<DOCUMENT>
<TYPE>EX-7.2
<SEQUENCE>4
<FILENAME>falconex73-1202.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>

                          REGISTRATION RIGHTS AGREEMENT


                          dated as of December 5, 2002


                                      among


                            MEXCO ENERGY CORPORATION


                                       and


                                   The Holders

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

     REGISTRATION  RIGHTS AGREEMENT (this  "AGREEMENT")  dated as of December 5,
2002 among Mexco Energy Corporation, a Colorado corporation (the "COMPANY"), and
the Holders named on the signature  pages of this Agreement  (collectively  with
their respective successors and assigns, the "HOLDERS").

                                    RECITALS
                                    --------

     WHEREAS,  pursuant  to  that  certain  Exploration  Agreement  dated  as of
December  5,  2002,  by  and  among   Company  and  the  Holders   ("EXPLORATION
AGREEMENT"),  the Holders acquired Warrants (as defined below) to purchase up to
107,500 shares of the Company's Common Stock (as defined below) from the Company
(and acquired the contingent right to acquire an additional  322,500 Warrants to
purchase shares of the Company's Common Stock),  and extended to the Company the
option for the Company to issue to the Holders an additional undetermined number
of shares of Common Stock pursuant to Section 3.3 of the Exploration  Agreement;
and

     WHEREAS,  the parties hereto hereby desire to set forth the Holders' rights
and the  Company's  obligations  to cause  the  registration  of the  securities
acquired  upon  exercise of the  Warrants  and upon  issuance of the  additional
shares of Common Stock  pursuant to the  Securities Act of 1933, as amended (the
"1933 Act");

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

     Section 1.     Definitions and Usage.
                    ---------------------

          As used in this Agreement:

          1.1. Definitions.
               -----------

     "AGENT"  means the  principal  placement  agent on an agented  placement of
Registrable Securities.

     "BOARD" means the Board of Directors of the Company.

     "COMMISSION" means the Securities and Exchange Commission.

     "COMMON  STOCK" means the Common  Stock of the Company,  par value $.50 per
share.

     "HOLDERS"  means each of the  purchasers  of the  Warrants  pursuant to the
Exploration  Agreement and such persons who may be issued  additional  shares of
Common Stock pursuant to the Exploration  Agreement and their  respective  legal
successors  and assigns and  Transferees  at all times as such Persons shall own
Registrable Securities.

<PAGE>

     "MAJORITY  SELLING  HOLDERS" means those Selling Holders whose  Registrable
Securities included in such registration represent a majority of the Registrable
Securities of all Selling Holders included therein.

     "PERSON" means any  individual,  corporation,  partnership,  joint venture,
association,    joint-stock   company,   limited   liability   company,   trust,
unincorporated   organization   or  government  or  other  agency  or  political
subdivision thereof.

     "PIGGYBACK REGISTRATION" shall have the meaning set forth in SECTION 2.

     "REGISTER,"  "REGISTERED," and "REGISTRATION" shall refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance  with the 1933 Act, and the declaration or ordering by the Commission
of effectiveness of such registration statement or document.

     "REGISTRABLE  SECURITIES"  means:  (i) the shares of Common Stock  issuable
upon  exercise  of any  of the  Warrants  owned  by a  Holder  on  the  date  of
determination; (ii) any shares of Common Stock issued pursuant to Section 3.3 of
the Exploration Agreement.

     "REGISTRABLE   SECURITIES  THEN  OUTSTANDING"  means,  with  respect  to  a
specified determination date, the Registrable Securities owned by all Holders on
such date.

     "REGISTRATION EXPENSES" shall have the meaning set forth in SECTION 5.1.

     "SELLING HOLDERS" means, with respect to a specified  registration pursuant
to this  Agreement,  Holders whose  Registrable  Securities are included in such
registration.

     "TRANSFER"  means and  includes the act of selling,  giving,  transferring,
creating a trust  (voting or  otherwise),  assigning or  otherwise  disposing of
other than pledging,  hypothecating  or otherwise  transferring as security (and
correlative words shall have correlative  meanings);  PROVIDED HOWEVER, that any
transfer or other  disposition upon foreclosure or other exercise of remedies of
a secured  creditor after an event of default under or with respect to a pledge,
hypothecation or other transfer as security shall constitute a "Transfer."

