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                                                                   EXHIBIT 10(h)

                               ENERGEN CORPORATION
                         1997 DEFERRED COMPENSATION PLAN
                         (As amended September 23, 1998)

         Energen Corporation, an Alabama corporation, hereby establishes the
Energen Corporation 1997 Deferred Compensation Plan, effective as of April 25,
1997, in order to provide deferred compensation to directors and certain key
employees of Energen Corporation and its affiliated companies. The purpose of
the Energen Corporation Deferred Compensation Plan is to assist Energen
Corporation and its affiliated companies in retaining directors and key
employees, encouraging their long term commitment to the company's success, and
attracting new directors and key employees by offering them an opportunity to
defer compensation and participate in the success of Energen Corporation and its
affiliated companies, and allowing them to share in increases in the value of
Energen Corporation.


                                   ARTICLE I.
                                   DEFINITIONS

         Section 1.1 Definitions. When used in this document with initial
capital letters, the following terms have the meanings indicated unless a
different meaning is plainly required by the context:

                  (a) "Account" or "Accounts" means the account or accounts
established and maintained for a Participant pursuant to Article IV of the Plan.
A Participant's Account shall consist of the Participant's Investment Account
and the Participant's Company Stock Account.

                  (b) "Alagasco" means Alabama Gas Corporation, a subsidiary of
Energen Corporation.

                  (c) "Allocation Request Form" means such form or forms as may
be approved by Energen from time to time for use by a Participant to request (i)
an allocation of certain deferred compensation and/or an allocation or
reallocation of the Participant's Investment Account among available investment
options pursuant to Section 7.2(c), (ii) that certain deferred compensation be
allocated to the Participant's Company Stock Account pursuant to Section 7.1(g);
and/or (iii) diversification of part or all of the Company Stock Account
pursuant to Section 7.1(h).

                  (d) "Basin" means Basin Pipeline Corporation, a subsidiary of
Energen Corporation.

                  (e) "Board of Directors" means the Board of Directors of
Energen Corporation.




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                  (f)      "Cash Compensation" means any one or more of the
following items of compensation:

                           (i)  Base salary;

                           (ii) Awards under the Energen Corporation Annual
                           Incentive Compensation Plan (or any successor plan),
                           as amended from time to time;

                           (iii)Awards under the Energen Corporation Salaried
                           Employee Incentive Compensation Plan (or any
                           successor plan), as amended from time to time; and

                           (iv) Director fees including retainer, meeting,
                           committee, and other fees payable to a Director for
                           service in such capacity.

                  (g)      "Change in Control" means:

                           (1) The acquisition by any person, entity or "group",
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (excluding for this purpose, any employee benefit plan of Energen or
any of its 'subsidiaries" which acquires beneficial ownership of voting
securities of Energen), of beneficial ownership (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934) of 50% or more of either the
then outstanding shares of Common Stock or the combined voting power of
Energen's then outstanding voting securities, in one transaction or a series of
transactions; or

                           (2) Individuals who, as of April 25, 1997,
constituted the Board of Directors (the "Continuing Directors") cease for any
reason to constitute at least a majority of the Board of Directors, provided
that any person becoming a director of Energen subsequent to April 25, 1997,
whose election, or nomination for election by Energen's stockholders, was
approved by a vote of at least a majority of the Continuing Directors (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened solicitation with respect
to the election or removal of directors of Energen, as such terms are used in
Rule 14a-11 of Regulation 14A under the Securities Exchange Act of 1934) shall
be, for purposes of the Plan, considered as though such person were a Continuing
Director; or

                           (3) (i) The occurrence of a merger, consolidation or
reorganization of Energen in which, as a consequence of the transaction, either
the Continuing Directors do not constitute a majority of the directors of the
continuing or surviving corporation or any person, entity or "group", within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
controls 50% or more of the combined voting power of the continuing or surviving
corporation; (ii) the occurrence of any sale, lease or other transfer, in one
transaction or a series of transactions, of all or substantially all of the
assets of Energen; or (iii) the adoption by Energen of a plan for its
liquidation or dissolution.




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         For purposes of this definition of "Change in Control," the term
"subsidiary" means any corporation, the majority of the outstanding voting stock
of which is owned, directly or indirectly, by Energen.

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

                  (i) "Common Stock" means the Common Stock, par value $0.01 per
share, of Energen Corporation as such stock may be reclassified, converted or
exchanged by reorganization, merger or otherwise.

                  (j) "Company Stock Account" means an account established and
maintained for a Participant as a record of the Participant's hypothetical
investments in shares of Common Stock.

                  (k) "Deferral Election Form" means such the form or forms as
may be approved by Energen from time to time for use by a Participant to elect
to defer compensation under the Plan.

                  (l) "Director" means a member of the board of directors of a
Participating Employer.

                  (m) "Disability" means the total and permanent disability of a
Participant which entitles the Participant to a disability benefit under a
disability program sponsored or maintained by the Participant's Participating
Employer; provided, that if no such program is applicable to the Participant,
then "Disability" with respect to such Participant means that, based on medical
evidence reasonably satisfactory to Energen, the Participant is totally and
permanently unable to engage in any occupation or gainful employment for which
the Participant is reasonably suited by background, training, education or
experience.

                  (n) "Discretionary Amount" means amounts credited to a
Participant's Account pursuant to Section 4.4.

                  (o) "Distributable Event" means an event identified as such in
Section 6.1.

                  (p) "EGN" means EGN Services, Inc., a subsidiary of Energen
Corporation.

