EX-10
Exhibit 10.9
                              EMPLOYMENT AGREEMENT


This Employment Agreement  ("AGREEMENT") is entered into as of September 1, 1999
(EFFECTIVE  DATE") by and between  KeySpan Energy and its  successors,  with its
principal office at One MetroTech Center,  Brooklyn, New York 11201 ("COMPANY"),
and Craig G. Matthews, 17 Wynwood Road, Chatham, NJ 07928 ("EMPLOYEE").

                                    ARTICLE I

WHEREAS,  the Company wishes to provide for the employment by the Company of the
Executive,  and the Executive wishes to serve the Company, in the capacities and
on the term and conditions set for in this Agreement;

            NOW, THEREFORE, it is hereby agreed as follows:


                  EMPLOYMENT PERIOD; POSITIONS AND DUTIES; ETC.
                  --------------------------------------------


1.1         EMPLOYMENT PERIOD

            The Company  shall employ the  Executive,  and the  Executive  shall
serve the Company, on the terms and conditions set forth in this Agreement,  for
the period (the "Employment  Period")  beginning on September 1, 1999 and ending
on August 31, 2003.

1.2         POSITIONS AND DUTIES

(A) While employed hereunder, CRAIG G. MATTHEWS shall serve as President & Chief
Operating  Officer,  or any other  such title  that is  equivalent  or higher in
responsibility and status,  reporting directly to R.B. Catell, Chairman and CEO,
KeySpan Energy,  having such duties and  responsibilities  commensurate with the
position of President & Chief Operating  Officer.  The Executive will also serve
as a member of the Brooklyn Union Board of Directors.

(B)  While  employed  herunder,  CRAIG G.  MATTHEWS  shall  serve on key  senior
strategy  committees,  such  as  the  Strategic  Directions  Committee  (Holding
Company, as member & Utility, as Chairman),  the Executive Committee of the SDC,
the Investment Review Committee, etc.

(C) While  employed  hereunder,  Employee  shall (i) devote all of his  business
time, attention,  skill and efforts to the faithful and efficient performance of
his duties hereunder; Employee may engage in the following activities so long as
they do not interfere in any material respect with the performance of Employee's
duties and responsibilities hereunder: (i) serve on corporate, civic, religious,
educational and/or charitable boards or committees and (ii)

                                        1



<PAGE>


manage his personal investments.

1.3         PLACE OF EMPLOYMENT

Employee's  place of employment  hereunder  shall be at the Company's  principal
executive  offices  (or other  offices as  appropriate)  in the greater New York
Metropolitan area.


                                   ARTICLE II

                            COMPENSATION AND BENEFITS

2.1         BASE SALARY

For services rendered by Employee under this Agreement, the Company shall pay to
Employee an annual base salary ("BASE  SALARY") no less than  $450,000,  payable
monthly.

2.2         INCENTIVE COMPENSATION & RESTRICTED STOCK

A.   During the  Employment  Period,  the  Executive  shall  participate  in
short-term  incentive  compensation  plans  ("Annual  Incentive  Compensation  &
Gainsharing  Plan") and/or long-term  incentive  compensation  plans ("Long-Term
Performance Incentive  Compensation Plan") providing him with the opportunity to
earn, on a year-by-year basis,  short-term and long-term incentive  compensation
at least  equal to the  amounts  that he had the  opportunity  to earn under the
comparable plans of KeySpan Energy as in effect as of August 31, 1999.

Upon  execution of this  Agreement  CRAIG G.  MATTHEWS  shall be granted  10,000
shares of  restricted  stock with a restriction  period that expires  August 31,
2003.


2.3         PERQUISTES

During  the  Employment  Period,  the  Executive  shall be  entitled  to receive
perquisites as provided for under the KeySpan Energy Perquisites Program.


2.4         OTHER BENEFITS

During the Employment  Period, the Executive shall be entitled to participate in
all applicable benefit plans, saving and retirement plans,  practices,  policies
and programs of the Company to the same extent as other senior executives.

2.5         DEATH OR DISABILITY

The Company shall be entitled to terminate the Executive's employment because of
the

<PAGE>





Executive's Disability during the Employment Period. "Disability" means that (i)
the  Executive  has  been  unable,  for a period  of one  hundred  eighty  (180)
consecutive  business  days,  to  perform  the  Executive's  duties  under  this
Agreement,  as a result of  physical  or mental  illness or  injury,  and (ii) a
physician  selected  by the  Company  or its  insurers,  and  acceptable  to the
Executive or the  Executive's  legal  representative,  has  determined  that the
Executive's  incapacity is total and permanent. A termination of the Executive's
employment by the Company for Disability  shall be communicated to the Executive
by written notice,  and shall be effective on the 30th day after receipt of such
notice by the Executive (the "Disability  Effective Date"), unless the Executive
returns to full-time performance of the Executive's duties before the Disability
Effective Date.

2.5         CHANGE OF CONTROL

IN THE EVENT THAT  EXECUTIVE'S  EMPLOYMENT IS TERMINATED  WITHIN THE TIME PERIOD
AND UNDER CONDITIONS GIVING RISE TO THE PAYMENT OF SEVERANCE  BENEFITS UNDER THE
KEYSPAN ENERGY SENIOR  EXECUTIVE  CHANGE OF CONTROL  SEVERANCE PLAN  ("SEVERANCE
PLAN"), AS WELL AS THE PAYMENT OF SEVERANCE  BENEFITS UNDER SECTIONS 3.3 AND 4.4
OF THIS AGREEMENT,  THE EXECUTIVE SHALL BE ENTITLED TO SEVERANCE  BENEFITS UNDER
THE SEVERANCE  PLAN OR UNDER  SEVERANCE  BENEFITS IN THIS  AGREEMENT,  WHICHEVER
BENEFITS ARE GREATER.
                                   ARTICLE III

                            TERMINATION OF EMPLOYMENT

3.1         TERMINATION BY EMPLOYEE

Employee may, at any time prior to the end of the Employment  Period,  terminate
employment hereunder for any reason by delivering a Notice of Termination to the
KeySpan Energy Board of Directors ("Board"). The Employee is required to give 30
calendar days notice.

3.2         TERMINATION BY THE COMPANY

This agreement shall terminate and the Employees employment shall cease upon any
of the  following:  (a) mutual  agreement of the  Employee and the Company;  (b)
death or  disability  (at the  expiration of the 180 day period as defined under
"Disability") of the Employee; or (c) in the discretion of the Board, Good Cause
for termination.

Good Cause for termination  ("Good Cause") shall mean Employee's:  (i) breach of
the terms in paragraphs 1.2, or Article IV of this agreement,  (ii) conduct that
constitutes  dishonesty or knowing and willful breach of fiduciary  duty;  (iii)
insubordination  or refusal to perform assigned duties or comply with directions
of the Board; (iv) conviction by a court of competent jurisdiction or entry of a
plea of no contest for a crime involving any act of moral turpitude or unlawful,
dishonest, or unethical conduct that a reasonable person would consider damaging
to the  reputation  of the Company or improper  and  unacceptable  conduct by an
Employee  thereof;  or. (v) continued  material  failure or inability to achieve
required  performance results or perform in a competent manner following written
notice and *PAGE  REVISED  11/8/99 FOR  CLARIFICATION  OF  PROVISION  2.5.  (SEE
REVISION IN ITLALICS)
                                            INITIALS: C.G.M. _____ R.B.C. ______


opportunity to improve performance.

If the Executive's employment is terminated by the Company for Good Cause during
the  Employment  Period,  the Company  shall pay the  Executive  the Annual Base
Salary  through  the Date of  Termination  and the  amount  of any  compensation
previously  deferred by the  Executive  (together  with any accrued  interest or
earnings  thereon),  in each case to the  extent not yet paid,  and the  Company
shall have no further  obligations under this Agreement,  except as specified in
Section 3.3 below. If the Executive voluntarily terminates employment during the
Employment Period, other than for Good Reason, the Company shall pay the Accrued
Obligations,  as defined  below,  to the  Executive in a lump sum in cash within
(30) days of the Date of  Termination,  and the  Company  shall  have no further
obligations under this Agreement, except as specified in Section 2.4 and Section
4.3 below.


3.3         SEVERANCE BENEFITS

The following  provisions shall apply if the Employee terminates  employment for
Good Reason or if the Company  terminates  Employee's  employment for any reason
other than the parties mutual agreement,  Good Cause, death or disability of the
Employee.

"Good Reason" shall mean any of the following:

without  Employee's  express  written  consent,  any action,  or failure to take
action,  by the  Company,  the Board or the  shareholders  of the Company by the
Company that results in a diminution  in the  Executive's  position,  authority,
titles,  duties or responsibilities,  other than an isolated,  insubstantial and
inadvertent action that is not taken in bad faith and is remedied by the Company
promptly after receipt of notice thereof from the Executive;  a material  breach
by the Company of any material  provision of this Agreement which, if capable of
being  remedied,  remains  unremedied for more than 15 days after written notice
thereof is given by Employee to the company; without Employee's written consent,
the relocation of the principal  executive  offices of the Company to a location
outside the greater New York area;  any purported  termination by the Company of
Employee's employment not in accordance with the provisions of this agreement;

For purposes of this agreement,  any good faith  determination  of "Good Reason"
made by the Employee shall be conclusive.

1. If, during the Employment  Period,  the Company  terminates  the  Executive's
employment,  other than for Good Cause,  Death or  Disability,  or the Executive
terminates  employment for Good Reason, the Company (A) shall pay the Executive,
in a single  lump sum,  the Accrued  Obligations  (as defined in Section 3.3 (2)
below),  except that the following provisions will be substituted for subsection
A & B thereof;  and the  aggregate  amount of the  salary  and Annual  Incentive
Compensation  that he would have  received if he had  remained  employed for the
Severance  Period  (assuming  that the Annual  Incentive  Compensation  for such
period would have equaled the target amounts of such Incentive  Compensation  as
in effect  immediately  before  the Date of  Termination);  (B) shall  cause the
Executive to continue to accrue benefits under Senior Executive  Retirement Plan
(SERP)  during the  Severance  Period;  and (C) shall  continue  to provide  the
Executive  with the Life  Insurance  Coverage and benefits as if he had remained
employed by the Company  pursuant to this Agreement  during the Severance Period
and then  retired (at which time he will be treated as eligible  for all retiree
welfare benefits and other benefits,  provided to retired senior executives,  to
the  extent  such  benefits  can be  provided  pursuant  to the plan or  program
maintained by the Company for its executives.  In addition to the foregoing, any
restricted stock outstanding on the Date of Termination shall be fully vested as
of  the  Date  of  Termination  and  all  options  outstanding  on the  Date  of
Termination shall be fully vested and exercisable and shall remain in effect and
exercisable  through the end of their  respective  terms,  without regard to the
termination of the Executive's  Employment (but in the case of options that were
not vested  immediately  before the Date of  Termination,  not longer than three
years).  Severance  Period  used here  shall  mean the  period  from the Date of
Termination through the end of the Employment Period.

