EXHIBIT 10.1


                                                                     [Execution]

                               SECURITY AGREEMENT
                               ------------------

         THIS SECURITY AGREEMENT (this "Agreement") is made as of May 1, 2002,
                                        ---------
by St. Mary Land & Exploration Company, a Delaware corporation, St. Mary
Operating Company, a Colorado corporation, St. Mary Energy Company, a Delaware
corporation, Nance Petroleum Corporation, a Montana corporation, St. Mary
Minerals Inc. a Colorado corporation, Parish Corporation, a Colorado
corporation, Four Winds Marketing, LLC, a Colorado limited liability company and
Roswell, L.L.C., a Texas limited liability company, as debtors (collectively
"Debtors" and each individually a "Debtor"), in favor of Bank of America, N.A.,
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individually and as agent ("Secured Party").
                            -------------

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, St. Mary Land & Exploration Company, as borrower (in such
capacity, "Borrower"), Secured Party, as Agent, and certain lenders
           --------
(collectively, the "Lenders") are parties to a Credit Agreement dated as of June
                    -------
30, 1998 (as from time to time amended, supplemented, or restated, the "Credit
Agreement");                                                            ------
---------

         WHEREAS, pursuant to the Credit Agreement, Lenders have agreed to
extend credit to Borrower;

         WHEREAS, in order to induce Lenders to extend such credit pursuant to
the Credit Agreement, Debtors have agreed to grant to Secured Party, for the
benefit of Lenders, a security interest in the Collateral as defined herein;

         WHEREAS, Borrower owns, directly, or indirectly through one or more of
its subsidiaries, all of the equity interests of each other Debtor;

         NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to extend such credit under the Credit Agreement, Debtor hereby agrees
with Secured Party, for the benefit of Lenders and Secured Party, as follows:

                                    ARTICLE I

                           Definitions and References
                           --------------------------

         Section 1.1. General Definitions. As used herein, the terms
                      -------------------
"Agreement", "Debtor", and "Credit Agreement" shall have the meanings indicated
above, and the following terms shall have the following meanings:

         "Collateral" means all property, of whatever type, which is described
          ----------
in Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.

         "Commercial Tort Claims" means a claim arising in tort with respect to
          ----------------------
which the claimant is Debtor.

         "Commitment" means the agreement or commitment by Lenders to make loans
          ----------
or otherwise extend credit to Borrower under the Credit Agreement, and any other
agreement, commitment, statement of terms or other document contemplating the
making of loans or advances or other extension of credit by Lenders to or for
the account of Borrower which is now or at any time hereafter intended to be
secured by the Collateral under this Agreement.

         "Deposit Accounts" means all "deposit accounts" (as defined in the UCC)
          ----------------
or other demand, time, savings, passbook, or similar accounts maintained with a
bank, including nonnegotiable certificates of deposit.

         "Documents" means all "documents" (as defined in the UCC) or other
          ---------
receipts covering, evidencing or representing inventory, equipment, or other
goods.

         "Equipment" means all "equipment" (as defined in the UCC) in whatever
          ---------
form, wherever located, and whether now or hereafter existing, and all parts
thereof, all accessions thereto, and all replacements therefor.

         "General Intangibles" means all "general intangibles" (as defined in
          -------------------
the UCC) of any kind (including choses in action, Commercial Tort Claims,
Software, Payment Intangibles, tax refunds, insurance proceeds, and contract
rights), and all instruments, security agreements, leases, contracts, and other
rights (except those constituting Receivables, Documents, or Instruments) to
receive payments of money or the ownership or possession of property, including
all general intangibles under which an account debtor's principal obligation is
a monetary obligation.

         "Guaranty" means that certain Guaranty of even date herewith from
          --------
Debtors (not including Borrower) in favor of Secured Party for the benefit of
Lenders.

         "Instruments" means all "instruments", "chattel paper" or "letters of
          -----------
credit" (as each is defined in the UCC) and all Letter-of-Credit Rights.

         "Inventory" means all "inventory" (as defined in the UCC) in all of its
          ---------
forms, wherever located and whether now or hereafter existing, including (a) all
movable property and other goods held for sale or lease, all movable property
and other goods furnished or to be furnished under contracts of service, all raw
materials and work in process, and all materials and supplies used or consumed
in a business, (b) all movable property and other goods which are part of a
product or mass, (c) all movable property and other goods which are returned to
or repossessed by the seller, lessor, or supplier thereof, (d) all goods and
substances in which any of the foregoing is commingled or to which any of the
foregoing is added, and (e) all accessions to, products of, and documents for
any of the foregoing.

                                       2

         "Investment Property" means all "investment property" (as defined in
          -------------------
the UCC) and all other securities, whether certificated or uncertificated,
securities entitlements, securities accounts, commodity contracts, or commodity
accounts.

         "Letter-of-Credit Rights" means all rights to payment or performance
          -----------------------
under a "letter of credit" (as defined in the UCC) whether or not the
beneficiary has demanded or is at the time entitled to demand payment or
performance.

         "Lenders" means the Persons who are from time to time "Lenders" as
          -------
defined in the Credit Agreement.

         "Obligation Documents" means the Credit Agreement, the Notes, the Loan
          --------------------
Documents, and all other documents and instruments under, by reason of which, or
pursuant to which any or all of the Secured Obligations are evidenced, governed,
secured, or otherwise dealt with, and all other agreements, certificates, and
other documents, instruments and writings heretofore or hereafter delivered in
connection herewith or therewith.

