May 10, 1995



Mr. William S. Sudhaus
606 Pugh Road
Strafford, PA 19087

Dear Bill:

     This letter confirms our mutual agreement that, effective April 1, 1995,
your "base salary" from the Castle Energy group of companies will be reduced by
15 percent from its present level. The reduction will remain in effect until the
first to occur of (in each case, a "Restoration Event") (i) the day prior to the
date of closing of any sale or other disposition (whether by stock, partnership
interest or asset transfer, merger or otherwise) of the Indian Refinery in
Lawrenceville, Illinois, (ii) the day prior to the date any "WARN Act" notice is
issued with respect to the Indian Refinery, (iii) the date of commencement of
any general "shut down" or operation discontinuance with respect the Indian
Refinery, (iv) the day prior to the date any bankruptcy event occurs with
respect to the Indian Refinery or Indian Refining Limited Partnership, (v) the
day of any breach of your employment contract by Castle Energy Corporation or
any of its subsidiaries, or (vi) December 31, 1995. Prior to the occurrence of a
Restoration Event, your base salary (as so reduced) will be increased by any
applicable percentage cost of living adjustment to which you become entitled by
reason of any employment contract obligation. Upon the occurrence of a subject
triggering Restoration Event, your base salary will again be placed at its
current level (increased by any cost of living adjustments to which you become
entitled by reason of any employment contract obligation).

     Further, upon the first occurrence of a Restoration Event (unless the
subject Restoration Event is a sale or disposition of the Indian Refinery to
CORE Refining Corp. ("CORE") and CORE enters into an employment agreement with
you within 30 days of the subject Restoration Event), the aggregate amount of
the reduction in your base salary pursuant to this letter agreement during the
period prior to the subject Restoration Event will be reimbursed to you in a
lump sum payment (net of applicable tax and other withholding) within 20 days
after the subject triggering Restoration Event. Castle Energy Corporation hereby
guarantees the full and prompt payment of the lump sum amount set forth in the
immediately preceding sentence and all other amounts due under your employment
agreement.






     Except as expressly set forth in this letter, any employment rights
(whether contractual or otherwise) which you may currently have remain
unmodified and in full force and effect.


                                                CASTLE ENERGY
                                                 CORPORATION


                                                By /s/ Joseph L. Castle, II
                                                   -------------------------
                                                   Its Chairman
                                                   and CEO


Accepted and agreed as of
the date first set forth above.


\s\ William S. Sudhaus 
--------------------------
    William S. Sudhaus