(2) If the  Executive's  employment is  terminated by reason of the  Executive's
death or Disability during the Employment  Period,  the Company shall pay to the
Executive  or,  in  the  case  of the  Executive's  death,  to  the  Executive's
designated beneficiaries(or if there is not such beneficiary, to the Executive's
estate or legal  representative),  in a lump sum in cash within thirty (30) days
after the Date of  Termination,  the sum of the following  amounts (the "Accrued
Obligations"): (a) any portion or the Executive's Annual Base Salary through the
Date of Termination  that has not yet been paid; (b) an amount  representing the
Annual Incentive  Compensation and cash Long-Term Incentive Compensation for the
period that  includes  the Date of  Termination,  computed by assuming  that the
amount of all such Incentive Compensation would be equal to the target amount of
such  Incentive  Compensation  as in  effect  immediately  before  the  Date  of
Termination,  and multiplying that amount by a fraction,  the numerator of which
is the number of days in such period  through the Date of  Termination,  and the
denominator  of which is the total  number of days in the  relevant  performance
period; (c) any compensation  previously  deferred by the Executive that has not
been paid ; and (d) any accrued but unpaid  vacation  pay, and the Company shall
have no further  obligations under this agreement except as specified in Section
2.4.

3.4         NOTICE OF TERMINATION.

If such  termination  is by  Employee  for Good  Reason  or by the  Company  for
Disability or Good Cause,  such notice shall set forth in reasonable  detail the
reason for such termination and the facts and circumstances claimed to provide a
basis therefor.  Any notice purporting to terminate Employee's  employment which
is not  in  compliance  with  the  requirements  of  this  definition  shall  be
ineffective.  The Date of  Termination  shall mean ("Date of  Termination")  the
termination  date specified in a Notice of  Termination  delivered in accordance
with this Agreement.



                                   ARTICLE IV




4.1         CONFIDENTIAL INFORMATION.
            ------------------------

 The Executive shall hold in a fiduciary capacity for the benefit of the Company
all  secret or  confidential  information,  knowledge  or data  relating  to the
Company or any of its affiliated  companies and their  respective  business that
the Executive obtains during the Executive's employment by the Company or any of
its affiliated  companies and that is not public knowledge.  The Executive shall
not  communicate,  divulge or disseminate  Confidential  Information at any time
during or after  the  Executive's  employment  with the  Company,  except in the
course of performing his duties  hereunder or with the prior written  consent of
the Company or as otherwise required by law or legal process.  In no event shall
any asserted  violation of the provisions of this Section 4.1 constitute a basis
for  deferring or  withholding  any amounts  otherwise  payable to the Executive
under this agreement.

4.2         SUCCESSORS.

This  Agreement  is personal to the  Executive  and,  without the prior  written
consent of the Company,  shall not be assignable by the Executive otherwise than
by will or the laws of descent and  distribution.  This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal representatives.

This Agreement shall inure to the benefit of and be binding upon the Company and
its  successors  and  assigns,  provided  that the  Company  may not assign this
Agreement  except in connection  with the  assignment or  disposition  of all or
substantially  all of the assets or stock of the Company,  or by law as a result
of a merger or consolidation.  In the event of such assignment, a failure by the
successor to  specifically  assume in writing,  delivered to the Executive,  the
obligations and liabilities of the Company  hereunder shall be deemed a material
breach of this Agreement.

4.3         NON EXCLUSIVITY OF RIGHTS.

Nothing in this Agreement shall prevent or limit the  Executive's  continuing or
future  participation in any plan,  program,  policy or practice provided by the
Company or any of its affiliated  companies for which the Executive may qualify.
Vested  benefits and other amounts that the  Executive is otherwise  entitled to
receive under the Incentive Compensation, the SERP, the Life Insurance Coverage,
or any other plan, policy,  practice or program of, or any contract or agreement
with,  the Company or any of its  affiliated  companies  on or after the Date of
Termination  shall be  payable in  accordance  with the terms of each such plan,
policy, practice,  program, contract or agreement, as the case may be, except as
explicitly modified by this Agreement.

4.4.        CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
----        ------------------------------------------

(a) Any thing in this Agreement to the contrary notwithstanding, in the event it
shall be determined  that any payment or  distribution by the Company to, or for
the  benefit  of, the  Executive  (whether  paid or payable  or  distributed  or
distributable  pursuant  to the  terms  of  this  Agreement  or  otherwise,  but
determined without regard to any additional payments required under this Section
4.4) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal  Revenue Code of 1986 (the  "Code"),  as amended or any interest or
penalties  are incurred by the  Executive  with respect to such excise tax (such
excise tax,  together  with any such  interest and  penalties,  are  hereinafter
collectively  referred  to as the "Excise  Tax"),  then the  Executive  shall be
entitled to receive and additional  payment (a "Gross-Up  Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes),  including,  without  limitation,
any income taxes (and any interest and penalties  imposed with respect  thereto)
and Excise Tax imposed  upon the  Gross-Up  Payment,  the  Executive  retains an
amount  of the  Gross-Up  payment  equal  to the  Excise  Tax  imposed  upon the
Payments.

(b)  Subject  to the  provisions  of  paragraph  (c) of this  Section  4.4,  all
determinations required to be made under this Section 4.4, including whether and
when a Gross-Up  Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination,  shall be made
by  a  certified  public  accounting  firm  designated  by  the  Executive  (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the Company  and the  Executive  with 15 business  days of the receipt of notice
from the  Executive  that there has been a Payment,  or such  earlier time as is
requested by the Company.  In the event that the  Accounting  Firm is serving as
accountant or auditor for the  individual,  entity or group effecting the change
of control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations  required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder).  All fees and expenses of
the Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment,
as determined  pursuant to this Section 4.4, shall be paid by the Company to the
Executive  within  five  (5)  days  of  the  receipt  of the  Accounting  Firm's
determination.  Any  determination  by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of  Section  4999 of the Code at the time of the  initial  determination  by the
Accounting Firm hereunder,  it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the  calculations  required  to be made  hereunder.  In the event  that the
Company exhausts its remedies  pursuant to paragraph (c) of this Section 4.4 and
the  Executive  thereafter  is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such  Underpayment  shall be promptly  paid by the Company to or for the
benefit of the Executive.

(c) The  Executive  shall  notify  the  Company  in  writing of any claim by the
Internal  Revenue Service that, if successful,  would require the payment by the
Company of the Gross-Up  Payment.  Such  notification  shall be given as soon as
practicable  but not later than ten (10)  business  days after the  Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such  claim  and the  date on which  such  claim is  requested  to be paid.  The
Executive  shall not pay such claim prior to the  expiration  of the thirty (30)
day period  following  the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notices the Executive in writing prior to the
expiration  of such period that is desires to contest such claim,  the Executive
shall:

     (I) give the Company any  information  reasonably  requested by the Company
relating to such claim,

     (ii) take such  action in  connection  with  contesting  such  claim as the
Company  shall  reasonably  request  in  writing  from time to time,  including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

     (iii)  cooperate  with the  Company in good faith in order  effectively  to
contest such claim, and,

     (iv) permit the Company to participate in any proceedings  relating to such
claim; PROVIDED, however, that the Company shall bear and pay directly all costs
and  expenses   (including   additional  interest  and  penalties)  incurred  in
connection  with  such  contest  and  shall  indemnify  and hold  the  Executive
harmless,  on an after-tax  basis,  for any Excise Tax or income tax  (including
inters  and  penalties  with  respect  thereto)  imposed  as a  result  of  such
representation  and payment of costs and  expenses.  Without  limitation  on the
foregoing  provisions  of this  paragraph  (c) of Section 4.4, the Company shall
control all  proceedings  taken in connection with such contest and, at its sole
option,  may pursue or forego any and all administrative  appeals,  proceedings,
hearings and conferences  with the taxing authority in respect of such claim and
may, at its sole option,  either direct the Executive to pay the tax claimed and
sue for a refund  or  contest  the  claim  in any  permissible  manner,  and the
Executive  agrees to  prosecute  such  contest  to a  determination  before  any
administrative  tribunal,  in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; PROVIDED, however, that if the
Company directs the Executive  harmless,  on an after-tax basis, from any Excise
Tax or income tax) including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed  income with respect
to such  advance;  and PROVIDED,  further,  that any extension of the stature of
limitations  relating to payment of taxes for the taxable year of the  Executive
with  respect  to which  such  contested  amount is claimed to be due is limited
solely to such  contested  amount.  Furthermore,  the  Company's  control of the
contest  shall be limited  to issues  with  respect to which a Gross-Up  Payment
would be payable  hereunder  and the  Executive  shall be  entitled to settle or
contest,  as the case may be, any other  issue  raised by the  Internal  Revenue
Service or any other taxing authority.

(d) If, after the receipt by the Executive of an amount  advanced by the Company
pursuant to paragraph (c) of this Section 4.4, the Executive becomes entitled to
receive any refund with respect to such claim,  the Executive  shall (subject to
the Company's  complying with the  requirements of paragraph (c) of this Section
4.4,  promptly pay to the Company the amount of such refund  (together  with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the  Executive  of an amount  advanced  by the  Company  pursuant  to
paragraph  (c) of this Section 4.4, a  determination  is made that the Executive
shall not be entitled to any refund with respect such claim and the Company does
not notify the  Executive  in  writing of its intent to contest  such  denial of
refund prior to the  expiration of 30 days after such  determination,  then such
advance  shall be forgiven and shall not be required to be repaid and the amount
of such advance  shall  offset,  to the extent  thereof,  the amount of Gross-Up
Payment required to be paid.

4.5         ATTORNEYS' FEES.

The Company agrees to pay, as incurred,  to the fullest extent permitted by law,
all legal fees and expenses that the Executive may reasonably  incur as a result
of any contest  (regardless  of the  outcome) by the Company,  the  Executive or
others of the validity or  enforceability  of or liability  under,  or otherwise
involving, any provision of the Agreement, together with interest on any delayed
payment at the applicable federal rate provided for in Section  7872(f)(2)(A) of
the Code.


4.6.        GOVERNING LAW.

This Agreement shall be governed by, and construed in accordance  with, the laws
of the State of New York,  without  reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions  here of and shall
have no force or effect. This Agreement may not be amended or modified except by
a  written  agreement  executed  by  the  parties  hereto  or  their  respective
successors and legal representatives.

     (b) All notices and other  communications  under this Agreement shall be in
writing and shall be given by hand  delivery to the other party or by registered
or certified  mail,  return receipt  requested,  postage  prepaid,  addressed as
follows:


                     If to the Executive:    Craig G. Matthews
                                             17 Wynwood Road
                                             Chatham, NJ 07928

                        If to the Company:   KeySpan Energy
                                             One MetroTech Center
                                             Brooklyn, NY 11201
                                Attention:   Deputy General Counsel

            or such other  address  as either  party  furnishes  to the other in
writing  in  accordance  with this  paragraph  (b) of  Section  4.6.  Notice and
communications shall be effective when actually received by the addressee.

            IN WITNESS  WHEREOF,  the Executive has hereunto set the Executive's
hand and, pursuant to the  authorization of its Board of Directors,  the Company
has caused this  Agreement to be executed in its name and on its behalf,  all as
of the day and year first above written


                                             __________________
                                             Craig G. Matthews


                                             Keyspan Energy


                                             ___________________
                                             Name:
                                             Title:


Exhibit 10.10
                          EMPLOYMENT AGREEMENT


This  Employment  Agreement  ("AGREEMENT")  is entered  into as of July 29, 1999
(EFFECTIVE  DATE") by and between KeySpan  Energy) with its principal  office at
One MetroTech Center, Brooklyn, New York 11201 ("COMPANY"), and Gerald Luterman,
65 Old Hill Road, Westport, Connecticut 06880 ("EMPLOYEE").