     "UNDERWRITERS'  REPRESENTATIVE" means the managing underwriter,  or, in the
case of a co-managed  underwriting,  the managing underwriter  designated as the
Underwriters' Representative by the co-managers.

     "VIOLATION" shall have the meaning set forth in SECTION 6.1.

     "1934 ACT" means the Securities Exchange Act of 1934, as amended.

     "WARRANT" means the warrants to purchase Common Stock issued by the Company
pursuant to the Exploration Agreement.

                                       2
<PAGE>

     1.2. Usage.
          -----

     (i)  References  to a  Person  are  also  references  to  its  assigns  and
successors  in  interest  (by means of merger,  consolidation  or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).

     (ii) References to Registrable Securities "owned" by a Holder shall include
Registrable  Securities  beneficially owned by such Person but which are held of
record in the name of a nominee, trustee, custodian, or other agent.

     (iii) References to a document are to it as amended,  waived and  otherwise
modified  from time to time and  references  to a statute or other  governmental
rule  are to it as  amended  and  otherwise  modified  from  time to  time  (and
references  to any provision  thereof shall include  references to any successor
provision).

     (iv) References  to Sections or to  Schedules  or Exhibits  are to sections
hereof or schedules or exhibits hereto, unless the context otherwise requires.

     (v)  The "date of" any notice or request given  pursuant to this  Agreement
shall be determined in accordance with SECTION 10.2.

     Section 2.     Piggyback Registration.
                    ----------------------

     2.1. If at any time the Company  proposes to register,  whether for its own
account or for the  account of  shareholders  of the Company (or if for a Holder
other  than  pursuant  to SECTION 2  hereof),  securities  under the 1933 Act in
connection  with a public  offering  solely for cash on Form S-1, S-2 or S-3 (or
any replacement or successor forms), the Company shall promptly give each Holder
of Registrable Securities written notice of such registration.  Upon the written
request of each Holder  given within 20 days  following  the date of such notice
and  subject to SECTION  2.2,  the  Company  shall  cause to be included in such
registration  statement and use its best efforts to be registered under the 1933
Act all the Registrable Securities that each such Holder shall have requested to
be registered (a "PIGGYBACK REGISTRATION");  PROVIDED,  HOWEVER, that such right
of inclusion shall not apply to any  registration  statement  covering solely an
underwritten   offering  of   non-convertible   debt   securities,   unless  the
Underwriters'  Representative or Agent expressly  consents thereto.  The Company
shall  have the  absolute  right to  withdraw  or cease to  prepare  or file any
registration  statement  for any offering  referred to in this SECTION 2 without
any obligation or liability to any Holder.

     2.2. If the Underwriters'  Representative or Agent shall advise the Company
in writing (with a copy to each Selling Holder) that, in its opinion, the amount
of Registrable  Securities requested to be included in such offering pursuant to
any such Piggyback Registration would materially adversely affect such offering,
or the timing  thereof,  then the  Company  will  include  in such  registration
statement, to the extent of the amount and class which the Company is so advised
can be sold without such material  adverse effect in such offering:  First,  all
securities  proposed  to be sold by the  Company for its own account or, if such
registration is

                                       3
<PAGE>

being  effected for the account of any security  holder of the Company,  for the
account of such security holder; second, the Registrable Securities requested to
be included in such  registration by Holders pursuant to this SECTION 2, and all
other securities being registered pursuant to the exercise of contractual rights
comparable to the rights granted in this SECTION 2, pro rata based on the amount
of such  securities then owned by such holders;  and third all other  securities
requested to be included in such registration.

     2.3. Each  Holder  shall be  entitled  to have its  Registrable  Securities
included in an  unlimited  number of  Piggyback  Registrations  pursuant to this
SECTION 2.

