EMPLOYMENT AGREEMENT


     This Employment Agreement ("Agreement") is made and effective this 30th day
of December, 1983 by and between Seagull Energy Corporation, a Texas corporation
having  its  principal  place of  business  in  Houston,  Harris  County,  Texas
("Company")  and Barry J. Galt, an individual  currently  residing at 6730 South
Evanston, Tulsa, Oklahoma ("Galt").

     W I T N E S S T H: WHEREAS, the Company is desirous of employing Galt in an
executive  capacity  on the terms  and  conditions,  and for the  consideration,
hereinafter set forth and Galt is desirous of entering the employ of the Company
on such terms and conditions and for such consideration; NOW, THEREFORE, for and
in consideration of the mutual promises,  covenants,  and obligations  contained
herein, Company and Galt agree as follows:


ARTICLE 1:  EMPLOYMENT AND DUTIES

     1.1  Company  agrees  to employ  Galt and Galt  agrees  to be  employed  by
Company, beginning as of the effective date of this Agreement and continuing for
the  period of time set forth in  Article 2 of this  Agreement,  subject  to the
terms and conditions of this Agreement.

     1.2 On the effective date of this  Agreement,  the Company shall cause Galt
to be  appointed  Chief  Executive  Officer and elected a member of the Board of
Directors, and Chairman of the Board of Directors, of the Company. Company shall
maintain  Galt in such  positions,  or in such other  positions  as the  parties
mutually may agree, for the full term of Galt's employment hereunder.

     1.3 Galt agrees to serve as Chief Executive Officer,  Director and Chairman
of the Board of Directors of Company and to perform  diligently  and to the best
of his  abilities  the duties and services  appertaining  to such offices as set
forth in the  Bylaws  of the  Company,  as well as such  additional  duties  and
services  appropriate  to  such  offices  which  he from  time  to  time  may be
reasonably directed to perform by the Board of Directors of the Company.
<PAGE>

     1.4 Galt agrees,  during the period of his employment by Company, to devote
his entire  time,  energy and best  efforts to the  business  and affairs of the
Company and not to engage,  directly  or  indirectly,  in any other  business or
businesses,  whether or not  similar  to that of the  Company,  except  with the
consent of the Board of Directors.  The foregoing  notwithstanding,  the parties
recognize and agree (i) that Galt may engage in passive personal investments and
other business  activities that do not conflict with the business and affairs of
the Company or interfere with Galt's  performance of his duties  hereunder,  and
(ii) that during the period of time from the  effective  date of this  Agreement
until  April 1,  1984,  Galt  will  devote  such time as he finds  necessary  to
fulfilling and completing to the extent  possible his  obligations as Chapter 11
Trustee for Nucorp Energy, Inc. and affiliated companies,  and that periodically
after said date he will be required  to devote a limited  amount of time to such
activities  until  he is  finally  discharged  as such  Trustee  by a  Court  of
competent jurisdiction.

ARTICLE 2:  TERM AND TERMINATION OF EMPLOYMENT

     2.1 Unless sooner terminated  pursuant to other provisions hereof,  Company
agrees to employ Galt for a period  beginning  with the  effective  date of this
Agreement and terminating  December 31, 1986.  Beginning December 31, 1984, said
term of employment  shall be extended  automatically  as of each December 31 for
successive  one (1) year  periods  until such time,  prior to December 31 of any
year during the term of employment, as either party shall give written notice to
the other that no further such automatic  extensions shall occur, in which event
Galt's  employment  shall  terminate on December 31 of the second  calendar year
following such notice.

     2.2 Notwithstanding the provisions of paragraph 2.1, Company shall have the
right to terminate Galt's employment under this Agreement at any time for any of
the following reasons:

     (i)  upon Galt's death;

     (ii) upon Galt's  becoming  incapacitated  by  accident,  sickness or other
          circumstance  which  renders him mentally or  physically  incapable of
          performing the duties and services required of him hereunder for a

<PAGE>

          period  of at  least  120  consecutive  days  or for a  period  of 180
          business days during any twelve (12) month period;

     (iii)for cause,  which for  purposes  of this  Agreement  shall mean Galt's
          gross  negligence or willful  misconduct in  performance of the duties
          and  services  required of him pursuant to this  Agreement,  or Galt's
          final  conviction  of a felony  or of a  misdemeanor  involving  moral
          turpitude;

     (iv) for Galt's material breach of any material provision of this Agreement
          which,  if  correctable,  remains  uncorrected  for  thirty  (30) days
          following written notice to Galt by the Company of such breach; or

     (v)  for any other reason  whatsoever,  in the sole discretion of the Board
          of Directors of the Company.