                               ARTICLE I

Whereas,  the  Company  desires to employ  employee as an officer of the Company
with the title of Senior Vice President, and Chief Financial Officer, and

Whereas,  the  Employee  desires  to accept  such  employment,  on the terms and
conditions
herein set forth

Now,  therefore  for good and valid  consideration,  and intending to be legally
bound, the Employee and the Company agree as follows:

                    DEFINITIONS AND INTERPRETATIONS

1.1   DEFINITIONS

For purposes of this Agreement, except as otherwise expressly provided or unless
the context  otherwise  requires,  the following  terms shall have the following
respective meanings:

      "BASE SALARY" shall have the meaning specified in Section 3.1
       -----------

      "BOARD" shall mean the Board of Directors of KeySpan Energy
       -----

      "CONFIDENTIAL  INFORMATIOn"  shall have the meaning  specified  in Section
5.1(A).

      "COMPANY" shall mean KeySpan Energy and their successor(s).

      "DISABILITY"shall mean a mental or physical incapacity, which prevents the
      Employee from  satisfactorily  performing the duties of his position for a
      period of 90 days.

      "EXPIRATION DATE" shall have the meaning specified in Section 2.2.

      "GOOD CAUSE" shall have the meaning specified in Section 4.2.





<PAGE>




      "GOOD REASON" shall mean any of the following:

      (1)   without  Employee's  express  written  consent,  a material  adverse
            alteration  in  the  nature  or  status  of   Employee's   position,
            functions, duties or responsibilities with the Company;

      (2)   a material  breach by the Company of any material  provision of this
            Agreement  which, if capable of being remedied,  remains  unremedied
            for more  than 15 days  after  written  notice  thereof  is given by
            Employee to the Company;

      (3)   without  Employee's  express written consent,  the relocation of the
            Employees executive office outside his place of employment set forth
            in section 2.4;

      (4)   any purported termination by the Company of Employee's employment
            not in accordance with the provisions of this Agreement;

      "NOTICE  OF  TERMINATION"  shall  mean a notice  purporting  to  terminate
      Employee's  employment  in  accordance  with  Section  4.1 or 4.2. If such
      termination  is by  Employee  for  Good  Reason  or  by  the  Company  for
      Disability or Good Cause, such notice shall set forth in reasonable detail
      the reason for such termination and the facts and circumstances claimed to
      provide a basis therefor.  Any notice  purporting to terminate  Employee's
      employment  which  is not in  compliance  with  the  requirements  of this
      definition shall be ineffective.

      "PERSON"  shall mean and include an  individual,  a  partnership,  a joint
      venture, a corporation, a trust and an unincorporated organization.

      "TERM" shall have the meaning specified in Section 2.2.

      "TERMINATION  DATE" shall mean the termination  date specified in a Notice
      of Termination delivered in accordance with this Agreement.

1.2   INTERPRETATIONS

(A) In this Agreement,  unless a clear contrary intention appears, (i) the words
"herein,"  "hereof" and  "hereunder"  and other words of similar import refer to
this  Agreement as a whole and not to any particular  Article,  Section or other
subdivision,  (ii)  reference  to any Article or Section,  means such Article or
Section  hereof,  (iii)  the word  "including"  (and  with  correlative  meaning
"include") means  including,  without limiting the generality of any description
preceding such term,  and (iv) where any provision of this  Agreement  refers to
action to be taken by either  party,  or which  such  party is  prohibited  from
taking,




<PAGE>



such  provision  shall be  applicable  whether such action is taken  directly or
indirectly by such party.



(B) The Article and Section  headings herein are for convenience  only and shall
not affect the construction hereof.


                               ARTICLE II

              EMPLOYMENT; TERM; POSITIONS AND DUTIES; ETC.
              -------------------------------------------

2.1   EMPLOYMENT

The Company agrees to employ Gerald Luterman who agrees to accept employment and
remain in such employment,  on a full-time basis with the Company,  in each case
on the terms and conditions set forth in this Agreement.

2.2   TERM OF EMPLOYMENT

Unless  sooner  terminated  pursuant  to  Article  IV,  the  term of  Employee's
employment  under this  Agreement  (the "TERM") shall  commence on the Effective
Date and shall continue until July 31, 2002, (the "EXPIRATION DATE");  PROVIDED,
HOWEVER,  that no later than (6) six  months  prior to the  Expiration  Date the
Employee  shall be notified in writing of the  Company's  intent to continue his
employment  after the initial  three-year term. If the Employee does not receive
such notice,  his employment  shall terminate on the Expiration Date. If he does
receive  such  notice  and  elects to  continue  in the  Company's  employ,  his
employment  shall continue  after the Expiration  Date subject to termination by
the  Employee  upon thirty (30) days notice to the Company at any time after the
Expiration  Date and subject to  termination by the Company upon 180 days notice
to the Employee at any time after the Expiration Date.

2.3   POSITIONS AND DUTIES

(A) While  employed  hereunder,  GERALD  LUTERMAN  shall  serve as  Senior  Vice
President  and Chief  Financial  Officer,  reporting  directly  to R.B.  Catell,
Chairman  and CEO,  KeySpan  Energy,  having  such  duties and  responsibilities
commensurate  with the  position of Senior Vice  President  and Chief  Financial
Officer  as the  Chairman  and/or  Board or  Directors  shall  from time to time
specify.

(B) While  employed  hereunder,  Employee  shall (i) devote all of his  business
time, attention,  skill and efforts to the faithful and efficient performance of
his duties  hereunder and (ii) not accept  employment with any Person other than
with the Company unless explicitly approved




<PAGE>



in  writing  by  the  Board  prior  to  the  engagement  or  outside   activity.
Notwithstanding the foregoing,  Employee may engage in the following  activities
so long as they do not interfere in any material respect with the performance of
Employee's duties and responsibilities hereunder: (i) serve on corporate, civic,
religious,  educational  and/or  charitable boards or committees and (ii) manage
his personal investments.

(C) While employed hereunder, Employee shall conduct himself in such a manner as
not to prejudice,  in any material respect, the reputation of the Company in the
fields of business,  in which it is engaged or with the investment  community or
the public at large.

2.4   PLACE OF EMPLOYMENT

The Employee's primary place of employment  hereunder shall be at, or within the
immediate vicinity of, the Company's MetroTech headquarters in Brooklyn, N.Y.

       Employee  understands that he may need to establish a secondary office at
another Company facility on Long Island.


                               ARTICLE III

                        COMPENSATION AND BENEFITS

3.1   BASE SALARY

For services rendered by Employee under this Agreement, the Company shall pay to
Employee an annual base salary ("BASE  SALARY") no less than  $300,000,  payable
monthly.

3.2   ANNUAL INCENTIVE COMPENSATION & GAINSHARING PLAN

The Company shall maintain an annual  incentive  bonus plan,  which will provide
for an annual  bonus as  determined  by the Board of  Directors  after review of
performance,  progress, and the profits of the Company with respect to goals and
expectations established by the Board from time to time and the contribution and
performance of the Employee.  Such bonus shall be payable in accordance with the
plan  provisions  included  in the  annual  incentive  plan.  Employee  shall be
eligible to  participate  in the annual  incentive  plan, as may be amended from
time to time by the Board, at all times during the Term.

      All terms set forth in Exhibit A hereto are  incorporated by reference and
are an integral part of this Employment Agreement

3.3   LONG-TERM PERFORMANCE INCENTIVE COMPENSATION PLAN

The  Company  shall  maintain  a  long-term  incentive  compensation  plan which
provides an




<PAGE>



incentive compensation  opportunity based upon the long term performance results
of the Company.  The Employee  shall be eligible to participate in the long-term
compensation  incentive plan in accordance with its terms as may be amended from
time to time by the Board.

3.4   VACATION

The Employee shall be entitled to 5 weeks  vacation/year,  effective  January 1,
2000.  During 1999,  2 weeks will be granted.  Vacation not used in one calendar
year, shall not carry over to the next year. No payments shall be due for unused
vacation at the end of a calendar year.

3.5   BUSINESS EXPENSES

The  Company  shall,  in  accordance  with the  rules and  policies  that it may
establish from time to time,  promptly  reimburse Employee for business expenses
reasonably  incurred in the  performance  of  Employee's  duties.  Requests  for
reimbursement for such expenses must be accompanied by appropriate documentation
and be approved according to corporate procedure.

3.6   COMPENSATION, BENEFITS AND PERKS

The Employee shall be eligible to participate  in any and all  compensation  and
benefit  plans  (including  but not  limited  to the  medical,  dental  and life
insurance)  provided  to  comparably  situated  officers  and  Employees  of the
Company,  subject  to the rules and  requirements  of such  plans as they may be
amended from time to time. In addition, Employee shall be eligible for a Company
paid annual physical exam, health club membership,  financial planning, personal
computer  loaned for home use and a Company  leased  automobile  pursuant to the
Compensation  and  Capital  Accumulation  Program  provided  to you  attached as
Exhibit A.

3.7   DISABILITY BENEFITS

If Employee  becomes  disabled,  as  determined  by a physician  selected by the
Employee  and approved by the Company,  Employee  shall  continue to be paid his
base salary for 90 days of sick pay and accrue any annual incentive compensation
for the first 90 days of such disability.

The Company  shall make  available an optional Long Term  Disability  Plan which
Employee shall be eligible to participate  subject to the terms and condition of
such plan as may be amended from time to time.  Eligibility  for coverage  shall
commence on the first day of employment.






<PAGE>



                               ARTICLE IV

                        TERMINATION OF EMPLOYMENT

4.1   TERMINATION BY EMPLOYEE

Employee may, at any time prior to the  Expiration  Date,  terminate  employment
hereunder for any reason by delivering a Notice of Termination to the Board. The
Employee is required to give 30 calendar days notice.

4.2   TERMINATION BY THE COMPANY

This agreement  shall terminate and the Employee's  employment  shall cease upon
any of the following:  (a) mutual agreement of the Employee and the Company; (b)
death or  disability  (at the  expiration  of the 90 day period as defined under
"Disability")  of the  Employee;  or (c) upon the  occurrence  of Good Cause for
termination.

Good  Cause  for  termination  means  Employee's:  (i)  breach  of the  terms in
paragraphs  2.3, or Article V of this agreement and  continuation  of the breach
for more than fifteen days after  written  notice by the Company to the Employee
specifying in reasonable  detail the nature of the alleged breach;  (ii) conduct
that  constitutes  knowing and willful  breach of fiduciary duty as addressed in
the KeySpan  Corporate  Policy  Statement:  Ethical Business Conduct attached as
Exhibit B hereto;  (iii)  refusal  to  perform  assigned  duties or comply  with
directions  of the Board of Directors  relating to his position and functions as
Chief Financial Officer and a Company Officer;  or (iv) conviction by a court of
competent  jurisdiction  or entry of a plea of no contest for a crime  involving
any act of moral turpitude or unlawful,  dishonest,  or unethical conduct that a
reasonable  person would  consider  damaging to the reputation of the Company or
improper and unacceptable conduct by an Employee thereof.

