
                  FORM OF PROXY SOLICITED BY THE MANAGEMENT OF
                 COTTON VALLEY RESOURCES CORPORATION FOR USE AT
                 THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
                         TO BE HELD ON DECEMBER 10, 1996

     The undersigned  shareholder(s) of COTTON VALLEY RESOURCES CORPORATION (the
"Corporation")  hereby  appoint(s)  in  respect  of  all of  his  shares  of the
Corporation Eugene A. Soltero,  Chief Executive Officer or failing him, James E.
Hogue,  President,  or in lieu of the  foregoing as nominee of the  undersigned,
with power of substitution,  to attend,  act and vote for the undersigned at the
Annual and Special  Meeting of Shareholders of the Corporation to be held on the
10th day of December, 1996, and any adjournment or adjournments thereof:

1.       TO VOTE FOR (  ) WITHHOLD FROM VOTING IN (  )  the
         election of directors.

2.       TO VOTE FOR (  ) WITHHOLD FROM VOTING ON (  ) the
         appointment of Coopers & Lybrand, Chartered Accountants as
         auditors of the Corporation; and authorizing the directors of the
         Corporation to fix their remuneration.

3.       TO VOTE FOR (  ) AGAINST (  ) the resolution approving the
         proposed financing of between US$7,500,000 and US$20,000,000
         through the issuance of a minimum of 1,250,000 units and a
         maximum of 3,333,333 units.

4.       TO VOTE FOR (  ) AGAINST (  ) the special resolution approving
         the continuance of the Corporation from the jurisdiction of the
         Province of Ontario into the jurisdiction of the Yukon Territory.


         This Proxy revokes and supersedes all proxies of earlier date.

                  If any  amendments or variations to matters  identified in the
Notice of Meeting are proposed at the Meeting or if any other  matters  properly
come before the Meeting, this proxy confers  discretionary  authority to vote on
such  amendments  or  variations  or such other  matters  according  to the best
judgment of the person voting the proxy at the Meeting.

                  DATED the           day of                  , 1996.




                                            Signature of Shareholder(s)



                                   Print Name

                        (SEE NOTES ON BACK OF THIS PAGE)

0157477.01

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NOTES:

(1)      This form of proxy  must be dated and  signed by the  appointor  or his
         attorney  authorized  in  writing  or,  if  the  appointer  if  a  body
         corporate,  this  form of  proxy  must be  executed  by an  officer  or
         attorney thereof duly authorized. If the proxy is not dated, it will be
         deemed to bear the date on which it was mailed.

(2)      The shares  represented  by this proxy will be voted or  withheld  from
         voting in accordance  with the  instructions  of the shareholder on any
         ballot that may be called for.

(3)      A  SHAREHOLDER  HAS THE RIGHT TO  APPOINT  A PERSON  (WHO NEED NOT BE A
         SHAREHOLDER)  TO ATTEND  AND ACT FOR HIM ON HIS  BEHALF AT THE  MEETING
         OTHER THAN THE PERSONS  DESIGNATED IN THE ENCLOSED FORM OF PROXY.  SUCH
         RIGHT  MAY BE  EXERCISED  BY  STRIKING  OUT THE  NAMES  OF THE  PERSONS
         DESIGNATED  IN THIS FORM OF PROXY AND BY  INSERTING  IN THE BLANK SPACE
         PROVIDED  FOR  THAT  PURPOSE  THE  NAME  OF THE  DESIRED  PERSON  OR BY
         COMPLETING  ANOTHER FORM OF PROXY AND, IN EITHER CASE,  DELIVERING  THE
         COMPLETED AND EXECUTED  PROXY TO THE  CORPORATION AT ANY TIME UP TO AND
         INCLUDING  THE LAST  BUSINESS DAY  PRECEDING THE TIME OF THE MEETING OR
         ANY ADJOURNMENT THEREOF.

(4)      IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE PERSONS
         NAMED IN THIS FORM OF PROXY WILL VOTE FOR EACH OF THE MATTER
         IDENTIFIED IN THIS PROXY.

(5)      This proxy ceases to be valid one year from its date.

(6)      If your address as shown is incorrect, please give your correct address
         when returning this proxy.

0157477.01

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