                  (q) "Energen" means Energen Corporation, an Alabama
corporation.

                  (r) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.




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                  (s)      (i) "Fair Market Value Average", (ii) "Fair Market 
Value Close", and (iii) "Fair Market Value Twenty" mean respectively:

                           (i) the average of the high and low sales prices on
                           the Composite Tape for the New York Stock Exchange -
                           Listed Stocks ("NYSE composite") for the Common Stock
                           on a specified date,

                           (ii) the closing sales price of the Common Stock on
                           the NYSE composite for a specified date, and

                           (iii) the twenty day average high and low sales
                           prices for the Common Stock on the NYSE composite for
                           the twenty business days ending on a specified date.

In the event that the Common Stock is not traded on the NYSE, the Officers
Review Committee, in its reasonable discretion, shall specify appropriate
alternative measures of Common Stock value.

                  (t)      "Heat Tech, Inc." means American Heat Tech, Inc., a
subsidiary of Energen Corporation.

                  (u)      "Investment Account" means an account established and
maintained for a Participant as a record of the Participant's hypothetical
investments in available investment options.

                  (v)      "Midtown NGV" means Midtown NGV, Inc., a subsidiary
of Energen Corporation.

                  (w)      "Officer" means an officer of a Participating
Employer elected to such position by the board of directors of such
Participating Employer.

                  (x)      "Officers Review Committee" means the Officers Review
Committee of the Board of Directors or such other person or persons as may be
designated by the Board of Directors to act on behalf of the Board of Directors
in the administration of the Plan.

                  (y)      "Participant" means an individual identified as such
under Article III of the Plan.

                  (z)      "Participating Employer" means any employer
participating in the Plan pursuant to Article II of the Plan.

                  (aa)     "Plan" means the Energen Corporation 1997 Deferred
Compensation Plan, as of its original effective date, including any amendments
thereto, which is maintained by Energen and its affiliated companies primarily
for the purpose of providing financial incentives for directors and certain key
employees of Energen and its affiliated companies.




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                 (bb)      "Qualifying Compensation" means items of compensation
which either:

                           (i) first become payable in a calendar year
                           subsequent to the calendar year of the applicable
                           election for services rendered during periods of
                           service subsequent to the date of such election; or

                           (ii) first become payable and determinable in amount
                           during a calendar year subsequent to the calendar
                           year of the applicable election and at least 180 days
                           subsequent to the date of such election.

The foregoing notwithstanding, with respect to an election made within thirty
days of the effective date of the Plan, "Qualifying Compensation" means items of
Compensation which either

                           (i) first become payable subsequent to the date of
                           the applicable election for services rendered during
                           periods of service subsequent to the date of such
                           election; or

                           (ii) first become payable and determinable in amount
                           subsequent to the date of the applicable election.

                 (cc)      "stock Compensation" means any one or more of
the following items of compensation:

                           (i) Awards under the Restricted Stock Incentive Plan
                           of Energen Corporation, as amended;

                           (ii) Awards under the Energen Corporation 1992
                           Long-Range Performance Share Plan, as amended from
                           time to time;

                           (iii)Annual or elective grants under the Energen
                           Corporation 1992 Directors Stock Plan, as amended
                           from time to time;

                           (iv) Grants under the Energen Corporation 1988 Stock
                           Option Plan, as amended from time to time; and

                           (v) Awards under the Energen Corporation 1997 Stock
                           Incentive Plan, as amended from time to time.

                 (dd)      "Taurus" means Taurus Exploration, Inc., a
subsidiary of Energen Corporation.

                 (ee)      "Taurus USA" means Taurus Exploration USA, Inc.,
a subsidiary of Taurus.




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                  (ff) "Trust" means the trust described in Section 12.4. The
Trust shall constitute an unfunded arrangement and shall not affect the status
of the Plan as an unfunded plan. Participants and their beneficiaries shall have
no beneficial ownership interest in any assets of any such Trust.

                  (gg) "Trustee" means the corporation or person or persons
selected by Energen to serve as Trustee for the Trust.

                  (hh) "Vested" means an interest in the benefit described under
the Plan which may be payable to or on behalf of the Participant in accordance
with the terms of the Plan.


                                   ARTICLE II.
                             PARTICIPATING EMPLOYERS

         Section 2.1 Eligibility. To be eligible to adopt and participate in the
Plan, an employer must be a member of the "controlled group" of corporations,
within the meaning of Section 414 of the Code, that includes Energen and must be
determined to be eligible to participate in the Plan by Energen. The
corporations which are eligible to participate in this Plan as of April 25,
1997, are Energen, Alagasco, Taurus, Taurus USA, Basin, EGN, Heat Tech, and
Midtown NGV.

         Section 2.2 Participation Reimbursements. Energen, the sponsor of the
Plan, Alagasco, Taurus, Taurus USA, Basin, EGN, Heat Tech and Midtown NGV are
Participating Employers in the Plan effective as of April 25, 1997. Any other
affiliated company that is or becomes eligible to adopt the Plan and become a
Participating Employer pursuant to Section 2.1 of the Plan may, with the
approval of the Board of Directors by resolution of the Board of Directors,
adopt this Plan and become a Participating Employer in the Plan. The date on
which such eligible company may become a Participating Employer in the Plan
shall be stated in the resolutions of the Board of Directors. Each of the
Participating Employers agree to make payments of their allocable portion of the
benefits provided under the Plan to their respective employee and Director
Participants. Energen hereby guarantees the performance by each of the other
Participating Employers of their respective obligations under the Plan. Neither
the respective benefit payment obligations of the Participating Employers nor
Energen's guarantee of performance is secured in any way. Such obligations and
guarantee constitute no more than unfunded and unsecured promises of payment and
performance. Each Participating Employer, other than Energen, shall reimburse
Energen for its allocable share of costs and expenses paid by Energen in
connection with the operation and administration of the Plan, and shall
reimburse Energen for any benefits paid by Energen under the Plan to
Participants to the extent allocable to such Participating Employer and its
Participants. Payments made to Participants by the Trust shall constitute
payments by Energen and Energen shall be reimbursed for such payments by the
appropriate Participating Employers.