4.3   PAYMENT OF ACCRUED BASE SALARY, VACATION PAY, ETC.

Upon the termination of Employee's employment for any reason (including death or
disability),  the Company  shall pay to Employee  (or estate) a lump sum for (i)
any unpaid Base Salary earned hereunder prior to the Termination  Date, (ii) all
unused  vacation  time  accrued  by  Employee  as of  the  Termination  Date  in
accordance  with Section 3.4, and (iii) any amounts in respect of which Employee
has requested, and is entitled to, reimbursement in accordance with Section 3.5,
and (iv) any other  amounts  payable in  accordance  with the  provisions of the
applicable compensation or benefits plans for KeySpan Energy Employees.

4.4   SEVERANCE BENEFITS

(1) The following  provisions shall apply if the Employee terminates  employment
for Good  Reason or if the  Company  terminates  Employee's  employment  for any
reason other than the parties mutual agreement,  Good Cause, death or disability
of the Employee.




<PAGE>




(A) Lump Sum Payment.  The Company shall pay to Employee  within thirty business
days after the Termination Date,  without offset of any kind except as described
below,  (i) a lump sum payment equal to the aggregate  amount of the Employees's
Base Salary for the remainder of the Term and (ii) a lump sum  representing  the
aggregate of the annual  incentive  amount for each year (measured at the target
level) for the  remainder  of the Term.  Employee  will also vest in one hundred
percent of the stock options set forth in Exhibit A. Additionally,  for purposes
of pension benefit accruals, Employee shall vest in service for the remainder of
the Term, so that Employee shall receive a single life annuity  pension  benefit
of $16,053.74 per year,  payable monthly.  If Employee desires to select a joint
and surviving  spousal  annuity,  this amount will be reduced based on actuarial
factors set forth in the Company's plan.

      The salary and incentive  amounts payable to Employee under this paragraph
(A) is to be offset from,  and not in addition to, any severance  payment due or
to become due to Employee  under any  separate  agreement  or  contract  between
Employee and the Company or pursuant to any severance  payment plan,  program or
policy of the Company.

(B) Insurance  Benefits,  etc. The Company will continue to provide  medical and
dental  coverage in which the Employee was enrolled in at the  Termination  Date
under same Terms with same Employee  contributions for the remainder of the term
of the contract  however,  in the event the Employee  becomes covered during the
period in which the Company is providing  benefits by another  employer's  group
plan which  provides  comparable  coverage to the Employee  and his  dependents,
provided  the plan  does not  contain  any  exclusion  or  limitation  regarding
pre-existing conditions,  then the Company's similar plans and programs shall no
longer be liable for any benefits  under this  paragraph.  COBRA  coverage shall
begin at the end of the  Employee's  coverage  under the Company's  group health
plan as provided in this  paragraph.  Employee is  obligated  to notify  company
immediately if he receives comparable coverage.

      Employee will be eligible to  participate  in the Company's life insurance
plan and long term  disability  plan for the remaining term of this Agreement if
permitted by the company  providing such insurance.  Employee  acknowledges that
under the terms of the current plans,  he will not be able to participate if his
employment should cease.

C ) The Employee shall participate in the KeySpan Energy Senior Executive Change
of Control  Severance  Plan as adopted by the Board of  Directors on October 30,
1998.  In the event of  termination  upon Change of Control,  Employee  shall be
considered to be vested in his actual  service  accrued to date of  termination,
plus three years of credited service as provided in the Plan.

D) In the event of any  termination by the Company of the Employee's  employment
under this Agreement, other than for Good Cause, the Employee shall not have any
obligation to seek other employment or to otherwise mitigate his damages and the
amount payable




<PAGE>



to him and the other benefits to be provided to him under this  Agreement  shall
not be  reduced  by the  amount  of any  other  compensation  that  he may  earn
following termination of employment.

(2) Release.  Notwithstanding anything in this Section 4.4 to the contrary, as a
condition to the receipt of any severance  payment or benefit under this Section
4.4,  Employee  must first  execute  and  deliver to the  Company a release  and
agreement in a form acceptable to the Company, releasing the Company, affiliated
and subsidiary companies,  their officers,  managers,  Employees and agents from
any and all  claims  and  from  any and all  causes  of  action  of any  kind or
character that Employee may have arising out of Employee's  employment  with the
Company or the  termination  of such  employment or anything  else.  The Company
acknowledges   that  such  release  will  be  conditioned   upon  the  Company's
fulfillment of its obligations under this Agreement.

It  being   understood   that  the  Employee  will  not  agree  to  release  any
indemnification  to which he is  entitled  as an  Officer  and  Employee  of the
Company.


(3) Notwithstanding  anything in this Section 4.4 to the contrary,  the Employee
shall not be  eligible  for any  severance  payment or  benefits  hereunder,  if
Employee  is offered a  comparable  position  with the  Company,  subsidiary  or
affiliated companies and the Employee accepts such offer.

                                ARTICLE V

              CONFIDENTIAL INFORMATION AND NON-COMPETITION

5.1CONFIDENTIAL INFORMATION

(A) Employee recognizes that the services to be performed hereunder are special,
unique,  and  extraordinary  and that, by reason of employment with the Company,
Employee may acquire  Confidential  Information  concerning the operation of the
Company, the use or disclosure of which would cause the Company substantial loss
and damages which could not be readily calculated and for which no remedy at law
would be adequate.  Accordingly,  Employee  agrees that he will not (directly or
indirectly)  at any time,  whether  during or after  employment  hereunder,  (i)
knowingly use for an improper personal benefit any Confidential Information that
may be learned or has learned by reason of  employment  with the Company or (ii)
disclose  any such  Confidential  Information  to any  Person  except (a) in the
performance  of the  obligations  to the Company  hereunder,  (b) as required by
applicable  law, (c) in  connection  with the  enforcement  of rights under this
Agreement,  (d) in  connection  with any  disagreement,  dispute  or  litigation
(pending or threatened)  between  Employee and the Company or (e) with the prior
written consent of the Board. As used herein "CONFIDENTIAL INFORMATION" includes
information  that the  Company  treats  as  confidential,  with  respect  to the
Company's  products,  facilities and methods,  research and  development,  trade
secrets and




<PAGE>



other  intellectual   property,   systems,   patents  and  patent  applications,
procedures,  manuals, confidential reports, product price lists, customer lists,
financial  information,  business plans,  prospects or opportunities;  PROVIDED,
HOWEVER, that such term shall not include any information that (x) is or becomes
generally  known or available other than as a result of a disclosure by Employee
or (y) is or becomes known or available to Employee on a  nonconfidential  basis
from a source (other than the Company)  which, to Employee's  knowledge,  is not
prohibited from disclosing such information to Employee by a legal, contractual,
fiduciary or other obligation to the Company.

(B)  Employee  confirms  that  all  Confidential  Information  is the  exclusive
property of the Company. All business records, papers and documents kept or made
by  Employee  while  employed by the  Company  relating  to the  business of the
Company  shall be and remain the property of the Company at all times.  Upon the
request  of the  Company at any time,  Employee  shall  promptly  deliver to the
Company  and  shall  retain  no copies of any  written  materials,  records  and
documents made by Employee or coming into his  possession  while employed by the
Company  concerning  the business or affairs of the Company  other than personal
materials,  records  and  documents  (including  notes  and  correspondence)  of
Employee not  containing  proprietary  information  relating to such business or
affairs.

5.2   NON-COMPETITION

(A) While employed  hereunder and for a period of six months from the Expiration
Date  (the   "RESTRICTED   PERIOD"),   neither  Employee  nor  any  corporation,
partnership  or other entity  controlled  by Employee  will (a) in the Northeast
United  States,  travel,  canvas or advertise for, or otherwise  assist,  render
services to, become  employed by, be a consultant  to, or invest in any business
entity or with any individual  engaged in, or engaged  directly in, any business
which is a direct  competitor  of the  Company,  (b) solicit  business in direct
competition with the Company from any customers or persons who were Employees of
customers of the Company at any time,  (c) directly  divert or attempt to divert
from the Company,  any business in which it has been engaged  during the term of
Employee's  employment  with the  Company,  or in which it might  reasonably  be
expected to become engaged,  (d) directly interfere or attempt to interfere with
the relationships between the Company, its customers,  Employees of customers or
vendors, (e) directly interfere or attempt to interfere with the relationship of
employer-Employee or principal and agent of any person bearing such relationship
to the Company,  nor  directly  divert or attempt to divert any such person from
employment or representation of the Company;  provided,  however,  that Employee
shall not be prohibited by the terms of Section 5.2 from investing in and owning
not more than one percent (1%) of the  outstanding  share of common stock of any
corporation,  the shares of which are publicly traded pursuant to the Securities
Exchange  Act of 1934,  and/or  passively  invest  as a limited  partner  in any
non-publicly  traded  security  For  purposes  of this  provision,  the  "direct
competitors"  of the Company  are those  individuals,  Persons or entities  that
engage in any business  enterprises  involving  telecommunication  and/or energy
including, but not limited to those related to gas and electric utilities.





<PAGE>



(B) Employee has carefully  read and  considered  the provisions of this Section
5.2 and, having done so, agrees that the  restrictions set forth in this Section
5.2 are fair and reasonable  and are  reasonably  required for the protection of
the interests of the Company, its officers, directors,  Employees, creditors and
shareholders.  Employee  understands  that the  restrictions  contained  in this
Section  5.2  may  limit  their  ability  to  engage  in a  business  in  direct
competition with the Company's  business,  but acknowledges that he will receive
sufficiently  high remuneration and other benefits from the Company hereunder to
justify such restrictions.

(C) In the  event  that  any  provision  of this  Section  5.2  relating  to the
Restricted  Period and/or the areas of restriction  shall be declared by a court
of competent  jurisdiction to exceed the maximum time period or areas such court
deems  reasonable  and  enforceable,  the  Restricted  Period  and/or  areas  of
restriction  deemed  reasonable  and  enforceable  by the court shall become and
thereafter be the maximum time period and/or areas.

5.3   INJUNCTIVE RELIEF

Employee  acknowledges  that a breach of any of the covenants  contained in this
Article V may result in  material  irreparable  injury to the  Company for which
there is no  adequate  remedy at law,  that it will not be  possible  to measure
damages for such injuries  precisely and that, in the event of such breach,  the
Company  shall be  entitled  to obtain a temporary  restraining  order  and/or a
preliminary  or  permanent  injunction  restraining  Employee  from  engaging in
activities  prohibited by this Article V or such other relief as may required to
specifically  enforce any of the covenants contained in this Article V. Employee
agrees to and hereby  does submit to IN  PERSONAM  jurisdiction  before each and
every New York State and Federal  courts in New York for that purpose.  Employee
agrees  that the rights of the Company to obtain an  injunction  granted by this
paragraph  of the  Agreement  shall not be  considered a waiver of its rights to
assert any other remedies it may have at law or in equity.


