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                                                                    EXHIBIT 10.7



                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective Date
by and between E. Joseph Grady (the "Executive") and Forcenergy Inc, a Delaware
corporation (the "Company" or "Employer").

                              PRELIMINARY STATEMENT

     The Executive and the Company have heretofore executed that certain
Employment Agreement dated as of September 1, 1996, as amended (the "Original
Agreement").

     The Company filed on March 21, 1999 (the "Filing Date") for protection
under Chapter 11 of the U.S. Bankruptcy Code in the proceeding In re Forcenergy
Inc, Case No. 99-11391-"A" (the "Proceeding") in the U.S. Bankruptcy Court of
the Eastern District of Louisiana (the "Court").

     The Company is engaged in the oil and gas business, which includes, but is
not limited to, the purchase, sale, development, improvement, drilling and
exploration of oil and gas properties (the "Business").

     The Executive has particular expertise in the Business. This Agreement
shall amend and restate the Original Agreement effective on the effective date
of the confirmation of the plan of reorganization (the "Plan") in the Proceeding
(the "Effective Date") and shall govern the employment of the Executive.

     NOW, THEREFORE, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the receipt and adequacy of which
are conclusively acknowledged, the parties hereto, intending to be legally
bound, hereby amend and restate the Original Agreement as follows:

     1.   Term. The initial term of the Executive's employment under this
Agreement shall be for a period commencing on the Effective Date and, subject to
the terms hereof, shall terminate on the earlier of (i) two years from the
Effective Date or (ii) termination pursuant to Section 8 hereof. The term of the
Executive's employment hereunder (the "Employment Term") may be renewed from
year to year for additional one-year periods, if the Company gives notice to the
Executive of renewal at least 120 days prior to the scheduled termination of the
Employment Term.

     2.   Duties. The Executive shall serve as a Vice President of the Company
and the Company's Chief Financial Officer, with such duties as are generally
incident to such position and such other duties as may be hereafter assigned to
Executive by the Board of Directors or the Chief Executive Officer of the
Company. The Executive agrees that he will devote his full time and attention to
the affairs of the Company and use his best efforts to promote the Business and
interests of the Company.

     3.   Compensation. The Company shall pay Executive a base salary ("Base
Salary") fixed at $300,000 per annum for the period commencing on the Effective
Date and ending on the termination date of the Employment Term, payable in
monthly installments equal to 1/12 of the




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Base Salary, subject to the withholding of such amounts relating to the taxes
and other governmental assessments as the Company may reasonably determine it
should withhold pursuant to any applicable law, rule or regulation. Base Salary
shall be subject to review and may be increased (but not decreased) by the Board
of Directors of the Company during the Employment Term.

     4.   Benefits. The Executive shall be entitled to four (4) weeks vacation
time per calendar year, which vacation time shall be scheduled at the mutual
convenience of the Executive and the Company. The Executive shall be entitled to
participate in, and receive benefits under, any and all pension, insurance,
hospitalization, medical or disability programs or policies of the Company which
may be in effect at any time during the course of his employment by the Company
and generally available to employees of the Company, subject to the terms of
such plans, programs or policies. Notwithstanding the foregoing, the Company
may, in its discretion, at any time and from time to time, change or revoke any
of its employee benefits plans, programs or policies, and the Executive shall
not be deemed, by virtue of this Agreement, to have any vested interest in any
such plans, programs or policies. All stock options granted to the Executive in
connection with the Plan shall vest 25% each year of employment, 1, 2, 3 and 4
years after the Effective Date. All stock options granted to the Executive after
the Effective Date shall vest 25% each year of employment, 2, 3, 4 and 5 years
after the grant date.

     5.   Bonus. The Company may also pay the Executive an annual bonus, either
on a "ad hoc" basis or pursuant to bonus plan or arrangement as may be
established at the Company's discretion to senior executives of the Company. The
amount of any bonus may vary depending on actual performance of the Company and
the Executive as determined in the discretion of the Board of Directors and/or
its Compensation Committee. Nothing contained herein shall imply the Company has
any obligation to grant to the Executive any bonus compensation or any increases
in Base Salary. Bonus compensation shall be subject to withholding for taxes and
other deductions as the Company may determine.

