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                                                                  EXHIBIT 10.4


                               PRIZE ENERGY CORP.
                        AMENDED AND RESTATED OPTION PLAN

                                    RECITALS

         A. Effective as of January 25, 1999 (the "Effective Date"), the Board
of Directors of Prize Energy Corp., a Delaware corporation (the "Company"),
adopted an Option Plan (the "Initial Plan") for the benefit of the officers and
employees of the Company.

         B. It was the purpose of the Initial Plan to promote the interests of
the Company and its shareholders by attracting, retaining and stimulating the
performance of selected employees and giving such employees the opportunity to
acquire a proprietary interest in the Company and an increased personal interest
in its continued success and progress, by granting to them options to acquire
additional shares of common stock of the Company, on the terms and subject to
the conditions described below.

         C. The Board of Directors of the Company has authorized the issuance of
additional shares of its common stock and the issuance of shares of its Series A
6% Convertible Preferred Stock (the "Series A Preferred") which may be converted
into shares of the Company's common stock.

         D. In connection with the issuance of such additional shares of equity
securities, the Board of Directors of the Company has determined that it is in
the best interests of the Company and its shareholders to amend and restate the
Initial Plan to increase the number of Option Shares which may be acquired
thereunder and to make certain other changes in the Initial Plan, in order to
further the purpose of the Initial Plan.

         E. Effective as of June 29, 1999 (the "Amendment Date"), the Board of
Directors of the Company adopted an Amended and Restated Option Plan, for the
purpose of amending and restating the Initial Plan, as set forth herein (as so
amended and restated, this "Plan").

                                    ARTICLE I
                                     GENERAL

         1.1 Definitions. Terms used in this Plan and not otherwise defined
shall have the respective meanings assigned to such terms in the Bylaws of the
Company (the "Bylaws"); and the following terms shall have the following
meanings:

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

              "Change in Control" means and shall be deemed to have occurred if
         (i) any single Person or group of related Persons, other than the
         Company or any Related Party, purchases or otherwise acquires
         "beneficial ownership" of securities of the Company representing 40
         percent or more of the total voting power of all the then outstanding
         Voting Securities,




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         unless such purchase or acquisition has been approved by the
         Board; (ii) the Company is a party to a merger, consolidation,
         recapitalization, reorganization or other similar transaction and the
         Persons who serve as directors of the Company immediately before
         consummation of such transaction cease to constitute at least 40
         percent of the total number of members of the Board of Directors of the
         surviving entity immediately following completion of such transaction;
         (iii) the stockholders approve a plan of complete liquidation of the
         Company or an agreement for the sale or disposition by the Company of
         all or substantially all of the Company's assets, other than any such
         transaction which would result in a Related Party owning or acquiring
         more than 50 percent of the assets owned by the Company immediately
         prior to the transaction; or (iv) the Board adopts a resolution to the
         effect that a Change in Control has occurred.

              "Code" means the Internal Revenue Code of 1986, as amended.

              "Common Stock" means the common stock, $.01 par value per share,
         of the Company.

              "Contribution Agreement" means, collectively, the Subscription and
         Contribution Agreements between the Company and each of its
         stockholders dated the Effective Date, the Amendment Date and
         subsequent to the Amendment Date.

                  "Employee" means an individual (i) who is employed by the
         Company and/or any of its subsidiaries and/or affiliates and whose
         wages are subject to the withholding of federal income tax under
         Section 3401 of the Code, (ii) who is an independent contractor or
         consultant of the Company and/or any of its subsidiaries and/or
         affiliates, and/or (iii) who is employed by an organization that is
         retained under contract to provide services to the Company and/or any
         of its subsidiaries and/or affiliates and is engaged in providing such
         services.

              "Expiration Date" means 6:00 P.M. Tulsa, Oklahoma, time, on June
         29, 2004.

              "Going Public Event" means the consummation of (i) an initial
         public offering of any of the Company's securities, or (ii) any merger,
         business combination or other transaction by which the Company is
         combined with or becomes owned by a company which is a reporting
         company under the Securities Exchange Act of 1934, as amended.

              "Holder" means any Employee to whom an Option has been granted
         under this Plan.

              "Option" means any option granted to an Employee under this Plan.

              "Options" means, collectively, all Options granted to Employees
         under this Plan.


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              "Officer" means an individual elected or appointed by the Board or
         chosen in such other manner as may be prescribed in the Bylaws of the
         Company to serve as such.

              "Person" (whether or not capitalized) means any natural person,
         corporation, company, limited or general partnership, joint stock
         company, joint venture, association, limited liability company, trust,
         bank, trust company, business trust or other entity or organization,
         whether or not a governmental authority.

              "Related Party" means (i) any Person who is a stockholder of the
         Company as of June 29, 1999, and any partner, owner, shareholder,
         officer, director, employee or other affiliate of such Person, (ii) an
         employee or group of employees of the Company, (iii) a trustee or other
         fiduciary holding securities under an employee benefit plan of the
         Company, or (iv) a corporation owned directly or indirectly by the
         stockholders of the Company in substantially the same proportion as
         their ownership of stock of the Company.

              "Voting Securities" means any securities of the Company which
         carry the right to vote generally in the election of directors.

