Approved April 29, 1997


                           SEAGULL ENERGY CORPORATION
                                      1997
                            EXECUTIVE INCENTIVE PLAN


Background

The 1997  Executive  Incentive  Plan (the  "Incentive  Plan") for Seagull Energy
Corporation  is  designed to motivate  key  employees  of the Company to achieve
tough,  but  realistic,  performance  goals and to reward  those  employees  who
perform at or above the expected level. The Incentive Plan defines participants,
award  opportunities and performance goals for the 1997 performance year. It is,
of course,  based upon the 1997  Operating  Plan (the  "Operating  Plan") and is
designed to maximize  performance  incentives while allowing for the recognition
of individual efforts through a significant discretionary component.

Participation

Participants  in the Incentive Plan are officers or individuals  whose positions
have been valued in the salary  structure  in and above Grade 12.  These are the
persons responsible for the annual and longer-term success of the company.

Timing of Payments

Seventy-five  percent of any Incentive Plan award is paid to the recipient early
in the year  following  the  performance  year,  and the  remaining  25% plus an
interest  factor in the next year. In this case, the  performance  year is 1997.
The award will be determined and the first 75% increment paid in early 1998, and
the  remaining  installment  (increased  by a 10%  interest  factor,  i.e.,  the
deferred payment will be 110% of such remaining  installment) in early 1999. The
recipient  must be an employee  on the payment  dates in order to receive any of
the respective payments.

Award Opportunities

Annual  incentive  targets are  expressed as a percentage of total salary earned
during a given year and can increase to double the targeted  amounts or decrease
to zero,  relative to the  achievement of  predetermined  performance  goals and
subject to senior management and Board of Director  discretion at year-end.  The
Compensation Committee of the Board reserves the right to modify the performance
measures and award levels specified in the objective components of the Incentive
Plan if presently  unforeseen  circumstances  should occur during the year which
invalidate any of the material  assumptions that underlie the Operating Plan, or
if,  in the  opinion  of the  Compensation  Committee,  such  modifications  are
required  to avoid a result  that is  inequitable  to either the  company or the
Incentive Plan participants.


<PAGE>




Performance Measures

The performance measures for the Incentive Plan are summarized  on  pages 3 - 7.
Four  performance  components  are  included  with  the  following weightings:

  Pre-tax cash flow from operations                                20%  weight
  Reserve additions and production replacement costs               20%  weight
  Company stock performance assessment                             20%  weight
  Discretionary individual performance assessment                  40%  weight

Pre-tax  cash flow from  operations  (PCFO) - the first  component is defined as
earnings  before income taxes,  plus operating and  non-operating  depreciation,
depletion and amortization,  plus pre-tax incentive compensation expense, and is
based on actual corporate  performance for the year as compared to the Company's
Operating Plan projection of PCFO.

Reserve  additions and production  replacement  costs - the second  component is
comprised of two subparts,  reserve additions and production  replacement costs,
weighted at 10% each.  Using the Company's  Operating Plan  projections  for the
Incentive Plan year,  actual  reserves added and actual  production  replacement
costs are compared to the corresponding projections for each.

Company  stock  performance  assessment  -  the  third  component  compares  the
Company's  average  stock price for the Plan year to its average stock price for
the  preceding  year and then compares the  resulting  percentage  change to the
percentage  change  (calculated  in the same  manner) for each of the peer group
companies.

Discretionary  individual  performance assessment - the fourth component will be
determined individually and subjectively, based on each participant's individual
job performance.

The  performance  components  will be  measured  independently  of the  other at
year-end.  At that time, the Chief  Executive  Officer will  recommend  specific
awards,  subject to final  approval of each  element of the total  awards by the
Compensation Committee and ultimately by the Board of Directors.