     6.   Expenses. The Executive shall be entitled to reimbursement by the
Company, in accordance with the Company's policies then applicable to employees
at the Executive's level, against appropriate vouchers or other receipts for
authorized travel, entertainment and other business expenses reasonably incurred
by him in the performance of his duties hereunder.

     7.   Death; Permanent Disability. Upon the death of the Executive during
the term of this Agreement, the Employment Term shall terminate. If during the
Employment Term the Executive fails, because of illness or other incapacity, to
perform the services required to be performed by him hereunder for any period of
more than 90 days during any calendar year (any such illness or incapacity being
hereinafter referred to as "Permanent Disability"), then the Company, in its
discretion, may at any time thereafter terminate the Employment Term upon not
less than 30 days' written notice thereof to the Executive, and the Employment
Term shall terminate and come to an end upon the date set forth in said notice
as if said date were the termination date of the Employment Term; provided,
however, that no such termination shall be effective if prior to the date when
such notice is given, the Executive's illness or incapacity shall have
terminated and he shall be physically and mentally able to perform the services
required hereunder and shall have taken up and be performing such duties.

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          If the Executive's employment shall be terminated by reason of his
death or Permanent Disability, the Executive or his estate, as the case may be,
shall be entitled to receive (i) any earned and unpaid salary accrued through
the date of termination; (ii) an aggregate amount equal to 12 months' Base
Salary at the rate in effect immediately prior to such termination of
employment, payable in a lump sum on the effective date of termination for
Permanent Disability or within 60 days after the Executive's death (payment in
such case being payable to the Executive's estate); and (iii) subject to the
terms thereof, any benefits that may be due to the Executive on the date of
termination under the provisions of any employee benefit plan, program or
policy.

     8.   Termination. (a) The Company may terminate the employment of the
Executive at any time, for cause by written notice, the cause to be specified in
the notice. For purposes of this Agreement, "cause" shall mean: (i) any material
misconduct of the Executive in connection with the performance of any of his
material duties hereunder, including, without limitation, misappropriation of
funds or property of the Company, securing or attempting to secure personally
any profit in connection with any transaction entered into on behalf of the
Company, regardless of whether such act results in material financial loss to
the Company or to any of its Affiliates, or any act having the effect of
materially injuring the reputation, business or business relationships of the
Company; (ii) failure, neglect or refusal in any material respect to comply with
and abide by the decisions or directions of the Company; (iii) material breach
of any covenants contained in this Agreement; (iv) conviction of a felony; (v)
drug or alcohol abuse materially affecting the Executive's performance of his
duties under this Agreement, where the Executive has refused medical or
professional help; or (vi) sexual misconduct within the workplace. Termination
for cause shall be effective upon the giving of such notice and, upon the giving
of such notice, the Executive shall be entitled to receive: (i) within thirty
(30) days of the effective date of such termination, any earned and unpaid
salary accrued through the date of termination; and (ii) subject to the terms
thereof, any benefits which may be due to the Executive on such termination date
under the provisions of any employee benefit plan, program or policy. After the
termination of the Executive's employment under this Section 8(a), the
obligations of the Company under this Agreement to make any further payments, or
to provide any benefits other than those specified herein, to the Executive
shall thereupon cease and terminate.