         "Other Liable Party" means any Person, other than Debtors, who may now
          ------------------
or may at any time hereafter be primarily or secondarily liable for any of the
Secured Obligations or who may now or may at any time hereafter have granted to
Secured Party or Lenders a Lien upon any property as security for the Secured
Obligations.

         "Payment Intangibles" means all "payment intangibles" (as defined in
          -------------------
the UCC).

         "Proceeds" means, with respect to any property of any kind, all
          --------
proceeds of, and all other profits, products, rentals or receipts, in whatever
form, arising from any sale, exchange, collection, lease, licensing or other
disposition of, distribution in respect of, or other realization upon, such
property, including all claims against third parties for loss of, damage to or
destruction of, or for proceeds payable under (or unearned premiums with respect
to) insurance in respect of, such property (regardless of whether Secured Party
is named a loss payee thereunder), and any payments paid or owing by any third
party under any indemnity, warranty, or guaranty with respect to such property,
and any condemnation or requisition payments with respect to such property, in
each case whether now existing or hereafter arising.

         "Receivables" means (a) all "accounts" (as defined in the UCC) and all
          -----------
other rights to payment for goods or other personal property which have been (or
are to be) sold, leased, or exchanged or for services which have been (or are to
be) rendered, regardless of whether such accounts or other rights to payment
have been earned by performance and regardless of whether such accounts or other
rights to payment are evidenced by or characterized as accounts receivable,
contract rights, book debts, notes, drafts or other obligations of indebtedness,
(b) all Documents and Instruments of any kind relating to such accounts or other
rights to payment or otherwise arising out of or in connection with the sale,
lease or exchange of goods or other personal property or the rendering of
services, (c) all rights in, to, or under all security agreements, leases and
other contracts securing or otherwise relating to any such accounts, rights to
payment, Documents, or Instruments, (d) all rights in, to and under any purchase
orders, service contracts, or other contracts out of which such accounts and

                                       3

other rights to payment arose (or will arise on performance), and (e) all rights
in or pertaining to any goods arising out of or in connection with any such
purchase orders, service contracts, or other contracts, including rights in
returned or repossessed goods and rights of replevin, repossession, and
reclamation.

         "Related Person" means Debtors, each Subsidiary of Debtors and each
          --------------
Other Liable Party.

         "Secured Obligations" has the meaning given such term in Section 2.2.
          -------------------

         "Secured Party" means the Person named as such at the beginning of this
          -------------
Agreement, together with its successors and assigns as the "Agent" under the
Credit Agreement.

         "Software" means all "software" (as defined in the UCC), including all
          --------
computer programs, any supporting information provided in connection with a
transaction relating to a computer program, all licenses or other rights to use
any of such computer programs, and all license fees and royalties arising from
such use to the extent permitted by such license or rights.

         "Subsidiary Debtor" means any Debtor other than Borrower.
          -----------------

         "UCC" means the Uniform Commercial Code in effect in the State of
          ---
Colorado from time to time.

         Section 1.2. Other Definitions. Reference is hereby made to the Credit
                      -----------------
Agreement for a statement of the terms thereof. All capitalized terms used in
this Agreement which are defined in the Credit Agreement and not otherwise
defined herein shall have the same meanings herein as set forth therein. All
terms used in this Agreement which are defined in the UCC and not otherwise
defined herein or in the Credit Agreement shall have the same meanings herein as
set forth therein, except where the context otherwise requires. The parties
intend that the terms used herein which are defined in the UCC have, at all
times, the broadest and most inclusive meanings possible. Accordingly, if the
UCC shall in the future be amended or held by a court to define any term used
herein more broadly or inclusively than the UCC in effect on the date hereof,
then such term, as used herein, shall be given such broadened meaning. If the
UCC shall in the future be amended or held by a court to define any term used
herein more narrowly, or less inclusively, than the UCC in effect on the date
hereof, such amendment or holding shall be disregarded in defining terms used
herein.

         Section 1.3. Attachments. All exhibits or schedules which may be
                      -----------
attached to this Agreement are a part hereof for all
purposes.

         Section 1.4. Amendment of Defined Instruments. Unless the context
                      --------------------------------
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including, but not
limited to, references in Section 2.1) also refer to and include all renewals,
extensions, amendments, modifications, supplements or restatements of any such
agreement, instrument or document, provided that nothing contained in this
Section shall be construed to authorize any Person to execute or enter into any
such renewal, extension, amendment, modification, supplement or restatement.

                                       4

         Section 1.5. References and Titles. All references in this Agreement to
                      ---------------------
Exhibits, Articles, Sections, subsections, and other subdivisions refer to the
Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases "this Section" and "this subsection" and similar phrases refer only to
the Sections or subsections hereof in which the phrase occurs. The word "or" is
not exclusive, and the word "including" (in all of its forms) means "including
without limitation". Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa unless the context otherwise
requires.

                                   ARTICLE II

                                Security Interest
                                -----------------

         Section 2.1. Grant of Security Interest. As collateral security for all
                      --------------------------
of the Secured Obligations, each Debtor hereby pledges and assigns to Secured
Party and grants to Secured Party a continuing security interest, for the
benefit of Lenders, in and to all right, title and interest of such Debtor in
and to any and all of the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.

