EXHIBIT 10.1

ANNUAL PERFORMANCE INCENTIVE AWARD PLAN

The  following  is a  description  of the KCS Energy,  Inc.  Annual  Performance
Incentive Award Plan (the "Plan") provided pursuant to Item 601  (6)(10)(iii)(A)
of Regulation S-K, which requires a written  description of a compensatory  plan
when no formal document contains the compensation information.

The Plan is designed to reward executive  officers and company employees for the
achievement of annual performance objectives.  The annual performance objectives
are reviewed  and approved by the  Compensation  Committee  for their  potential
contribution to the creation of stockholder  value and may include such measures
as production  levels,  oil and gas reserve  additions,  finding and development
costs, lease operating expenses,  debt reduction,  profitability,  cash flow and
strategic objectives. All performance objectives are established and recommended
by the Chief Executive  Officer and Chief Operating  Officer and approved by the
Board of Directors within 90 days of the start of the calendar year.

Executive  officers are assigned  threshold,  target and maximum incentive award
opportunities  based  on the  executive's  position.  Annual  award  levels  are
reviewed   periodically   by  the   Compensation   Committee  to  ensure  market
competitiveness and adjustments may be made based on the review. Set forth below
are the current  annual  incentive  target award levels as a percentage  of base
salary for the Chief  Executive  Officer  and each of the four other most highly
compensated executive officers for 2005. The threshold award level is 50% of the
target  award  level and the  maximum  award  level is 200% of the target  award
level.

            Officer                      Target
-----------------------------------------------

James Christmas
Chairman, Chief Executive Officer          55%

William Hahne
President, Chief Operating Officer         50%

Harry Stout
Sr. VP, Marketing/Risk Management          30%

Joseph Leary
Vice President and
Chief Financial Officer                    30%

Frederick Dwyer
Vice President, Controller/Secretary       25%

Actual payments made under the Plan between  threshold and maximum are dependent
on achievement of established performance objectives. The Compensation Committee
and the Board of Directors retain discretion to award bonuses below threshold or
above the maximum award level.

In 2004, the annual  performance  objectives for the  Corporation  were based on
production  levels,  finding and  development  costs,  reserve  replacement  and
various  strategic  objectives.  For the Mid-Continent and Gulf Coast divisions,
the  performance  objectives  were  based  on  production  levels,  finding  and
development costs,  reserve  replacement,  lease operating expenses and specific
divisional strategic objectives.

In 2005, the annual performance  objectives for the Corporation will be based on
production levels, finding and development cost, reserve replacement and various
strategic  objectives.  For the  Mid-Continent  and Gulf  Coast  divisions,  the
performance   objectives  will  be  based  on  production  levels,  finding  and
development  costs,  reserve  additions,  lease operating  expenses and specific
divisional strategic objectives.

After the end of the calendar year, the  Compensation  Committee  determines the
extent to which the performance objectives were achieved and approves the amount
of the award to be paid to each executive  officer,  with its determination with
respect  to the  Chairman  and Chief  Executive  Officer  being  subject  to the
approval  of the  independent  members  of the Board of  Directors.  Payment  of
bonuses,  if any,  is normally  made in March  after the end of the  performance
period during which the bonuses were earned and after the audit of the financial
statements is complete.  Bonuses  normally will be paid in cash in a single lump
sum, subject to payroll taxes and tax withholding.