          (b)  The Company may also terminate the Employment Term at any time
without cause. In the event (i) the Company terminates the Employment Term
without cause, (ii) the Company fails to renew this Agreement at the end of the
initial term or any renewal term, or (iii) the Executive terminates the
Employment Term pursuant to a "Termination by Executive for Good Reason" (as
both such terms are defined in subparagraph (c) below), the Company shall pay to
the Executive, in addition to all sums then accrued, due and payable under this
Agreement, an aggregate amount equal to 2.0 times the Executive's annual Base
Salary at the rate in effect immediately prior to such termination of employment
(the "Severance Payment"), payable in a lump sum on the effective date of the
termination of the employment. Further, effective with the effective date of the
termination of the employment as provided in this subparagraph (b), 50% of all
stock options, warrants and other rights to acquire the securities of the
Company and any of its Affiliates, and all rights to compensation based upon or
measured by the stock price or other indicia of value of the Company, previously
issued to the Executive (vested and unvested) shall immediately vest and become
exercisable (to the extent such 50% has not previously vested) and remain
exercisable for a period ending one year after the effective



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date of termination of employment; provided, however, if the Executive
terminates the Employment Term pursuant to a Termination by Executive for Good
Reason within 12 months after a Change in Control, 100% of all such options,
warrants or other rights shall immediately vest and become exercisable and
remain exercisable for a period ending one year after the effect date of
termination of employment.

          (c)  For purposes of this Agreement, the following capitalized terms
shall have the meanings set forth herein:

               (i)  "Affiliate" shall mean any "person" (as such term is
utilized in Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement (the "Exchange
Act")), who or which, directly and/or indirectly, controls, is controlled by or
is under common control with another person. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of management and policies, whether through ownership of
voting securities, by contract, or otherwise.

               (ii) "Change in Control": a Change in Control shall be deemed to
occur if:

                    (A)  any "person" (as such term is utilized in Section 13(d)
and Section 14(d)(2) of the Exchange Act), including without limitation any
"group" (as such term is utilized in Section 13(d)(3) of the Exchange Act), who
is not, on the date of this Agreement, an Affiliate of the Company, shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing more than 50% of the votes that
may be cast for the election of directors of the Company; or

                    (B)  as the result of, or in connection with, any cash or
other tender offer, or exchange offer, merger, consolidation or other business
combination, sale of assets, liquidation or dissolution, or any combination of
any one or more of the foregoing transactions, the persons who were directors of
the Company immediately prior to the consummation of any such transaction or
combination of transactions shall cease to constitute a majority of the
directors of the Company, or any successor thereto; provided however, a Change
in Control shall not be deemed to occur in connection with the consummation of
the transactions contemplated by the confirmation of the Plan in the Proceeding.

               (iii) "Maximum Amount" shall mean the amount equal to three times
the Executive's annualized includible compensation for the base period, as such
may be defined in Section 280G of the Internal Revenue Code of 1986, as amended
(or regulations thereunder).

               (iv) "Termination by Executive for Good Reason" shall mean a
termination of the Executive's employment by the Executive upon the occurrence
of any one or more of the following:

                    (A)  Change in Control where the Executive does not receive
stock options and other benefits in amounts and on such terms at least as
favorable to the Executive as they existed prior to the Change in Control;



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                    (B)  the reassignment of the Executive by Employer, without
the Executive's express written consent, to a position with Employer other than
that set forth in Section 2 hereof, or a materially adverse change in the nature
or scope of the Executive's title, authorities, powers, functions, duties or
responsibilities in those positions;

                    (C)  the reduction in the Executive's Base Salary without
the Executive's consent;

                    (D)  (i) the relocation of the Executive's place of
employment, other than to another currently existing office of the Company
within the contiguous 48 states of the U.S., without the Executive's consent, or
(ii) the relocation of the Executive's place of employment with or without his
consent where the Company refuses to reimburse the Executive for his reasonably
incurred relocation expenses (moving and closing costs in connection with the
sale of his residence); or

                    (E)  the Company's failure to perform its obligations under
this Agreement in any material respect that remains uncured 10 days after the
Company receives notice of its default, including, without limitation, the
failure of the Company to pay compensation in accordance with this Agreement or
the failure of the Company to provide the Executive with fringe benefits
substantially the same as those previously provided to the Executive under this
Agreement provided, however, that a change in the benefits available to the
executive officers of the Company shall not constitute such a failure so long as
such change of benefits is applied consistently with respect to all executive
officers of the Company;

