DEVELOPMENT AGREEMENT



         THIS DEVELOPMENT AGREEMENT (the "Agreement") is effective as of the

22nd day of November, 2002 ("Effective Date"), by and between AMERICAN NATURAL

ENERGY CORPORATION ("ANEC"), an Oklahoma corporation, and EXXON MOBIL

CORPORATION ("ExxonMobil"), a New Jersey Corporation hereinafter collectively

referred to as the ("Parties") or individually as a ("Party").



                                   WITNESSETH:



         WHEREAS, ANEC is currently the holder of the rights of lessee under the

"Bayou Couba Lease" (as herein defined); and



         WHEREAS, ExxonMobil is the owner of certain mineral fee interests in

the "ExxonMobil Lands" (as herein defined); and



         WHEREAS, ANEC owns a 3-D seismic survey covering all of a 23.138 square

mile area as indicated on Exhibit "A" hereto; and



         WHEREAS, the Parties desire to establish and create an Area of Mutual

Interest ("AMI"), which shall be defined as the area lying within the red

outline, as set forth on Exhibit "A" hereto, covering approximately 8,427 acres;

and



         WHEREAS, the Parties desire to set forth the Parties' agreement to

jointly develop the AMI.



          NOW, THEREFORE, in consideration of the mutual covenants and

conditions set forth herein, and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the Parties agree as

follows:



                                    CONTENTS

                                    --------



ARTICLE                                                                    PAGE

-------                                                                    ----



1.  DEFINITIONS                                                              2

2.  SEISMIC                                                                  3

3.  ESTABLISHMENT OF AMI                                                     4

4.  OPERATIONS WITHIN THE AMI                                                5

5.  CONFIDENTIALITY                                                          7

6.  TERM                                                                     7

7.  PRODUCTION HANDLING AND GAS LIFT SUPPORT                                 8

8.  MISCELLANEOUS                                                            8







                                       1



{PAGE}





                                   ARTICLE 1.

                                  DEFINITIONS



         The following terms shall have the following meanings for purposes of

this Agreement:



         1.01 "Acreage" shall mean all fee mineral interests, term mineral

interests, mineral leasehold rights, prescribed interests, farm-in rights, force

pooled acreage, rights under voluntary unitization agreements, option rights,

and all other rights, whether by recorded instruments or under contract, giving

rise to the right to drill upon lands lying within the geographic boundaries of

an AMI.



         1.02 "Affiliate" shall mean any Company that is owned or controlled by

a Party. Ownership or control is deemed to exist if fifty percent (50%) or more

of the stock of such company, having the right to vote for directors, is owned

or controlled, directly or indirectly, by the particular Party. An Affiliate of

a Party also includes any company that is owned or controlled, directly or

indirectly, by any other company that is owned or controlled by a Party. An

Affiliate of a Party also includes any parent company that owns or controls,

directly or indirectly, fifty percent (50%) or more of the voting shares,

partnership interests or voting rights, or other equity interest of such Party.



         1.03 "AMI" or "Area of Mutual Interest" shall mean the area lying

within the red outline, as set forth on Exhibit "A" hereto, covering

approximately 8,427 acres.



         1.04 "AMI JOA" shall mean the AAPL Form 610-1982 Model Form Operating

Agreement, as modified, attached as Exhibit "B" hereto.



         1.05 "Bayou Couba Lease" shall mean all of the undivided working

interest owned by ANEC in a 1,319.991 gross acre divided portion of that certain

Oil, Gas, and Mineral Lease from Delta Securities Company, Inc. as Lessor to

Gulf Refining Company as Lessee dated November 14, 1941, recorded in Entry No.

1458, Conveyance Book SS, Folio 382, of the records of St. Charles Parish,

Louisiana.



         1.06 "Confidential Data" shall mean all geological, geophysical or

reservoir information, including, without limitation, the 3D Seismic (and

reprocessed 3D Seismic), logs or other information pertaining to the progress,

tests or results of any well drilled within the AMI, furnished by one Party to

the other pursuant to this Agreement which is not otherwise available in the

public domain.



         1.07 "Drilling Prospects" shall mean any geologic presentation proposed

in a Notice which shall be specifically identified as to (a) a legal geographic

location of the initial wellbore, (b) maximum depth to be drilled, (c) the

estimated cost to drill the well and (c) anticipated areal extent of a proposed

prospect area surrounding such unit and well (not to exceed 1280 acres), unless

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