                               ARTICLE VI

                             MISCELLANEOUS

6.1   NOTICES

All notices and all other communications  provided for in the Agreement shall be
in writing and addressed (i) to the Company,  at its principal office address or
such other address as it may have  designated by written  notice to Employee for
purposes  hereof,  directed  to the  attention  of the Board  with a copy to the
Secretary of the Company and (ii) if to Employee,  in person or at the residence
address on the records of the  Company or to such other  address as she may have
designated  to the Company in writing for purposes  hereof.  Each such notice or
other  communication  shall be deemed to have been  duly  given  when  delivered
personally or mailed by United States registered mail, return receipt




<PAGE>



requested, postage prepaid, except that any notice of change of address shall be
effective only upon receipt.

6.2   SEVERABILITY

The invalidity or non  enforceability  of any provision of this Agreement  shall
not  affect  the  validity  or  enforceability  of any other  provision  of this
Agreement, which shall remain in full force and effect.

6.3   TAX WITHHOLDINGS

The Company shall  withhold from all payments  hereunder  all  applicable  taxes
(federal,  state or other)  which it is required to  withhold  therefrom  unless
Employee has  otherwise  paid (or made other  arrangements  satisfactory  to the
Company) the amount of such taxes.

6.4   AMENDMENTS AND WAIVERS

No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by Employee
and  such  member  of the  Board  or other  individuals  as may be  specifically
authorized  by the Board.  No waiver by either  party  hereto at any time of any
breach by the other party hereto of, or in  compliance  with,  any  condition or
provision of this  Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.


6.5   ENTIRE AGREEMENT; TERMINATION OF OTHER AGREEMENTS

This Agreement and the attached  Exhibit A and Exhibit B,  constitute the entire
agreement of the parties and no previous agreements or representations,  oral or
otherwise,  express or implied,  with respect to the subject  matter hereof have
been made by either party which are not set forth expressly in this Agreement.

6.6   GOVERNING LAW

The validity,  interpretation,  construction  and  performance of this Agreement
shall be  governed  by the laws of the State of New York  without  regard to its
conflict of laws provision.

6.7   COUNTERPARTS

This Agreement may be executed in one or more counterparts,  each of which shall
be deemed to be an original,  but all of which together will  constitute one and
the same instrument.




<PAGE>



6.8   SUCCESSORS: BINDING AGREEMENT

The Company will require any successor (whether direct or indirect, by purchase,
merger,  consolidation  or otherwise) to all or  substantially  all the business
and/or  assets of the Company,  by agreement  in form and  substance  reasonably
acceptable to Employee,  to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company  would be required to
perform it if no such  succession  had taken place.  As used in this  Agreement,
Company shall  include any successor to its business  and/or assets as aforesaid
which  executes and delivers the  agreement  provided for in this Section 6.8 or
which  otherwise  becomes bound by all terms and provisions of this Agreement by
operation of law.







<PAGE>



      IN WITNESS WHEREOF,  the parties have executed this Agreement effective as
of the date first above written.


WITNESS:                      KeySpan Corporation:

______________________        By:   _______________________________

                              Title: _______________________________

WITNESS                       EMPLOYEE:

---------------------         ------------------------------------

Exhibit 10.14
                               FIRST AMENDMENT TO

                           SUBORDINATED LOAN AGREEMENT

                               AND PROMISSORY NOTE

                  THIS  FIRST  AMENDMENT  TO  SUBORDINATED  LOAN  AGREEMENT  AND
PROMISSORY NOTE (this "First  Amendment") dated effective as of October 27, 1999
is  entered  into  by  and  between  HOUSTON  EXPLORATION  COMPANY,  a  Delaware
corporation (the "Company"),  and KEYSPAN  CORPORATION  d/b/a KeySpan Energy (as
successor to MarketSpan Corporation d/b/a KeySpan Energy) (the "Lender").

                              PRELIMINARY STATEMENT

                  The  Lender  and the  Company  are  parties  to  that  certain
Subordinated  Loan  Agreement  dated  as of  November  30,  1998 (as same may be
further amended, restated and extended herein, the "Credit Agreement") under and
subject to the terms of which the Lender has committed to make Advances  through
January 1, 2000, not to exceed  $150,000,000.00 in aggregate amount outstanding,
and that certain Promissory Note dated November 30, 1998 executed by the Company
to the order of Lender (the "Note").

                  The  Company  and  the  Lender  desire  to  amend  the  Credit
Agreement for the sole purpose of extending the maturity date.

                  NOW THEREFORE, in consideration of the premises and the mutual
agreements,  representations  and warranties herein set forth and for other good
and valuable consideration, the Company and the Lender hereby agree as follows:

                  SECTION 1. Definitions. Unless otherwise defined in this First
Amendment,  each  capitalized  term used in this First Amendment has the meaning
assigned to such term in the Credit Agreement.

                  SECTION 2. Amendments to the Credit Agreement.  (a) The Credit
Agreement and the Note are hereby  amended such that all references to "Maturity
Date" or "Termination  Date," and all references to "January 1, 2000" within the
definitions  of  Maturity  Date and  Termination  Date,  whether  in the  Credit
Agreement,  the schedules  thereto or in the Note, shall mean and be a reference
to the date of March 31, 2000.

                  (b) Specifically,  the section of the Credit Agreement on page
one thereof entitled "Maturity Date" and the identical  provision under the same
title on page one of Schedule I to the Credit  agreement  are hereby  amended by
deleting same in their entirety and replacing same with the following:

Maturity Date: All outstanding principal,  unpaid accrued interest and fees will
be repaid at  Maturity,  March 31,  2000.  Any  principal  amount  that  remains
outstanding  subsequent to the Maturity Date will be converted  into equity (the
number of shares to be issued to the Lender  will be  determined  based upon the
average of the closing prices of Houston  Exploration's common stock, rounded to
three decimal places, as reported under "NYSE Composite  Transaction Reports" in
the Wall Street  Journal  during the 20  consecutive  trading  days ending three
trading days prior to March 31, 2000.  Because the market  value  represents  an
average of the  Company's  common  stock over twenty  consecutive  trading  days
ending three  trading days prior to Maturity,  the market price may be higher or
lower  than the price of the  common  stock on the  conversion  date.  The total
amount  converted to equity shall not exceed the Total  Commitment  Amount.  Any
unpaid  accrued  interest  or fees that  remain  outstanding  subsequent  to the
Maturity  Date will be paid in cash.  Notwithstanding  the  foregoing,  upon any
sale,  transfer or other  disposition of the stock or  substantially  all of the
assets of the Company  prior to March 31, 2000,  all  outstanding  principal and
unpaid  accrued  interest and fees will be paid in cash on the  consummation  of
such sale, transfer or other disposition.

                  (c) The Credit Agreement is hereby amended to reflect the fact
that, as  consideration  for the extension of the Maturity Date as evidenced by,
and as a condition to the  effectiveness  of, this First Amendment,  the Company
shall pay to the Lender an up-front fee of Twelve  Thousand  and No/100  Dollars
($12,000.00).

                  SECTION 3. Ratification. The agreements and obligations of the
Company  under  the  Credit  Agreement,  the  Note  and any and all  other  Loan
Documents,   are  hereby  brought  forward,   renewed  and  extended  until  the
indebtedness  evidenced  by the  Credit  Agreement  and the Note shall have been
fully paid and  discharged.  The Credit  Agreement  and the Note,  and all terms
thereof shall remain in full force and effect.  The Lender hereby  preserves all
of its rights  against the Company,  and the Company hereby agrees that all such
rights are ratified and brought forward for the benefit of the Lender.

                  SECTION 4.  Representations  True; No Default. The Company and
the  Lender  represent  and  warrant  that this  First  Amendment  has been duly
authorized,  executed  and  delivered  on behalf of the  Company and the Lender,
respectively, and the Credit Agreement, as amended hereby, constitutes the valid
and legally  binding  agreement  of the Company and the Lender,  enforceable  in
accordance with its terms,  except as  enforceability  thereof may be limited by
bankruptcy,  insolvency,  reorganization  or  moratorium  or other  similar  law
relating to  creditors'  rights and by general  equitable  principles  which may
limit  the  right to obtain  equitable  remedies  (regardless  of  whether  such
enforceability is considered in a proceeding, in equity or at law);

                  SECTION  5. No  Obligation.  This  First  Amendment  shall not
create a course of dealing among or between the parties  hereto,  and no further
obligation  of any kind in excess of those  expressly  set forth herein shall be
inferred from this First Amendment.

                  SECTION 6. Conditions of  Effectiveness.  This First Amendment
shall become  effective on the date upon which this First  Amendment  shall have
been duly executed and delivered by the Company and the Lender,  together with a
certificate  of the Company  certifying as to (i) the  incumbency of the officer
executing  this  First  Amendment,  (ii) the  truth of the  representations  and
warranties in the Credit Agreement,  and (iii) the absence of any defaults under
the Credit Agreement.

                  SECTION  7.   Reference  to  the   Agreement.   (a)  Upon  the
effectiveness of this First Amendment, each reference in the Credit Agreement to
"hereunder,"  "herein,"  "hereof"  or words of like  import  shall mean and be a
reference to the Agreement, as affected and amended hereby.

                  (b) Upon effectiveness of this First Amendment, each reference
in the Credit  Agreement shall mean and be a reference to the Credit  Agreement,
as affected and amended hereby.

                  SECTION 8. Miscellaneous Provisions.  (a) This First Amendment
may be signed in any number of  counterparts,  each of which  shall be deemed an
original,  but  all  of  which  together  shall  constitute  one  and  the  same
instrument.

     (b) The headings  herein shall be accorded no  significance in interpreting
this First Amendment.

                  SECTION  9.  Governing  Law.  This  First  Amendment  shall be
governed by and construed in  accordance  with the laws of the State of New York
and applicable federal law.

                  SECTION  10.  FINAL  AGREEMENT  OF  THE  PARTIES.  THIS  FIRST
AMENDMENT,  THE  CREDIT  AGREEMENT,  THE  NOTES  AND THE  OTHER  LOAN  DOCUMENTS
CONSTITUTE  A "LOAN  AGREEMENT"  AS  DEFINED IN  SECTION  26.02(a)  OF THE TEXAS
BUSINESS AND COMMERCE CODE AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS OR SUBSEQUENT
AGREEMENTS OF THE PARTIES.

                  THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.


<PAGE>





                  IN  WITNESS  WHEREOF,  the  parties  have  caused  this  First
Amendment  to be executed by their  respective  duly  authorized  officers to be
effective as of the date first written above.

                              KEYSPAN CORPORATION,
                              d/b/a KeySpan Energy

                              By:      /s/ Robert R. Wieczorek
                              Name: Robert R. Wieczorek
                              Title: VP, Secretary and Treasurer
                              Address: One MetroTech Center
                              Brooklyn, NY 11201

                         THE HOUSTON EXPLORATION COMPANY

                            By: /s/ Thomas W. Powers

                                Thomas W. Powers
                                Senior Vice President
                                1100 Louisiana, Suite 2000
                                Houston, Texas 77002
Exhibit 10.16>

                    FIRST AMENDMENT TO EXPLORATION AGREEMENT


         This First Amendment to Exploration Agreement ("Amendment") is made and
entered  into  this  the  third  day  of  November  1999,  between  THE  HOUSTON
EXPLORATION  COMPANY, a Delaware  corporation,  of 1100 Louisiana Street,  Suite
2000,  Houston,  Texas 77002 ("THEC") and KEYSPAN  EXPLORATION  AND  PRODUCTION,
L.L.C., a Delaware limited  liability  company,  of One Metro Tech Centre,  18th
Floor, Brooklyn, New York 11201 ("KE&P").