     2.3  Notwithstanding  the  provisions of paragraph 2.1, Galt shall have the
right to terminate his  employment  under this  Agreement at any time for any of
the following reasons:

     (i)  the assignment to Galt by the Board of Directors of duties  materially
          inconsistent  with the duties of the Company's Chief Executive Officer
          as  such  duties  are  constituted  as of the  effective  date of this
          Agreement;

     (ii) the  failure of the  Company to elect or  appoint,  or to  re-elect or
          reappoint,  Galt to the offices  described  in  paragraph  1.2 of this
          Agreement;

     (iii)the  occurrence  of a  "change  of  control."  For  purposes  of  this
          paragraph  2.3(iii),  a "change  of  control"  shall be deemed to have
          occurred if:

          (i)  any person (other than Galt,  the Company,  Dee S. Osborne and/or
               Finial Investment Corporation) including a "group" as determined

<PAGE>

          in   accordance with Section  13(d)(3) of the Securities  Exchange Act
               of 1934,  becomes the  beneficial  owner of shares of the Company
               having 40% or more of the total  number of votes that may be cast
               for the election of directors of the Company; or

          (ii) as a  result  of,  or in  connection  with,  any cash  tender  or
               exchange  offer,  merger or other business  combination,  sale of
               assets or contested election, or any combination of the foregoing
               transactions (a "Transaction"), the persons who were directors of
               the Company  before the  Transaction  shall cease to constitute a
               majority  of  the  Board  of  Directors  of  the  Company  or any
               successor to the Company;

     (iv) a material  breach by the Company of any  material  provision  of this
          Agreement which, if correctable,  remains  uncorrected for thirty (30)
          days  following  written notice of such breach by Galt to the Company;
          or

     (v) for any other reason whatsoever, in the sole discretion of Galt.

     2.4 If the Company or Galt desires to terminate Galt's employment hereunder
at any time  prior  to  expiration  of the term of  employment  as  provided  in
paragraph  2.1, it or he shall do so by giving written notice to the other party
that it or he has elected to terminate Galt's  employment  hereunder and stating
the effective date and reason for such termination, provided that no such action
shall alter or amend any other  provisions  hereof or rights arising  hereunder.
Such  notice  shall  also,  to the extent  material  to any right or  obligation
hereunder,  constitute  notice under paragraph 2.1 of the  discontinuance of any
further automatic extensions of the term of paragraph 2.1.


<PAGE>

ARTICLE 3:  COMPENSATION AND BENEFITS

     3.1 Base Salary.  During the period  beginning  with the effective  date of
this Agreement and ending on March 31, 1984, Galt shall receive a base salary of
$10,000 per month.  Beginning April 1, 1984, and continuing for the remainder of
the term of Galt's  employment,  Galt shall receive a base salary at the rate of
$250,000 per calendar  year,  or such larger sum as may be fixed by the Board of
Directors of the Company in its sole discretion,  payable in equal  installments
not  less  often  than  monthly.  The  Compensation  Committee  of the  Board of
Directors of the Company shall make an annual review and  recommendation  to the
Board regarding possible increases in Galt's base salary compensation.

     3.2 Stock Grant.  Effective January 2, 1984, the Company will grant to Galt
in lieu of a cash  bonus of thirty  thousand  (30,000)  shares of the  Company's
common stock in  consideration  of Galt's agreement to become an employee of the
Company and to execute this  Agreement.  Seven thousand five hundred  (7,500) of
such  shares  will  be  transferred  free  of  any  restriction.  The  remaining
twenty-two  thousand five hundred  (22,500) shares of such stock will be subject
to the  restrictions  and other  terms and  conditions  set forth in  Exhibit A,
"Restricted  Stock  Agreement,"  attached  to,  and  forming  a  part  of,  this
Agreement.