         (g)  all Deposit Accounts.

         (h)  all Investment Property.

         (i)  All books and records (including, without limitation, customer
lists, marketing information, credit files, price lists, operating records,
vendor and supplier price lists, sales literature, computer software, computer

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hardware, computer disks and tapes and other storage media, printouts and other
materials and records) of such Debtor pertaining to any of the Collateral.

         (j)  All moneys and property of any kind of such Debtor in the
possession or under the control of Secured Party.

         (k)  All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtors'
ownership or other rights therein are presently held or hereafter acquired and
howsoever Debtors' interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         Section 2.2. Secured Obligations Secured. The security interest created
                      ---------------------------
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred or arising:

         (a) Credit Agreement Indebtedness. The payment by Borrower, as and when
             -----------------------------
due and payable, of all amounts from time to time owing by Borrower under or in
respect of the Credit Agreement, the Notes, or any of the other Obligation
Documents.

         (b) Guaranteed Indebtedness. The payment by any Debtor, when due and
             -----------------------
payable, of all amounts from time to time owing by such Debtor under or in
respect of the Guaranty or any of the other Obligation Documents to which such
Debtor is a party, and the due performance by such Debtor of all of its other
respective obligations under or in respect of the Guaranty and such other
Obligation Documents.

         (c) Other Indebtedness. All loans and future advances made by Lenders
             ------------------
to Borrower and all other debts, obligations and liabilities of every kind and
character of Borrower now or hereafter existing in favor of Lenders, whether
such debts, obligations or liabilities be direct or indirect, primary or
secondary, joint or several, fixed or contingent, and whether originally payable
to Lenders or to a third party and subsequently acquired by Lenders and whether
such debts, obligations or liabilities are evidenced by notes, open account,
overdraft, endorsement, security agreement, guaranty or otherwise (it being
contemplated that Borrower may hereafter become indebted to Lenders in further
sum or sums but Lenders shall have no obligation to extend further indebtedness
by reason of this Agreement).

         (d) Renewals. All renewals, extensions, amendments, modifications,
             --------
supplements, or restatements of or substitutions for any of the foregoing.

         (e) Performance. The due performance and observance by Debtors of all
             -----------
of their other obligations from time to time existing under or in respect of any
of the Obligation Documents.

As used herein, the term "Secured Obligations" refers to all present and future
indebtedness, obligations and liabilities of whatever type which are described
above in this section, including any interest which accrues after the

                                       6

commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of any Debtor. Each Debtor hereby
acknowledges that the Secured Obligations are owed to the various Lenders and
that each Lender is entitled to the benefits of the Liens given under this
Agreement.

         It is the intention of each Subsidiary Debtor and Secured Party that
this Agreement not constitute a fraudulent transfer or fraudulent conveyance
under any state or federal law that may be applied hereto. Each Subsidiary
Debtor and, by its acceptance hereof, Secured Party hereby acknowledge and agree
that, notwithstanding any other provision of this Agreement: (a) the
indebtedness secured hereby by such Subsidiary Debtor shall be limited to the
maximum amount of indebtedness that can be incurred or secured by such
Subsidiary Debtor without rendering this Agreement subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state or federal law, and (b) the Collateral pledged by such
Subsidiary Debtor hereunder shall be limited to the maximum amount of Collateral
that can be pledged by such Subsidiary Debtor without rendering this Agreement
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any comparable provisions of any applicable state or federal law.

                                   ARTICLE III

                    Representations, Warranties and Covenants
                    -----------------------------------------

         Section 3.1. Representations, Warranties and Covenants. Each of the
                      -----------------------------------------
representations and warranties in the Credit Agreement made by any Debtor or any
Restricted Person is true and correct. Unless Secured Party shall otherwise
consent in writing, each Debtor will at all times comply with the covenants
contained in the Credit Agreement which are applicable to such Debtor for so
long as any part of the Secured Obligations or the Commitment is outstanding. In
addition, each Debtor hereby represents, warrants and covenants to Secured Party
and Lenders as follows:

         (a) Name, Place of Business and Formation. Each Debtor is a corporation
             -------------------------------------
or limited liability company organized under the laws of the State listed for
such Debtor on the first page of this Agreement, which is such Debtor's location
pursuant to the UCC. During the past five years, no Debtor has conducted
business under any name except the name in which such Debtor has executed this
Agreement, which is the exact name as it appears in such Debtor's organizational
documents, as amended, as filed with such Debtor's jurisdiction of organization.
Each Debtor's principal place of business and chief executive office, and the
place where such Debtor kept its books and records concerning the Collateral was
for the four month period prior to July 1, 2001 located at such Debtor's address
set forth in Section 5.1 below.

         (b) Ownership Free of Liens. Each Debtor has good and marketable title
             -----------------------
to the Collateral, free and clear of all Liens, encumbrances or adverse claims
except for the security interest created by this Agreement. No effective
financing statement or other registration or instrument similar in effect
covering all or any part of the Collateral is on file in any recording office
except any which have been filed in favor of Secured Party relating to this

                                       7

Agreement. None of the Collateral is in the possession of any Person other than
the Debtor owning such Collateral or Secured Party, except for Collateral being
transported in the ordinary course of business.

