Exhibit 10.1

SECOND AMENDMENT TO AMENDED AND

RESTATED CREDIT AGREEMENT

     THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Second Amendment”) dated
effective as of October 8, 2004 (the “Second Amendment Effective Date”), among
THE HOUSTON EXPLORATION COMPANY, a Delaware corporation (the “Company”); the
lenders party hereto (the “Lenders”); WACHOVIA BANK, NATIONAL ASSOCIATION, as
Issuing Bank and as Administrative Agent (in its capacity as Administrative
Agent, the “Administrative Agent”); THE BANK OF NOVA SCOTIA and FLEET NATIONAL
BANK, as Co-Syndication Agents; and BNP PARIBAS and COMERICA BANK, as
Co-Documentation Agents.

R E C I T A L S:

     A. The Company, the Lenders, the Administrative Agent, the Co-Syndication
Agents and the Co-Documentation Agents are parties to that certain Amended and
Restated Credit Agreement dated as of April 1, 2004 (as amended by First
Amendment to Amended and Restated Credit Agreement dated as of May 26, 2004, the
“Credit Agreement”).

     B. The parties to the Credit Agreement intend to amend the Credit Agreement
to, among other things, amend Section 9.15 (Sale of Oil and Gas Properties) and
amend and restate Schedule 7.14 (Listing of Subsidiaries and Partnerships).

     C. Therefore, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:

     SECTION 1. Defined Terms. Except as amended hereby, terms used herein when
defined in the Credit Agreement shall have the same meanings herein unless the
context otherwise requires.

     SECTION 2. Amendments to Credit Agreement.

          (a) Definitions. The term “Agreement”, defined in Section 1.02 of the
Credit Agreement, is hereby amended in its entirety to read as follows:

     “Agreement” shall mean this Amended and Restated Credit Agreement, as
amended by the First Amendment, as further amended by the Second Amendment, and
as the same may be further amended, supplemented, waived or otherwise modified
from time to time in accordance herewith.

          (b) New Definitions. Section 1.02 of the Credit Agreement is hereby
further amended by adding thereto the following new definitions in their
appropriate alphabetical order:

     “Second Amendment” shall mean that certain Second Amendment to Amended and
Restated Credit Agreement dated effective as of March ___, 2005 (the “Second
Amendment Effective Date”), among the Company, the Lenders party thereto, the
Administrative Agent, the Issuing Bank, the Co-Syndication Agents and the
Co-Documentation Agents.

     “THEC, LLC” shall mean THEC, LLC, a Delaware limited liability company, a
wholly-owned Subsidiary of the Company.

     “THEC, LP” shall mean THEC, LP, a Texas limited partnership, in which the
Company will have a 1% general partner interest and THEC, LLC will have a 99%
limited partner interest.

 

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          (c) Conditions Precedent. Section 6.05 of the Credit Agreement is
hereby amended in its entirety to read as follows:

     Section 6.05. Guarantors. In the event a Guarantor shall have executed a
Guaranty Agreement pursuant to Section 9.19, the Lenders’ obligation to make
subsequent Loans or to issue, renew, extend or reissue Letters of Credit shall
be subject to the Administrative Agent’s receipt of the following documents:

     (a) certificates of the Secretary or Assistant Secretary of such Guarantor
(or its general partner or member, as the case may be) setting forth:

     (i) resolutions of its board of directors (or similar governing body) in
form and substance reasonably satisfactory to the Administrative Agent with
respect to the authorization of the Guaranty Agreement;

     (ii) the officers of such Guarantor (or its general partner or member, as
the case may be) who are authorized to sign such Guaranty Agreement and who
will, until replaced by another officer or officers duly authorized for the
purpose, act as a representative for the purposes of signing documents and
giving notices and other communications in connection with such Guaranty
Agreement and the transactions contemplated thereby; and

     (iii) specimen signatures of the officers so authorized.

