REVOLVING CREDIT LOAN AGREEMENT





     THIS REVOLVING CREDIT LOAN AGREEMENT, is made this 5th day of May, 2003, by

and between Kestrel Energy, Inc. (the "Borrower"), a Colorado corporation, and

Barry D. Lasker ("Lender"), an individual.



                                    RECITALS



     A. WHEREAS, Borrower is desirous of borrowing sums from time to time up to

an aggregate amount of Two Hundred Thousand Dollars ($200,000) from Lender in

the form of a revolving line of credit;



     B. WHEREAS, Lender serves as the President and Chief Executive Officer of

Borrower and Borrower is already indebted to Lender on account of unpaid wages

and unreimbursed expenses advanced by Lender on Borrower's behalf in the

approximate amount of $150,000 (the "Existing Debt"); and



     C. WHEREAS, Lender is willing to provide the above-described loans to

Borrower on the terms and conditions hereinafter set forth.



        NOW, THEREFORE, in consideration of the foregoing and the mutual

covenants herein contained, the parties agree as follows:



     1. Terms of Revolving Credit. Subject to the terms and conditions of this

Agreement, Lender hereby agrees to establish a revolving credit facility

(hereinafter, the "Revolving Credit") in the maximum amount of Two Hundred

Thousand Dollars ($200,000) in favor of Borrower on the following terms and

conditions:



        a. The term of the Revolving Credit shall begin on the date hereof and

shall end on the earlier to occur of two (2) years from the date of this

agreement or the date which is mutually agreed upon by the Lender and the

Borrower (the "Repayment Date").



        b. Concurrently herewith, Borrower shall execute a Revolving Credit

Master Note of even date herewith in the form attached hereto as Exhibit A in

favor of Lender in the face amount of $200,000 (the "Note"), payable on the

Repayment Date.



        c. Advances under the Revolving Credit may be made, upon request of

Borrower in accordance with the terms of this Agreement, at any time prior to

the Repayment Date upon receipt by Lender of a request therefor signed by

Borrower. At no time shall the aggregate obligation of Borrower to Lender,

including the Existing Debt, exceed Two Hundred Thousand Dollars ($200,000) plus

accrued but unpaid interest on amounts previously received. Borrower may at any

time prior to the Repayment Date repay all or any part of said loans under the

Revolving Credit and subsequently receive further advances, consistent with the

terms and conditions hereof.



<PAGE>



        d. Principal amounts due under the Revolving Credit, including the

Existing Debt, shall bear interest and principal and interest shall be payable

in accordance with the terms of the Note.



        e. Borrower may prepay under the Note at any time in any amount without

premium or penalty.



        f. Amounts borrowed under the Revolving Credit shall be used for the

purposes specified in Section 8.a(2) of this Agreement.



     2. Fees and Expenses. Borrower agrees to bear all legal expenses required

for the preparation of this Agreement, the Note, and other documents in

connection with this Revolving Credit and the making, protection, enforcement

and collection of all amounts advanced under the Revolving Credit. These costs

do not include, however, the fees of separate counsel for Lender, if any, or the

costs and expenses incurred in enforcing the rights of Lender under this

Agreement except upon the occurrence of an Event of Default (hereinafter

defined).



     3. Promise to Pay, Conversion and Acceleration upon Termination of

Employment. Borrower promises to pay to Lender when due, whether by normal

maturity, acceleration or otherwise, the entire outstanding principal amount of

the Revolving Credit, including the Existing Debt, together with interest, and

all other amounts payable by Borrower to Lender hereunder, including costs of

collection. Borrower also agrees that Lender may elect to convert all or any

portion of the unpaid principal and interest owed under this Agreement and the

Note into shares of the Borrower's common stock at a conversion price of $.40

per share (the "Conversion Price"). Borrower further agrees that Lender shall

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