EXHIBIT 10.4
                              GULFWEST ENERGY INC.
                     2004 STOCK OPTION AND COMPENSATION PLAN

ARTICLE I.
                                     GENERAL

         1.1.  NAME.  This plan will be known as the "GulfWest  Energy Inc. 2004
Stock Option and Compensation  Plan."  Capitalized terms used herein are defined
in Article V hereof.

         1.2.  PURPOSE.  The  purpose of the Plan is to  promote  the growth and
general  prosperity of the Company by permitting the Company to grant to its key
employees Options to purchase Common Stock of the Company.  The Plan is designed
to help the Company  attract and retain  superior  personnel  for  positions  of
substantial responsibility and to provide employees with an additional incentive
to contribute to the success of the Company.

         1.3. EFFECTIVE DATE. The Plan will be effective as of April 1, 2004.

         1.4.  ELIGIBILITY  TO  PARTICIPATE.  Any of the Company's key employees
(including officers) will be eligible to participate in the Plan.

         1.5.  MAXIMUM NUMBER OF SHARES OF COMMON STOCK SUBJECT TO OPTIONS.  The
shares of Common Stock  subject to Options  granted  pursuant to the Plan may be
either  authorized and unissued shares or shares issued and thereafter  acquired
by the Company. Subject to adjustment pursuant to the provisions of Section 4.2,
and subject to any  additional  restrictions  elsewhere in the Plan, the maximum
aggregate  number of shares of Common Stock that may be issued from time to time
pursuant  to the  exercise  of Options  shall be one  million,  six  hundred ten
thousand (1,610,000).  The maximum number of shares of Common Stock with respect
to which Options may be granted to any  participant  in the Plan during the term
of the Plan is 500,000.  Plan  Shares  with  respect to which an Option has been
exercised will not again be available for grant hereunder.  If Options terminate
for any reason  without  being  wholly  exercised,  new  Options  may be granted
hereunder  covering  the number of Plan Shares to which such Option  termination
relates.

         1.6. ADMINISTRATION. The Plan will be administered by the Board or by a
committee of directors (the "Stock Option Committee") appointed by the Board. As
used herein, unless otherwise indicated, "Committee" shall mean the Board or the
duly appointed Stock Option Committee, as applicable.  Subject to the provisions
of the Plan,  the  Committee  will have the sole  discretion  and  authority  to
determine  from time to time the  employees  to whom Options will be granted and
the number of Plan Shares  subject to each  Option,  to interpret  the Plan,  to
prescribe,  amend and rescind any rules and regulations necessary or appropriate
for the  administration  of the Plan, to determine and interpret the details and
provisions of each Option Agreement,  to modify or amend any Option Agreement or
waive any  conditions or  restrictions  applicable to any Option or the exercise
thereof,  and to make all other  determinations  necessary or advisable  for the
administration  of the Plan.  Except when the  Committee  consists of the entire
Board,  the Committee  shall consist  solely of two or more persons who are both
"nonemployee  directors" within the meaning of Rule 16b-3 under the Exchange Act
and "outside directors" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

<PAGE>

         A majority of the members of the  Committee  will  constitute a quorum,
and any  action  taken by a  majority  present at a meeting at which a quorum is
present or any action taken without a meeting evidenced by a writing executed by
all members of the Committee will constitute the action of the Committee.

         1.7.  CONDITIONS  PRECEDENT.  The Company will not issue or deliver any
Option  Agreement or any  certificate for Plan Shares pursuant to the Plan prior
to fulfillment of all of the following conditions:

         (A) The admission of the Plan Shares to listing on all stock  exchanges
on which the Common Stock is then listed, unless the Committee determines in its
sole discretion that such listing is neither necessary nor advisable;

         (B) The completion of any  registration or other  qualification  of the
sale of the Plan  Shares  under any federal or state law or under the rulings or
regulations of the Securities and Exchange  Commission or any other governmental
regulatory  body that the Committee in its sole  discretion  deems  necessary or
advisable; and

         (C) The obtaining of any approval or other  clearance  from any federal
or  state  governmental  agency  that  the  Committee  in  its  sole  discretion
determines to be necessary or advisable.

         1.8.  RESERVATION  OF SHARES OF COMMON  STOCK.  During  the term of the
Plan,  the Company will at all times reserve and keep  available  such number of
shares of Common Stock as may be necessary  to satisfy the  requirements  of the
Plan as to the number of Plan Shares. In addition, the Company will from time to
time,  as is necessary  to  accomplish  the  purposes of the Plan,  use its best
efforts to obtain from any regulatory  agency having  jurisdiction any requisite
authority necessary to issue Plan Shares hereunder. The inability of the Company
to obtain from any regulatory agency having jurisdiction the authority deemed by
the Company's counsel to be necessary for the lawful issuance of any Plan Shares
will relieve the Company of any liability in respect of the  nonissuance of Plan
Shares as to which the requisite authority has not been obtained.

