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                                                                   EXHIBIT 10.38


                              EMPLOYMENT AGREEMENT

This agreement is made and entered into as of the 1st day of December, 1997, by
and between TRANSTEXAS GAS CORPORATION, hereinafter called "COMPANY" and ARNOLD
BRACKENRIDGE , hereinafter called "EMPLOYEE".

1. The term of this Agreement is for one year commencing on December 01, 1997,
and ending on December 1 , 1998. Thereafter EMPLOYEE shall be considered an "at
will" Employee subject to termination for any cause at any time. This agreement
may be terminated prior to the end of the term pursuant to paragraph 6,7,or 8
hereof.

2. The COMPANY agrees to employ EMPLOYEE for the term of this Agreement, and
EMPLOYEE shall have and fulfill such duties, responsibilities and obligations as
are usual and customary for the Vice President and Chief Operating Officer,
subject to the direction and control of the Board of Directors and the Chief
Executive Officer.

3. EMPLOYEE agrees EMPLOYEE will faithfully and diligently serve the COMPANY to
the best of his ability.

4. During his service hereunder, EMPLOYEE'S salary shall be $500,000.00 per
year payable in installments in accordance with the COMPANY'S regular payroll
practices. EMPLOYEE shall also receive a $250,000 guaranteed annual bonus with
1/2 of this amount paid upon notification by Arnold Brackenridge.

5. At such costs and eligibility restrictions applicable to all employees,
EMPLOYEE shall participate in all plans and benefits generally applicable or
available to employees of the COMPANY, including but not limited to health,
hospital and surgical benefits, disability, life insurance plans, and AD & D
insurance.

         a. During his service hereunder, EMPLOYEE shall receive FOUR WEEKS (4)
         of vacation per calendar year.

6. This agreement shall be terminable by the COMPANY for "cause" without advance
notice. In the event of such termination properly for cause, the salary set
forth above shall cease on the effective date of termination, however, benefits
earned to date shall be paid in full. "Cause" shall mean:

         a. Neglect or mismanagement by EMPLOYEE of his duties, responsibilities
         and obligations which either significantly damages or could have
         significantly damaged the property or interest of the COMPANY; or

         b. Material breach of this Agreement by EMPLOYEE; or

         c. Inability of EMPLOYEE to perform his duties, responsibilities and
         obligations by reason of illness, accident or other incapacity for a
         continuous period of six months.

7. This Agreement shall be terminable by EMPLOYEE for cause. In the event that
EMPLOYEE terminates this Agreement properly for cause within thirty days after
he knows or should have known of the existence of such cause, the COMPANY shall
be obligated to pay EMPLOYEE his salary up to the effective date of such
termination and severance as hereinafter provided.

"Cause" shall mean:

         a. Wrongful behavior or willful neglect by the COMPANY, not caused by 
         EMPLOYEE; or





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         b. Material breach of its obligations under this Agreement by the
         COMPANY; or

         c. Sale, reorganization or merger of the COMPANY resulting in a change
         in the actual control of the COMPANY.

8. The COMPANY shall have the right to terminate this Agreement without cause by
giving EMPLOYEE written notice of such termination and paying him severance as
set forth in paragraph 9.

9. In the event that the COMPANY terminates EMPLOYEE other than for cause before
the end of the term of this Agreement, or EMPLOYEE terminates this Agreement for
cause before the end of the term of this Agreement, The COMPANY shall pay to
EMPLOYEE his salary for the remaining term of this Agreement plus an additional
six months salary ($           ).

10. The entire understanding and agreement between the parties has been
incorporated into this Agreement. This Agreement shall inure to the benefit of,
and shall be binding upon the COMPANY, its successors and assigns and upon
EMPLOYEE and his heirs, successors, and assigns. EMPLOYEE agrees that this
Agreement may be assigned by the COMPANY to a subsidiary, affiliate, or
successor of the COMPANY; such assignments, however, shall not relieve the
COMPANY of any of its obligations hereunder except to the extent that such
obligations are actually paid and discharged by such subsidiary, affiliate, or
successor. This agreement may not otherwise be assigned without the prior
written approval of the other party.

11. This agreement shall be renewable on an annual basis; however, in the event
that the Company terminates Employee other than for cause before the end of the
term of the renewed agreement, or Employee terminates this Agreement for cause
before the end of the term of the renewed agreement, the Company shall pay to
Employee his salary to the date of his termination plus an additional six months
salary ($            ).

12. Any disputes concerning or arising out of interpretation or application of
this Agreement shall be determined by final and binding arbitration under and in
accordance with the rules and procedures of the American Arbitrations
Association provided that the dispute is submitted to arbitration by written
demand therefor delivered to and received by the other party within sixty days
after occurrence of the event giving rise to the dispute.

13. If there is a conflict between the COMPANY personnel policies and this
Agreement, this Agreement shall prevail.

TRANSTEXAS GAS CORPORATION                  MR. ARNOLD BRACKENRIDGE


BY                                          BY
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DATE                                        DATE
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