     3.3 Stock Options. As additional compensation,  the Company has granted, or
shall grant, to Galt the following stock options:

     (i)  1983 Incentive Stock Option - On the effective date of this Agreement,
          Company  shall  execute  and  deliver to Galt a ten (10) year  option,
          under the "Seagull Energy  Corporation 1981 Nonqualified and Incentive
          Stock Option  Plan," to purchase up to 6,100  shares of the  Company's
          common stock (being the maximum number of shares which may be optioned
          to Galt as of the  effective  date  hereof  under an  incentive  stock
          option plan  pursuant to section 422A of the Internal  Revenue  Code).
          The form,  price and other terms and conditions of such option are set
          forth in Exhibit B, "Incentive Stock Option  Agreement,"  attached to,
          and  forming a part of,  this  Agreement.

     (ii) 1984 Incentive  Stock Option - Effective  January 2, 1984, the Company
          shall  execute and deliver to Galt a ten (10) year  option,  under the
          "Seagull  Energy  Corporation  1981  Nonqualified  and Incentive Stock
          Option  Plan,"  to  purchase  an  additional  number  of shares of the
          Company's  common stock,  being the maximum number of shares which may
          be optioned to Galt at such time under an incentive  stock option plan
          pursuant to section 422A of the Internal Revenue Code. The form, price
          and other terms and  conditions of such option shall be  substantially
          in  accordance  with Exhibit C,  "Incentive  Stock Option  Agreement,"
          attached to, and forming a part of, this Agreement.

     (iii)Non-Qualified  Stock Option - Effective  January 2, 1984,  the Company
          shall  execute and deliver to Galt a ten (10) year  option,  under the
          "Seagull Energy Corporation 1983 Stock Option Plan," to purchase up to
          107,800  shares of the Company's  common stock (being  120,000  shares
          less  the  total  number  of  shares  to be  optioned  under  the 1983
          Incentive Stock Option and the 1984 Incentive Stock Option pursuant to
          subparagraphs  3.3(i) and (ii) above). The form, price and other terms
          and   conditions   of  such   option  are  set  forth  in  Exhibit  D,
          "Nonqualified Stock Option Agreement," attached to, and forming a part
          of, this  Agreement.  If the  Seagull  Energy  Corporation  1983 Stock
          Option Plan is not approved by the  shareholders of the Company within
          one year after the date of this  Agreement,  the Company shall replace
          such  option  with  a  comparable   benefit  that  provides  for  Galt
          substantially the same opportunity for realizing economic gain, when

<PAGE>

          viewed  prospectively  from the date hereof (e.g.,  a "phantom"  stock
          grant).

     3.4 Life Insurance.  The Company will provide, or cause to be provided,  to
Galt, at no cost to Galt, five hundred thousand dollars ($500,000), of term life
insurance coverage payable to a beneficiary to be designated in writing by Galt.
Notwithstanding  the foregoing,  however, if Galt fails to qualify medically for
such insurance  coverage at standard rates for his age group,  Company shall not
be required to provide such coverage  unless Galt pays the cost of such coverage
that  is in  excess  of  the  standard  rate  cost.  Such  insurance,  including
replacement or substitute  policies  therefor,  shall be maintained for the same
period as Galt's  compensation  hereunder  is  continued  pursuant  to Article V
hereof.

     3.5 Incentive  Compensation  Program. Galt shall be entitled to participate
in an executive incentive  compensation  program to be formulated and instituted
by the Company as soon as reasonably  practicable  after the  effective  date of
this  Agreement,  based  upon the  advice  of a  compensation  consultant  to be
retained by the Company.  Such incentive  compensation program will be effective
for  calendar  year 1984 and is expected to be based upon a mixture of objective
criteria and subjective judgment by members of the Board of Directors concerning
employee performance.

     3.6  Payment In Lieu of 1984  Thrift  Plan  Contribution.  Galt will not be
eligible to participate in the Seagull Energy Corporation Thrift Plan until such
time as he has satisfied the eligibility  requirements for such Plan. In lieu of
Galt's   participation  in  such  Plan  prior  to  satisfying  such  eligibility
requirements,  the Company  agrees to pay Galt,  in January of 1985,  a one-time
payment  equal to six  percent  (6%) of Galt's  cash  compensation  taxable  for
federal  income tax purposes  received from the Company during the calendar year
1984.