         Section 2.3 Recordkeeping and Reporting. Each Participating Employer,
other than Energen, shall furnish to Energen the information with respect to
each of its Participants necessary to enable Energen to maintain records
sufficient to determine the benefits (and the compensation



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sources of such benefits) which may become payable to or with respect to such
Participants and to give those Participants any reports which may be required
under the terms of the Plan or by law.

         Section 2.4 Termination of Participation. A Participating Employer,
other than Energen, may withdraw from participation in the Plan at any time by
providing Energen with 30 days advance written notice of such withdrawal from
participation and the effective date of such Participating Employer's
withdrawal, which 30-day notice period may be waived by Energen. In addition,
Energen may terminate a Participating Employer's participation in the Plan by
providing such Participating Employer with 30 days advance written notice, which
30-day notice period may be waived by the Participating Employer. A
Participating Employer which terminates its participation in the Plan shall
remain obligated under the Plan with respect to deferrals made prior to such
termination by its Participants (including subsequent investment performance
adjustments), unless otherwise expressly agreed by Energen with Energen fully
assuming such obligations.

         Section 2.5 Separate Accounting. Energen shall establish and maintain
separate Accounts for each of the Participating Employers and their respective
Participants. Such separate accounting is intended to comply with Section
404(a)(5) of the Code and Section 1.404(a) - 12 of the Treasury Regulations
(which provide that an employer can deduct the amounts contributed to a
nonqualified plan in the taxable year in which an amount attributable to the
contribution is includable in the gross income of employees participating in the
plan, but, in the case of a plan in which more than one employee participates
only if separate accounts are maintained for each employee).


                                  ARTICLE III.
                          ELIGIBILITY AND PARTICIPATION

         Section 3.1 Eligibility. Each Director and each Officer of a
Participating Employer shall be eligible to participate in the Plan effective as
of the later of the effective date of the Plan or the date on which such
individual first becomes a Director or Officer. In addition, the Officers Review
Committee may by express action designate other management level or highly
compensated employees of the Participating Employers as eligible to participate
in the Plan. If the Officers Review Committee designates a management level or
highly compensated employee as eligible to become a Participant in the Plan,
Energen shall inform the employee in writing of such designation and the date on
which the employee shall become a Participant in the Plan.

         Section 3.2 Participation. An individual eligible to participate in the
Plan shall become a Participant upon the filing with Energen of a completed
Deferral Election Form and acceptance of such form by Energen. The name of each
individual eligible to participate in the Plan and the date on which such
individual becomes a Participant in the Plan, shall be recorded on Exhibit A,
which exhibit is attached hereto and incorporated herein by reference and which
shall be revised by Energen from time to time to reflect the operation of the
Plan. Once an individual becomes a Participant in the Plan, the individual shall
remain a Participant until the benefits which may be payable to the individual
under the Plan have been distributed to or on behalf of the individual.




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         Section 3.3 Suspension of Eligibility. The Officers Review Committee
(or the Board of Directors if the affected Participant is a Director) may in its
discretion determine that a Participant will no longer be eligible to
participate in the Plan and in such event, the Participant's Section 4.1
compensation deferral election will immediately terminate and no additional
amounts shall be credited to his or her Accounts under Sections 7.1(a), (b), (c)
and 7.2(a) until such time as the individual is again determined to be eligible
to participate in the Plan by the Officers Review Committee (or Board of
Directors as appropriate) and makes a new Section 4.1 election. However, the
Account of such Participant shall continue to be adjusted by the other
provisions of Sections 7.1 and 7.2 until fully distributed.


                                   ARTICLE IV.
                                    BENEFITS

         Section 4.1 Deferred Compensation. A Participant may elect to defer
receipt of part or all of any one or more items of Cash Compensation and/or
Stock Compensation. A Participant may defer an item of compensation only to the
extent that the Participant is entitled to receive such item of compensation.
Upon such deferral, the Participant will have no further right to such deferred
compensation other than as provided under the Plan. Such deferred compensation
shall be the record of the value of such deferred compensation credited to a
Participant's Account and shall be used solely for accounting purposes.

         Section 4.2 Form and Effectiveness of Deferral Election. Elections to
defer compensation under the Plan shall be made in writing on the Deferral
Election Form. Such elections may be revised or terminated by the making of a
new deferral election on the Deferral Election Form. Deferral elections
(including revisions or terminations of prior elections) shall be effective for
Qualifying Compensation (subject to the last sentence of this section).
Notwithstanding the other provisions of this Plan, a Participant's Deferral
Election Form and the various elections and selections made thereon (excepting
elections to terminate deferral of one or more items of compensation), shall not
become effective unless acceptance thereof by Energen in its sole discretion is
acknowledged in writing. A Participant's election to terminate a prior
compensation deferral election shall be effective upon delivery to Energen and
shall be accepted and honored by the Participating Employers with respect to
Qualifying Compensation (subject to the following sentence). An election to
reduce or terminate a prior election to defer an item of compensation shall in
no event be effective with respect to compensation for services rendered during
a period of service commencing prior to the date of such election.

