THIRD WARRANT AMENDMENT AGREEMENT

     This  Third Warrant Amendment Agreement dated as of July 16,
1999 by and between XCL Ltd., a Delaware corporation ("XCL"), and
Doug Ashy, Sr. (the "Warrantholder").

                      W I T N E S S E T H:

     WHEREAS, the Warrantholder holds 21,705 warrants to purchase
shares  of common stock, par value $0.01 per share, of XCL having
been  originally issued pursuant to Warrant Certificate No.  LM-6
dated  March 22, 1999 and reflecting an exercise price  of  $1.50
per  share  of  common  stock (subject to adjustment  as  therein
provided) (the "Warrant Certificate"); and

     WHEREAS,  the Warrantholder acquired the Warrant Certificate
in connection with his purchase of one Unit in a private offering
by  XCL Land Ltd., a wholly owned subsidiary of XCL and XCL Ltd.,
to a limited number of qualified investors of up to 62 Units each
Unit  consisting of $100,000 in principal amount of a  promissory
note  of  XCL  Land (collectively the "Notes" and individually  a
"Note") and 21,705 Warrants (the "Warrants"); and

     WHEREAS,  the  exercise  price  contained  in  the   Warrant
Certificate  has  previously been reduced  by  Warrant  Amendment
Agreement  dated as of April 13, 1999 from $1.50  to  $1.325  per
share of common stock (subject to adjustment as therein provided)
and  further reduced by Second Warrant Amendment Agreement  dated
as  of  May  21, 1999 from $1.3125 to $1.25 per share  of  common
stock (subject to adjustment as therein provided); and

     WHEREAS,  the Subscription Agreement pursuant to  which  the
Warrantholder  subscribed for the Unit referenced above  provides
that until the Warrantholder's Note is paid in full, if the terms
of  the Units (including the Notes and the Warrants) are amended,
no  amendment shall be effective until it is offered to the other
Unit owners and either accepted or rejected by them; and

     WHEREAS,  in  order  to  induce two of  the  Unitholders  to
purchase  an  undivided  interest in  certain  notes  held  by  a
subsidiary of XCL, XCL agreed to reduce the exercise price of the
Warrants held by those Unitholders from $1.25 to $0.10 per  share
of common stock (subject to adjustment as therein provided); and

     WHEREAS,   pursuant  to  his  Subscription  Agreement,   the
Warrantholder was offered the same amendment and accepted it.

     NOW,  THEREFORE, in consideration of the premises and  other
good  and valuable consideration, the receipt and sufficiency  of
which  are hereby acknowledged and confirmed, the parties  hereto
hereby agree as follows:

     1.      The  definition of AInitial Exercise Price@  in  the
first  paragraph of the Warrant Certificate is hereby amended  to
read as follows:

                    "...  at the initial exercise price
          of   U.S.   $0.10  per  share  (the  "Initial
          Exercise Price") ..."

All  other  terms  and provisions of the first paragraph  of  the
Warrant Certificate shall remain unchanged.

     2.      This  Third  Warrant Amendment Agreement  shall  not
constitute  a waiver or amendment of any other provision  of  the
Warrant  Certificate not expressly referred to herein and  except
as  expressly  amended  hereby, the  provisions  of  the  Warrant
Certificate are and shall remain in full force and effect.

     3.      Upon  surrender of the original Warrant Certificate,
XCL  shall issue a new Warrant Certificate of like tenor  and  an
equivalent number of Warrants to the Warrantholder reflecting the
amendment set forth in paragraph 1 above.

     4.     This Third Warrant Amendment Agreement sets forth the
entire  understanding of the parties hereto with respect  to  the
subject mater hereof and may be executed in counterparts, each of
which when executed shall be deemed to be an original but all  of
which taken together shall constitute one and the same agreement.

     5.      This  Third  Warrant Amendment  Agreement  shall  be
governed by and construed in accordance with the internal laws of
the State of Delaware without regard to conflicts of laws.

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

                              XCL LTD.


                              By:______________________________
                              Name:____________________________
                              Title:_____________________________


                              WARRANTHOLDER:


                              _________________________________
                              Doug Ashy, Sr.