Finance Note.

The proceeds of each collection, sale or other disposition under this Section
4.04 shall be applied in accordance with Section 4.07 hereof.

4.05 Private Sale. The Bank shall incur no liability as a result of the
sale of the Collateral, or any part thereof, at any private sale pursuant to
Section 4.04 hereof conducted in a commercially reasonable manner. The Pledgor
hereby waives any claims against the Bank arising by reason of the fact that
the price at which the Collateral may have been sold at such a private sale was
less than the price that might have been obtained at a public sale or was less
than the aggregate amount of the Secured Obligations, even if the Bank accepts
the first offer received and does not offer the Collateral to more than one
offeree.

4.06 Application of Proceeds. The proceeds of any collection, sale or
other realization of all or any part of the Collateral pursuant hereto, and any
other cash at the time held by the Bank under this Section 4, shall be applied
by the Bank to reimburse the Bank for costs and expenses incurred in connection
with such collection, sale or other realization and thereafter, shall be
applied by the Bank to the payment in full of the Obligations. As used in this
Section 4, "proceeds" of Collateral shall mean cash, securities and other
property realized in respect of, and distributions in kind of, Collateral,
including

Pledge Agreement

<PAGE> 60
8

any thereof received under any reorganization, liquidation or adjustment of
debt of the Pledgor or any issuer of or obligor on any of the Collateral.

4.07 Attorney-in-Fact. Without limiting any rights or powers granted by
this Agreement to the Bank while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default, the Bank is hereby appointed the attorney-in-fact of the Pledgor for
the purpose of carrying out the provisions of this Section 4 and taking any
action and executing any instruments that the Bank may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, (i) the Bank shall have the right to require
the Pledgor to exercise the Pledgor's right, if any, to require the Borrower to
prepay the Finance Note and (ii) so long as the Bank shall be entitled under
this Section 4 to make collections in respect of the Collateral, the Bank shall
have the right and power to receive, endorse and collect all checks made
payable to the order of the Pledgor representing any dividend, payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.

4.08 Perfection. Prior to or concurrently with the execution and
delivery of this Agreement, the Pledgor has delivered the Finance Note to the
Bank.

Section 5. Miscellaneous.

5.01 No Waiver. No failure or delay by the Bank in exercising, and no
course of dealing with respect to, any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.

5.02 Notices. All notices, requests, consents and demands hereunder
shall be in writing and telexed, telecopied or

Pledge Agreement

<PAGE> 61
9

delivered to the intended recipient at its "Address for Notices" specified
below.

5.03 Expenses. The Pledgor agrees to reimburse the Bank for all
reasonable out-of-pocket expenses (including without limitation reasonable fees
and expenses of legal counsel) incurred by it in connection herewith,
including, without limitation, all such expenses of, or incident to, the
enforcement of any of the provisions of this Section 5, or performance by the
Bank of any of the obligations of the Pledgor in respect of the Collateral
which the Pledgor has failed or refused to perform, or any actual or attempted
sale, or any exchange, enforcement, collection, compromise or settlement in
respect of any Collateral, and for the care of the Collateral and defending or
asserting rights or claims of the Bank in respect thereof, by litigation or
otherwise, including expenses of insurance, and all such expenses shall be
Secured Obligations.

5.04 Amendments, Etc. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Pledgor and the Bank.

5.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and each holder of any of the
Secured Obligations and their respective successors and assigns, except that
the Pledgor may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of the Bank.

5.06 Captions. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

5.07 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

Pledge Agreement

<PAGE> 62
10

5.08 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.

5.09 Severability. If any provision hereof is invalid and unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (i) the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Bank in order to
carry out the intentions of the parties hereto as nearly as may be possible and
(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.

Pledge Agreement

<PAGE> 63
11

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.

BELCO FINANCE CO.

By___________________________
Title:

Address for Notices:

Belco Finance Co.
c/o Belco Oil & Gas Corp.
767 Fifth Avenue, 46th Floor
New York, New York 10153
Attention:
Telecopier:

Pledge Agreement

<PAGE> 64
12

THE CHASE MANHATTAN BANK, N.A.