     Section 3.     REGISTRATION  PROCEDURES.  Whenever required under SECTION 2
to effect the registration of any Registrable Securities,  the Company shall, as
expeditiously as practicable:

     3.1. Prepare and file with the  Commission a  registration  statement  with
respect to such  Registrable  Securities  and use the Company's  best efforts to
cause such registration statement to become effective;  PROVIDED,  HOWEVER, that
before  filing a  registration  statement or  prospectus  or any  amendments  or
supplements  thereto,  including  documents  incorporated by reference after the
initial filing of the registration statement and prior to effectiveness thereof,
the  Company  shall  furnish  to one firm of  counsel  for the  Selling  Holders
(selected by Majority  Selling Holders) copies of all such documents in the form
substantially  as  proposed  to be filed with the  Commission  at least four (4)
business  days prior to filing for review  and  comment by such  counsel,  which
opportunity  to comment  shall  include an absolute  right to control or contest
disclosure if the applicable  Selling Holder reasonably  believes that it may be
subject to controlling  person liability under  applicable  securities laws with
respect thereto.

     3.2. Prepare and file with the Commission  such  amendments and supplements
to such  registration  statement and the prospectus used in connection with such
registration  statement as may be necessary to comply with the provisions of the
1933 Act and rules  thereunder with respect to the disposition of all securities
covered by such registration  statement. If the registration statement is for an
underwritten  offering,  the Company shall amend the  registration  statement or
supplement the  prospectus  whenever  required by the terms of the  underwriting
agreement entered into pursuant to SECTION 4.2.

     3.3. Furnish to each  Selling  Holder of  Registrable  Securities,  without
charge, such numbers of copies of the registration statement,  any pre-effective
or post-effective amendments thereto, the prospectus, including each preliminary
prospectus and any amendments or supplements thereto, in each case in conformity
with the requirements of the 1933 Act and the rules  thereunder,  and such other
related documents as any such Selling Holder may reasonably  request in order to
facilitate  the  disposition  of  Registrable  Securities  owned by such Selling
Holder.

     3.4. Use the  Company's  best  efforts  (i) to  register  and  qualify  the
securities covered by such registration statement under such other securities or
Blue Sky laws of such states or jurisdictions  as shall be reasonably  requested
by the Underwriters' Representative or Agent (as applicable, or if inapplicable,
the Majority  Selling  Holders),  and (ii) to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or obtain the

                                       4
<PAGE>

lifting of any suspension of the qualification (or exemption from qualification)
of  the  offer  and  transfer  of  any of  the  Registrable  Securities,  in any
jurisdiction,  at the earliest  possible  moment;  PROVIDED,  HOWEVER,  that the
Company shall not be required in connection  therewith or as a condition thereto
to qualify to do business or to file a general  consent to service of process in
any such states or jurisdictions.

     3.5. In the event of any underwritten or agented  offering,  enter into and
perform the Company's  obligations  under an  underwriting  or agency  agreement
(including indemnification and contribution obligations), in usual and customary
form,  with the  managing  underwriter  or  underwriters  of or agents  for such
offering. The Company shall also cooperate with the Majority Selling Holders and
the Underwriters'  Representative or Agent for such offering in the marketing of
the Registerable Securities,  including making available the Company's officers,
accountants, counsel, premises, books and records for such purpose.

     3.6. Promptly  notify  each  Selling  Holder  of any stop  order  issued or
threatened to be issued by the Commission in connection  therewith (and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered).

     3.7. Make generally  available to the Company's  security holders copies of
all periodic  reports,  proxy statements,  and other information  referred to in
SECTION 8.1.

     3.8. Make available for inspection by any Selling  Holder,  any underwriter
participating  in such offering and the  representatives  of such Selling Holder
and underwriter (but not more than one firm of counsel to such Selling Holders),
all financial and other  information  as shall be reasonably  requested by them,
and provide the Selling Holder,  any underwriter  participating in such offering
and the  representatives  of such Selling Holder and underwriter the opportunity
to discuss the business affairs of the Company with its principal executives and
independent   public  accountants  who  have  certified  the  audited  financial
statements  included  in  such  registration  statement,  in  each  case  all as
necessary to enable them to exercise  their due diligence  responsibility  under
the 1933 Act; PROVIDED,  HOWEVER,  that information that the Company determines,
in good faith, to be  confidential  and which the Company advises such Person in
writing is  confidential  shall not be  disclosed  unless  such  Person  signs a
confidentiality  agreement reasonably satisfactory to the Company, or unless the
related  Selling Holder of Registrable  Securities  agrees to be responsible for
such Person's breach of confidentiality on terms reasonably  satisfactory to the
Company.