     3.7 Vacation and Sick Leave. During each year of his employment, Galt shall
be entitled to vacation and sick leave benefits  equal to the maximum  available
to any  Company  employee,  without  regard to the period of service  that might
otherwise  be  necessary  to entitle  Galt to such  vacation or sick leave under
standard Company policy. <PAGE>

     3.8 Other  Perquisites.  During  his  employment  hereunder,  Galt shall be
afforded the following benefits as incidences of his employment:

     (i)  Company automobile - the Company will provide to Galt for his personal
          and business use a top-of-the-line  automobile,  and shall provide, or
          reimburse Galt for, maintenance and insurance (liability and collision
          coverage insuring both the Company and Galt and covering both business
          and personal use) for such automobile.  Such automobile shall be owned
          or leased by the Company,  or an  affiliate  of the  Company,  and, if
          requested  by Galt,  shall be replaced not less  frequently  than each
          three (3)  years.

     (ii) Business and entertainment  expenses - the Company will reimburse Galt
          for, or pay on behalf of Galt,  reasonable  and  appropriate  expenses
          incurred by Galt for business  related  purposes,  including  dues and
          fees  to   industry   and   professional   organizations,   costs   of
          entertainment and business development,  and costs reasonably incurred
          as a result of Galt's wife accompanying Galt on business travel.

     (iii)Club memberships - in addition to the other business and entertainment
          expenses  reimbursable  pursuant to  subparagraph  3.8(ii) above,  the
          Company shall pay membership fees, dues and assessments for (a) Galt's
          current  memberships  in the  Eldorado  Country  Club and Castle Pines
          Country Club, (b) one country club located in Harris County, Texas, to
          be selected by Galt, (c) one luncheon club located in Houston,  Texas,
          to be selected  by Galt,  (d) one  luncheon  club  located  outside of
          Houston,  Texas,  to be selected by Galt, and, (e) such other luncheon
          or country club memberships as the Compensation Committee of the Board
          of Directors of the Company may deem to be justified by

<PAGE>

          business usage. The foregoing  notwithstanding,  the Company shall not
          be obligated to buy from Galt, or to reimburse  Galt for the price of,
          his  membership  in any  club  of  which  Galt is a  member  as of the
          effective date of this Agreement.

     (iv) Annual physical examination - the Company shall pay for the cost of an
          annual  physical  examination to be conducted by a doctor or clinic of
          Galt's choosing in Houston, Texas.

     (v)  Parking - the  Company  shall  provide at no expense to Galt a parking
          place convenient to Galt's office.

     (vi) Other Company  benefits - Galt and, to the extent  applicable,  Galt's
          family, dependents and beneficiaries,  shall be allowed to participate
          in  all  benefits,  plans  and  programs,  including  improvements  or
          modifications  of the  same,  which  are  now,  or may  hereafter  be,
          available to  similarly-situated  Company  employees.  Such  benefits,
          plans and programs may include,  without  limitation,  profit  sharing
          plan,  thrift  plan,  health  insurance  or  health  care  plan,  life
          insurance,  disability  insurance,  pension  plan,  and the like.  The
          Company shall not,  however,  by reason of this paragraph be obligated
          to  institute,   maintain,  or  refrain  from  changing,  amending  or
          discontinuing,  any  such  benefit  plan or  program,  so long as such
          changes are similarly applicable to executive employees generally.

The  perquisites  provided in this paragraph 3.8 (except  subparagraph  3.8(ii))
shall be  provided  for the same  period as  Galt's  compensation  hereunder  is
continued pursuant to Article V hereof;  provided,  however,  that to the extent
that any  benefit  cannot  be  continued  during a  period  when  Galt is not an
employee  of the  Company,  the  Company  shall pay Galt an amount  equal to the
economic value of such benefit.


<PAGE>

ARTICLE 4:  HOUSING ARRANGEMENTS

     4.1 Temporary  Housing.  From the  effective  date of this  Agreement,  and
continuing  until Galt relocates his permanent  residence to Houston,  Texas, or
until  September  30, 1984,  whichever is the earlier,  the Company will provide
Galt with a furnished apartment,  utilities paid, in Houston, Texas, and, during
the same period, will pay for travel,  including air travel, between Houston and
Tulsa, Oklahoma by Galt and his wife.

     4.2  Moving  Expenses.  Company  will  pay,  or  reimburse  Galt  for,  all
reasonable  expenses  incurred  by Galt in the  course of moving  his  principal
residence,  family and goods from Tulsa, Oklahoma, to Houston,  Texas, including
packing, storage and cartage.