By ________________________
Title:

Address for Notices:

The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza, 3rd Floor
New York, New York 10081
Attention: Mr. Andrew Oram
Global Petroleum
Telecopier: 212-552-1687

with a copy to:

The Chase Manhattan Bank, N.A.
2 Chase Manhattan Plaza, 5th Floor
New York, New York 10081
Attention: Ms. Jackie Reid
Telecopier: 212-552-4455

Pledge Agreement

<PAGE> 65
1

SUBORDINATED PROMISSORY NOTE

March 29, 1996
New York, New York

FOR VALUE RECEIVED, BELCO ENERGY L.P., a Delaware limited partnership (the
"Company"), hereby promises to pay to BELCO FINANCE CO., a Wyoming corporation
(the "Payee"), on June 30, 1998 (the "Maturity Date") in New York, New York, in
lawful money of the United States of America and in immediately available
funds, the then aggregate unpaid principal amount of this Note together with
interest thereon as provided in Section 2 hereof.

Section 1. Principal. The principal amount of this Note shall initially
be $113,000,000 equal to the principal amount of the loan made by the Payee to
the Company on the date hereof. On the last day of each calendar quarter
ending after the date hereof, the principal amount of this Note shall
automatically increase by an amount equal to the amount of interest accrued for
such calendar quarter pursuant to Section 2 hereof to the extent not paid in
cash by the Company as provided therein. The principal amount of this Note
shall automatically decrease at the time of any payment or prepayment of the
principal hereof by the amount of such payment or prepayment.

Section 2. Interest. The Company hereby promises to pay to the Payee
interest on the unpaid principal amount of this Note for the period from and
including the date hereof to but excluding the date this Note shall be paid in
full at a rate per annum equal to 1% plus the Prime Rate as in effect from time
to time. On the last day of each calendar quarter, accrued interest shall be
capitalized by increasing the principal amount of this Note as provided in
Section 1 hereof, with such capitalization satisfying in full the Company's
obligation to pay interest for such calendar quarter (provided that the Company
may, at its option, pay all or a portion of the interest accrued during such
calendar quarter in cash rather than by increasing the principal

Finance Note

<PAGE> 66
2

amount of this Note as aforesaid). Interest shall be calculated on the basis
of a year of 365 days and actual days elapsed (including the first day but
excluding the last). Subject to the terms and conditions hereof, interest on
any principal amount hereof that is not paid when due shall be payable from
time to time upon demand of the Payee at a rate per annum equal to 2% plus the
Prime Rate as in effect from time to time.

Section 3. Definitions. As used herein, the following terms shall have
the following meanings:

"Bank" shall mean The Chase Manhattan Bank, N.A.

"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.

"Belco G.P." shall mean Belco Oil & Gas Corp., a Delaware
corporation and the general partner of the Company, together with its
successors in such capacity.

"Credit Agreement" shall mean the Credit Agreement dated as of
December 1, 1994 between the Company and the Bank, as the same may be
modified, supplemented, amended and restated or refinanced and from time
to time in effect (including any such modification, supplement, amendment
and restatement or refinancing resulting in an increase in the principal
or other amount of obligations of the Company thereunder).

"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).

"Prime Rate" shall mean the rate of interest from time to time
announced by the Bank at its principal office in New York, New York as
its prime commercial lending rate.

"Reorganization Debt Securities" shall mean debt or equity
securities of the Company as reorganized or

Finance Note

<PAGE> 67
3

readjusted, or debt or equity securities of the Company (or any other
company, trust or organization provided for by a plan of reorganization
or readjustment succeeding to the assets and liabilities of the Company),
that are subordinated, to at least the same extent as this Note, to the
payment of all Senior Debt that will be outstanding after giving effect
to such plan of reorganization or readjustment, so long as (a) the rate
of interest on such debt securities shall not exceed the effective rate
of interest on this Note on the date hereof, (b) such debt securities
shall not be entitled to the benefits of covenants or defaults materially
more beneficial to the holders of such debt securities than those in
effect with respect to this Note on the date hereof (or the Senior Debt,
after giving effect to such plan of reorganization or readjustment) and
(c) such debt securities shall not provide for amortization (including
sinking fund and mandatory prepayment provisions) commencing prior to the
date six months following the final scheduled maturity date of the Senior
Debt (as modified by such plan of reorganization or readjustment).

"Senior Debt" shall mean all obligations of the Company under the
Credit Agreement and the other Credit Documents (as defined therein).
The term "Senior Debt" shall include any interest accruing after the date
of any filing by the Company or Belco G.P. of any petition in bankruptcy
or the commencing of any bankruptcy, insolvency or similar proceedings
with respect to the Company or Belco G.P., whether or not such interest
is allowable as a claim in any such proceeding.