     The Administrative Agent and the Lenders may conclusively rely on such
certificate until the Administrative Agent receives notice in writing from such
Guarantor to the contrary;

     (b) a copy, certified as true by the Secretary or Assistant Secretary of
such Guarantor (or its general partner or member, as the case may be) , of the
organizational documents of such Guarantor;

     (c) certificates of the appropriate state agencies with respect to the
valid existence and good standing of such Guarantor and the qualification of
each to do business as a foreign entity in any jurisdiction in which the
ownership of Property or the nature of activities requires such qualification,
except where the failure so to qualify would not have a Material Adverse Effect;

     (d) a Guaranty Agreement duly executed by such Guarantor; and

     (e) an opinion of counsel to such Guarantor in form and substance
reasonably acceptable to the Administrative Agent.”

          (d) Representations and Warranties. Sections 7.01, 7.05, 7.10 and 7.14
of the Credit Agreement are hereby amended in their entirety to read as follows:

     “Section 7.01 Corporate Existence. The Company and each Subsidiary (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority, and
has all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, and (c) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.”

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     “Section 7.05 Corporate Action. The Company is duly authorized and
empowered to create and issue the Notes; and the Company and each Subsidiary are
duly authorized and empowered to execute, deliver and perform the Security
Instruments, including this Agreement, to which they respectively are parties;
all action on the Company’s part requisite for the due creation and issuance of
the Notes and on the Company’s and each Subsidiary’s respective part for the due
execution, delivery and performance of the Security Instruments, including this
Agreement, to which the Company and each Subsidiary respectively are parties has
been duly and effectively taken; and this Agreement does, and the Notes and
other Security Instruments to which the Company and each Subsidiary respectively
are parties upon their creation, issuance, execution and delivery will,
constitute valid and binding obligations of the Company and each Subsidiary,
respectively, enforceable in accordance with their terms.”

     “Section 7.10 Titles, etc. The Company and each Subsidiary has good and
indefeasible title to its material (individually or in the aggregate)
Properties, free and clear of all Liens except Liens permitted by Section 9.03,
and Liens disclosed to the Lenders in Schedule 7.10. After giving full effect to
the Excepted Liens and Liens disclosed to the Lenders in Schedule 7.10, the
Company or the Subsidiary specified as the owner owns the net interests in
production attributable to the wells and units reflected in the most recently
delivered Reserve Report and the ownership of such Properties shall not in any
material respect obligate the Company or such Subsidiary to bear the costs and
expenses relating to the maintenance, development and operations of each such
Property in an amount in excess of the working interest of each Property set
forth in the most recently delivered Reserve Report. Further, upon delivery of
each reserve report furnished to the Lenders pursuant to Sections 8.04(a) or
(b) the statements made in the preceding sentence shall be true with respect to
such furnished reserve reports. All information contained in the most recently
delivered Reserve Report is true and correct in all material respects as of the
Second Amendment Effective Date.”

     “Section 7.14 Subsidiaries and Partnerships. The Company has no
Subsidiaries and no interest in any partnerships (excluding tax partnerships),
joint ventures, limited liability companies or other entities except those shown
on Schedule 7.14 hereto, which Exhibit is complete and accurate but which may be
amended from time to time as set forth in this Section 7.14. The Company owns
100% of the issued and outstanding shares of stock or other equity interests of
each such Subsidiary, unless otherwise disclosed on Schedule 7.14. The Company
will forward to the Administrative Agent a revised Schedule 7.14 prior to or
concurrently with the delivery of the quarterly financial statements required to
be delivered pursuant to Section 8.01(b).

          (e) Corporate Existence, Etc. Section 8.03(a) of the Credit Agreement
is hereby amended in its entirety to read as follows:

     “(a) The Company shall and shall cause each Subsidiary to (i) preserve and
maintain its legal existence and all of its material rights, privileges and
franchises, except as otherwise permitted by Section 9.10 hereof; (ii) keep
books of record and account in which full, true and correct entries will be made
of all dealings or transactions in relation to its business and activities;
(iii) comply with the requirements of all applicable laws, rules, regulations
and orders of governmental or regulatory authorities if failure to comply with
such requirements would have a Material Adverse Effect; (iv) pay and discharge
all taxes, assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; (v) permit
representatives of any Lender or the Administrative Agent, during normal
business hours upon reasonable prior notice, to examine, copy and make extracts
from its books and records, to inspect its Properties,

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and to discuss its business and affairs with its officers, all to the extent
reasonably requested by such Lender or the Administrative Agent (as the case may
be); and (vi) keep insured by financially sound and reputable insurers all
property of a character usually insured by companies engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such companies and carry such other
insurance as is usually carried by such companies.”