         1.9. TAX WITHHOLDING.

         (A)  CONDITION  PRECEDENT.  The  issuance,  delivery or exercise of any
Options or Plan Shares under the Plan is subject to the condition that if at any
time the Committee  determines,  in its  discretion,  that the  satisfaction  of
withholding tax or other  withholding  liabilities  under any federal,  state or
local law is necessary or desirable as a condition  of, or in  connection  with,
the  issuance,  delivery or exercise  of the  Options or Plan  Shares,  then the
issuance,  delivery  or  exercise  thereof  will  not be  effective  unless  the
withholding  has  been  effected  or  obtained  in a  manner  acceptable  to the
Committee.

         (B)  MANNER  OF  SATISFYING  WITHHOLDING  OBLIGATION.  When a person is
required  to pay  to  the  Company  an  amount  required  to be  withheld  under
applicable  income tax laws in connection  with the exercise of an Option or the
payment of a director fee, such payment may be made (i) in cash,  (ii) by check,
(iii)  through the  withholding  by the  Company  ("Company  Withholding")  of a
portion of the Plan Shares  acquired  upon the  exercise of the Option  having a
Fair  Market  Value  on the  date  the  amount  of tax to be  withheld  is to be
determined equal to the amount required to be withheld or (iv) in any other form
of  valid  consideration,  as  permitted  by the  Committee  in its  discretion;
provided  that a person who is required to file reports  under Section 16 of the
Exchange  Act  shall  not be  permitted  to elect  to  satisfy  his  withholding
obligation  through Company  Withholding;  provided further,  however,  that the
Committee,  in its sole discretion,  may require that such person's  withholding
obligation be satisfied through Company Withholding.

                                       2
<PAGE>

         1.10. EXERCISE OF OPTIONS.

         (A) METHOD OF EXERCISE.  Each Option will be  exercisable in accordance
with the terms of the Option Agreement pursuant to which the Option was granted.
Any Option will be deemed to be exercised  for purposes of the Plan when written
notice of exercise has been received by the Company at its principal office from
the person  entitled to exercise the Option and payment for the Plan Shares with
respect to which the Option is  exercised  has been  received  by the Company in
accordance  with paragraph (b) below.  No Option may be exercised for a fraction
of a Plan Share.

         (B) PAYMENT OF PURCHASE  PRICE.  The purchase  price of any Plan Shares
purchased will be paid at the time of exercise of the Option either (i) in cash,
(ii) by certified or  cashier's  check,  (iii) by cash or certified or cashier's
check  for the par  value  of the Plan  Shares  plus a  promissory  note for the
balance of the purchase price, which note will contain such terms and provisions
as the Committee may permit, including without limitation the right to repay the
note  partially  or wholly  with  Common  Stock,  (iv) by  delivery of a copy of
irrevocable  instructions  from the  Optionee to a broker or dealer,  reasonably
acceptable  to the Company,  to sell certain of the Plan Shares  purchased  upon
exercise of the Option or to pledge them as  collateral  for a loan and promptly
deliver to the Company the amount of sale or loan proceeds necessary to pay such
purchase price or (v) in any other form of valid consideration,  as permitted by
the Committee.  If any portion of the purchase price or a note given at the time
of exercise is paid in shares of Common  Stock,  those  shares will be valued at
the then Fair Market Value.

         1.11.  ACCELERATION OF RIGHT OF EXERCISE OF OPTIONS.  In the case of an
Option not otherwise  exercisable  in full,  the Committee  may  accelerate  the
exercisability  of such Option in whole or in part at any time.  Notwithstanding
the  provisions  of any Option  Agreement  regarding the time for exercise of an
Option, the following provisions will apply:

         (A) MERGERS  AND  REORGANIZATIONS.  If the Company or its  shareholders
enter into an agreement to dispose of all or substantially  all of the assets of
the Company by means of a sale, merger or other  reorganization,  liquidation or
otherwise  in  a  transaction   in  which  the  Company  is  not  the  surviving
corporation,  any Option will become immediately exercisable with respect to the
full number of shares subject to that Option during the period  commencing as of
the date of the agreement to dispose of all or  substantially  all of the assets
of the Company and ending when the  disposition of assets  contemplated  by that
agreement is  consummated  or the Option is otherwise  terminated  in accordance
with its  provisions or the  provisions of the Article  pursuant to which it was
granted,  whichever  occurs first;  provided that no Option will be  immediately
exercisable  under this  section on account of any  agreement of merger or other
reorganization  when the  shareholders  of the  Company  immediately  before the
consummation  of the  transaction  will own at least fifty  percent of the total
combined  voting power of all classes of stock entitled to vote of the surviving
entity  immediately  after the consummation of the transaction.  The Option will
not  become  immediately  exercisable  if the  transaction  contemplated  in the
agreement is a merger or reorganization in which the Company will survive.