     4.3 Loan and  Note.  Upon  purchase  by Galt of a  principal  residence  in
Houston, during the term of this Agreement,  the Company will lend to Galt a sum
of money equal to one-half the cost of such principal  residence,  including not
only the cost of acquiring such residence but all costs and expenses incurred by
Galt in  improving,  remodeling,  enlarging  and  decorating  same  (hereinafter
"Acquisition  Cost"), or Three Hundred Thousand dollars ($300,000)  whichever is
the  lesser.  Such loan  shall be  evidenced  by,  and  subject to the terms and
conditions of, a promissory note  (hereinafter  "Note") from Galt payable to the
order of Company and bearing interest at the rate of six percent (6%) per annum.
Interest only shall be payable on said Note for the first three (3) years, after
which  said Note  shall be payable  in ten (10)  equal  annual  installments  of
principal,  each such principal payment to be accompanied by payment of all then
accrued  interest.  Such loan and Note shall be secured by a second lien deed of
trust  (hereinafter  "Deed  of  Trust")  on  Galt's  Houston  residence,  or any
replacement residence,  such Deed of Trust to be in customary form. In the event
of  termination  of Galt's  employment  hereunder  by the  Company  pursuant  to
paragraphs  2.2(iii) or (iv) or by Galt pursuant to paragraph 2.3(v),  such Note
shall accelerate and be fully payable six (6) months following such termination.


<PAGE>

ARTICLE 5:  EFFECT OF TERMINATION ON COMPENSATION

     5.1 By Expiration.  If Galt's  employment  hereunder  shall  terminate upon
expiration  of the term  provided in  paragraph  2.1 hereof as the same may have
been automatically extended from time to time, then:

     (i)  all  compensation  and all benefits to Galt hereunder  shall terminate
          contemporaneously with termination of his employment; and

     (ii) the rights and obligations of Galt pursuant to Exhibits A through D to
          this Agreement, and pursuant to said Note and said Deed of Trust shall
          be specifically as provided in such instruments.

This  paragraph  5.1 shall not be  applicable  in the  event of  termination  of
employment  prior to the expiration of the term provided in paragraph 2.1 hereof
(as same may have been  automatically  extended  from time to time)  pursuant to
paragraphs 2.2 or 2.3 hereof.

     5.2 By Company.  If Galt's employment  hereunder shall be terminated by the
Company  prior to expiration of the term provided in paragraph 2.1 hereof as the
same may have been  automatically  extended from time to time,  then,  upon such
termination,  regardless  of the  reason  therefor,  all  compensation  and  all
benefits  to  Galt  hereunder   shall  terminate   contemporaneously   with  the
termination of such employment, except that:

     (i)  the rights and obligations of Galt pursuant to Exhibits A through D to
          this Agreement, and pursuant to said Note and said Deed of Trust shall
          be specifically as provided in such instruments; and

     (ii) if  such  termination  shall  be  for  any  reason  other  than  those
          encompassed by paragraphs  2.2(iii) or (iv), then Galt's  compensation
          and  benefits  pursuant to  paragraphs  3.1 and 3.4 and  subparagraphs
          3.8(i),  (iii),  (iv),  (v) and (vi) shall continue for the balance of
          such term.

     5.3 By Galt.  If Galt's  employment  hereunder  shall be terminated by Galt
prior to expiration of the term provided in paragraph 2.1 hereof as the same may

<PAGE>

have been automatically extended from time to time, then, upon such termination,
regardless  of the  reason  therefor,  all  compensation  and  benefits  to Galt
hereunder  shall  terminate  contemporaneously  with  the  termination  of  such
employment, except that:

     (i)  the rights and obligations of Galt pursuant to Exhibits A through D to
          this Agreement, and pursuant to said Note and said Deed of Trust shall
          be specifically as provided in such instruments;

     (ii) if such  termination  shall occur within twelve  months  following the
          occurrence  prior to April 1, 1984 of a "change of control" as defined
          in paragraph 2.3(iii),  then Galt's compensation and benefits pursuant
          to paragraphs 3.1 and 3.4 and subparagraphs  3.8(i),  (iii), (iv), (v)
          and (vi) shall  continue until October 31, 1984 or the last day of the
          sixth full month following such  termination of employment,  whichever
          is later;

     (iii)if such  termination  shall occur within twelve  months  following the
          occurrence  subsequent  to March 31, 1984, of a "change of control" as
          defined in paragraph  2.3(iii) then Galt's  compensation  and benefits
          pursuant to paragraphs 3.1 and 3.4 and  subparagraphs  3.8(i),  (iii),
          (iv), (v) and (vi) shall continue for the balance of such term; and


     (iv) if such termination shall be pursuant to paragraphs  2.3(i),  (ii), or
          (iv) then Galt's  compensation and benefits pursuant to paragraphs 3.1
          and 3.4 and  subparagraphs  3.8(i),  (iii),  (iv),  (v) and (vi) shall
          continue for the balance of such term.