         (c) No Conflicts or Consents. Neither the ownership or the intended use
             ------------------------
of the Collateral by any Debtor, nor the grant of the security interest by
Debtors to Secured Party herein, nor the exercise by Secured Party of its rights
or remedies hereunder, will (i) conflict with any provision of (a) any domestic
or foreign law, statute, rule or regulation, (b) the articles or certificate of
incorporation, charter or bylaws of any Debtor, or (c) any agreement, judgment,
license, order or permit applicable to or binding upon any Debtor, or (ii)
result in or require the creation of any Lien, charge or encumbrance upon any
assets or properties of any Debtor or of any Related Person. Except as expressly
contemplated in the Obligation Documents, no consent, approval, authorization or
order of, and no notice to or filing with any court, governmental authority or
third party is required in connection with the grant by Debtors of the security
interest herein, or the exercise by Secured Party of its rights and remedies
hereunder.

         (d) Security Interest. Each Debtor has and will have at all times full
             -----------------
right, power and authority to grant a security interest in the Collateral owned
by such Debtor to Secured Party as provided herein, free and clear of any Lien,
adverse claim, or encumbrance. This Agreement creates a valid and binding
security interest in favor of Secured Party in the Collateral, which security
interest secures all of the Secured Obligations.

         (e) Change of Name, Location, or Structure; Additional Filings. Each
             ----------------------------------------------------------
Debtor recognizes that financing statements pertaining to the Collateral have
been or may be filed with the secretary of state (or equivalent governmental
official) of the state in which such Debtor is organized. Without limitation of
any other covenant herein, no Debtor will cause or permit any change to be made
in its name, identity or corporate or limited liability company structure, or
any change to be made to its jurisdiction of organization, unless such Debtor
shall have first (1) notified Secured Party of such change at least forty-five
(45) days prior to the effective date of such change, (2) taken all action
requested by Secured Party for the purpose of further confirming and protecting
Secured Party's security interests and rights under this Agreement and the
perfection and priority thereof, and (3) if requested by Secured Party, provided
to Secured Party a legal opinion to its satisfaction confirming that such change
will not adversely affect in any way Secured Party's security interests and
rights under this Agreement or the perfection or priority thereof. In any notice
furnished by any Debtor pursuant to this subsection, such Debtor will expressly
state that the notice is required by this Agreement and contains facts that may
require additional filings of financing statements or other notices for the
purposes of continuing perfection of Secured Party's security interest in the
Collateral.

         (f) Further Assurances. Debtors will, at their expense as from time to
             ------------------
time reasonably requested by Secured Party, promptly execute and deliver all
further instruments, agreements, filings and registrations, and take all further
action, in order: (i) to confirm and validate this Agreement and Secured Party's
rights and remedies hereunder, (ii) to correct any errors or omissions in the
descriptions herein of the Secured Obligations or the Collateral or in any other
provisions hereof, (iii) to perfect, register and protect the security interests

                                       8

and rights created or purported to be created hereby or to maintain or upgrade
in rank the priority of such security interests and rights, (iv) to enable
Secured Party to exercise and enforce its rights and remedies hereunder in
respect of the Collateral, or (v) to otherwise give Secured Party the full
benefits of the rights and remedies described in or granted under this
Agreement. As part of the foregoing Debtors will, whenever reasonably requested
by Secured Party (1) execute and file any financing statements, continuation
statements, and other filings or registrations relating to Secured Party's
security interests and rights hereunder, and any amendments thereto, and (2)
mark their books and records relating to any Collateral to reflect that such
Collateral is subject to this Agreement and the security interests hereunder. To
the extent reasonably requested by Secured Party from time to time, Debtors will
obtain from any material account debtor or other obligor on the Collateral the
acknowledgment of such account debtor or obligor that such Collateral is subject
to this Agreement.

         (g) Inspection of Collateral. Debtors will keep adequate records
             ------------------------
concerning the Collateral and will permit Secured Party and all representatives
appointed by Secured Party, including independent accountants, agents,
attorneys, appraisers and any other persons, to inspect any of the Collateral
and the books and records of or relating to the Collateral at any time during
normal business hours, and to make photocopies and photographs thereof, and to
write down and record any information which such representatives obtain.

         (h) Information. Upon request from time to time by Secured Party,
             -----------
Debtors will furnish to Secured Party (i) any information concerning any
covenant, provision or representation contained herein or any other matter in
connection with the Collateral or such Debtor's business, properties, or
financial condition, and (ii) statements and schedules identifying and
describing the Collateral and other reports and information requested in
connection with the Collateral, all in reasonable detail.

         (i) Ownership, Liens, Possession and Transfers. Each Debtor will
             ------------------------------------------
maintain good and marketable title to all Collateral owned by such Debtor, free
and clear of all Liens, encumbrances or adverse claims except for the security
interest created by this Agreement, and no Debtor will grant or allow any such
Liens, encumbrances or adverse claims to exist. No Debtor will grant or allow to
remain in effect, and Debtors will cause to be terminated, any financing
statement or other registration or instrument similar in effect covering all or
any part of the Collateral, except any which have been filed in favor of Secured
Party relating to this Agreement. Debtors will defend Secured Party's right,
title and special property and security interest in and to the Collateral
against the claims of any Person. Each Debtor (i) will insure that all of the
Collateral owned by such Debtor -- whether goods, Documents, Instruments, or
otherwise -- is and remains in the possession of such Debtor or Secured Party
(or a bailee selected by Secured Party who is holding such Collateral for the
benefit of Secured Party), except for goods being transported in the ordinary
course of business, and (ii) will not sell, assign (by operation of law or
otherwise), transfer, exchange, lease or otherwise dispose of any of the
Collateral, except in the ordinary course of its business.