Finance Note

<PAGE> 68
4

Section 4. Certain Acceleration Events. In the event that:

(a) The Company or Belco G.P. shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code (as
now or hereafter in effect), (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the Bankruptcy Code, or (vi) take any corporate action for the purpose of
effecting any of the foregoing; or

(b) A proceeding or case shall be commenced, without the
application or consent of the Company or Belco G.P. in any court of
competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like for it of all or any substantial part of its assets, or (iii)
similar relief in respect of the Company or Belco G.P. under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 or more days; or an order for relief
against the Company or Belco G.P. shall be entered in an involuntary case
under the Bankruptcy Code;

THEREUPON the principal amount then outstanding of, and the accrued interest
on, this Note shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company.

Finance Note

<PAGE> 69
5

Section 5. Subordination to Senior Debt. The Company, for itself and its
successors and assigns, covenants and agrees, and the Payee, by its acceptance
hereof, on its own behalf and on behalf of each subsequent holder of this Note,
likewise covenants and agrees, that this Note, and the payment from whatever
source of the principal of, and interest on, this Note, are hereby expressly
made subordinate and subject in right of payment to the prior payment in full
in cash of all Senior Debt as hereinafter set forth:

A. In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the
Company, Belco G.P. or any of their respective creditors, as such, or to
the Company, Belco G.P. or any of their respective assets, or (b) any
liquidation, dissolution or other winding up of the Company or Belco
G.P., whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the
Company or Belco G.P., then and in any such event:

(1) the Bank shall be entitled to receive payment in full in
cash of all amounts due or to become due on or in respect of all
Senior Debt, or provision shall be made for such payment, before
the Payee shall be entitled to receive any payment on account of
principal of, or interest on, this Note;

(2) any payment or distribution of assets of the Company or
Belco G.P. of any kind or character, whether in cash, property or
securities, by set-off or otherwise, to which the Payee would be
entitled but for the provisions of this Section 5, including any
such payment or distribution that may be payable or deliverable by
reason of the payment of any other indebtedness of the Company
being subordinated to the payment of this Note (other than
Reorganization Debt Securities), shall be paid by the liquidating
trustee

Finance Note

<PAGE> 70
6

or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the Bank, according to the aggregate
amounts remaining unpaid on account of the principal of, and
interest on, the Senior Debt held or represented by the Bank, to
the extent necessary to make payment in full in cash of all Senior
Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the Bank;

(3) in the event that, notwithstanding the foregoing
provisions of this paragraph A, the Payee shall have received,
before all Senior Debt is paid in full in cash or payment thereof
provided for, any such payment or distribution of assets of the
Company or Belco G.P. of any kind or character, whether in cash,
property or securities (other than Reorganization Debt Securities),
including any such payment or distribution arising out of the
exercise by the Payee of a right of set-off or counterclaim and any
such payment or distribution received by reason of any other
indebtedness of the Company being subordinated to this Note, then,
and in such event, such payment or distribution shall be held in
trust for the benefit of, and shall be immediately paid over or
delivered to, the Bank, according to the aggregate amounts
remaining unpaid on account of the principal of, and interest on,
the Senior Debt held or represented by the Bank, to the extent
necessary to make payment in full in cash of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution to the Bank; and

(4) if the Payee shall have failed to file claims or proofs
of claim with respect to this Note earlier than 30 days prior to
the deadline for any such filing, the Payee shall execute and
deliver to the Bank such powers of attorney, assignments or other
instruments as the Bank may reasonably request to file such claims
or proofs of claim.

Finance Note

<PAGE> 71
7

B. The Payee hereby agrees that, unless and until the
principal of and interest on the Senior Debt shall have been paid
in full in cash, (a) no payment on account of the principal of, or
interest or premium (if any) on, this Note or any judgment with
respect thereto (and no payment on account of the purchase or
redemption or other acquisition of this Note) shall be made by or
on behalf of the Company and (b) the Payee shall not (i) ask,
demand, sue for, take or receive from the Company, by set-off or in
any other manner, or (ii) seek any other remedy allowed at law or
in equity against the Company for breach of the Company's
obligations under this Note, provided, that nothing in this
paragraph B shall be deemed to prohibit prepayment of any of this
Note to the extent expressly permitted by Section 6.19 of the
Credit Agreement.