     3.9. Use the Company's best efforts to obtain a so-called  "comfort letter"
from its independent  public  accountants,  and legal opinions of counsel to the
Company  addressed to the Selling  Holders,  in customary form and covering such
matters  of the type  customarily  covered by such  letters,  and in a form that
shall be reasonably  satisfactory to Majority Selling Holders. The Company shall
furnish to each Selling  Holder a signed  counterpart of any such comfort letter
or legal  opinion.  Delivery  of any such  opinion  or comfort  letter  shall be
subject  to  the   recipient   furnishing   such  written   representations   or
acknowledgments as are customarily  provided by selling shareholders who receive
such comfort letters or opinions.

                                       5
<PAGE>

     3.10. Provide and cause to be maintained a transfer agent and registrar for
all Registrable Securities covered by such registration statement from and after
a date not later than the effective date of such registration statement.

     3.11.  Use all  reasonable  efforts  to cause  the  Registrable  Securities
covered by such registration statement (i) to be listed on a national securities
exchange or included  for  quotation in a recognized  trading  market,  on which
similar  securities issued by the Company are then listed or included,  and (ii)
to be  registered  with or  approved  by  such  other  United  States  or  state
governmental  agencies  or  authorities  as may be  necessary  by  virtue of the
business  and  operations  of the  Company  to enable  the  Selling  Holders  of
Registrable  Securities  to  consummate  the  disposition  of  such  Registrable
Securities.

     3.12.  Take such  other  actions  as are  reasonably  required  in order to
expedite or facilitate the  disposition of  Registrable  Securities  included in
each such registration statement.

     Section  4.    HOLDERS'  OBLIGATIONS.  It shall be a condition precedent to
the  obligations  of the Company to take any action  pursuant to this  Agreement
with respect to the Registrable  Securities of any Selling Holder of Registrable
Securities that such Selling Holder shall:

     4.1. Furnish to the Company such information regarding such Selling Holder,
the number of the Registrable Securities owned by it, and the intended method of
disposition of such  securities as shall be required to effect the  registration
of such Selling  Holder's  Registrable  Securities,  and to  cooperate  with the
Company in preparing such registration statement;

     4.2. Agree to sell its  Registrable  Securities to the  underwriters at the
same price and on substantially  the same terms and conditions as the Company or
the other  Persons on whose behalf the  registration  statement  was being filed
have agreed to sell their securities, and to execute the underwriting agreement.

     Section 5.     EXPENSES  OF  REGISTRATION.   Expenses  in  connection  with
registrations pursuant to this Agreement shall be allocated and paid as follows:

     5.1. The  Company  shall  bear  and pay all pay all  expenses  incurred  in
connection  with any  registration,  filing,  or  qualification  of  Registrable
Securities with respect to each Piggy Back  Registration for each Selling Holder
(which right may be assigned to any Person to whom  Registrable  Securities  are
Transferred as permitted by SECTION 7), including all  registration,  filing and
National Association of Securities Dealers,  Inc. fees, all fees and expenses of
complying with securities or Blue Sky laws, all word processing, duplicating and
printing  expenses,  messenger and delivery  expenses,  the reasonable  fees and
disbursements  of counsel  for the  Company,  and of the  Company's  independent
public accountants, including the expenses of "cold comfort" letters required by
or incident to such  performance  and  compliance,  but  excluding  underwriting
discounts and  commissions  relating to Registrable  Securities  (which shall be
paid on a pro rata basis by the Selling  Holder of Registrable  Securities)  and
the  reasonable  fees and  disbursements  of one firm of counsel for the Selling
Holders of Registrable Securities (selected by the Majority Selling Holders)(the
"REGISTRATION EXPENSES").

                                       6
<PAGE>

     5.2. Any  failure  of the  Company  to pay  any  Registration  Expenses  as
required by this  SECTION 5 shall not  relieve  the  Company of its  obligations
under this Agreement.