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         (j) Impairment of Security Interest. No Debtor will take or fail to
             -------------------------------
take any action which would in any manner impair the value or enforceability of
Secured Party's security interest in any Collateral.

         (k) Commercial Tort Claims. If any Debtor shall at any time hold or
             ----------------------
acquire a Commercial Tort Claim, such Debtor shall immediately notify Secured
Party in writing of the details thereof and grant to Secured Party in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
acceptable to Secured Party.

                                   ARTICLE IV.

                       Remedies, Powers and Authorizations
                       -----------------------------------

         Section 4.1. Normal Provisions Concerning the Collateral.
                      -------------------------------------------

         (a) Authorization to File Financing Statements. Each Debtor hereby
             ------------------------------------------
irrevocably authorizes Secured Party at any time and from time to time to file,
without the signature of such Debtor, in any jurisdiction any amendments to
existing financing statements and any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as "all assets of Debtor
and all proceeds thereof, and all rights and privileges with respect thereto" or
words of similar effect, regardless of whether any particular asset comprised in
the Collateral falls within the scope of Article 9 of the UCC, or (ii) as being
of an equal or lesser scope or with greater detail; (b) contain any other
information required by subchapter E of Article 9 of the UCC for the sufficiency
or filing office acceptance of any financing statement or amendment, including
whether such Debtor is an organization, the type of organization and any
organization identification number issued to such Debtor; and (c) are necessary
to properly effectuate the transactions described in the Loan Documents, as
determined by Secured Party in its discretion. Each Debtor agrees to furnish any
such information to Secured Party promptly upon request. Each Debtor further
agrees that a carbon, photographic or other reproduction of this Agreement or
any financing statement describing any Collateral is sufficient as a financing
statement and may be filed in any jurisdiction by Secured Party.

         (b) Power of Attorney. Each Debtor hereby appoints Secured Party as
             -----------------
such Debtor's attorney-in-fact and proxy, with full authority in the place and
stead of such Debtor and in the name of such Debtor or otherwise, from time to
time in Secured Party's discretion, to take any action and to execute any
instrument which Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement including any action or instrument: (i) to obtain and
adjust any insurance required to be paid to Secured Party pursuant hereto; (ii)
to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (iii) to receive, indorse and collect any drafts or other
Instruments or Documents; (iv) to enforce any obligations included among the
Collateral; and (v) to file any claims or take any action or institute any
proceedings which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of such

                                       10

Debtor or Secured Party with respect to any of the Collateral. Each Debtor
hereby acknowledges that such power of attorney and proxy are coupled with an
interest, are irrevocable, and are to be used by Secured Party for the sole
benefit of Lenders.

         (c) Performance by Secured Party. If any Debtor fails to perform any
             ----------------------------
agreement or obligation contained herein, Secured Party may itself perform, or
cause performance of, such agreement or obligation, and the expenses of Secured
Party incurred in connection therewith shall be payable by such Debtor under
Section 4.5.

         (d) Bailees. If any Collateral is at any time in the possession or
             -------
control of any warehouseman, bailee or any of any Debtor's agents or processors,
such Debtor shall, upon the request of Secured Party, notify such warehouseman,
bailee, agent or processor of Secured Party's rights hereunder and instruct such
Person to hold all such Collateral for Secured Party's account subject to
Secured Party's instructions. (No such request by Secured Party shall be deemed
a waiver of any provision hereof which was otherwise violated by such Collateral
being held by such Person prior to such instructions by such Debtor.)

         (e) Collection. Secured Party shall have the right at any time, upon
             ----------
the occurrence and during the continuance of a Default or an Event of Default,
to notify (or to require Debtors to notify) any and all obligors under any
Receivables, General Intangibles, Instruments, or other rights to payment
included among the Collateral of the assignment thereof to Secured Party under
this Agreement and to direct such obligors to make payment of all amounts due or
to become due to Debtors thereunder directly to Secured Party and, upon such
notification and at the expense of Debtors and to the extent permitted by law,
to enforce collection of any such Receivables, General Intangibles, Instruments,
or other rights to payment and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as Debtors could have
done. After any Debtor receives notice that Secured Party has given (and after
Secured Party has required any Debtor to give) any notice referred to above in
this subsection:
                  (i) all amounts and proceeds (including instruments and
         writings) received by Debtors in respect of such Receivables, General
         Intangibles, Instruments, or other rights to payment shall be received
         in trust for the benefit of Secured Party hereunder, shall be
         segregated from other funds of Debtors and shall be forthwith paid over
         to Secured Party in the same form as so received (with any necessary
         indorsement) to be, at Secured Party's discretion, either (A) held as
         cash collateral and released to Debtors upon the remedy of all Defaults
         and Events of Default, or (B) while any Event of Default is continuing,
         applied as specified in Section 4.3, and

                  (ii) Debtors will not adjust, settle or compromise the amount
         or payment of any such Receivable, General Intangible, Instrument, or
         other right to payment or release wholly or partly any account debtor
         or obligor thereof or allow any credit or discount thereon.