ARTICLE 6:  CONFIDENTIAL INFORMATION

     6.1 Company  Information.  Galt acknowledges that the Company's business is
highly  competitive  and that the Company's  books,  records and documents,  the
Company's technical information concerning its products, equipment, services and

<PAGE>

processes, procurement procedures and pricing techniques, the names of and other
information  (such as  credit  and  financial  data)  concerning  the  Company's
customers  and  business   affiliates,   all  comprise   confidential   business
information  and trade secrets of the Company which are valuable,  special,  and
unique assets of the Company, which the Company uses in its business to obtain a
competitive  advantage over the Company's  competitors  which do not know or use
this  information.  Galt further  acknowledges  that protection of the Company's
confidential   business  information  and  trade  secrets  against  unauthorized
disclosure and use is of critical  importance to the Company in maintaining  its
competitive position.  Accordingly,  Galt hereby agrees that he will not, at any
time  during or after  his  employment  by the  Company,  make any  unauthorized
disclosure  of any  confidential  business  information  or trade secrets of the
Company,  or make any use thereof,  except for the benefit of, and on behalf of,
the Company.  For the purposes of this paragraph,  the term "Company" shall also
include affiliates of the Company.

     6.2 Third Party  Information.  Galt  acknowledges  that, as a result of his
employment by the Company, he may from time to time have access to, or knowledge
of, confidential business information or trade secrets of third parties, such as
customers,  suppliers,  partners, joint venturers, and the like, of the Company.
Galt agrees to preserve  and  protect  the  confidentiality  of such third party
confidential  information and trade secrets to the same extent,  and on the same
basis, as Company confidential business information and trade secrets.

     6.3  Information  of Prior  Employers.  Galt  agrees not to disclose to the
Company,  or to  use  on  behalf  of  the  Company,  any  confidential  business
information or trade secrets of any of Galt's prior employers.

     6.4 Return of Documents. All written materials, records and other documents
made by, or  coming  into the  possession  of,  Galt  during  the  period of his
employment  by the  Company  which  contain  or  disclose  Company  confidential
business  information  or trade  secrets shall be and remain the property of the
Company.  Upon termination of Galt's employment by the Company,  for any reason,
he promptly shall deliver the same, and all copies thereof, to the Company.


<PAGE>

ARTICLE 7:  INVENTIONS AND DISCOVERIES

     7.1 Galt agrees promptly and freely to disclose to the Company, in writing,
any and all  ideas,  conceptions,  inventions,  improvements,  and  discoveries,
whether  patentable  or not,  which  are  conceived  or made by Galt,  solely or
jointly with another,  during the period of his  employment by Company and which
are related to the business or activities of Company.  Galt agrees to assign and
hereby  does assign to Company  all his  interest  in said  ideas,  conceptions,
inventions,  improvements, and discoveries. Galt agrees that, whenever requested
to do so by Company,  he shall execute any and all applications,  assignments or
other instruments that Company shall deem necessary, in its sole discretion,  to
apply for and obtain protection,  including patent  protection,  for said ideas,
conceptions,  inventions,  improvements  and discoveries in all countries of the
world.  The  obligations in the preceding  sentence  shall  continue  beyond the
termination of Galt's employment regardless of the reason for such termination.

     7.2  Galt  represents  that he has not  heretofore  made any  invention  or
discovery related to the Company's  business which he wishes to exclude from the
provisions of paragraph 7.1 above.