                              W I T N E S S E T H:

     A. THEC and KE&P have entered into that certain Exploration Agreement dated
the 15th day of March 1999 between The Houston  Exploration  Company and KeySpan
Exploration and Production, L.L.C. ("Exploration Agreement"); and

     B. THEC and KE&P desire to amend the Exploration  Agreement as set forth in
this Amendment. NOW, THEREFORE, for valuable consideration,  THEC and KE&P agree
as follows: I. Section 1.15 of the Exploration  Agreement is amended so that the
existing  language  becomes  Section  1.15(a) and the  following  is inserted as
Section 1.15(b): 1.15(b) KE&P's Quarterly Commitment.  The sum of (a) 25 million
dollars per  calendar  quarter  during the Primary Term plus (b) that portion of
prior quarters'  Quarterly  Commitments that have not been expended or committed
for expenditure


<PAGE>



under this Agreement  which sum shall be used to pay all costs  attributable  to
KE&P under this Agreement, including G and A Costs, during the relevant quarter.

                                                        II.
         Section 1.28 of the  Agreement is deleted and the following new Section
1.28 is substituted therefor:

         1.28 Program Year. Each calendar year (or portion of a calendar year if
the Primary Term ends at the end of any calendar  quarter during such year other
than December 31 of such year) during the Primary Term of this Agreement. A cost
under this Agreement for purposes of Payout shall be attributable to the Program
Year in which the first  Exploratory  Well is spudded on the Lease to which such
cost  relates.  If an  Exploratory  Well is not  spudded  on a Lease  during the
Primary Term of this  Agreement,  the costs relating to such Lease shall be used
in the  calculation  of Payout for the Program Year in which they were incurred.
Net  Proceeds  shall be  attributable  to the  Program  Year in which  the first
Exploratory Well is spudded on the Lease to which such proceeds relate.

                                                       III.
         Section 2.1 of the  Agreement is deleted and the  following new Section
2.1 is substituted therefor:

     2.1 Primary Term.  This Agreement shall be for a primary term (the "Primary
Term")  commencing  on January 1, 1999  ("Commencement  Date") and ending on the
earliest to occur of the following:

(a)      December 31, 2001;



                                                         2


<PAGE>



                  (b) the end of any calendar  quarter if either party  notifies
the other party in writing on or before  thirty (30) days before the end of such
quarter  of its  election  to  terminate  the  Primary  Term  at the end of such
quarter; or

                  (c)      the mutual agreement of the parties.

                                                        IV.

         Section 5.1 of the  Agreement is deleted and the  following new Section
5.1 is substituted therefor:

         5.1 Allocation of IDCs. Subject to Section 5.4, during each year of the
Primary Term, KE&P shall pay one hundred percent (100%) of all Intangible  Costs
attributable to THEC's Original  Working  Interests in the Leases until KE&P has
paid  Intangible  Costs for such  year  totaling  20.725  million  dollars  and,
thereafter  during  such year KE&P  shall  pay  fifty one and  seventy  five one
hundredths  percent  (51.75%) of all  Intangible  Costs  attributable  to THEC's
Original  Working  Interests  in the Leases  and THEC shall pay forty  eight and
twenty five one hundredths percent (48.25%) of all Intangible Costs attributable
to THEC's Original Working Interest in the Leases.  If during any of such years,
one  hundred  percent  (100%) of the  Intangible  Costs  attributable  to THEC's
Original  Working  Interests in the Leases are less than 20.725 million dollars,
the shortage shall be added to the following year and KE&P shall pay during such
following year one hundred percent (100%) of all Intangible  Costs  attributable
to  THEC's  Original  Working  Interests  in the  Leases  until  KE&P  has  paid
Intangible Costs for such year totaling 20.725 million dollars plus the shortage
from the preceding year(s);  provided that, during the first calendar quarter of
the 2000


                                                         3


<PAGE>



Program  Year,  KE&P's  obligation  to pay one  hundred  percent  (100%) of such
Intangible Costs shall be limited to 5.18 million dollars and, further provided,
if the Primary Term ends on March 31, 2000 KE&P's  obligation to pay one hundred
percent  (100%) of Intangible  Costs shall  terminate.  Subject to the preceding
sentence,  during  the  Secondary  Term,  KE&P  shall pay all  Intangible  Costs
attributable  to THEC's  Original  Working  Interest  in the  Leases  until such
shortage  from the Primary Term,  if any, is expended and  thereafter  shall pay
fifty one and seventy five one  hundredths  percent  (51.75%) of all  Intangible
Costs  attributable to THEC's Original  Working  Interest in the Leases and THEC
shall pay forty eight and twenty  five one  hundredths  percent  (48.25%) of all
Intangible Costs attributable to THEC's Original Working Interest in the Leases;
provided  that,  KE&P shall have no  obligation to pay  Intangible  Costs to the
extent such costs  relate to a Lease  reassigned  to THEC under  Section 6.5 and
such costs accrue after such reassignment.

                                                        V.

         Section 5.3 of the  Agreement is deleted and the  following new Section
5.3 is substituted therefor:

         5.3  Allocation  of  Remaining  Costs.  Subject to Section 5.4 and 5.8,
during  the  Primary  Term and the  Secondary  Term,  KE&P  shall pay forty five
percent (45%) of all Drilling Costs, Development Costs, Seismic Costs, Leasehold
Costs,  Abandonment  Costs and Operating  Costs  attributable to THEC's Original
Working  Interest in the Leases and THEC shall pay fifty five  percent  (55%) of
all Drilling Costs,



                                                         4


<PAGE>



Development  Costs,  Seismic  Costs,  Leasehold  Costs,  Abandonment  Costs  and
Operating Costs  attributable to THEC's Original Working Interest in the Leases;
provided  that,  KE&P shall have no  obligation  to pay any of such costs to the
extent such costs  relate to a Lease  reassigned  to THEC under  Section 6.5 and
such costs accrue after such reassignment.

                                                        VI.

         Section 5.4 of the  Agreement is amended so that the existing  language
becomes Section 5.4A and the following is inserted as 5.4B:

         5.4B Primary Term  Commitment.  Notwithstanding  the foregoing  Section
5.4A, for the period  commencing  January 1, 2000, this Section 5.4B shall apply
prospectively  in lieu of  Section  5.4A.  KE&P's  obligation  to pay the  costs
specified in Sections 5.1 to 5.3 incurred during any quarter of the Primary Term
is limited to KE&P's Quarterly Commitment subject to the following:

         (a) If THEC  determines that the allocation to KE&P of its share of the
Drilling Costs and  Intangible  Costs of the first  Exploratory  Well on a Lease
will result in KE&P's  Quarterly  Commitment  being exceeded,  THEC shall notify
KE&P in writing of such fact prior to commencing such Well.  Within fifteen (15)
days (or such lesser period specified in the notice if the proposed spud date of
such Well is less than  thirty  (30)  days from the date of such  notice)  after
receiving  such  notice,  KE&P shall  notify  THEC in writing  whether or not it
approves such Well.  If KE&P  approves  such Well,  KE&P's share of the Drilling
Costs and Intangible Costs of such Well shall be deemed "Excess



                                                         5


<PAGE>



Costs" and, to the extent the Excess Costs result in KE&P's Quarterly Commitment
being exceeded, such commitment shall be increased accordingly for such quarter.
If KE&P does not approve such Well or fails to notify THEC of its decision, KE&P
shall forfeit its interests in such Well and the Lease on which it is located.

         (b) Except as provided in Section  5.4(a),  if KE&P is not obligated to
pay a portion of its share of the costs  specified in Sections 5.1 to 5.3 during
any quarter of the Primary  Term,  because its share exceeds in whole or in part
KE&P's Quarterly Commitment, and THEC pays such costs, KE&P shall reimburse THEC
for such costs out of KE&P's Quarterly  Commitment for the following  quarter on
or before thirty days after the end of the quarter in which THEC paid such costs
or, if the  Primary  Term has ended,  THEC  shall  receive  KE&P's  share of Net
Proceeds from all Wells drilled under this Agreement until such time as THEC has
received a sum of money  (exclusive of all Burdens,  Marketing  Costs and Taxes)
out of such  share  equal to  KE&P's  share of costs  which  were  paid by THEC,
provided,  however,  that the  amount to be paid by KE&P as  contemplated  above
shall not exceed twenty percent (20%) of KE&P's Quarterly Commitment without its
written consent.

         (c)  KE&P's  Quarterly  Commitment  shall  first be  applied to G and A
Costs,  Seismic Costs,  Leasehold Costs and Operating Costs and the remainder to
the Intangible Costs, Drilling Costs, Development Costs and Abandonment Costs.

     (d) All Drilling Costs, Intangible Costs and Development Costs for purposes
of  applying  the  limitations  of KE&P's  Quarterly  Commitment  shall,  at the
election of



                                                         6


<PAGE>



THEC, be deemed to have been incurred  entirely on the date THEC submits to KE&P
the information set forth in Section 7.3 relating to the applicable operation or
the date of the AFE relating to the  expenditure  of such costs,  rather than on
the dates such costs are actually incurred.

         (e) Such  portion  of KE&P's  Yearly  Commitment  for the year 1999 not
expended or committed  for  expenditure  by December 31, 1999 shall be available
for use during the Primary Term only for Development  Costs and Intangible Costs
related to Development  Operations on Leases on which the first Exploratory Well
was spudded during the 1999 Program Year.

         (f) Such  portion  of KE&P's  Quarterly  Commitment,  for any  calendar
quarter,  not  expended or  committed  for  expenditure  by the last day of such
quarter  shall be available for use in  subsequent  quarters  during the Primary
Term only for  Development  Costs and  Intangible  Costs related to  Development
Operations on Leases on which the first  Exploratory Well was spudded during the
quarter to which the unused portion of the quarterly  Commitment relates, or any
previous quarter, including the 1999 Program Year.

                                                       VII.

         Section  10.4 of the  Exploration  Agreement  is  amended  so that  the
existing  language  becomes  Section  10.4(a) and the  following  is inserted as
Section 10.4(b):

         10.4(b) Budgets. Notwithstanding the foregoing Section 10.4(a), for the
period   commencing   January  1,  2000,   this  Section   10.4(b)  shall  apply
prospectively  in lieu of Section  10.4(a).  THEC shall submit  quarterly to the
Management  Committee THEC's Program Budget and a quarterly budget setting forth
the anticipated financial


                                                         7


<PAGE>


requirements of KE&P under this Agreement. Such budgets for the first quarter of
the year 2000 shall be  submitted  on or before  January 1, 2000 and the budgets
for the following  quarters  during the terms on or before the first day of such
quarters.

         Except as herein amended,  the parties do hereby ratify and confirm the
Exploration Agreement.

         Executed on the day set forth above,  but to be effective as of January
1, 2000.

THE HOUSTON EXPLORATION COMPANY



By:/s/ James Westmoreland
         James Westmoreland, Vice President

KEYSPAN EXPLORATION AND
   PRODUCTION, L.L.C.


