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                                                                   EXHIBIT 10(k)


                               ENERGEN CORPORATION
                       ANNUAL INCENTIVE COMPENSATION PLAN
                      As amended effective October 1, 2001

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Article                                Description                              Page
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      I.                        Purpose                                          1

      II.                       Policy                                           1

      III.                      Scope                                            1

      IV.                       Terms and Definitions                            1

      V.                        Control Responsibility                           3

      VI.                       Plan Design                                      4

      VII.                      Deferral Arrangements                            5

      VIII.                     Participant Eligibility and                      5
                                       Partial Year Awards

      IX.                       Taxes and Effect on Other Benefits               6

      X.                        Termination and/or Amendments                    6

      XI.                       Assignments or Transfers                         6

      XII.                      Payment of Awards                                7

      Attachment         Fiscal Year Potential Incentive

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                               ENERGEN CORPORATION
                       ANNUAL INCENTIVE COMPENSATION PLAN

I.       PURPOSE: Attract, retain and motivate key management personnel for
         Energen and its subsidiaries while promoting a team spirit and the pay
         for performance concept.


II.      POLICY: It is the policy of Energen and its subsidiaries to provide an
         incentive compensation plan which rewards superior performance that
         benefits:

         -        Stockholders (earnings plus capital appreciation)

         -        Customers (quality service and products)

         -        Management (income)


III.     SCOPE: This Incentive Compensation Plan is applicable to key executive
         management personnel of Energen and its subsidiaries as recommended by
         the CEO and approved by the ORC.


IV.      TERMS AND DEFINITIONS

         4.01 Attachment - For each Plan Year, an attachment to this Plan
         setting forth for such Plan Year the Participants, the Base Incentive
         Factor, Potential Bonus Pool, Maximum, and such other items as may be
         approved by the ORC.

         4.02 Base Incentive Factor - A number expressed in terms of "percent of
         salary" that each Participant is potentially eligible to receive based
         on Energen Performance (see Attachment).

         4.03 Board of Directors - The Board of Directors of Energen.

         4.04 CEO - The Chief Executive Officer of Energen.

         4.05 Competitive - The Energen financial median performance objective.



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         4.06 Energen - Energen Corporation

         4.07 Energen Performance - The Energen financial performance objectives
         approved by the ORC.

         4.08 Incentive Award - The annual cash incentive payment based on
         Energen, subsidiary and individual performance, as applicable.

         4.09 Individual Performance Factor - An adjustment to the Base
         Incentive Factor based on measurement of individual Participant
         performance.

         4.10 Maximum - The maximum is controlled by the individual maximum caps
         (see Section 6.05 and Attachment) and Energen net income (see Incentive
         Pool footnote on Attachment).

         4.11 ORC - The Officer Review Committee of the Board of Directors.

         4.12 Participant - An executive employee of Energen and/or an Energen
         subsidiary recommended by the CEO and approved by the ORC to
         participate in the Plan (see Attachment).

         4.13 The Plan - This Annual Incentive Compensation Plan as amended from
         time to time.

         4.14 Plan Year - Fiscal year October 1 through September 30.

         4.15 Potential Incentive Pool - The potential amount of money available
         for distribution for different levels of Energen performance results
         (see Attachment).

         4.16 Salary - The actual salary earned by the Participant during the
         applicable Plan Year. Salary shall be determined without reduction for
         salary amounts deferred by the Participant pursuant to the Energen
         Corporation 1997 Deferred Compensation Plan and without increase for
         any amounts distributed to the Participant under said Deferred
         Compensation Plan.

         4.17 Subsidiary Performance Factor - An adjustment to the Base
         Incentive Factor based on measurement of selected performance
         objectives (earnings and other) for a subsidiary.

         4.18 Target - The Energen financial performance "stretch" objective

         4.19 Threshold - The Energen financial performance objective below
         which no incentive awards will be made regardless of subsidiary or
         individual performance.


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V.       CONTROL RESPONSIBILITY

         5.01 The Board of Directors will approve Energen Performance objectives
         on recommendation of the ORC on an annual basis.

         5.02 The ORC will administer the Plan, which will include approval of:

              a.       Participants

              b.       Energen Performance Objectives

              c.       Potential Incentive Pool

              d.       Subsidiary Performance Factor results

              e.       Individual Performance Factor results and individual
                       incentive award results for the CEO and all
                       Participants directly reporting to the CEO

         5.03 The Energen CEO will approve:

              a.       The establishment of Subsidiary Performance Factor
                       objectives in conjunction with the subsidiary presidents.

              b.       The Individual Performance Factor objectives and the
                       individual incentive awards for all other Participants.

VI.      PLAN DESIGN

         6.01 Potential Incentive Pool - The Potential Incentive Pool is
         expressed as a pool of dollars available for distribution based on
         Energen Performance as covered in Section 6.02 (see Attachment).