         Section 4.3 Participant Accounts. A Company Stock Account and an
Investment Account shall be established and maintained for each Participant. The
Company Stock Account shall be measured in shares of Common Stock and the
Investment Account shall be measured in dollars. The Company Stock Account shall
be credited as described in Section 7.1 for deferred amounts attributable to (i)
Stock Compensation and (ii) such amounts of Cash Compensation as may be



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allocated to the Company Stock Account pursuant to Section 7.1(g). The
Investment Account shall be credited as described in Section 7.2 for any
deferred amounts of Cash Compensation which are not allocated to the Company
Stock Account pursuant to Section 7.1(g).

         Section 4.4 Discretionary Amounts. In addition to amounts deferred by a
Participant, the Board of Directors may from time to time, in its sole
discretion, authorize a Participant's Participating Employer to credit the
Participant's Company Stock Account with additional amounts (denominated in
dollars). Such additional amounts may be authorized for such purpose or purposes
as the Board of Directors may deem appropriate, including, without limitation,
as mirror employer matching contributions or ESOP contributions made by such
Participating Employer with respect to The Energen Corporation Employee Savings
Plan.


                                   ARTICLE V.
                                    VESTING

         Section 5.1 Vested Benefit. A Participant shall be considered to be
100% Vested in his or her Account.


         Section 5.2 Limitation on Benefits. The benefits that may be payable to
or on behalf of a Participant under the Plan shall be equal to a cash payment
equal to the value of the amounts credited to the Participant's Investment
Account and a distribution of that number of Common Shares equal to the number
of shares credited to the Participant's Company Stock Account (with any
fractional share being rounded to a whole share).


                                   ARTICLE VI.
                                 DISTRIBUTIONS.

         Section 6.1 Distributable Events. A Participant's Distributable Event
shall be the first to occur of the following events; provided, that events (b) -
(e) shall be Distributable Events only if so elected by the Participant in the
Deferral Election Form and further provided that events (d) - (f) are subject to
Section 6.6:

                  (a) the Participant's 70th birthday (i.e., the 70th
anniversary of the Participant's birth) or such earlier birthday as the
Participant may specify in the Deferral Election Form;

                  (b) Disability (as defined in Section 1.1);

                  (c) the Participant's death;

                  (d) the first date on which the Participant is NEITHER an
employee nor a Director of any Participating Employer;




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                  (e) such other event as the Participant may specify in the
Deferral Election Form (subject to approval of Energen);

                  (f) the taking of action by the Board of Directors to
terminate the Plan pursuant to Section 14.1, or

                  (g) termination for Cause subject to and in accordance with
Section 6.7.

         A Participant's Distributable Event elections must be made on the
Participant's initial Deferral Election Form and are irrevocable; provided, that
Energen may in its sole discretion allow a Participant to make different
Distributable Event elections applicable only with respect to Qualifying
Compensation for services rendered during periods of service commencing after
the date of such election.

         Section 6.2  Distribution of Benefits.

                  (a) Distribution Commencement Date. Excepting withdrawals
under Sections 6.3 and 6.4 which shall be distributed in accordance with those
Sections, distribution of a Participant's Plan benefit shall commence as of the
first day of the second calendar month immediately following the calendar month
in which the Participant's applicable Distributable Event occurs.

                  (b) Form of Distribution. Benefits attributable to the value
of the Investment Account shall be delivered to the Participant in dollars.
Benefits attributable to the Company Stock Account shall be delivered to the
Participant in the form of shares of Common Stock. To the extent that the
distribution is in the form of shares of Common Stock, such delivery shall be
subject to all applicable securities laws and regulations and Energen shall have
taken all steps, if any, including registration and listing, as may be necessary
to make the shares immediately saleable by the Participant without further
regulatory action or compliance on the part of the Participant (other than
compliance with paragraphs (f) and (h) of Rule 144 under the Securities Act of
1933). The Participant shall reasonably cooperate with Energen, at Energen's
expense, to facilitate such compliance and related actions by Energen.

                  (c) Payment Options. In the event a Participant becomes
eligible to receive a payment of benefits under the Plan, the benefits payable
to the Participant or, in the event of the Participant's death, to the
Participant's designated beneficiary under the Plan shall be paid in accordance
with one of the payment options available under the Plan as elected by the
Participant on the Participant's Deferral Election Form. The Participant may
elect separate payment options with respect to the Investment Account and the
Company Stock Account. A Participant may change payment options by electing
another payment option available under the Plan on a subsequent Deferral
Election Form, but such change in payment option will not be effective until the
calendar year following the calendar year in which the change was elected.
Further, in no event will any such change in payment option be effective if such
change is elected during the calendar year in which the Distributable Event
occurs and no further elections may be made once a Distributable Event occurs.
The payment options include installment payments over a period certain, a lump
sum


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payment, and such other payment method as may be specified by the Participant
and accepted by Energen. The Board of Directors may, in its sole discretion,
reduce the payment period over which payments would have been made pursuant to
the payment option elected by a Participant (including consolidation into a lump
sum); provided, that in the event of a Change in Control, no reduction of a
payment period may be made prior to the fifth anniversary of such Change in
Control. Absent a payment option election, the Board of Directors shall direct
the payment of any benefits payable under the Plan to or on behalf of the
Participant in a lump sum payment to the Participant, or in the event of the
Participant's death, to the Participant's designated beneficiary under the Plan.