                                   ARTICLE II
                                 ADMINISTRATION

         This Plan shall be administered by the Board. The Board shall have full
authority, discretion and power to select the Employees who will receive Options
and, subject to the aggregate limitations set forth herein, to set the number of
shares of Common Stock to be covered by each Option granted to an Employee. The
decisions of the Board relating to such matters shall be final and binding upon
the Company and the Employees. The Board shall have no authority, discretion or
power to set the exercise price or the period within which the Options may be
exercised, or to alter any other terms or conditions specified herein.

         Subject to the foregoing limitations, the Board shall have authority
and power to adopt such rules and regulations and to take such action as the
Board shall consider necessary or advisable for the administration of this Plan,
and to construe, interpret and administer this Plan. The Board shall incur no
liability by reason of any action or determination made in good faith with
respect to this Plan or any option agreement entered into pursuant to this Plan.

                                   ARTICLE III
                                GRANT OF OPTIONS

         3.1 Option Agreements. Each Option granted under this Plan to an
Employee shall be a non-qualified option for federal income tax purposes and
shall be evidenced by a written option agreement, which agreement shall be
entered into between the Company and the Employee to whom the Option is granted.
The agreement for each Option shall be in substantially the form of the Option
Agreement set forth in Exhibit A hereto (the "Option Agreement"), with
appropriate




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insertions of the name of the optionee and the number of shares for which such
Option may be exercised.

         3.2 Maximum Number of Shares Subject to Options. The Company is
authorized to grant Options hereunder to acquire up to a maximum of 1,285.922
shares of Common Stock (collectively, the "Option Shares"); provided, however,
that, if the number of shares of Common Stock issuable upon conversion of the
Series A Preferred shall ever be reduced to less than 2,307.693 shares (as such
number may be adjusted from time to time to take into account stock splits,
combinations, stock dividends and similar adjustments) after the date hereof as
a result of any redemption, payment, exchange, cancellation or other termination
of the Series A Preferred that does not result in the issuance of shares of
Common Stock (collectively, a "Share Reduction Event"), then the total number of
Option Shares which may be acquired upon exercise of all Options granted
hereunder shall be correspondingly reduced upon the occurrence of such Share
Reduction Event by an amount (rounded to the nearest one-hundredth of a whole
number) equal to (i) the amount of the decrease in the number of shares of
Common Stock issuable upon conversion of the Series A Preferred as a result of
such Share Reduction Event, divided by .85, less (ii) the amount of the decrease
in the number of shares of Common Stock issuable upon conversion of the Series A
Preferred as a result of such Share Reduction Event; provided, that in no event
shall the aggregate decrease in the number of Option Shares issuable hereunder
as a result of Share Reduction Events exceed 407.24 shares (as such number may
be adjusted from time to time to take into account future stock splits,
combinations, stock dividends and similar adjustments).

         3.3 Initial Grant of Options. Options were granted as of the Effective
Date to Philip B. Smith to purchase 259.857 shares of Common Stock. Said Options
shall be surrendered in exchange for one or more Options for a like amount under
an Option Agreement with appropriate insertions so that the terms thereof are
equivalent to those of the Options so surrendered.

         3.4 Additional Grants of Options. Options shall be granted as of the
Amendment Date to certain Employees, as determined by the Board, to purchase
additional shares of Common Stock. Such Options shall be evidenced by Option
Agreements dated the Amendment Date, with appropriate insertions.

         3.5 Subsequent Grants of Options. After the initial and additional
grants of options pursuant to Sections 3.3 and 3.4 above, the Board may at any
time grant Options to purchase any of the remaining Option Shares authorized
under Section 3.2 above to any Person then serving as an Employee of the Company
and/or any of its subsidiaries and/or affiliates on the date of such grant;
provided, that, if Options to purchase the maximum number of Option Shares
permitted by Section 3.2 above shall have not been granted before the earlier of
(i) the termination of this Plan, (ii) a Change in Control or (iii) a Going
Public Event, then Options to purchase all remaining Option Shares shall be
deemed to have been granted to Employees then holding Options, pro rata to the
number of Option Shares represented by such Options, immediately before the
occurrence of such termination, Change or Event.





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                                   ARTICLE IV
                               GENERAL PROVISIONS

         4.1 Termination of Plan. This Plan shall terminate on the earlier of
(i) the Expiration Date, (ii) the date the Board adopts a resolution terminating
this Plan, or (iii) the date of any event which accelerates the vesting of all
outstanding Options. After termination of this Plan, no Options shall be granted
under this Plan, but the Company shall continue to recognize Options previously
granted to the extent such Options shall not have expired or been exercised.

         4.2 Amendment of Plan. The Board may from time to time amend, modify,
suspend or terminate this Plan. Nevertheless, no such amendment, modification,
suspension or termination shall impair any Options theretofore granted under
this Plan or deprive any Holder of any shares of Common Stock which such Holder
might have acquired through or as a result of this Plan.

         4.3 Treatment of Proceeds. Proceeds from the sale of shares of Common
Stock pursuant to Options granted under this Plan shall constitute general funds
of the Company.

         4.4 Effectiveness. This Plan became effective as of the Effective Date.


         4.5 Paragraph Headings. The paragraph headings included herein are only
for convenience, and they shall have no effect on the interpretation of this
Plan.


                                   CERTIFICATE

         The foregoing is a true and correct copy of the Amended and Restated
Option Plan as authorized and approved by the Board of Directors of the Company
and effective as of June 29, 1999.


                                                 /s/ Philip B. Smith
                                                 ------------------------------
                                                 Philip B. Smith
                                                 Chairman, President and
                                                 Chief Executive Officer


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