          (d)  In the event that the Company shall terminate the employment of
the Executive without cause within 12 months after a Change in Control, the
Company shall pay to the Executive, in addition to all sums then accrued, due
and payable under this Agreement, an aggregate amount equal to 2.0 times the
Executive's one-year Base Salary as in effect on the date of the Change in
Control payable in a lump sum on the effective date of termination of
employment, provided that (i) such payment, together with all other payments
made to Executive in connection with such Change in Control, shall not exceed
the Maximum Amount and (ii) such payment shall not be payable until the
effective date of termination of employment. All stock options, warrants and
other rights to acquire the securities of the Company and any of its Affiliates,
and all rights to compensation based upon or measured by the stock price or
other indicia of value of the Company, issued to the Executive prior to the
termination shall immediately vest and become exercisable as of the effective
date of the termination and remain exercisable for a period ending one year
after the effective date of termination of employment.

     9.   Non-Competition. (a) Without the express written consent of the
Company having been given (which consent will not be unreasonably withheld), the
Executive agrees that for a period of one year after the expiration of the
Employment Term he shall not directly or indirectly, either individually or as
an employee, agent, partner, shareholder, director, consultant, employer, lender
of money, guarantor or in any other capacity, participate in, engage in or have
a financial interest or management position or other interest in any independent
oil and gas exploration and development company that competes directly against
the Company. The foregoing provisions of this Section shall not prohibit the
passive ownership by the Executive of (i) non-controlling, minority interests in
any private entities, to the extent that the Executive's


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investment in such entities does not exceed $150,000, or (ii) less than five
percent (5%) of any class of the capital stock of any public corporation.

          (b)  The Executive will not at any time during his employment with the
Company and for one year thereafter, directly or indirectly solicit (or assist
or encourage the solicitation of) or offer employment to any person who has been
an employee of the Company, or any of its subsidiaries or affiliates, at any
time during the six months immediately preceding such solicitation , to work for
the Executive or for any business, firm, corporation or other entity in which
the Executive, directly or indirectly, participates or engages (or expects to
participate or engage) or has (or expects to have) a financial interest or
management position; provided, however, that this paragraph shall not prohibit
an Executive who is no longer employed by the Company from soliciting or
offering employment to a former employee of the Company whose employment with
the Company had terminated prior to the date the Executive's employment with the
Company terminated.

          (c)  The Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances and that any breach of
the covenants contained in this Section 9 would irreparably injure the Company.
Notwithstanding, if any of the covenants contained in this Section or any part
thereof is held by a court of competent jurisdiction to be unenforceable because
of the duration of such provision, the activity limited by or the subject of
such provision and/or the area covered thereby, then the court making such
determination shall construe such restriction so as to thereafter be limited or
reduced to be enforceable to the greatest extent permissible by applicable law.

     10.  Confidentiality. The Executive acknowledges that, during and as a
result of his employment hereunder, he may have access to trade secrets and
other confidential information of the Company, including, but not limited to,
the nature and material terms of business opportunities and proposals available
to the Company, technical memoranda, research reports, designs and
specifications, operating procedures, ledgers, and other information, data and
documents relating to the Company's present or future operations, including, but
not limited to geological, seismic, 3-D seismic, and all other studies conducted
by, or on behalf of, the Company's oil and gas properties and prospects
(collectively, the "Confidential Information"). The Executive covenants and
agrees that he shall not at any time during or following any termination of
employment, without the consent of the Company use or disclose (except for the
sole and exclusive benefit of the Company or as required to perform his duties
under this Agreement or as required by law or as is already in the public
domain) any Confidential Information which has been obtained by or disclosed to
him as a result of his employment with the Company.

     11.  Additional Remedy. If the Executive breaches any of the provisions of
Section 9 or 10 of this Agreement, then the Company, in addition to all other
rights and remedies hereunder, may cease making payments to Executive under
Sections 7 or 8 of this Agreement, require Executive to repay to the Company any
payments previously made under such Sections and obtain an injunction against
the Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive.