         Section 6.3 Early Withdrawals. Notwithstanding any provision in this
Plan to the contrary, a Participant may request, by providing a written request
to the Officers Review Committee, a withdrawal prior to the distribution date
under the Plan of all or any portion of his or her benefits from any of his or
her Accounts under the Plan in increments of 25% (of aggregate Account value).
If such a request is approved by the Officers Review Committee, which decision
by the Officers Review Committee shall be made in its sole discretion on a case
by case basis, a distribution of such benefits may be made to the Participant
subject to a penalty for such an early withdrawal at any point equal to a
six-month period of nonparticipation (during which no additional amounts will be
credited to the Participant's Accounts under Sections 7.1(a), (b), (c) and
7.2(a) of the Plan) for each 25% increment withdrawn. The nonparticipation
period would begin as of the date on which the request made by the Participant
is approved by the Officers Review Committee. As a result, a Participant
withdrawing his or her entire benefit from all of his or her Accounts would be
excluded from eligibility to participate in the Plan for a 24-month period
beginning as of the date of such approval by the Officers Review Committee. In
addition, a penalty of 10% of the amount withdrawn will be imposed on any
withdrawal made pursuant to this Section 6.3.

         Section 6.4 Hardship Withdrawals. In addition to the other distribution
and withdrawal provisions of this Article VI and notwithstanding any provision
herein to the contrary, in the event a Participant incurs an unforeseeable
emergency, the Participant may request, by providing a written request to the
Officers Review Committee, a hardship withdrawal of all or any portion of his or
her benefits from his or her Accounts under the Plan. An unforeseeable emergency
is a severe financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a dependent (as defined
in Section 152(a) of the Code) of the Participant, loss of the Participant's
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant. If such a request is approved by the Officers Review Committee,
which decision by the Officers Review Committee shall be made in its sole
discretion on a case by case basis, a hardship withdrawal may be permitted under
this Section 6.4. Withdrawals of amounts because of an unforeseeable emergency
are only permitted to the extent reasonably needed to satisfy the emergency
need. This provision shall be interpreted in a manner not inconsistent with
Sections 1.457-2(h)(4) and 1.457-2(h)(5) of the Treasury Regulations.




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         Section 6.5 Distributions as Result of Tax Determination.
Notwithstanding any provision in this Plan to the contrary, if, at any time, a
court or the Internal Revenue Service determines that any amounts or shares
credited to a Participant's Accounts under the Plan or Trust are includable in
the gross income of the Participant and subject to tax, the Officers Review
Committee may, in its sole discretion, permit a lump sum distribution of an
amount equal to the amounts or shares determined to be includable in the
Participant's gross income.

         Section 6.6 No Parachute Payment. An event described in Sections
6.1(d), (e) and (f) shall not constitute a Distributable Event if the Officers
Review Committee in its reasonable discretion following consultation with
appropriate tax and/or legal advisors reasonably determines that such
distribution will likely constitute a parachute payment for purposes of Section
280G of the Code. Furthermore, if such event occurs subsequent to a Change in
Control, the Officers Review Committee shall, at Energen's expense, promptly
request a written opinion of the Independent Auditor with respect to the
applicability of such Section 280G and such event shall not constitute a
Distributable Event unless and until the Independent Auditor delivers its
written unqualified opinion, a copy of which shall be provided to the
Participant, to the effect that a distribution of benefits as a result of such
event will not constitute a parachute payment under Section 280G of the Code. As
used in this Section 6.6, the term independent auditor means the firm of
certified public accountants which at the time of the Change in Control had been
most recently engaged by Energen or such other comparable and nationally
recognized firm of certified public accountants as may be selected by the
Officers Review Committee in its reasonable discretion.

         Section 6.7 Distribution Upon Termination for Cause. In the event that
a Participant is terminated for Cause (as defined below), the Company may, at
its discretion, treat such termination or any date subsequent thereto as a
Distributable Event. For purposes of this Plan, termination for Cause means
termination based on any of the following:

                         (i) The willful and continued failure by the
                         Participant to substantially perform Participant's
                         duties with a Participating Employer (other than any
                         such failure resulting from Participant's incapacity
                         due to physical or mental illness) after a written
                         demand for substantial performance is delivered to
                         Participant specifically identifying the manner in
                         which Participant has not substantially performed
                         Participant's duties;

                         (ii) the engaging by Participant in willful misconduct
                         which is demonstrably injurious to any one or more of
                         the Participating Employers monetarily or otherwise; or

                         (iii) the conviction of Participant of a felony.





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                                  ARTICLE VII.
                             VALUATION OF BENEFITS.

         Section 7.1 Company Stock Account.

                  (a) Stock Award Deferral. When a Participant's Company Stock
Account is to be credited for deferred amounts attributable to awards which
would otherwise have been distributed to the Participant in the form of Common
Stock, then the number of shares of Common Stock which would have otherwise been
distributed to the Participant shall be credited to the Participant's Company
Stock Account as of the date that such distribution to the Participant would
have otherwise occurred.

                  (b) Cash Deferral. When a Participant's Company Stock Account
is to be credited for deferred amounts which would have otherwise been
distributed to the Participant in the form of cash, then the Participant's
Company Stock Account shall be credited with that number of shares of Common
Stock equal to the number of such shares that could have been purchased with
such cash amounts at the Fair Market Value Average for the last business day of
the month during which such cash amounts would have otherwise been distributed
to the Participant.