In the event that, notwithstanding the foregoing provisions of this
paragraph B, the Payee shall have received any payment prohibited by the
foregoing provisions of this paragraph B, including, without limitation,
any such payment arising out of the exercise by the Payee of a right of
set-off or counterclaim and any such payment received by reason of other
indebtedness of the Company being subordinated to this Note, then, and in
any such event, such payment shall be held in trust for the benefit of,
and shall be immediately paid over or delivered to, the Bank, according
to the aggregate amounts remaining unpaid on account of the principal of,
and interest and premium (if any) on, the Senior Debt held or represented
by the Bank, for application to such Senior Debt remaining unpaid,
whether or not then due and payable.

The provisions of this Section 5.B shall not alter the rights of the
holders of Senior Debt under the provisions of Section 5.A hereof.

C. Subject to the payment in full in cash of all Senior Debt, the
Payee shall be subrogated to the rights of the Bank to receive payments
and distributions of cash, property and securities applicable to the
Senior Debt until

Finance Note

<PAGE> 72
8

the principal of, and interest on, this Note shall be paid in full in
cash. For purposes of such subrogation, no payments or distributions to
the Bank of any cash, property or securities to which the Payee would be
entitled except for the provisions of this Section 5, and no payments
over pursuant to the provisions of this Section 5 to the Bank by the
Payee, shall, as between the Company, its creditors other than the Bank,
and the Payee, be deemed to be a payment or distribution by the Company
to or on account of the Senior Debt.

D. The provisions of this Section 5 are and are intended solely for
the purpose of defining the relative rights of the Payee on the one hand
and the Bank on the other hand. Nothing contained in this Section 5 is
intended to or shall:

(a) impair, as among the Company, its creditors other than
the Bank and the Payee, the obligation of the Company, which is
absolute and unconditional, to pay to the Payee the principal of
and interest on this Note as and when the same shall become due and
payable in accordance with its terms;

(b) affect the relative rights against the Company of the
Payee and creditors of the Company other than the Bank; or

(c) prevent the Payee from exercising all remedies otherwise
permitted by applicable law upon default under this Note, subject
to the rights, if any, under this Section 5 of the Bank (i) in any
case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company or Belco G.P. referred to in
Section 5.A hereof, to receive, pursuant to and in accordance with
said Section 5.A, cash, property and securities otherwise payable
or deliverable to the Payee, or (ii) under the

Finance Note

<PAGE> 73
9

conditions specified in Section 5.B hereof, to prevent any payment
prohibited by said Section 5.B.

E. No right of the Bank to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to
act, in good faith, by the Bank, or by any non-compliance by the Company
with the terms, provisions and covenants of this Section 5, regardless of
any knowledge thereof the Bank may have or be otherwise charged with.

Without in any way limiting the generality of the foregoing
paragraph, the Bank may, at any time and from time to time, without the
consent of or notice to the Payee, without incurring responsibility to
the Payee and without impairing or releasing the subordination provided
in this Section 5 or the obligations hereunder of the Payee to the
holders of Senior Debt, do any one or more of the following: (a) change
the time, manner or place of payment of Senior Debt, increase the amount
of Senior Debt, or otherwise modify or supplement in any respect any of
the provisions of the Credit Agreement or any other instrument evidencing
or relating to any of the Senior Debt; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Debt; (c) release any Person liable in any manner for the
collection of Senior Debt; and (d) exercise or refrain from exercising
any rights against the Company and any other Person.

F. Upon any payment or distribution of assets of the Company
referred to in this Section 5, the Payee shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in
which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to
the Payee, for the

Finance Note

<PAGE> 74
10

purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of Senior Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 5.

G. Notwithstanding anything herein to the contrary, no payments or
principal of or interest on this Note are required, or may be made, under
this Note during any period during which a "Default" shall have occurred
and is continuing under (and as defined in) the Credit Agreement.

H. The terms of this Agreement may be waived, altered or amended
only by an instrument in writing duly executed by the Payee and the Bank.

Section 6. Other Limitations. The Payee, by its acceptance hereof, on
its own behalf and on behalf of each subsequent holder of this Note, hereby
covenants and agrees for the benefit of the holders of the Senior Debt that it
will not, nor will it join with other creditors of the Company or any other
Person to (and the Payee hereby irrevocably waives any right that it may have
to), at any time prior to the payment in full in cash of the Senior Debt:

(1) institute any legal or arbitral proceedings (including, without
limitation, any counterclaims) against the Company with respect to this
Note, the loans made to the Company hereunder and the obligations of the
Company with respect hereto and thereto; or

(2) commence any proceeding seeking the reorganization,
liquidation, dissolution, arrangement or winding-up of the Company, or
the composition or readjustment of the Company's debts, seek the
appointment of a receiver, custodian, trustee, examiner, liquidator or
the like of the Company or of all or any substantial part of the
Company's Property or seek similar relief in respect of the Company under
any law relating to bankruptcy, insolvency,

Finance Note

<PAGE> 75
11

reorganization, winding-up, or composition or adjustment of debts.