         Section 4.2. Event of Default Remedies. If an Event of Default shall
                      -------------------------
have occurred and be continuing, Secured Party may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:

                                       11

         (a) exercise in respect of the Collateral, in addition to any other
rights and remedies provided for herein, under the other Obligation Documents,
or otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral);

         (b) require Debtors to, and each Debtor hereby agrees that it will at
its expense and upon request of Secured Party forthwith, assemble all or part of
the Collateral as directed by Secured Party and make it (together with all
books, records and information of such Debtor relating thereto) available to
Secured Party at a place to be designated by Secured Party which is reasonably
convenient to both parties;

         (c) prior to the disposition of any Collateral, (i) to the extent
permitted by applicable law, enter, with or without process of law and without
breach of the peace, any premises where any of the Collateral is or may be
located, and without charge or liability to Secured Party seize and remove such
Collateral from such premises, (ii) have access to and use Debtors' books,
records, and information relating to the Collateral, and (iii) store or transfer
any of the Collateral without charge in or by means of any storage or
transportation facility owned or leased by Debtors, process, repair or
recondition any of the Collateral or otherwise prepare it for disposition in any
manner and to the extent Secured Party deems appropriate and, in connection with
such preparation and disposition, use without charge any copyright, trademark,
trade name, patent or technical process used by Debtors;

         (d) reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest created hereby by any available judicial
procedure;

         (e) dispose of, at its office, on the premises of Debtors or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Secured Party's power of sale,
but sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Secured Obligations have been paid and
performed in full), and at any such sale it shall not be necessary to exhibit
any of the Collateral;

         (f) buy (or allow one or more of the Lenders to buy) the Collateral, or
any part thereof, at any public sale in accordance with the UCC;

         (g) buy (or allow one or more of the Lenders to buy) the Collateral, or
any part thereof, at any private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the subject of widely
distributed standard price quotations, in accordance with the UCC; and

         (h) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and each Debtor hereby
consents to any such appointment.

                                       12

Each Debtor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) days' notice to such Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.

         Section 4.3. Application of Proceeds. If any Event of Default shall
                      -----------------------
have occurred and be continuing, Secured Party may in its discretion apply any
cash held by Secured Party as Collateral, and any cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, to any or all of the following in such
order as Secured Party may (subject to the rights of Lenders under the Credit
Agreement) elect:

         (a) To the repayment of the reasonable costs and expenses, including
reasonable attorneys' fees and legal expenses, incurred by Secured Party in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of Secured Party hereunder, or (iv) the failure of any Debtor to
perform or observe any of the provisions hereof;

         (b) To the payment or other satisfaction of any Liens, encumbrances, or
adverse claims upon or against any of the Collateral;

         (c) To the reimbursement of Secured Party for the amount of any
obligations of any Debtor or any Other Liable Party paid or discharged by
Secured Party pursuant to the provisions of this Agreement or the other
Obligation Documents, and of any expenses of Secured Party payable by any Debtor
hereunder or under the other Obligation Documents;

         (d)  To the satisfaction of any other Secured Obligations;

         (e)  By holding the same as Collateral;

         (f) To the payment of any other amounts required by applicable law
(including any provision of the UCC); and

         (g) By delivery to Debtors or to whoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.

         Section 4.4. Deficiency. In the event that the proceeds of any sale,
                      ----------
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, Debtors shall be liable for the deficiency,
together with interest thereon as provided in the governing Obligation Documents
or (if no interest is so provided) at such other rate as shall be fixed by
applicable law, together with the costs of collection and the reasonable fees of

                                       13

any attorneys employed by Secured Party or Lenders to collect such deficiency.

         Section 4.5. Indemnity and Expenses. In addition to, but not in
                      ----------------------
qualification or limitation of, any similar obligations under other Obligation
Documents:

         (a) Debtors will indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities growing out of or resulting
from this Agreement (including enforcement of this Agreement), WHETHER OR NOT
SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT CAUSED BY OR
ARISING OUT OF SUCH INDEMNIFIED PARTY'S OWN NEGLIGENCE, except to the extent
such claims, losses or liabilities are proximately caused by such indemnified
party's individual gross negligence or willful misconduct.

         (b) Debtors will upon demand pay to Secured Party the amount of any and
all reasonable costs and expenses, including the reasonable fees and
disbursements of Secured Party's counsel and of any experts and agents, which
Secured Party may incur in connection with (i) the transactions which give rise
to this Agreement, (ii) the preparation of this Agreement and the perfection and
preservation of this security interest created under this Agreement, (iii) the
administration of this Agreement; (iv) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral; (v) the exercise or enforcement of any of the rights of Secured
Party hereunder; or (vi) the failure by any Debtor to perform or observe any of
the provisions hereof, except expenses resulting from Secured Party's individual
gross negligence or willful misconduct.

         Section 4.6. Non-Judicial Remedies. In granting to Secured Party the
                      ---------------------
power to enforce its rights hereunder without prior judicial process or judicial
hearing, each Debtor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to enforce its rights by
judicial process. In so providing for non-judicial remedies, Debtors recognize
and concede that such remedies are consistent with the usage of trade, are
responsive to commercial necessity, and are the result of a bargain at arm's
length. Nothing herein is intended, however, to prevent Secured Party from
resorting to judicial process at its option.