         6.02 Energen Performance - Base Incentive Factor - Energen Performance
         includes financial objectives for Threshold, Competitive, Target, and
         Maximum award levels. Energen Performance therefore dictates the Base
         Incentive Factor (see Attachment) which is used in the following
         formula to determine the individual incentive award:


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      Incentive Award  = Salary  X  Base Incentive Factor  X
                                    ---------------------
                         Subsidiary Performance Factor X
                         Individual Performance Factor

      If a Subsidiary Performance Factor or Individual Performance Factor is not
      applicable to a Participant's individual incentive award then it shall be
      measured as 1.0 for purposes of the Incentive Award formula.

      6.03 Subsidiary Performance - The CEO in consultation with the subsidiary
      presidents may establish criteria for evaluating subsidiary performance.
      In determining the individual incentive award for a Participant, the Base
      Incentive Factor is adjusted for subsidiary performance. The subsidiary
      Performance Factor will typically range from 0.50 to 1.50 although
      individual components may have tighter or broader ranges.

      6.04 Individual Performance - Participants may be required to meet or
      exceed certain individual performance criteria prior to earning an
      incentive award. Participants may be required to establish with their
      supervisor key objectives, both strategic and operational, for the fiscal
      year. Incentive Awards will be adjusted based on Individual Performance
      Factor measurement of the achievement of these objectives.

      Typically, each individual performance objective will be assigned a weight
      and the sum will be equal to 100. At the end of the plan year the
      Participant's overall performance on such objectives will be rated as
      follows:

             a.  Unacceptable          -        0
             b.  Effective             -      1.0
             c.  Highly Effective      -      1.5
             d.  Outstanding           -      2.0

      The Individual Performance Factor is calculated as follows:

      Sum Total of  = Objective Weight  X  Rating
                      ---------------------------
                                           100

      The Attachment may also provide for by the ORC to set an Individual
      Performance Factor using such objective or subjective criteria as it
      may select in its discretion.

      6.05 Control Measure - Individual Maximum Bonus Potential - Maximum
      individual awards will be established for each group of Participants
      (see Attachment).


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VII.  DEFERRAL ARRANGEMENTS:

      A Participant may elect to defer an award payment in accordance with the
      terms of the Energen Corporation 1997 Deferred Compensation Plan and upon
      such deferral shall have no further right to such award other than as
      provided under said Deferred Compensation Plan.


VIII. PARTICIPANT ELIGIBILITY AND PARTIAL YEAR AWARDS

      8.01 A Participant in this Plan will be a key executive of the Company
      recommended by the CEO and approved by the ORC.

      8.02 An individual is a Participant for a Plan Year only if he or she
      has been recommended by the CEO and approved by the ORC for that Plan
      Year.

      8.03 A Participant who vacates an eligible position during the plan
      year due to retirement, disability or death will be included in the
      Plan on a pro rata basis (number of months worked during the year
      divided by 12). No Payments will be made to Participants who otherwise
      vacate an eligible position during a Plan Year except as may otherwise
      be determined by the ORC in its discretion.

      8.04 Payments for partial year Participants under Section 8.03 will be
      made at the end of the Plan Year in conjunction with all other awards.


IX.   TAXES AND EFFECT ON OTHER BENEFITS

      9.01 Any award shall be considered as compensation for tax purposes and
      there shall be deducted from the payment the amount of any tax required by
      any governmental authority.

      9.02 Incentive award payments will not be considered as wages, salaries or
      compensation under any of the employee fringe benefit plans of Energen or
      its subsidiaries, except as otherwise expressly provided in an applicable
      plan document.


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X.    TERMINATION AND/OR AMENDMENTS

      10.1 The Board of Directors may terminate the Plan at any time and may
      from time to time amend the Plan.


XI.   ASSIGNMENTS OR TRANSFER

      11.1 Neither the Participant, Participant's beneficiary, nor the
      Participant's personal representative shall have any rights to commute,
      sell, assign, transfer or otherwise convey the right to receive any
      payments or awards under this Plan. Such payments or awards are
      non-assignable and non-transferable and any attempt to assign or transfer
      payments or awards shall be void and have no effect.

XII.  PAYMENT OF AWARDS

12.1  At the end of the Plan Year the annual Incentive Awards will be paid by
      payroll check as soon as practicable after all evaluations and approvals
      are complete, provided that any amounts, the payment of which has been
      deferred by the Participant under the Energen Corporation 1997 Deferred
      Compensation Plan, shall be payable in accordance with the terms of that
      plan.

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As adopted April 1986, and subsequently amended May 1990, October 1993, April
25, 1997, and October 24, 2001, effective as of October 1, 2001.


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                                                        Assistant Secretary


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