     Section 6.     INDEMNIFICATION; CONTRIBUTION. If any Registrable Securities
are included in a registration statement under this Agreement:

     6.1. To the extent permitted by applicable law, the Company shall indemnify
and hold harmless each Selling  Holder,  each Person,  if any, who controls such
Selling  Holder within the meaning of the 1933 Act, and each officer,  director,
partner,  and  employee  of such  Selling  Holder and such  controlling  Person,
against any and all losses, claims, damages,  liabilities and expenses (joint or
several),   including   attorneys'  fees  and   disbursements  and  expenses  of
investigation,  incurred  by such party  pursuant  to any  actual or  threatened
action,  suit,  proceeding  or  investigation,  or to which any of the foregoing
Persons may become  subject under the 1933 Act, the 1934 Act or other federal or
state laws, insofar as such losses,  claims,  damages,  liabilities and expenses
arise out of or are based upon any of the  following  statements,  omissions  or
violations (collectively a "VIOLATION"):

          (i)  Any untrue  statement or alleged  untrue  statement of a material
fact  contained  in  such  registration  statement,  including  any  preliminary
prospectus  or  final  prospectus   contained  therein,  or  any  amendments  or
supplements thereto;

          (ii) The omission or alleged omission to state therein a material fact
required to be stated therein,  or necessary to make the statements  therein not
misleading; or

          (iii) Any violation  or alleged  violation  by the Company of the 1933
Act, the 1934 Act, any applicable state securities law or any rule or regulation
promulgated  under the 1933 Act, the 1934 Act or any applicable state securities
law;

PROVIDED,  HOWEVER, that the indemnification  required by this SECTION 6.1 shall
not  apply to  amounts  paid in  settlement  of any such  loss,  claim,  damage,
liability or expense if such  settlement is effected  without the consent of the
Company  (which  consent  shall  not be  unreasonably  withheld),  nor shall the
Company be liable in any such case for any such loss, claim,  damage,  liability
or  expense to the  extent  that it arises  out of or is based upon a  Violation
which  occurs  in  reliance  upon and in  conformity  with  written  information
furnished  to  the  Company  by  the  indemnified  party  expressly  for  use in
connection with such registration statement.

     6.2. To the extent  permitted  by  applicable  law,  each  Selling  Holder,
severally and not jointly,  shall indemnify and hold harmless the Company,  each
of its  directors,  each of its officers who shall have signed the  registration
statement,  each Person,  if any, who controls the Company within the meaning of
the 1933 Act, any other Selling Holder, any controlling Person of any such other
Selling Holder and each officer,  director,  partner, and employee of such other
Selling Holder and such controlling Person,  against any and all losses, claims,
damages, liabilities and expenses (joint and several), including attorneys' fees
and disbursements and expenses of investigation, incurred by such party pursuant
to any actual or threatened  action,  suit,  proceeding or investigation,  or to
which any of the foregoing Persons may otherwise

                                       7
<PAGE>

become  subject under the 1933 Act, the 1934 Act or other federal or state laws,
insofar as such losses, claims,  damages,  liabilities and expenses arise out of
or are based upon any  Violation,  in each case to the  extent  (and only to the
extent)  that such  Violation  occurs in reliance  upon and in  conformity  with
written  information  furnished  by such  Selling  Holder  expressly  for use in
connection   with   such   registration;   PROVIDED,   HOWEVER,   that  (x)  the
indemnification  required by this SECTION 6.2 shall not apply to amounts paid in
settlement of any such loss, claim,  damage,  liability or expense if settlement
is effected  without the consent of the relevant  Selling  Holder of Registrable
Securities,  which consent  shall not be  unreasonably  withheld,  and (y) in no
event  shall the  amount of any  indemnity  under  this  SECTION  6.2 exceed the
proceeds from the applicable offering received by such Selling Holder.