         Section 4.7. Other Recourse. Each Debtor waives any right to require
                      --------------
Secured Party or any Lender to proceed against any other Person, to exhaust any
Collateral or other security for the Secured Obligations, to have any Other
Liable Party or any other Debtor joined with such Debtor in any suit arising out
of the Secured Obligations or this Agreement, or to pursue any other remedy in
Secured Party's power. Each Debtor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension for any period of any of the Secured Obligations of any
Other Liable Party or any other Debtor from time to time. Each Debtor further
waives any defense arising by reason of any disability or other defense of any
Other Liable Party or any other Debtor or by reason of the cessation from any
cause whatsoever of the liability of any Other Liable Party or any other Debtor.
This Agreement shall continue irrespective of the fact that the liability of any

                                       14

Other Liable Party or any other Debtor may have ceased and irrespective of the
validity or enforceability of any other Obligation Document to which such
Debtor, any Other Liable Party or any other Debtor may be a party, and
notwithstanding any death, incapacity, reorganization, or bankruptcy of any
Other Liable Party or any other Debtor or any other event or proceeding
affecting any Other Liable Party or any other Debtor. Until all of the Secured
Obligations shall have been paid in full, no Debtor shall have right to
subrogation and each Debtor waives the right to enforce any remedy which Secured
Party or any Lender has or may hereafter have against any Other Liable Party or
any other Debtor, and waives any benefit of and any right to participate in any
other security whatsoever now or hereafter held by Secured Party. Each Debtor
authorizes Secured Party and each Lender, without notice or demand, without any
reservation of rights against such Debtor, and without in any way affecting such
Debtor's liability hereunder or on the Secured Obligations, from time to time to
(a) take or hold any other property of any type from any other Person as
security for the Secured Obligations, and exchange, enforce, waive and release
any or all of such other property, (b) apply the Collateral or such other
property and direct the order or manner of sale thereof as Secured Party may in
its discretion determine, (c) renew, extend for any period, accelerate, modify,
compromise, settle or release any of the obligations of any Other Liable Party
or any other Debtor in respect to any or all of the Secured Obligations or other
security for the Secured Obligations, (d) waive, enforce, modify, amend or
supplement any of the provisions of any Obligation Document with any Person
other than such Debtor, and (e) release or substitute any Other Liable Party or
any other Debtor.

         Section 4.8. Limitation on Duty of Secured Party in Respect of
                      -------------------------------------------------
Collateral. Beyond the exercise of reasonable care in the custody thereof,
----------
Secured Party shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. Secured Party shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by Secured Party in good faith.

         Section 4.9. Appointment of Collateral Agents. At any time or times, in
                      --------------------------------
order to comply with any legal requirement in any jurisdiction, Secured Party
may appoint any bank or trust company or one or more other Persons, either to
act as co-agent or co-agents, jointly with Secured Party, or to act as separate
agent or agents on behalf of the Lenders, with such power and authority as may
be necessary for the effectual operation of the provisions hereof and may be
specified in the instrument of appointment. In so doing Secured Party may, in
the name and on behalf of Debtors, give to such co-agent or separate agent
indemnities and other protections similar to those provided in Section 4.5.

                                       15

                                   ARTICLE V.

                                  Miscellaneous
                                  -------------
         Section 5.1. Notices. Any notice or communication required or permitted
                      -------
hereunder shall be given in writing, sent by (a) personal delivery, (b)
expedited delivery service with proof of delivery, (c) registered or certified
United States mail, postage prepaid, or (d) telegram or facsimile (i) for
Secured Party and Borrower, at the address set forth for such Person in the
Credit Agreement, and (ii) for each Debtor (other than Borrower), at the address
set forth for such Person on its signature page hereto, or to such other address
or to the attention of such other individual as hereafter shall be designated in
writing by the applicable party sent in accordance herewith. Any such notice or
communication shall be deemed to have been given either at the time of personal
delivery or, in the case of delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or in the
case of telegram, telex or facsimile, upon receipt.

         Section 5.2. Amendments. No amendment of any provision of this
                      ----------
Agreement shall be effective unless it is in writing and signed by each Debtor
and Secured Party, and no waiver of any provision of this Agreement, and no
consent to any departure by Debtors therefrom, shall be effective unless it is
in writing and signed by Secured Party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given and to the extent specified in such writing. In addition, all such
amendments and waivers shall be effective only if given with the necessary
approvals of Lenders as required in the Credit Agreement.

         Section 5.3. Preservation of Rights. No failure on the part of Secured
                      ----------------------
Party or any Lender to exercise, and no delay in exercising, any right hereunder
or under any other Obligation Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. Neither the
execution nor the delivery of this Agreement shall in any manner impair or
affect any other security for the Secured Obligations. The rights and remedies
of Secured Party provided herein and in the other Obligation Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law or otherwise. The rights of Secured Party under any Obligation
Document against any party thereto are not conditional or contingent on any
attempt by Secured Party to exercise any of its rights under any other
Obligation Document against such party or against any other Person.

         Section 5.4. Unenforceability. Any provision of this Agreement which is
                      ----------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

         Section 5.5. Survival of Agreements. All representations and warranties
                      ----------------------
of Debtors herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any

                                       16

other Obligation Documents and the creation of the Secured Obligations.