     7.3 As used in this Article 7,  "Company"  shall include  affiliates of the
Company.

ARTICLE 8:  NON-COMPETITION

     8.1 As part of the  consideration  for the  compensation to be paid to Galt
hereunder,  and as an  additional  incentive  for the Company to enter into this
Agreement, Galt hereby agrees that he will not at any time during his employment
by the Company,  or at any time following his employment by the Company while he
is still  receiving  base  salary  compensation  from the  Company  pursuant  to
paragraph  3.1 or Article V above,  directly or  indirectly,  for himself or for
others,  in any state of the United  States or in any foreign  country where the
Company or any of its affiliates is then conducting any business, or has, during
the previous twelve (12) months, conducted any business:
<PAGE>

     (i)  engage in any business  similar to or competitive  with that conducted
          by the Company or its  affiliates;

     (ii) render advice or services to, or otherwise assist, any other person or
          entity who is engaged, directly or indirectly, in any business similar
          to, or competitive with, the business  conducted by the Company or its
          affiliates;

     (iii)transact  any  business  in any  manner  pertaining  to  suppliers  or
          customers of the Company or any affiliate which, in any manner,  would
          have, or is likely to have, an adverse  effect upon the Company or any
          affiliate; or,

     (iv) induce any employee of the Company or any  affiliate to terminate  his
          or her employment with the Company or such affiliate.

     8.2 Galt understands that the foregoing  restrictions may limit his ability
to engage in a business similar to the Company's  business anywhere in the world
during any time when he is receiving base salary  compensation  from the Company
pursuant to  paragraph  3.1 or Article V above,  but  acknowledges  that he will
receive  sufficiently  high  remuneration  and other  benefits  from the Company
hereunder  to justify  such  restriction.  The  Company  and Galt agree that the
Company's  remedy for breach of the  provisions  of this Article 8 shall be, and
shall be limited to,  termination of all  compensation  and all benefits to Galt
otherwise provided under this Agreement.

     8.3 It is  expressly  understood  and  agreed  that  the  Company  and Galt
consider the restrictions contained in paragraphs 8.1 above to be reasonable and
necessary  for the  purposes  of  preserving  and  protecting  the good will and
proprietary  information of the Company.  Nevertheless,  if any of the aforesaid
restrictions  are found by a court having  jurisdiction to be  unreasonable,  or
over  broad as to  geographic  area or time,  or  otherwise  unenforceable,  the
parties  intend for the  restrictions  therein  set forth to be modified by such
court so as to be reasonable and  enforceable  and, as so modified by the court,
to be fully enforced.


<PAGE>

     ARTICLE 9:  MISCELLANEOUS

     9.1  Notices.  For  purposes  of this  Agreement,  notices  and  all  other
communications  provided  for herein  shall be in writing and shall be deemed to
have been duly given when  personally  delivered or when mailed by United States
registered  or  certified  mail,  return  receipt  requested,  postage  prepaid,
addressed as follows:

  If to the Company to:   Seagull Energy  Corporation
                          First International  Plaza
                          Suite 2000
                          1100  Louisiana  Street
                          Houston,  Texas  77002
                          Attention: Corporate Secretary

         If to Galt to:   Mr. Barry J. Galt
                          6730 South Evanston
                          Tulsa, Oklahoma 74136

or to such other  address as either party may furnish to the other in writing in
accordance  herewith,  except  that  notices  of  changes  of  address  shall be
effective only upon receipt.

     9.2  Applicable  Law.  This  contract is entered  into under,  and shall be
governed for all purposes by, the laws of the State of Texas.

     9.3 No Waiver. No failure by either party hereto at any time to give notice
of any  breach  by the  other  party  of, or to  require  compliance  with,  any
condition or provision of this Agreement  shall be deemed a waiver of similar or
dissimilar  provisions  or  conditions at the same or at any prior or subsequent
time.

     9.4 Severability.  If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable,  then the invalidity or
unenforceability   of  that   provision   shall  not  affect  the   validity  or
enforceability  of  any  other  provision  of  this  Agreement,  and  all  other
provisions shall remain. in full force and effect.

     9.5   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.


<PAGE>

     9.6  Withholding of Taxes.  Company may withhold from any benefits  payable
under this Agreement all federal,  state, city or other taxes as may be required
pursuant to any law or governmental regulation or ruling.

     9.7  Headings.  The  paragraph  headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

     9.8  Affiliate.  As used in this  Agreement,  "affiliate"  shall mean.  any
entity which owns or  controls,  is owned or  controlled  by, or is under common
ownership or control with, the Company.

     9.9  Assignment.  This  Agreement,  and the rights and  obligations  of the
parties  hereunder,  are  personal and neither  this  Agreement,  nor any right,
benefit or obligation  of either party hereto,  shall be subject to voluntary or
involuntary assignment,  alienation or transfer,  whether by operation of law or
otherwise, without the prior written consent of the other party.