          (f) Sale of Oil and Gas Properties. Section 9.15 of the Credit
Agreement is hereby amended in its entirety to read as follows:

     “Section 9.15. Sale of Oil and Gas Properties. The Company will not, nor
permit any Subsidiary or Affiliate to sell, assign, transfer or convey any
interest in any Oil and Gas Properties, except as follows:

     (a) Hydrocarbons sold in the ordinary course of business as and when
produced;

     (b) Routine farm-outs of non-proven acreage;

     (c) Sales of Properties, provided the sales of all such Properties
permitted under this clause since the date of the last Scheduled Redetermination
of the Borrowing Base do not have a market value in excess of $25,000,000 in the
aggregate;

     (d) In addition to sales permitted above, sales of Properties included in
the Borrowing Base, provided simultaneously with any such sale the Borrowing
Base is reduced by amounts agreed to at the time by the Required Lenders;

     (e) The transfer of the Appalachian Assets to Seneca-Upshur and thereafter
the transfer of the common stock of Seneca-Upshur to KeySpan, each in connection
with the KeySpan Split-Off; and

     (f) The transfer of the equitable interest in and to the Company’s Texas
Oil and Gas Properties to THEC, LP, with the Company retaining legal title to
such Properties.”

          (g) Schedule 7.14. Schedule 7.14 attached to the Credit Agreement at
the time of its execution is hereby amended and restated in its entirety to read
as set forth on Schedule 7.14 attached to this Second Amendment.

          (h) Other. The Administrative Agent and the Lenders hereby waive any
Default which may have occurred prior to the date hereof or that may occur under
any other term or provision of the Credit Agreement not amended hereby, solely
by reason of the formation of THEC, LP and THEC, LLC or the transfer of the
equitable interest in and to the Company’s Texas Oil and Gas Properties to THEC,
LP as contemplated hereby, on or after the Second Amendment Effective Date;
provided that the Company shall retain legal title to such Properties.

     SECTION 3. Conditions Precedent; Effectiveness. This Second Amendment shall
become effective as of the Second Amendment Effective Date when the
Administrative Agent shall have received:

          (i) Counterparts hereof duly executed by the Company and the Required
Lenders (or, in the case of any party as to which an executed counterpart shall
not have been received, telegraphic, telex, or other written confirmation from
such party of execution of a counterpart hereof by such party);

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          (ii) Each of the instruments and documents required to be delivered
pursuant to Section 6.05 of the Credit Agreement, as amended hereby;

          (iii) True and correct copies of all documents and instruments
executed and delivered in connection with the Company’s transfer of the
equitable interest in and to its Texas Oil and Gas Properties to THEC, LP; and

          (iv) Such other documents as the Administrative Agent or special
counsel to the Administrative Agent may reasonably request.

     SECTION 4. Reaffirmation of Representations and Warranties. To induce the
Lenders, the Administrative Agent and the Issuing Bank to enter into this Second
Amendment, the Company hereby reaffirms, as of the date hereof, its
representations and warranties in their entirety contained in Article VII of the
Credit Agreement, as amended by this Second Amendment, and in all other
documents executed pursuant thereto (except to the extent such representations
and warranties relate solely to an earlier date).

     SECTION 5. Reaffirmation of Credit Agreement. This Second Amendment shall
be deemed to be an amendment to the Credit Agreement, and the Credit Agreement,
as amended hereby, is hereby ratified, approved and confirmed in each and every
respect. All references to the Credit Agreement herein and in any other
document, instrument, agreement or writing shall hereafter be deemed to refer to
the Credit Agreement, as amended hereby.

     SECTION 6. Governing Law; Entire Agreement. This Second Amendment shall be
governed by, and construed in accordance with, the laws of the State of Texas.
The Credit Agreement, as amended by this Second Amendment, the Notes and the
other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.