Section 7. Remedies Cumulative, Etc. No failure on the part of the Payee
to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Payee of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.

Section 8. Successors and Permitted Assigns. This Agreement shall be
binding upon the benefit of the respective successors and assigns of the
Company (provided, however, that the Company shall not assign or delegate its
obligations hereunder without the prior written consent of the Payee).

Section 9. Limited Recourse. Notwithstanding anything in this Note or
any instrument executed in connection herewith to the contrary, Belco G.P. in
its capacity as general partner of the Company shall be liable for the
obligations of the Company hereunder to the full extent, but only to the extent
of, and the Payee's recourse against Belco G.P. shall be limited, to the
interests of Belco G.P. in the Company. Any judicial proceedings brought by
the Payee against Belco G.P. shall be limited to the attachment, execution,
writ of process, preservation, enforcement and foreclosure against the
interests of Belco G.P. in the Company, and no attachment, execution, writ,
process or legal proceedings shall be sought, issued or levied upon or against
any other assets, properties or funds of Belco G.P. If the Payee exercises any
remedy which it may have available against the Company, no judgment for any
deficiency upon this Note shall be sought or obtained by the Payee against
Belco G.P.

Section 10. Recordation of Payments. Each payment made on account of the
principal of this Note shall be recorded by the Payee on its books and, prior
to any transfer of this Note, endorsed by the Payee on the schedule attached
hereto or any

Finance Note

<PAGE> 76
12

continuation thereof, provided that the failure of the Payee to make any such
recordation or endorsement shall not affect the obligations of the Company to
make a payment when due of any amount owing hereunder.

Section 11. Governing Law. This Note shall be governed by, and construed
in accordance with, the law of the State of New York.

Section 12. Submission to Jurisdiction, Etc. The Company hereby submits
to the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a

Finance Note

<PAGE> 77
13

court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

BELCO ENERGY L.P.

By: Belco Oil & Gas Corp., a
Delaware corporation and its
General Partner

By:________________________________
Robert A. Belfer
President

Finance Note

<PAGE> 78

SCHEDULE OF LOANS

This Note evidences the loan made to the Company, on the date and in the
principal amount set forth below, subject to the capitalization of accrued
interest and to the payments and prepayments of principal set forth below:

<TABLE>
Principal Accrued Principal
Amount Interest Amount Principal
Date Lent Capitalized Prepaid Balance
- - ---- -------- -------------- ------------ -------
<S> <C> <C> <C> <C>
</TABLE>

Finance Note

<PAGE> 1

EX - 11.1

BELCO OIL & GAS CORP.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31,
---------
1996 1995
---- ----
<S> <C> <C>

Primary Calculation:
-------------------
Shares issued in connection with the combination and assumed
outstanding for all periods 25,000 25,000

Weighted average shares and equivalent shares outstanding:

Issued in connection with the public offering 420 --
Restricted stock, treasury stock method 1 --
Stock options, treasury stock method 3
--------- ---------

Weighted average common and common equivalent shares
outstanding 25,424 25,000
========== =========

Net Income (Loss) $(13,408) $ 5,783
========= =========

Primary Earnings (Loss)
Per Share $ (.53) $ .23
========= =========
Pro forma Net Income $ 11,066 $ 5,783
========= =========

Pro forma Net Income
Per Share - Primary $ .44 $ .23
========= =========
</TABLE>

The difference between primary and fully diluted earnings per share is not
significant.

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 84,034
<SECURITIES> 0
<RECEIVABLES> 17,673
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 101,707
<PP&E> 196,265
<DEPRECIATION> (55,261)
<TOTAL-ASSETS> 243,154
<CURRENT-LIABILITIES> 12,213
<BONDS> 0
<COMMON> 315
0
0
<OTHER-SE> 200,726
<TOTAL-LIABILITY-AND-EQUITY> 243,154
<SALES> 28,605
<TOTAL-REVENUES> 28,610
<CGS> 11,242
<TOTAL-COSTS> 11,242
<OTHER-EXPENSES> 876
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,492
<INCOME-TAX> 29,900
<INCOME-CONTINUING> (13,408)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,408)
<EPS-PRIMARY> (0.53)
<EPS-DILUTED> (0.53)

</TABLE>