     6.3. Promptly after receipt by an indemnified party under this SECTION 6 of
notice of the  commencement of any action,  suit,  proceeding,  investigation or
threat thereof made in writing for which such indemnified party may make a claim
under this SECTION 6, such  indemnified  party shall deliver to the indemnifying
party a written notice of the commencement  thereof and the  indemnifying  party
shall have the right to  participate  in,  and,  to the extent the  indemnifying
party so desires,  jointly with any other  indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties.
The  failure  to  deliver  written  notice to the  indemnifying  party  within a
reasonable  time following the  commencement  of any such action,  if materially
prejudicial   to  its  ability  to  defend  such  action,   shall  relieve  such
indemnifying  party of any liability to the indemnified party under this SECTION
6 to the extent of such material prejudice  resulting  therefrom,  but shall not
relieve  the  indemnifying  party  of any  liability  that  it may  have  to any
indemnified  party  otherwise  than  pursuant  to this  SECTION  6. Any fees and
expenses  incurred by the  indemnified  party  (including  any fees and expenses
incurred in connection with  investigating or preparing to defend such action or
proceeding) shall be paid to the indemnified  party, as incurred,  within thirty
(30)  days of  written  notice  thereof  to the  indemnifying  party.  Any  such
indemnified  party shall have the right to employ  separate  counsel in any such
action,  claim or proceeding and to participate in the defense thereof,  but the
fees and  expenses of such  counsel  shall be the  expenses of such  indemnified
party unless (i) the indemnifying party has agreed to pay such fees and expenses
or (ii) the indemnifying  party shall have failed to promptly assume the defense
of such action,  claim or proceeding or (iii) such indemnified  party shall have
been advised by counsel that there may be one or more legal  defenses  available
to it  which  are  different  from or in  addition  to  those  available  to the
indemnifying  party  and that the  assertion  of such  defenses  would  create a
conflict of interest such that counsel employed by the indemnifying  party could
not  faithfully  represent  the  indemnified  party  (in  which  case,  if  such
indemnified  party notifies the indemnifying  party in writing that it elects to
employ  separate  counsel  at  the  expense  of  the  indemnifying   party,  the
indemnifying  party  shall  not have the  right to assume  the  defense  of such
action,  claim or  proceeding  on behalf  of such  indemnified  party,  it being
understood,  that the  indemnifying  party shall not, in connection with any one
such  action,  claim or  proceeding  or separate  but  substantially  similar or
related actions,  claims or proceedings in the same jurisdiction  arising out of
the same general  allegations or  circumstances,  unless it otherwise agrees, be
liable for the  reasonable  fees and expenses of more than one separate  firm of
attorneys  (together  with  appropriate  local counsel) at any time for all such
indemnified parties, unless in the reasonable judgment of such indemnified party
a conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such action, claim or

                                       8
<PAGE>

proceeding,  in which event the indemnifying party shall be obligated to pay the
fees and expenses of such additional counsel or counsels), then, and in the case
of clauses (i), (ii) and (iii) above, the indemnifying  party shall pay all such
fees and expenses. No indemnifying party shall be liable to an indemnified party
for any  settlement  of any  action,  proceeding  or claim  without  the written
consent of the  indemnifying  party,  which  consent  shall not be  unreasonably
withheld.

     6.4. If  the   indemnification   required  by  this   Section  6  from  the
indemnifying  party is unavailable to an indemnified  party hereunder in respect
of any losses,  claims,  damages,  liabilities  or expenses  referred to in this
SECTION 6:

          (a)  The indemnifying  party, in lieu of indemnifying such indemnified
party,  shall contribute to the amount paid or payable by such indemnified party
as a result of such losses,  claims,  damages,  liabilities  or expenses in such
proportion as is appropriate  to reflect the relative fault of the  indemnifying
party and  indemnified  parties in connection with the actions which resulted in
such losses,  claims,  damages,  liabilities  or expenses,  as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information  supplied
by, such indemnifying  party or indemnified  parties,  and the parties' relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of the losses,
claims,  damages,  liabilities and expenses referred to above shall be deemed to
include,  subject to the  limitations  set forth in SECTION 6.1 and SECTION 6.2,
any  legal  or other  fees or  expenses  reasonably  incurred  by such  party in
connection with any investigation or proceeding.

          (b)  The parties  hereto agree that it would not be just and equitable
if  contribution  pursuant  to this  SECTION  6.4  were  determined  by pro rata
allocation or by any other method of allocation which does not take into account
the equitable  considerations referred to in SECTION 6.4(a). No Person guilty of
fraudulent  misrepresentation  (within the meaning of Section  11(f) of the 1933
Act) shall be  entitled  to  contribution  from any Person who was not guilty of
such fraudulent misrepresentation.

     6.5. If indemnification is available under this SECTION 6, the indemnifying
parties shall  indemnify each  indemnified  party to the full extent provided in
this SECTION 6 without regard to the relative fault of such  indemnifying  party
or indemnified party or any other equitable consideration referred to in SECTION
6.4.