     SECTION 7. Severability of Provisions. Any provision in this Second
Amendment that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Second Amendment are
declared to be severable.

     SECTION 8. Counterparts. This Second Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Second Amendment by
signing any such counterpart.

     SECTION 9. Headings. Article and section headings in this Second Amendment
are for convenience of reference only, and shall not govern the interpretation
of any of the provisions of this Second Amendment.

     SECTION 10. Successors and Assigns. This Second Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

[Signatures begin on next page]

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     IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
effective as of the Second Amendment Effective Date.

              COMPANY:   THE HOUSTON EXPLORATION
COMPANY    
 
           

  By:   /s/ James F. Westmoreland    

           

  Name:   James F. Westmoreland    

  Title:   VP and Chief Accounting Officer    
 
            AGENTS AND LENDERS:   WACHOVIA BANK, NATIONAL ASSOCIATION,
Individually, as Issuing Bank and as Administrative Agent    
 
           

  By:   /s/ David E. Humphreys    

           

  Name:   David E. Humphreys    

  Title:   Director    
 
                THE BANK OF NOVA SCOTIA,
Individually and as Co-Syndication Agent    
 
           

  By:   /s/ V. H. Gibson    

           

  Name:   V.H. Gibson    

  Title:   Assistant Agent    
 
                FLEET NATIONAL BANK, Individually and as Co-Syndication Agent  
 
 
           

  By:   /s/ Jeffrey H. Rathkamp    

           

  Name:   Jeffrey H. Rathkamp    

  Title:   Director    
 
                BNP PARIBAS, Individually and as Co-Documentation Agent    
 
           

  By:   /s/ Douglas H. Liftman    

           

  Name:   Douglas H. Liftman    

  Title:   Managing Director    
 
           

  By:   /s/ Polly Scott    

           

  Name:   Polly Scott    

  Title:   Vice President    
 
                COMERICA BANK, Individually and as Co-Documentation Agent    

  By:   /s/ Huma Vadgama    

           

  Name:   Huma Vadgama    

  Title:   Vice President    

 

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                  UNION BANK OF CALIFORNIA, N.A.    

  By:   /s/ Ali Hamed    

           

  Name:   Ali Hamed    

  Title:   Vice President    
 
           

  By:   /s/ Scott Myatt    

           

  Name:   Scott Myatt    

  Title:   Assistant Vice President    
 
                THE BANK OF NEW YORK    

  By:   /s/ Craig J. Anderson    

           

  Name:   Craig J. Anderson    

  Title:   Vice President    
 
                THE ROYAL BANK OF SCOTLAND    

  By:   /s/ James R. McBride    

           

  Name:   James R. McBride    

  Title:   Managing Director    
 
                WELLS FARGO BANK TEXAS, N.A.    

  By:   /s/ Chris Carter    

           

  Name:   Chris Carter    

  Title:   Relationship Manager    
 
                NATEXIS BANQUES POPULAIRES    

  By:   /s/ Donovan C. Broussard    

           

  Name:   Donovan C. Broussard    

  Title:   Vice President & Manager    
 
           

  By:   /s/ Daniel Payer    

           

  Name:   Daniel Payer    

  Title:   Vice President    
 
                COMPASS BANK    

  By:   /s/ Murray E. Brasseux    

           

  Name:   Murray E. Brasseux    

  Title:   Executive Vice President    
 
                AMEGY BANK, N.A.    

  By:   /s/ Mark A. Serice    

           

  Name:   Mark A. Serice    

  Title:   Vice President    

 

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THE HOUSTON EXPLORATION COMPANY
CREDIT AGREEMENT

SCHEDULE 7.14
LISTING OF SUBSIDIARIES AND PARTNERSHIPS

                                  Authorized     Outstanding          
Subsidiary     Shares     Shares     Owner    
THEC, LLC, a Delaware
limited liability company
    N/A     N/A     The Houston Exploration
Company, the Sole Member    
THEC, LP, a Texas
limited partnership
    N/A     N/A     The Houston Exploration Company
– 1% general partner interest

THEC, LLC – 99% limited partner
interest    

Schedule 7.14 Page 1