                  (c) Discretionary Amount. When a participant's Company Stock
Account is to be credited for a Discretionary Amount, it shall be credited with
that number of shares of Common Stock equal to the number of such shares
(including fractional shares) that could have been purchased with the dollar
amount of the Discretionary Amount at the Fair Market Value Average for the last
business day of the month during which such Discretionary Amount is authorized
or such other date as may be specified in the Discretionary Amount
authorization.

                  (d) Dividends. A Participant's Company Stock Account shall be
credited on each Common Stock dividend payment date with that number of shares
which could have been acquired through the Energen Corporation Dividend
Reinvestment and Direct Stock Purchase Plan or similar successor plan (the
"DRIP") by the reinvestment of the dividends payable on the number of shares of
Common Stock credited to such Company Stock Account as of the record date for
such dividend. In the event that the DRIP is no longer operative, or at such
time as the Officers Review Committee in its discretion shall specify, the
number of dividend reinvestment shares shall be calculated based on the Fair
Market Value Average for the dividend payment date.

                  (e) Stock Dividend, etc. The number of shares of Common Stock
shall be adjusted to reflect any change in the outstanding Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change.

                  (f) Transfer upon Change in Control. In the event of a Change
in Control, effective as of the close of business on the date of the Change in
Control, each Participant's Investment Account shall be credited with an amount
measured in dollars equal to the value of such Participant's Company Stock
Account based on the Fair Market Value Close on such date (or such

                                       13
<PAGE>   14

other valuation method selected by the Section 1.1(g) Continuing Directors in
their reasonable discretion), and the Participant's Company Stock Account shall
be closed and the Participant shall have no further interest in the Company
Stock Account.

                  (g) Allocation of Cash Compensation. A Participant may request
that part or all of deferred compensation attributable to Cash Compensation be
allocated to the Participant's Company Stock Account. A Participant's request to
make such an allocation or change a previous allocation must be in writing on an
Allocation Request Form. All such requests are subject to acceptance by Energen
in its discretion. If accepted by Energen, the allocation request will be
effective as of the date specified by the request.


         Section 7.2 Investment Account.

                  (a) Deferred Amounts. When a Participant's Investment Account
is to be credited with a deferred amount, that amount measured in dollars equal
to such deferred amount shall be credited to the Investment Account as of the
close of business on the date that such amount would have otherwise been paid to
the Participant.

                  (b) Interest. Subject to 7.2(c), as of the close of the last
day of each calendar quarter, an additional amount shall be credited to each
Participant's Investment Account equal to the product of (i) the average daily
balance in such Investment Account for the quarter, times (ii) one-fourth of the
annual prime rate for corporate borrowers quoted at the beginning of the quarter
by AmSouth Bank of Alabama, Birmingham, Alabama (or such other comparable
interest rate as the Officers Review Committee may designate from time to time).

                  (c) Investment Options. Energen may permit a Participant to
allocate the Participant's Investment Account among one or more investment
options for purposes of measuring the value of the benefit. To the extent that
the Investment Account is allocated to an investment option, it shall not be
credited with interest under Section 7.2(b). That portion of the Investment
Account allocated to an investment option shall be deemed to be invested in such
investment option and shall be valued as if so invested, reflecting all
earnings, losses and other distributions or charges and changes in value which
would have been incurred through such an investment. The determination of which
investment options, if any to make available, and the continued availability of
selected investment options rests in Energen's sole discretion; provided, that
subsequent to a Change in Control, Energen shall maintain the availability of
those investment options in place at the time of the Change in Control (or
substantially equivalent investment options).

                  (d) Participant Allocation Request. A Participant's request to
allocate or reallocate among investment options must be in writing on an
Allocation Request Form in such increments as Energen may require. All such
requests are subject to acceptance by Energen at its discretion. If accepted by
Energen, an allocation request will be effective as of the close of business on
the allocation date (as defined in Section 7.4).




                                       14
<PAGE>   15



         Section 7.3 Hypothetical Accounts. The Accounts established under this
Plan shall be hypothetical in nature and shall be maintained for bookkeeping
purposes only. Neither the Plan nor any of the Accounts (or subaccounts) shall
hold or be required to hold any actual funds or assets.

         Section 7.4 Allocation Date. Upon acceptance of an allocation request
pursuant to Section 7.1(g) or 7.2(d), Energen will process the request as soon
as reasonably administratively practicable and the request shall be implemented
and reflected in the Participant's account as of the close of business on such
date as may be determined by Energen in its reasonable discretion (the
"allocation date").


                                  ARTICLE VIII.
                               NONTRANSFERABILITY

         Section 8.1 Anti-Alienation of Benefits. Any benefits which may be
credited to a Participant's Accounts under the Plan, and any rights or
privileges pertaining thereto, may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, or subjected to any charge or legal
process; and no interest or right to receive a benefit may be taken, either
voluntarily or involuntarily, for the satisfaction of the debts of, or other
obligations or claims against, such person or entity, including claims for
alimony, support, separate maintenance and claims in bankruptcy proceedings.

         Section 8.2 Incompetent Participants. If any person who may be eligible
to receive a payment under the Plan has been legally declared incompetent and a
conservator or other person legally charged with the care of such person or of
his or her estate has been appointed, any payment under the Plan to which the
person is eligible to receive shall be paid to such conservator or other person
legally charged with the care of the person or his or her estate. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of the Participating Employers and the Plan therefor.