     6.6. The  obligations of the Company and the Selling Holders of Registrable
Securities  under this SECTION 6 shall survive the completion of any offering of
Registrable   Securities  pursuant  to  a  registration   statement  under  this
Agreement, and otherwise.

     Section 7.     TRANSFER OF  REGISTRATION  RIGHTS.  Rights  with  respect to
Registrable  Securities  may be  Transferred  by such  Holder  to any  Person in
connection  with the Transfer of Registrable  Securities to such Person,  in all
cases,  if Transferor  shall have delivered to the Secretary of the Company,  no
later than 15 days following the date of the Transfer,  written  notification of
such Transfer setting forth the name of the Transferor, name and address of the

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<PAGE>

Transferee,  and the number of Warrants and/or shares of Registrable  Securities
which shall have been so Transferred.

     Section 8.     COVENANTS  OF THE  COMPANY.  The Company  hereby  agrees and
covenants as follows:

     8.1. The  Company  shall,  at such time as any  securities  of the  Company
become registered for sale under the 1933 Act, file as and when applicable, on a
timely  basis,  all reports  required to be filed by it under the 1934 Act,  and
take such further action as may be reasonably  required from time to time and as
may be within the  reasonable  control of the Company,  to enable the Holders to
Transfer  Registrable  Securities without registration under the 1933 Act within
the limitation of the exemptions  provided by Rule 144 under the 1933 Act or any
similar rule or regulation hereafter adopted by the Commission.

     8.2. The  Company  shall not,  directly or  indirectly,  (x) enter into any
merger,  consolidation or  reorganization  in which the Company shall not be the
surviving  corporation or (y) Transfer or agree to Transfer all or substantially
all  the  Company's  assets,   unless  prior  to  such  merger,   consolidation,
reorganization or asset Transfer,  the surviving  corporation or the Transferee,
respectively,  shall have  agreed in writing  to assume the  obligations  of the
Company  under this  Agreement,  and for that  purpose  references  hereunder to
"REGISTRABLE  SECURITIES"  shall be deemed to include the  securities  which the
Holders of Registrable  Securities  would be entitled to receive in exchange for
Registrable   Securities   pursuant  to  any  such  merger,   consolidation   or
reorganization.

     8.3. The  Company  shall not grant to any  Person  (other  than a Holder of
Registrable  Securities) any  registration  rights with respect to securities of
the Company.

     Section 9.     ASSIGNMENT;   BENEFIT.   This   Agreement  and  all  of  the
provisions  hereof  shall be binding  upon and shall inure to the benefit of the
parties hereto and their respective heirs, assigns, executors, administrators or
successors;  PROVIDED, HOWEVER, that except as specifically provided herein with
respect  to certain  matters,  neither  this  Agreement  nor any of the  rights,
interests or obligations hereunder shall be assigned or delegated by the Company
without  the prior  written  consent of Holders  owning  Registrable  Securities
possessing a majority in number of the Registrable Securities outstanding on the
date as of which such delegation or assignment is to become effective.  A Holder
may Transfer its rights  hereunder to a successor in interest to the Registrable
Securities owned by such assignor only as permitted by SECTION 7.

     Section 10.    Miscellaneous.
                    -------------

     10.1. GOVERNING LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF TEXAS,  WITHOUT  GIVING  REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

     10.2. NOTICES. Any  and  all  notices,   designations,   consents,  offers,
acceptances,  or any other  communication  provided for herein shall be given in
writing delivered personally

                                       10
<PAGE>

(including delivery by courier or by facsimile if received during normal working
hours) or by registered or certified mail, addressed,  if to the Company, to the
attention of N.C. Taylor,  President;  and, if to a Holder, to him, her or it at
the address indicated for such Holder on the appropriate signature page attached
hereto;  or to such other  address as may be  designated  in writing by any such
party. Except as otherwise provided in this Agreement, each such notice shall be
deemed  given  when  delivered  or on a date  which is four (4) days after it is
mailed in any post  office or branch  post office  regularly  maintained  by the
United States Postal Service (registered or certified,  with postage prepaid and
properly addressed).