         Section 5.6. Other Liable Parties; Joint and Several Liability. Neither
                      -------------------------------------------------
this Agreement nor the exercise by Secured Party or the failure of Secured Party
to exercise any right, power or remedy conferred herein or by law shall be
construed as relieving any Other Liable Party from liability on the Secured
Obligations or any deficiency thereon. All undertakings, warranties and
covenants made by Debtors herein and all rights, powers and authorities given to
or conferred upon Agent and Lenders herein are made or given jointly and
severally by Debtors.

         Section 5.7. Binding Effect and Assignment. This Agreement creates a
                      -----------------------------
continuing security interest in the Collateral and (a) shall be binding on
Debtors and their respective successors and permitted assigns and (b) shall
inure, together with all rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and Lenders and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing,
Secured Party and any Lender may (except as otherwise provided in the Credit
Agreement) pledge, assign or otherwise transfer any or all of their respective
rights under any or all of the Obligation Documents to any other Person, and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted herein or otherwise. None of the rights or duties of
Debtors hereunder may be assigned or otherwise transferred without the prior
written consent of Secured Party.

         Section 5.8. Termination. It is contemplated by the parties hereto that
                      -----------
there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall be
in full force and effect as to subsequent outstanding Secured Obligations. Upon
the satisfaction in full of the Secured Obligations and the termination or
expiration of the Credit Agreement and any other commitment of Lenders to extend
credit to Borrower, then upon written request for the termination hereof
delivered by Debtors to Secured Party this Agreement and the security interest
created hereby shall terminate and all rights to the Collateral shall revert to
Debtors. Secured Party will thereafter, upon Debtors' request and at Debtors'
expense, (a) return to Debtors such of the Collateral in Secured Party's
possession as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (b) execute and deliver to Debtors such
documents as Debtor shall reasonably request to evidence such termination.

         Section 5.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
                      -------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF COLORADO.

         Section 5.10. Final Agreement. THIS WRITTEN AGREEMENT AND THE OTHER
                       ---------------
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES HERETO.

                                       17

         Section 5.11. Counterparts; Fax. This Agreement may be separately
                       -----------------
executed in any number of counterparts, all of which when so executed shall be
deemed to constitute one and the same Agreement. This Agreement may be validly
executed and delivered by facsimile or other electronic transmission.

         Section 5.12. "Loan Document". This Agreement is a "Loan Document", as
                        -------------
defined in the Credit Agreement, and, except as expressly provided herein to the
contrary, this Agreement is subject to all provisions of the Credit Agreement
governing such Loan Documents.

                                       18

         IN WITNESS WHEREOF, each Debtor has executed and delivered this
Agreement as of the date first above written.


                                         ST. MARY LAND & EXPLORATION COMPANY


                                         By: /s/ MILAM RANDOLPH PHARO
                                            -----------------------------------
                                            Milam Randolph Pharo
                                            Vice President - Land and Legal


                                         ST. MARY OPERATING COMPANY


                                         By: /s/ MILAM RANDOLPH PHARO
                                            -----------------------------------
                                            Milam Randolph Pharo
                                            Vice President - Land and Legal

                                         Address: 1776 Lincoln Street
                                                  Suite 1100
                                                  Denver, Colorado 80202
                                                  Fax: (303) 861-0934


                                         ST. MARY ENERGY COMPANY


                                         By: /s/ MILAM RANDOLPH PHARO
                                            -----------------------------------
                                            Milam Randolph Pharo
                                            Vice President - Land and Legal


                                         Address: 1776 Lincoln Street
                                                  Suite 1100
                                                  Denver, Colorado 80202
                                                  Fax: (303) 861-0934


                                         NANCE PETROLEUM CORPORATION


                                         By: /s/ RONALD B. SANTI
                                            -----------------------------------
                                            Ronald B. Santi
                                            Vice President - Land

                                         Address: 550 N. 31st Street
                                                  Suite 500
                                                  Box 7168
                                                  Billings, Montana 59103
                                                  Fax:
                                                      -------------------

                                         ST. MARY MINERALS INC.


                                         By: /s/ RICHARD C. NORRIS
                                            -----------------------------------
                                            Richard C. Norris
                                            Vice President - Finance

                                         Address: 1776 Lincoln Street
                                                  Suite 1100
                                                  Denver, Colorado 80202
                                                  Fax: (303) 861-0934


                                         PARISH CORPORATION


                                         By: /s/ RICHARD C. NORRIS
                                            -----------------------------------
                                            Richard C. Norris
                                            Vice President - Finance

                                         Address: 1776 Lincoln Street
                                                  Suite 1100
                                                  Denver, Colorado 80202
                                                  Fax: (303) 861-0934


                                         FOUR WINDS MARKETING, LLC


                                         By:    ST. MARY LAND & EXPLORATION
                                                COMPANY, as Manager


                                         By: /s/ MILAM RANDOLPH PHARO
                                            -----------------------------------
                                            Milam Randolph Pharo
                                            Vice President - Land and Legal

                                         Address: 1776 Lincoln Street
                                                  Suite 1100
                                                  Denver, Colorado 80202
                                                  Fax: (303) 861-0934


                                         ROSWELL, L.L.C.


                                         By:    ST. MARY LAND & EXPLORATION
                                                COMPANY, as a Member


                                         By: /s/ MILAM RANDOLPH PHARO
                                            -----------------------------------
                                            Milam Randolph Pharo
                                            Vice President - Land and Legal

                                         Address: 350 N. St. Paul Street
                                                  Dallas, Texas 75201
                                                  Fax:
                                                      ---------------