         Section 8.3 Designated Beneficiary. In the event of a Participant's
death prior to the payment of all or a portion of any benefits which may be
payable with respect to the Participant under the Plan, the payment of any
benefits payable on behalf of the Participant under the Plan shall be made to
the Participant's beneficiary designated on a Deferral Election Form. If no such
beneficiary has been designated, payment shall be made as required under the
Participant's will; or, in the event that there shall be no functioning will
under applicable state law, then to such persons as, at the date of the
Participant's death, would be entitled to share in the distribution of such
deceased Participant's personal estate under the provisions of the applicable
statute then in force governing the decedent's intestate property, in the
proportions specified in such statute.



                                       15
<PAGE>   16




                                   ARTICLE IX.
                                   WITHHOLDING

         Section 9.1 Withholding. The amounts payable pursuant to the Plan may
be reduced by the amount of any federal, state or local taxes required by law to
be withheld with respect to such payments.


                                   ARTICLE X.
                                 VOTING OF STOCK

         Section 10.1 Voting of Company Stock. No Participant shall be entitled
to any voting rights with respect to any shares credited to his or her Company
Stock Account.


                                   ARTICLE XI.
                            ADMINISTRATION OF A PLAN

         Section 11.1 Administrator. The administrator of the Plan shall be
Energen. However, the Board of Directors shall act on behalf of Energen with
respect to the administration of the Plan and may delegate authority with
respect to the administration of the Plan to the Officers Review Committee or
such other committee, person or persons as it deems necessary or appropriate for
the administration and operation of the Plan.

         Section 11.2 Authority of Administrator. Energen shall have the
authority, duty and power to interpret and construe the provisions of the Plan
as it deems appropriate, to adopt, establish and revise rules, procedures and
regulations relating to the Plan, to determine the conditions subject to which
any benefits may be payable, to resolve all questions concerning the status and
rights of Participants and others under the Plan, including, but not limited to,
eligibility for benefits and to make any other determinations which it believes
necessary or advisable for the administration of the Plan. Energen shall have
the duty and responsibility of maintaining records, making the requisite
calculations and disbursing payments hereunder. The determinations,
interpretations, regulations and calculations of Energen shall be final and
binding on all persons and parties concerned. The Secretary of Energen shall be
the agent of the Plan for the service of legal process in accordance with
Section 502 of the Employee Retirement Income Security Act of 1974, as amended.

         Section 11.3 Operation of Plan and Claims Procedures. Energen shall be
responsible for the general operation and administration of the Plan and for
carrying out the provisions thereof. Energen shall be responsible for the
expenses incurred in the administration of the Plan. Energen shall also be
responsible for determining eligibility for payments and the amounts payable
pursuant to the Plan. Energen shall be entitled to rely conclusively upon all
tables, valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by Energen
with respect to the Plan. The procedures for filing claims for 

                                       16
<PAGE>   17

payments under the Plan are described below. For claims procedures purposes, the
"Claims Manager" shall be Energen.

                  (a) Claim Forms. It is the intent of Energen to make payments
under the Plan without the Participant having to complete or submit any claims
forms. However, a Participant who believes he or she is entitled to a payment
under the Plan may submit a claim for payments in writing to Energen. Any claim
for payments under the Plan must be made by the Participant or his or her
beneficiary in writing and state the claimant's name and the nature of benefits
payable under the Plan on a form acceptable to Energen. If for any reason a
claim for payments under the Plan is denied by Energen, the Claims Manager shall
deliver to the claimant a written explanation setting forth the specific reasons
for the denial, specific references to the pertinent provisions of the Plan on
which the denial is based, a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary, and information on the
procedures to be followed by the claimant in obtaining a review of his or her
claim, all written in a manner calculated to be understood by the claimant. For
this purpose:

                         (i) The claimant's claim shall be deemed to be filed
                         when presented orally or in writing to the Claims
                         Manager.

                         (ii) The Claims Manager's explanation shall be in
                         writing delivered to the claimant within 90 days of the
                         date the claim is filed.

                  (b) Review. The claimant shall have 60 days following his or
her receipt of the denial of the claim to file with the Claims Manager a written
request for review of the denial. For such review, the claimant or the
claimant's representative may review pertinent documents and submit written
issues and comments.

                  (c) Decision on Review. The Claims Manager shall decide the
issue on review and furnish the claimant with a copy within 60 days of receipt
of the claimant's request for review of the claimant's claim. The decision on
review shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, as well as
specific references to the pertinent provisions in the Plan on which the
decision is based. If a copy of the decision is not so furnished to the claimant
within such 60 days, the claim shall be deemed denied on review. In no event may
a claimant commence legal action for benefits the claimant believes are due the
claimant until the claimant has exhausted all of the remedies and procedures
afforded the claimant by this Section 11.3.

         Section 11.4 Participant's Address. Each Participant shall keep Energen
informed of his or her current address and the current address of his or her
beneficiary. Energen shall not be obligated to search for any person. If the
location of a Participant is not made known to Energen within three (3) years
after the date on which payment of the Participant's benefits payable under the
Plan may be made, payment may be made as though the Participant had died at the
end of the three-year period. If, within one (1) additional year after such
three-year period has elapsed, or, within three (3) years after the actual death
of a Participant, Energen is unable to locate any designated 

                                       17
<PAGE>   18

beneficiary of the Participant, then Energen shall have no further obligation to
pay any benefit hereunder to or on behalf of such Participant or designated
beneficiary and such benefits shall be irrevocably forfeited.


                                  ARTICLE XII.
                            MISCELLANEOUS PROVISIONS

         Section 12.1 No Employment Rights. Neither the Plan nor any action
taken hereunder shall be construed as giving any Participant any right to be
retained in the service or employ of any Participating Employer.