By:/s/ Zain Mirza
         Zain Mirza, Vice President

                              8


Exhibit 10.20
[
                         THIRD AMENDMENT TO AMENDED AND

                            RESTATED CREDIT AGREEMENT

         This THIRD  AMENDMENT  AND  SUPPLEMENT  TO AMENDED AND RESTATED  CREDIT
AGREEMENT (this "Third  Amendment")  executed  effective as of December 31, 1999
(the  "Effective  Date"),  is by and among THE HOUSTON  EXPLORATION  COMPANY,  a
Delaware corporation ("Company");  CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (in
its individual capacity, "Chase"), as agent (in such capacity, "Agent") for each
of the lenders that is a signatory  hereto or which  becomes a signatory  hereto
and to the hereinafter  described  Credit Agreement as provided in Section 12.06
of the Credit Agreement (individually, together with its successors and assigns,
"Lender" and collectively, "Lenders").

                                 R E C I T A L S

         A. The Company,  the Agent and the Lenders (other than the  hereinafter
defined  "Additional  Lenders") are parties to that certain Amended and Restated
Credit  Agreement  dated as of March 30, 1999 (said Amended and Restated  Credit
Agreement,  as amended  and  supplemented  by First  Amendment  to  Amended  and
Restated  Credit  Agreement  dated as of May 4, 1999, and as further  amended by
Second Amendment to Amended and Restated Credit Agreement dated as of October 6,
1999,  "Credit  Agreement"),  pursuant to which the Lenders agreed to make loans
and issue Letters of Credit to and for the account of the Company.

     B. The Company,  the Lenders and the Agent mutually desire to amend certain
aspects of the Credit Agreement relating to,
     among other things, the Borrowing Base and Threshold Amount.

     C. In view of the foregoing,  the Company, the Agent and the Lenders hereby
agree to amend the Credit Agreement in the particulars hereinafter provided.

         NOW,  THEREFORE,  in  consideration  of the premises and other good and
valuable consideration and the mutual benefits,  covenants and agreements herein
expressed, the parties hereto now agree as follows:

     1.  Section  Certain  Terms.  All  capitalized  terms  used in  this  Third
Amendment and not otherwise defined herein shall have the meanings  ascribed to
such terms in the Credit Agreement.

     2. Section  Amendments  and  Supplements  to Credit  Agreement.  The Credit
Agreement        is        hereby        amended        and         supplemented
as follows:

                  2.1  Definitions.
                       -----------

                  (a) The following  terms defined in Section 1.02 of the Credit
Agreement are hereby amended as follows:

               (i) The term  "Agreement"  is hereby  amended in its  entirety to
          read as follows:

                           "Agreement"  shall  mean this  Credit  Agreement,  as
                  amended  by the First  Amendment,  as  further  amended by the
                  Second  Amendment,  as further amended by the Third Amendment,
                  and as the same may be further  amended or  supplemented  from
                  time to time.

                           (ii) The term  "Applicable  Margin" is hereby amended
in its entirety to read as follows:

         "Applicable Margin" shall mean at the time of calculation, with respect
to any Loan,  calculated  as a function of the type of such Loan,  the following
rate per annum as applicable:
<TABLE>
<CAPTION>


---------------------------------------- ------------------------------------- -------------------------------------
           Threshold Amount                   Fixed Rate Loan Applicable            Base Rate Loan Applicable
              Utilization                         Margin Percentage                     Margin Percentage

---------------------------------------- ------------------------------------- -------------------------------------
<S>                                                     <C>                                     <C>
             Less than 33%                              0.875%                                  0%
---------------------------------------- ------------------------------------- -------------------------------------
 Greater than or equal to 33% but less
               than 66%                                 1.125%                                  0%
---------------------------------------- ------------------------------------- -------------------------------------
 Greater than or equal to 66% but less
               than 100%                                1.375%                                  0%
---------------------------------------- ------------------------------------- -------------------------------------
     Greater than or equal to 100%                      1.625%                                  0%
---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>

                           (iii) The Term  "Threshold  Amount" is hereby amended
in its entirety to read as follows:

                                    "Threshold Amount" shall mean (i) during the
                           period from and including  the Effective  Date of the
                           Third  Amendment  to and  including  the  date of the
                           redetermination  by the Agent and the  Lenders of the
                           Threshold Amount scheduled to occur March 1, 2000, an
                           amount equal to $175,000,000,  (ii) during the period
                           from and  including  March 2,  2000 to and  including
                           September  1, 2000,  an amount equal to the amount of
                           the March 1, 2000 redetermined  Threshold Amount, and
                           (iii)  thereafter,  the amount equal to the Borrowing
                           Base in effect from time to time. The redetermination
                           of the  Threshold  Amount on March 1, 2000,  shall be
                           made  using the same  criteria  used by the Agent and
                           the Lenders  prior to the Closing  Date to  determine
                           the Threshold Amount.

                  (b)   Section   1.02  of  the  Credit   Agreement   is  hereby
         supplemented,  where alphabetically  appropriate,  with the addition of
         the following definition:

                           "Third  Amendment"  shall  mean  that  certain  Third
                  Amendment  to Amended  and  Restated  Credit  Agreement  dated
                  effective as of December 31,  1999,  between the Company,  the
                  Agent and the Lenders.

     2.2  Fees.  Section  2.04 of the  Credit  Agreement  is hereby  amended  as
     follows:


(a) The table found in Section  2.04(a)(i) is hereby  amended in its entirety to
read as follows:
<TABLE>
<CAPTION>

         -------------------------------------------------------------- -------------------------------------------
                               Threshold Amount
                                  Utilization                                         Commitment Fee

         -------------------------------------------------------------- -------------------------------------------
                <S>                                                                       <C>
                                 Less than 33%                                            0.25%
         -------------------------------------------------------------- -------------------------------------------
                Greater than or equal to 33% but less than 66%                            0.30%
         -------------------------------------------------------------- -------------------------------------------
                Greater than or equal to 66% but less than 100%                           0.30%
         -------------------------------------------------------------- -------------------------------------------
                         Greater than or equal to 100%                                    0.375%
         -------------------------------------------------------------- -------------------------------------------
</TABLE>

(b) The table found in Section 2.04(b) is hereby amended in its entirety to read
as follows:
<TABLE>
<CAPTION>

         ---------------------------------------------------- -----------------------------------------------------
                          Threshold Amount
                             Utilization                                          Issuance Fee

         ---------------------------------------------------- -----------------------------------------------------
           <S>                                                                       <C>
                            Less than 33%                                            0.875%
         ---------------------------------------------------- -----------------------------------------------------
           Greater than or equal to 33% but less than 66%                            1.125%
         ---------------------------------------------------- -----------------------------------------------------
           Greater than or equal to 66% but less than 100%                           1.375%
         ---------------------------------------------------- -----------------------------------------------------
                    Greater than or equal to 100%                                    1.625%
         ---------------------------------------------------- -----------------------------------------------------
</TABLE>

                  2.3  Prepayments.  Section 2.08(b) of the Credit  Agreement is
         hereby  amended and modified to provide that, if on March 29, 2000, the
         sum of the outstanding  aggregate principal amount of the Loans and the
         LC Exposure exceeds the lesser of the then effective  Borrowing Base or
         the  aggregate  amount  of the  Commitments,  then  the  Company  shall
         immediately  pay or  prepay  the  amount  of  such  excess  amount  for
         application  first,  towards the  reduction  of all amounts  previously
         drawn under Letters of Credit, but not yet funded as a Revolving Credit
         Loan pursuant to Section 4.07(b) or reimbursed,  second,  if necessary,
         towards reduction of the outstanding  principal balance of the Notes by
         prepaying  Base Rate Loans,  if any, then  outstanding,  and third,  if
         necessary, at the election of the Company, either toward a reduction of
         the outstanding  principal balance of the Notes by prepaying Fixed Rate
         Loans,  if any, then  outstanding or by paying such amount to the Agent
         as cash  collateral  for  outstanding  Letters of Credit,  which amount
         shall be held by the Agent as cash  collateral  to secure the Company's
         obligation to reimburse the Agent and the Lenders for drawing under the
         Letters of Credit.

               2.4  MarketSpan  Credit  Facility.  Section  8.07  of the  Credit
          Agreement is hereby amended in its entirety to read as follows:

                           "Section 8.07 MarketSpan Credit Facility. The Company
                  shall  maintain an unused and available  commitment  under the
                  MarketSpan Credit Facility equal to or greater than the amount
                  by which the Borrowing Base exceeds the Threshold Amount until
                  (i) such time as the Borrowing  Base is equal to the Threshold
                  Amount,  (ii)  such time as any and all  prepayments  required
                  under Section  2.08(b) have been made in full,  and (iii) such
                  time as no Default exists hereunder."

     Section 3. Borrowing Base;  Threshold Amount.  Notwithstanding  anything to
the contrary contained in the Credit Agreement  including,  without  limitation,
the provisions of Section 2.09:

                  (a) The amount of the Borrowing Base shall be (i) $240,000,000
         for the period  from and  including  the  Effective  Date of this Third
         Amendment to but not including March 29, 2000, and (ii) an amount equal
         to the  Threshold  Amount in effect on March 29,  2000,  for the period
         from and including  March 29, 2000 to and including  September 1, 2000,
         at which time and from time to time thereafter the Borrowing Base shall
         be   redetermined  in  accordance  with  Section  2.09  of  the  Credit
         Agreement.

          (b)  Any  unscheduled  redetermination  of the  Borrowing  Base or the
     Threshold Amount which occurs on or before March 29, 2000, must be approved
     by all of the Lenders.  Section 4.  Conditions.  In addition to any and all
     other applicable conditions precedent contained in Article VI of the

Credit Agreement,  this Third Amendment shall become binding upon receipt by the
Agent of the following  documents,  each of which shall be  satisfactory  to the
Agent in form and substance:

               (a)  Counterparts  of this Third  Amendment  duly executed by the
          Company.

                  (b)   Photocopies   of  all  duly   completed   and   executed
         documentation  evidencing  the  extension of the final  maturity of the
         MarketSpan Credit Facility from January 1, 2000 to March 31, 2000.

               (c)  Such  other  documents  as  the  Agent  or its  counsel  may
          reasonably request.

         Section 5. Extent of Amendments.  The parties hereto hereby acknowledge
and agree that,  except as  specifically  supplemented  and amended,  changed or
modified  hereby,  the Credit Agreement shall remain in full force and effect in
accordance with its terms.

         Section 6.  Reaffirmation.  The Company hereby reaffirms that as of the
date of this Third  Amendment,  the  representations  and warranties made by the
Company in Article VII of the Credit  Agreement are true and correct on the date
hereof as though made on and as of the date of this Third Amendment.

     Section 7.  Governing Law. This Third  Amendment  shall be governed by, and
construed in accordance with, the laws of the State of Texas.

         Section 8. Counterparts. This Third Amendment may be executed in two or
more  counterparts,  and it shall not be necessary  that the  signatures  of all
parties  hereto be contained on any one  counterpart  hereof;  each  counterpart
shall be deemed an original,  but all of which together shall constitute one and
the same instrument.

         Section 9. Final Agreement.  THE CREDIT  AGREEMENT,  AS AMENDED HEREBY,
THIS THIRD AMENDMENT, THE NOTES AND THE SECURITY INSTRUMENTS REPRESENT THE FINAL
AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS  OF THE PARTIES.  THERE ARE NO
UNWRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES.