     10.3. AMENDMENT. This  Agreement  may be  amended  with the  consent of the
Company  and the  Company  may take any  action  herein  prohibited,  or omit to
perform any act herein required to be performed by it, only if the Company shall
have  obtained  the written  consent of Holders  owning  Registrable  Securities
possessing a majority in number of the Registrable  Securities then  outstanding
to such amendment, action or omission to act.

     10.4. WAIVER. No failure or delay on the part of the parties or any of them
in exercising any right, power or privilege hereunder, nor any course of dealing
between the parties or any of them shall  operate as a waiver of any such right,
power or privilege  nor shall any single or partial  exercise of any such right,
power or privilege  preclude  the  simultaneous  or later  exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
cumulative  and are not exclusive of any rights or remedies which the parties or
any of them would  otherwise  have. No notice to or demand on the Company in any
case shall  entitle  the  Company  to any other or  further  notice or demand in
similar or other circumstances or constitute a waiver of the rights of the other
parties or any of them to take any other or further action in any  circumstances
without notice or demand.

     10.5. ENTIRE AGREEMENT;  INTEGRATION.  This Agreement  supersedes all prior
agreements  between  or among any of the  parties  hereto  with  respect  to the
subject matter  contained  herein and therein,  and such  agreements  embody the
entire understanding among the parties relating to such subject matter.

     10.6. INJUNCTIVE RELIEF.  Each of the parties hereto  acknowledges  that in
the  event  of a  breach  by any of  them  of any  material  provision  of  this
Agreement, the aggrieved party may be without an adequate remedy at law. Each of
the  parties  therefore  agrees  that in the event of such a breach  hereof  the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent  jurisdiction  to  enforce  specific  performance  or  to  enjoin  the
continuing breach hereof. By seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining any other relief to which
it may be entitled.

     10.7. COUNTERPARTS. This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of  which  shall  be an  original,  and all of  which  shall
together  constitute one and the same instrument.  All signatures need not be on
the same counterpart.

     10.8. SEVERABILITY. Any provision of this  Agreement  which is  prohibited,
unenforceable  or  not  authorized  in  any  jurisdiction   shall,  as  to  such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or nonauthorization without invalidating the

                                       11
<PAGE>

remaining  provisions  hereof  or  affecting  the  validity,  enforceability  or
legality of such provision in any other  jurisdiction.  The parties hereto agree
to  negotiate  in good faith to replace any  illegal,  invalid or  unenforceable
provision of this Agreement with a legal, valid and enforceable  provision that,
to the extent possible, will preserve the economic bargain of this Agreement.

     10.9. TERMINATION.  This Agreement  may  be  terminated  at any  time  by a
written  instrument  signed by the parties hereto.  Unless sooner  terminated in
accordance  with the preceding  sentence,  this Agreement  (other than SECTION 7
hereof)  shall  terminate  in its  entirety  on such  date as there  shall be no
Registrable  Securities  outstanding;  PROVIDED that any  securities  previously
subject to this Agreement shall not be Registrable Securities following the sale
of any such shares in an offering registered pursuant to this Agreement.

     10.10. ATTORNEYS' FEES. In any action or proceeding  brought to enforce any
provision of this Agreement,  or where any provision  hereof is validly asserted
as a defense,  the  successful  party shall be  entitled  to recover  reasonable
attorneys'  fees  (including any fees incurred in any appeal) in addition to its
costs and expenses and any other available remedy.

     10.11. NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended  to confer  upon any  person,  other than the  parties  hereto or their
respective permitted assigns, successors,  heirs and legal representatives,  any
rights,  remedies,  obligations  or  liabilities  under  or by  reason  of  this
Agreement.


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                                       12
<PAGE>

     IN WITNESS  WHEREOF,  this  Agreement has been duly executed by the parties
hereto as of the date first written above.

COMPANY

MEXCO ENERGY CORPORATION,
a Colorado corporation


By:
   --------------------------------------------------
Name:
     ------------------------------------------------
Title:
      -----------------------------------------------

HOLDERS

FALCONBAY OPERATING, L.L.C.
A Texas corporation


By:
   --------------------------------------------------
Name:
     ------------------------------------------------
Title:
      -----------------------------------------------

Address for Notice:

600 N. Marienfeld, Suite 900
Midland, Texas 79701

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</TEXT>
</DOCUMENT>