         Section 12.2 Participants Should Consult Advisors. Neither any
Participating Employer, nor their respective directors, officers, employees or
agents makes any representation or warranty with respect to the state, federal
or other tax, financial, estate planning, or the securities or other legal
implications of participation in the Plan. Participants should consult with
their own tax, financial and legal advisors with respect to their participation
in the Plan.

         Section 12.3 Unfunded and Unsecured. The Plan shall at all times be
considered entirely unfunded both for tax purposes and for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended, and no
provision shall at any time be made with respect to segregating assets of any
Participating Employer for payment of any amounts hereunder. Any funds invested
hereunder allocable to a Participating Employer shall continue for all purposes
to be part of the respective general assets of such Participating Employer and
available to the general creditors of such Participating Employer in the event
of a bankruptcy (involvement in a pending proceeding under the Federal
Bankruptcy Code) or insolvency (inability to pay debts as they mature) of such
Participating Employer. Energen shall promptly notify the Trustee and the
applicable Participants of such bankruptcy or insolvency of a Participating
Employer. No Participant or any other person shall have any interests in any
particular assets of any Participating Employer by reason of the right to
receive a benefit under the Plan and to the extent the Participant or any other
person acquires a right to receive benefits under the Plan, such right shall be
no greater than the right of any general unsecured creditor of any Participating
Employer. The Plan constitutes a mere promise by the Participating Employers to
make payments to the Participants in the future. With respect to the guarantee
of Energen under Section 2.2, Participants have rights only as general unsecured
creditors of Energen. Nothing contained in the Plan shall constitute a guaranty
by any Participating Employer or any other person or entity that any funds in
any trust or the assets of any Participating Employer will be sufficient to pay
any benefit hereunder. Furthermore, no Participant shall have any right to a
benefit under the Plan except in accordance with the terms of the Plan.




                                       18
<PAGE>   19



         Section 12.4 The Trust.

                  (a) Establishment of Trust. In order to provide assets from
which to fulfill its obligations to the Participants and their beneficiaries
under the Plan, Energen shall establish a Trust by a trust agreement with a
third party, the Trustee, to which Energen may, in its discretion, contribute
cash or other property, including securities issued by Energen, to provide for
the benefit payments under the Plan. The Trustee will have the duty to invest
the Trust assets and funds in accordance with the terms of the Trust. Energen
shall be entitled at any time, and from time to time, in its sole discretion, to
substitute assets of at least equal fair market value for any assets held in the
Trust. All rights associated with the assets of the Trust will be exercised by
the Trustee or the person designated by the Trustee, and will in no event be
exercisable by or rest with Participants or their beneficiaries. The Trust shall
provide that in the event of the insolvency of Energen, the Trustee shall hold
the assets for the benefit of the general creditors of Energen and its
affiliated companies. The Trust shall be based on the model trust contained in
Internal Revenue Service Revenue Procedure 92-64 with such changes and
modifications as may be approved by Energen.

                  (b) Contribution Upon Change in Control. If as of the close of
business on the date of a Change in Control, the aggregate value of the
Participant Accounts exceeds the value of the Trust assets, then within thirty
days of such Change in Control, Energen shall contribute to the Trust assets
having a value at least equal to the amount of such excess.

         Section 12.5 Plan Provisions. Except when otherwise required by the
context, any singular terminology shall include the plural.

         Section 12.6 Severability. If a provision of the Plan shall be held to
be illegal or invalid, the illegality or invalidity shall not affect the
remaining parts of the Plan and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

         Section 12.7 Applicable Law. To the extent not preempted by the laws of
the United States, the laws of the State of Alabama shall apply with respect to
the Plan.


                                  ARTICLE XIII.
                                   AMENDMENTS

         Section 13.1 Amendment of the Plan. Energen reserves the power to
alter, amend or wholly revise the Plan at any time and from time to time by the
action of the Board of Directors and the interest of each Participant is subject
to the powers so reserved; provided, however, that no amendment made subsequent
to a Change in Control shall be effective to the extent that it would have a
materially adverse impact on a Participant's reasonably expected economic
benefit attributable to compensation deferred by the Participant prior to the
Change in Control. An amendment shall be authorized by the Board of Directors
and shall be stated in an instrument in writing signed in the name of Energen by
a person or persons authorized by the Board of Directors. After the instrument
has been so executed, the Plan shall be deemed to have been amended in the

                                       19
<PAGE>   20

manner therein set forth, and all parties interested herein shall be bound
thereby. No amendment to the Plan may alter, impair, or reduce the benefits
credited to any Accounts prior to the effective date of such amendment without
the written consent of any affected Participant.


                                  ARTICLE XIV.
                                  TERM OF PLAN

         Section 14.1 Term of the Plan. Energen may at any time terminate the
Plan by action of the Board of Directors with such termination being effective
as of the date that all Participant Accounts have been distributed to
Participants in accordance with and subject to the provisions of Article VI of
the Plan including, without limitation, Section 6.6 of the Plan. Effective as of
the date of such Board of Directors action (or such later date as may be
specified therein) all Section 4.1 compensation deferral elections will
terminate and no further amounts shall be credited to any Accounts of any
Participant under Sections 7.1(a), (b), (c) and 7.2(a) after such date. However,
the Participants" Accounts shall continue to be adjusted by the other provisions
of Sections 7.1 and 7.2 until all benefits are distributed to the Participants
or to the Participants' beneficiaries.



                                       20