         (B)  CHANGE  IN  CONTROL.  In the  event  of a  change  in  control  or
threatened  change in control of the Company,  all Options  granted prior to the
change in  control  or  threatened  change in control  will  become  immediately
exercisable. The term "change in control" for purposes of this section refers to
the  acquisition  of 25% or more of the voting  securities of the Company by any
person or by persons acting as a group within the meaning of Section 13(d)(3) of
the Exchange  Act (other than an  acquisition  by a person or group  meeting the
requirements of clauses (i) and (ii) of Rule 13d-1(b)(1)  promulgated  under the
Exchange  Act);  provided  that no change in  control  or  threatened  change in
control will be deemed to have occurred if prior to the acquisition of, or offer
to acquire,  ten percent or more of the voting  securities  of the Company,  the
full  Board  has  adopted  by  not  less  than  two  thirds  vote  a  resolution
specifically approving such acquisition or offer. The term "person" for purposes
of this section  refers to an individual or a corporation,  partnership,  trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. Whether
a change in control is threatened will be determined solely by the Committee.

                                       3
<PAGE>

         1.12.  COMPLIANCE WITH SECURITIES  LAWS. Plan Shares will not be issued
with respect to any Option or director fee unless the exercise of the Option (if
applicable)  and the issuance and delivery of the Plan Shares  complies with all
relevant  provisions of federal and state law,  including without limitation the
Securities  Act,  the  rules  and  regulations  promulgated  thereunder  and the
requirements  of any  stock  exchange  upon  which the Plan  Shares  may then be
listed,  and will be further  subject to the approval of counsel for the Company
with respect to such  compliance.  The Committee may also require an Optionee or
director  fee  recipient  to  furnish  evidence  satisfactory  to  the  Company,
including  without  limitation  a written and signed  representation  letter and
consent  to be  bound  by any  transfer  restrictions  imposed  by law,  legend,
condition  or  otherwise,  that the Plan  Shares  are  being  acquired  only for
investment and without any present intention to sell or distribute the shares in
violation  of any  federal  or state  law,  rule or  regulation.  Further,  each
Optionee or director fee recipient will consent to the imposition of a legend on
the  certificate  representing  the Plan Shares  issued upon the exercise of the
Option or the payment of a director fee,  restricting their  transferability  as
required by law or by this section.

         1.13.  EMPLOYMENT  OF  OPTIONEE.  Nothing  in the Plan or in any Option
granted  hereunder  will  confer  upon  any  Optionee  any  right  to  continued
employment  by the  Company or any of its  subsidiaries  or limit in any way the
right of the Company or any  subsidiary  at any time to  terminate  or alter the
terms of that employment.

         1.14. TRANSFERABILITY OF OPTIONS. The Committee may, in its discretion,
provide  in  any  Option  Agreement  that  Options  granted   hereunder  may  be
transferred  by the holder  thereof upon five days prior  written  notice to the
Company, subject to compliance with applicable securities laws.

         1.15.  INFORMATION  TO  OPTIONEES.  The  Company  will  furnish to each
Optionee copies of annual reports,  proxy  statements and all other reports sent
to the Company's shareholders. Upon written request, the Company will furnish to
each  Optionee  a copy of its most  recent  Annual  Report on Form 10-K and each
quarterly  report to  shareholders  issued since the end of the  Company's  most
recent fiscal year.

                                       4
<PAGE>

         1.16.  PLAN  BINDING ON  SUCCESSORS.  The Plan will be binding upon the
successors and assigns of the Company and any of its subsidiaries that adopt the
Plan.

                                  ARTICLE II.
                                TERMS OF OPTIONS

         2.1. NATURE OF OPTIONS. Options may be only Nonqualified Options.

         2.2.  DURATION OF OPTIONS.  Each Option  granted under this Article and
all rights  thereunder will expire on the date determined by the Committee,  but
in no event will any Option  granted  under this  Article  expire later than ten
years after the date on which the Option is granted.

         2.3. RIGHTS UPON  TERMINATION OF EMPLOYMENT OR SERVICE AS A DIRECTOR OR
ADVISOR. The Committee shall have discretion to include in each Option Agreement
such provisions regarding exercisability of Options following the termination of
an Optionee's  employment or service as a director or Advisor as the  Committee,
in its sole discretion, deems to be appropriate.