                                           [SIGNATURE PAGES BEGIN ON NEXT PAGE]


<PAGE>




                                          [Third Amendment to Amended and
                                             Restated Credit Agreement

                                                 Signature Page 1]

Houston:52429.2
         IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be duly executed effective as of the date first above written.

                                      COMPANY:
                                     -------

                                     THE HOUSTON
                                     EXPLORATION
                                     COMPANY

                   By:/s/ Thomas W. Powers

                   Name:  Thomas W. Powers
                   Title:    Senior Vice President
                               Business Development
                               Finance and Treasurer

                   Address: 1100 Louisiana
                                     Suite 2000
                                     Houston, Texas  77002

                   Telecopier No.:  713/830-6885
                   Telephone No.:  713/830-6853



<PAGE>



                      LENDERS AND AGENTS:
                      ------------------

                      CHASE BANK OF

            TEXAS, NATIONAL ASSOCIATION, individually as a Lender and as
                      Administrative Agent

                      By: /s/ Russell Johnson

                      Name:  Russell Johnson
                      Title:  Vice President

                                                 Applicable Lending

                                        Office for Base Rate Loans:

                                        Address: 712 Main Street
                                                          Houston, Texas  77002

                                 Applicable Lending Office for Fixed Rate Loans:

                                        Address: 712 Main Street
                                                          Houston, Texas  77002
                                        Telecopier:       713/216-8870
                                        Telephone:        713/216-5617

                                        Address for Notices:

                                        Loan and Agency Services
                                        The Chase Manhattan Bank
                                        1 Chase Manhattan Plaza, 8th Floor
                                        New York, New York  10081

                                        Telecopier No.:  212/552-7490
                                        Telephone No.:  212/552-7943

                                        Attention: Muniram Appanna






                                        THE BANK OF NOVA SCOTIA,
                               individually as a Lender and as Syndication Agent

                                        By: /s/F.C.H. Ashby
                                        Name: F.C.H. Ashby
                                        Title: Senior Manager Loan Operations

                                                     Applicable Lending

                                        Office for Base Rate Loans:

                                        Address: 600 Peachtree Street N.E.
                                                          Suite 2700
                                                          Atlanta GA 30308

                               Applicable Lending Office for Fixed Rate Loans:

                                        Address: 600 Peachtree Street N.E.
                                                          Suite 2700
                                                          Atlanta GA 30308

                                        Address for Notices:

                                        1100 Louisiana, Suite 3000
                                        Houston, Texas 77002

                                        Telecopier No.:  713/752-2425
                                        Telephone No.:  713/759-3441

                                        Attention: Mark Ammerman

                                        with a copy to:

                                        Address: 600 Peachtree Street N.E.
                                                          Suite 2700
                                                          Atlanta GA 30308
                                        Telecopier:       404/888-8998
                                        Telephone:        404/877-1552
                                        Attention:        Phyllis Walker








                                        FIRST UNION NATIONAL BANK,
                             Individually as a Lender and as Documentation Agent

                                        By: /s/ Robert R. Wetteroff
                                        Name: Robert R. Wetteroff
                                        Title: Senior Vice President

                                  Applicable Lending Office for Base Rate Loans:

                                        Address: 301 South College Street
                                               Charlotte, North Carolina 28288

                                Applicable Lending Office for Fixed Rate Loans:
                                        Address: 301 South College Street
                                                 Charlotte, North Carolina 28288

                                        Address for Notices:

                                        1001 Fannin Street
                                        Houston, Texas 77002

                                        Telecopier:               713/650-6354
                                        Telephone No.     713/346-2727

                                        Attention:  Jay Chernosky

                                        with a copy to:

                                        1001 Fannin Street
                                        Houston, Texas 77002

                                        Telecopier:               713/650-6354
                                        Telephone No.     713/346-2727

                                        Attention:  Debbie Blank






                                  PNC BANK NATIONAL ASSOCIATION,
                                  Individually as a Lender and as Managing Agent

                                        By: /s/ Thomas A. Maleski
                                        Name: Thomas a. Maleski
                                        Title: Vice President

                                  Applicable Lending Office for Base Rate Loans:

                                        Address: 249 Fifth Avenue, 3rd Floor
                                                          Mail Stop P1-POPP-03-1
                                                  Pittsburgh, Pennsylvania 15222


                                 Applicable Lending Office for Fixed Rate Loans:

                                        Address: 249 Fifth Avenue, 3rd Floor
                                                          Mail Stop P1-POPP-03-1
                                                  Pittsburgh, Pennsylvania 15222

                                        Address for Notices:

                                        249 Fifth Avenue, 3rd Floor
                                        Mail Stop P1-POPP-03-1
                                        Pittsburgh, Pennsylvania 15222

                                        Telecopier:               412/762-2571
                                        Telephone No.     412/762-3025

                                        Attention:  Thomas A. Majeski

                                        with a copy to:

                                        620 Liberty Avenue
                                        Mail Stop P2-PTPP-03-1
                                        Pittsburgh, Pennsylvania 15222

                                        Telecopier:               412/762-5271
                                        Telephone No.     412/762-3025

                                        Attention:  Stephanie Angelini






                                        COMERICA BANK - TEXAS

                                        By: /s/ Martin W. Wilson
                                        Name: Martin W. Wilson
                                        Title: Vice President

                                  Applicable Lending Office for Base Rate Loans:

                                        Address: 1601 Elm Street, 2nd Floor
                                                          Dallas, Texas 75201


                                 Applicable Lending Office for Fixed Rate Loans:

                                        Address: 1601 Elm Street, 2nd Floor
                                                          Dallas, Texas 75201

                                        Address for Notices:

                                        1601 Elm Street, 2nd Floor
                                        Dallas, Texas 75201
                                        Telecopier:               214/969-6561
                                        Telephone No.     214/969-6563

                                        Attention:  Martin W. Wilson

                                        with a copy to:

                                        Livonia Operations Center
                                        39200 Six Mile Road, 4th Floor
                                        Livonia, Michigan 48152

                                        Telecopier:               734/632-7050
                                        Telephone No.     734/632-3063

                                        Attention:  Nancy Lee







                                                    THE BANK OF NEW YORK

                                        By: /s/ Peter Keller
                                        Name: Peter Keller
                                        Title: Vice President

                                                   Applicable Lending

                                        Office for Base Rate Loans:

                                        Address: One Wall Street

                                        Energy Division, 19th Floor

                                        New York, New York 10286

                                     Telecopier No.:212/635-7924
                                     Telephone No.:212/635-7550

                                     Attention:  Kathy D'Elena

                          Applicable Lending Office for Fixed Rate Loans:

                                     Address: One Wall Street

                                             Energy Division, 19th Floor
                                                      New York, New York 10286

                                     Telecopier No.:212/635-7924
                                     Telephone No.:212/635-7550

                                     Attention:  Kathy D'Elena

                                     Address for Notices:
                                     The Bank of New York
                                     One Wall Street
                                     Energy Division, 19th Floor
                                     New York, NY  10286

                                     Telecopier No.: 212/635-7924
                                     Telephone No.: 212/635-7550

                                     Attention: Kathy D'Elena

                                     with a copy to:

                                     Address:
                                     The Bank of New York
                                     One Wall Street
                                     Energy Division, 19th Floor
                                     New York, NY  10286

                                     Telecopier No.: 212/635-7924
                                     Telephone No.: 212/635-7861

                                     Attention: Peter Keller






                                                     NATEXIS BANQUE

                                     By: /s/ N. Eric Ditges
                                     Name: N. Eric Ditges
                                     Title: Vice President

                                     By: /s/ Louis P. Laville, III
                                        --------------------------
                                     Name: Louis P. Laville, III
                                          ----------------------
                                     Title: Vice President and Group Manager
                                           ---------------------------------

                                                    Applicable Lending

                                     Office for Base Rate Loans:

                                     Address: 645 5th Avenue, 20th Floor

                                     New York, New York

                                     Telecopier No.:212/872-5045
                                 Applicable Lending Office for Fixed Rate Loans:

                                       Address: 645 5th Avenue, 20th Floor
                                       New York, New York

                                       Telecopier No.:212/872-5045

                                       Address for Notices:

                                       Natexis Banque, Southwest
                                           Representative Office

                                       333 Clay Street, Suite 4340
                                       Houston, Texas  77002
                                       Telecopier No.: 713/759-9908
                                       Telephone No.: 713/759-9401

                                       Attention:  Tanya McAllister

                                       with a copy to:

                                       Address:

                                       Natexis Banque, New York Branch
                                       645 5th Avenue, 20th Floor
                                       New York, New York
                                       Telecopier No.: 212/872-5045

                                       Attention: Joan Rankine

                                       and

                                       Natexis Banque, Southwest
                                           Representative Office

                                       333 Clay Street, Suite 4340
                                       Houston, Texas  77002

                                       Telecopier No.: 713/759-9908
                                       Telephone No.: 713/759-9401

                                       Attention: Eric Ditges


<P




                                       BANK ONE, TEXAS, N.A.


                                       By: /s/ Christine M. Macan
                                       Name: Christine M. Macan
                                       Title: Vice President

                                           Applicable Lending

                                       Office for Base Rate Loans:

                                       Address: 910 Travis, TX2_4330
                                                         Houston, Texas 77002

                              Applicable Lending Office for Fixed Rate Loans:

                                       Address: 910 Travis, TX2_4330
                                                         Houston, Texas 77002

                                       Address for Notices:

                                       Bank One Center
                                       910 Travis, TX2_4330
                                       Houston, Texas 77002

                                       Telecopier No.: 713/751-3544
                                       Telephone No.: 713/751-3484

                                       Attention: Christine Macan

                                       with a copy to:

                                       Address: Bank One Center
                                                         910 Travis, TX2_4375
                                                         Houston, Texas 77002

                                       Telecopier No.: 713/751-3982
                                       Telephone No.: 713/751-6174

                                       Attention:  Jeanie Harman

                                       and

                                       Address: 500 Throckmorton
                                                         West Complex PG6
                                                         Fort Worth, Texas 76102

                                       Telecopier No.: 817/884-4651
                                       Telephone No.: 817/884-4399

                                       Attention:  Carol Peacock


<P



                                       HIBERNIA NATIONAL BANK

                                       By: /s/ David R. Reid
                                       Name: David R. Reid
                                       Title: Senior Vice President

                                                       Applicable Lending

                                       Office for Base Rate Loans:

                                       Address:          313 Carondelet Street
                                            New Orleans, Louisiana 70130

                       Applicable Lending Office for Fixed Rate Loans:

                                       Address:          313 Carondelet Street
                                          New Orleans, Louisiana 70130

                                       Address for Notices:

                                       213 W. Vermilion
                                       Lafayette, Louisiana 70501

                                       Telecopier No.: 318/268-4566
                                       Telephone No.: 318/268-4582

                                       Attention:  David Reid

                                       with a copy to:

                                       Address:          313 Carondelet Street
                                                   New Orleans, Louisiana 70130

                                       Telecopier No.: 504/533-5434
                                       Telephone No.: 504/533-5717

                                       Attention:  Spencer Gagnet

                                       and

                                       Address:          313 Carondelet Street
                                                  New Orleans, Louisiana 70130

                                       Telecopier No.: 504/533-5434
                                       Telephone No.: 504/533-5352

                                       Attention: Virginia Bell Cowart