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     12.  Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, and shall be given by hand-delivery to the
addressee or by deposit in the U.S. mail, postage prepaid, certified mail,
return receipt requested, as follows:

                  If to the Company, to:

                  Forcenergy Inc
                  2730 S.W. 3rd Avenue
                  Miami, Florida 33129
                  Attention: President

                  If to Executive, to:

                  E. Joseph Grady
                  11040 S.W. 69th Avenue
                  Miami, Florida  33156

or such other address as either party may specify by notice hereunder to the
other. Any notice sent in accordance with the foregoing provisions shall be
deemed given on the date of receipt if personally delivered, or on the date
three (3) days after being deposited in the mail, if mailed.

     13.  Miscellaneous. (a) This Agreement incorporates the entire agreement
between the parties hereto pertaining to the subject matter hereof, and
supersedes all prior and contemporaneous; agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations and other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No amendment, supplement, modification or waiver of this Agreement shall
be binding upon a party hereto unless in writing and executed by such party.

          (b)  The domestic internal laws of the State of Florida shall govern
the validity, construction and effect of this Agreement, without regard to
Florida's conflicts of laws principles.

          (c)  Each of the provisions of this Agreement shall be independent of
all other provisions, and if any provision of this Agreement is declared void or
invalid by any court or other governmental agency of competent jurisdiction,
each other provision of this Agreement shall remain in full force and effect and
shall be construed to the extent possible as consistent with all other valid
provisions in order to carry out the intent of the parties hereto.

          (b)  Any dispute or misunderstanding arising out of or in connection
with this Agreement, except any alleged violation of Section 9 or 10, shall
first be settled, if possible, by the parties themselves through negotiation
and, failing success at negotiation, through mediation and, failing success at
mediation, shall be arbitrated in Miami, Florida, unless otherwise agreed upon
in writing by the Company and the Executive. Unless otherwise agreed upon in
writing by the Company and the Executive, the arbitration shall be had before
three arbitrators, each party designating an arbitrator and the two designees
naming a third arbitrator experienced in employment related controversies. The
arbitration procedure shall be in accordance with the rules and regulations of
the American Arbitration Association.

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          (c)  In any proceeding relating to the enforcement or breach of this
Agreement, if the Executive is the prevailing party, the Company shall pay the
reasonable costs of any legal fees, other fees and expenses which may be
incurred by the Executive in connection with such proceeding. If the Company is
the prevailing party in such proceeding, each party shall pay its own legal
fees, other fees and expenses which may be incurred in connection with the
proceeding. For purposes of this Agreement, the party initiating the proceeding
shall be deemed to be the prevailing party in such proceeding if the party
initiating the proceeding is awarded in excess of 50% of the amount sought in
the proceeding and the non-initiating party shall be deemed to be the prevailing
party if the party initiating the proceeding is awarded 50% or less of the
amount sought in the proceeding.

          (d)  This Agreement shall be binding upon and inure to the benefit of
the respective heirs, executors, administrators, successors and assigns of the
Company and the Executive. If the Company, shall, at any time, be merged with or
consolidated into or with any other corporation or person or if all or
substantially all of the assets of the Company are transferred to another
corporation or person, the provisions of this Agreement shall be binding upon
and inure to the benefit of the entity resulting from such merger or
consolidation or the corporation or person to which or to whom such assets shall
be transferred, and this provision shall apply in the event of any subsequent
mergers, consolidations or transfers of assets.

          (e)  This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

          (f)  The section headings of this Agreement are inserted for the
convenience of reference only and are not intended to affect the meaning or
interpretation of this Agreement.

          (g)  This Agreement shall be construed within the fair meaning of each
of its terms and not against the party drafting the document.

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

                                 COMPANY:

                                 FORCENERGY INC


                                 By: /s/ STIG WENNERSTROM
                                     ------------------------------------
                                     Stig Wennerstrom
                                     President

                                 EXECUTIVE:

                                 /s/ E. JOSEPH GRADY
                                 ----------------------------------------
                                 E. Joseph Grady



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