         2.4.  PURCHASE  PRICE.  The  purchase  price for Plan  Shares  acquired
pursuant  to the  exercise,  in whole or in part,  of any Option may not be less
than the Fair  Market  Value of the Plan  Shares at the time of the grant of the
Option.

         2.5.  INDIVIDUAL OPTION  AGREEMENTS.  Each Optionee will be required to
enter  into a  written  Option  Agreement  with  the  Company.  In  such  Option
Agreement,  the Employee  will agree to be bound by the terms and  conditions of
the Plan and such other matters as the Committee deems appropriate.

                                  ARTICLE III.
                      AMENDMENT, TERMINATION AND ADJUSTMENT

         3.1. AMENDMENT AND TERMINATION. The Plan will terminate on February 11,
2005. No Options will be granted under the Plan after that date of  termination.
The Committee  may at any time amend or revise the terms of the Plan,  including
the  form  and  substance  of the  Option  Agreements  to be used in  connection
herewith. No amendment,  suspension, or termination of the Plan may, without the
consent of the Optionee who has  received an Option  hereunder,  alter or impair
any of that Optionee's  rights or obligations under any Option granted under the
Plan prior to that amendment, suspension, or termination.

         3.2.  ADJUSTMENT.   If  the  outstanding  Common  Stock  is  increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities through merger, consolidation, combination, exchange of shares, other
reorganization, recapitalization,  reclassification, stock dividend, stock split
or reverse stock split, an appropriate and proportionate adjustment will be made
in the maximum number and kind of Plan Shares as to which Options may be granted
and director fees paid under the Plan. A  corresponding  adjustment will be made
in the number or kind of shares allocated to and purchasable  under  unexercised
Options  or  portions  thereof  granted  prior  to any  such  change.  Any  such
adjustment in  outstanding  Options will be made without change in the aggregate
purchase price applicable to the unexercised  portion of the Option,  but with a
corresponding  adjustment  in the price  for each  share  purchasable  under the
Option. The foregoing adjustments and the manner of application of the foregoing
provisions will be determined  solely by the Committee,  and any such adjustment
may provide for the elimination of fractional share interests.

                                       5
<PAGE>

                                   ARTICLE IV.
                                   DEFINITIONS

         As used herein with initial capital  letters,  the following terms have
the meanings  hereinafter set forth unless the context clearly  indicates to the
contrary:

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

         4.2.  "Code" means the Internal  Revenue Code of 1986,  as from time to
time amended.

         4.3. "Committee" shall have the meaning set forth in Section 1.6.

         4.4.  "Common  Stock" means the Class A Common Stock,  par value $0.001
per share, of the Company or, in the event that the  outstanding  shares of such
Common Stock are  hereafter  changed into or exchanged for shares of a different
stock or security of the Company or some other corporation,  such other stock or
security.

         4.5. "Company" means Gulfwest Energy Inc., a Texas corporation.

         4.6. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

         4.7.  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

         4.8.  "Fair Market Value" means such value as will be determined by the
Committee on the basis of such factors as it deems appropriate; provided that if
the Common Stock is traded on a national  securities exchange or transactions in
the Common Stock are quoted on the NASDAQ  National  Market  System,  such value
will be determined by the Committee on the basis of the last reported sale price
for the Common Stock on the date for which such  determination  is relevant,  as
reported  on the  national  securities  exchange or the NASDAQ  National  Market
System,  as the case may be. If the Common Stock is not listed and traded upon a
recognized  securities  exchange or on the NASDAQ  National  Market System,  the
Committee  will make a  determination  of Fair Market  Value on the basis of the
closing  bid and asked  quotations  for such  stock on the date for  which  such
determination is relevant (as reported by a recognized stock quotation  service)
or, in the event that there will be no bid or asked  quotations  on the date for
which such determination is relevant,  then on the basis of the mean between the
closing bid and asked  quotations  on the date  nearest  preceding  the date for
which such  determination  is relevant  for which such bid and asked  quotations
were available.

                                       6
<PAGE>

         4.9.  "Nonqualified Option" means an Option that does not qualify as an
"incentive option," as defined in Section 422 of the Code.

         4.10. "Option" means a stock option granted under the Plan.

         4.11.  "Optionee"  means an  employee,  director  or Advisor to whom an
Option has been granted hereunder.

         4.12.  "Option Agreement" means an agreement between the Company and an
Optionee with respect to one or more Options.

         4.13.  "Plan"  means the  GulfWest  Energy Inc.  2004 Stock  Option and
Compensation Plan, as amended from time to time.

         4.14.  "Plan Shares" means shares of Common Stock issuable  pursuant to
the Plan.

         4.15. "Securities Act" means the Securities Act of 1933, as amended.


                                       7