     9.10  Term.  This  Agreement  has a term  co-extensive  with  the  term  of
employment as defined in paragraph 2.1.  Termination  shall not affect any right
or obligation of any party which is accrued or vested prior to such termination.
9.11 Entire  Agreement.  This  Agreement,  together  with the  Exhibits  hereto,
constitutes  the entire  agreement  of the  parties  with  regard to the subject
matter  hereof,  and  contains  all the  covenants,  promises,  representations,
warranties and agreements between the parties with respect to employment of Galt
by  the   Company.   Each  party  to  this   Agreement   acknowledges   that  no
representation, inducement, promise or agreement, oral or written, has been made
by either party,  or by anyone  acting on behalf of either  party,  which is not
embodied herein,  and that no agreement,  statement,  or promise relating to the
employment of Galt by the Company,  which is not contained in this  Agreement or
the  Exhibits  hereto,  shall be  valid or  binding.  Any  modification  of this
Agreement  will be effective only if it is in writing and signed by the party to
be charged.

     IN WITNESS  WHEREOF,  the parties have caused this Agreement to be executed
and delivered as of the day and year first above written.


<PAGE>

                           SEAGULL ENERGY CORPORATION



                           By:

                           Its:


                           BARRY J. GALT





<PAGE>



                        AMENDMENT TO EMPLOYMENT AGREEMENT



     WHEREAS,  Seagull Energy Corporation ("Company") and Barry J. Galt ("Galt")
have heretofore entered into an Employment Agreement ("Agreement"), effective as
of December 30, 1983; and

     WHEREAS,  Section  3.4 of the  Agreement  obligates  the Company to provide
certain term life  insurance  coverage to Galt during the term of the Agreement;
and

     WHEREAS,  the Company and Galt desire to enter into an agreement  regarding
the provision of insurance  coverage for Galt,  effective as of January 1, 1987,
and in  satisfaction  of the  Company's  obligations  under  Section  3.4 of the
Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:


     1.  Commencing  as of  February  9,  1987 and  during  each  year  that the
Agreement is in force and effect,  the Company agrees to tender annual  premiums
in the amounts  established  pursuant  to Schedule A attached  hereto and made a
part hereof to the  Philadelphia  Life  Insurance  Company to be applied by such
company to increase the cash value of Flexible Premium Adjustable Life Insurance
Policy Number 7226596.


     2. Galt agrees that  payment of the premiums by the Company as specified in
Item 1 above will constitute full and complete performance by the Company of its
obligations under Section 3.4 of the Agreement.

     IN WITNESS  WHEREOF,  the parties  hereto have caused these  presents to be
executed this ____ day of ____________, 1987.


                                         SEAGULL ENERGY CORPORATION



                                         By:
                                             Joe T. Rye, Vice President,
                                             Finance & Administration



                                         Barry J. Galt


<PAGE>


                                   SCHEDULE A




                       Philadelphia Life Insurance Company
       Policy No: 7226596; Insured: Barry J. Galt; Owner: Kathryn M. Galt
                  Annual Payment by Seagull Energy Corporation

<TABLE>
<CAPTION>

          Due Date                                Amount                            Age of Mr. Galt
<S>       <C>                                     <C>                               <C>

             2-9-87                            $     2,000.00                                53
             2-9-88                                  2,190.00                                54
             2-9-89                                  2,395.00                                55
             2-9-90                                  2,610.00                                56
             2-9-91                                  2,825.00                                57
             2-9-92                                  3,040.00                                58
             2-9-93                                  3,255.00                                59
             2-9-94                                  3,470.00                                60
             2-9-95                                  3,760.00                                61
             2-9-96                                  4,190.00                                62
             2-9-97                                  4,770.00                                63
             2-9-98                                  5,490.00                                64
             2-9-99                                  6,355.00                                65
             2-9-00                                  7,225.00                                66
             2-9-01                                  8,100.00                                67
             2-9-02                                  8,990.00                                68
             2-9-03                                  9,885.00                                69
             2-9-04                                 11,000.00                                70
             2-9-05                                 12,520.00                                71
             2-9-06                                 14,520.00                                72
             2-9-07                                 17,055.00                                73
             2-9-08                                 20,235.00                                74
             2-9-09                                 24,060.00                                75
             2-9-10                                 28,510.00                                76
             2-9-11                                 33,570.00                                77
             2-9-12                                 36,730.00                                78
             2-9-13                                 40,080.00                                79
             2-9-14                                 43,565.00                                80


</TABLE>