<PAGE>


Performance Weightings:

                20% on pre-tax cash flow from operations  
                20% on reserve additions and production replacement cost 
                20% on Company stock performance assessment   
                40% on discretionary individual performance assessment

I.       Objective Performance Assessments - 60%:

                Pre-Tax Cash Flow from Operations (PCFO) - 20%

         The performance award will be calculated as follows:
<TABLE>
<CAPTION>

         Column 1                  Column 2                  Column 3                  Column 4
         --------                  --------                  --------                  --------

       Pre-Tax Cash              Percentage of             Percentage of         Percentage of Total
        Flow From               Operating Plan              PCFOTarget              Target Award                                   
      Operations (1)            Projection (2)             Award Earned (3)          Earned (3)
      --------------            --------------             ----------------          ----------
<S>                              <C>                       <C>                    <C>   
         219,575                     85                         0                         0.00
         232,491                     90                        25                         5.00
         245,407                     95                        60                        12.00
         258,323                    100.00                    100.00                     20.00
         322,904                    125.00                    160.00                     32.00
         387,485                    150.00                    200.00                     40.00


</TABLE>



                (1)   Earnings   before   income   taxes  plus   operating   and
                non-operating depreciation,  depletion and amortization and also
                plus  pre-tax   incentive   compensation   expense  (dollars  in
                thousands).

                (2) If subsequent events over the course of the performance year
                invalidate any of the basic  assumptions in the Operating  Plan,
                then the original  Operating Plan projections will be revised to
                conform the Operating Plan  assumptions to reality.  The initial
                PCFO performance criteria for the Incentive Plan shown in Column
                1 will then be  adjusted by applying  the  percentages  shown in
                Column 2 to the revised Operating Plan projection of PCFO.

                (3) If,  after  the  actual  PCFO  for the  performance  year is
                determined,  it falls  within the ranges  shown in Column 1, the
                exact incentive award  percentages  from Columns 3 and 4 will be
                calculated by interpolation.

<PAGE>





             Reserve Additions and Production Replacement Cost - 20%

         The performance award will be comprised of two subparts as follows:

               1. The first  element  is  weighted  at 10% and  compares  actual
               reserves  added during the Plan year to the  Company's  Operating
               Plan projection for the Plan year.


<TABLE>
<CAPTION>

         Column 1                   Column 2                  Column 3                  Column 4
         --------                   --------                  -------                   --------

         Reserves                 Percentage of             Percentage of          Percentage of Total
           Added                 Operating Plan             Target Award              Target Award
        (BCFE) (1)               Projection (2)              Earned (3)                Earned (3)
        ----------               --------------              ----------                ----------

<S>                               <C>                       <C>                    <C>    

           248.0                      80.00                     0.00                      0.00
           279.0                      90.00                     25.00                     2.50
           294.5                      95.00                     60.00                     6.00
           310.0                     100.00                    100.00                     10.00
           341.0                     110.00                    160.00                     16.00
           372.0                     120.00                    200.00                     20.00

</TABLE>


               (1) To the extent that reserves added by  acquisition  exceed the
               Operating  Plan  projection  of 44.1 BCFE,  such excess  shall be
               reduced by 50 percent for purposes of this calculation.

               (2) If subsequent  events over the course of the performance year
               invalidate any of the basic  assumptions  in the Operating  Plan,
               then the original  Operating Plan  projections will be revised to
               conform the Operating Plan  assumptions  to reality.  The initial
               reserve  addition  performance  criteria for the  Incentive  Plan
               shown  in  Column  1  will  then  be  adjusted  by  applying  the
               percentages  shown in  Column  2 to the  revised  Operating  Plan
               projection of reserve additions.

               (3) If after the actual  reserve  additions  for the  performance
               year are determined, the aggregate total falls between the ranges
               shown in Column 1, the exact  incentive  award  percentages  from
               Columns 3 and 4 will be calculated by interpolation.



<PAGE>


               2. The second  element is  weighted  at 10% and  compares  actual
               production  replacement  costs for the Plan year to the Company's
               Operating Plan  projection for the Plan year,  calculated in both
               cases in the manner reflected in the Operating Plan.



<TABLE>
<CAPTION>

         Column 1                   Column 2                   Column3                   Column 4
         --------                   --------                   -------                   --------

        Production                Percentage of             Percentage of          Percentage of Total
        Replacement              Operating Plan             Target Award               Target Award
         Cost (1)                Projection (2)              Earned (3)                 Earned (3)
         --------                --------------              ----------                 ----------

<S>                              <C>                        <C>                    <C>   

           1.056                     120.00                     0.00                       0.00
           0.968                     110.00                     40.00                      4.00
           0.880                     100.00                    100.00                     10.00
           0.792                      90.00                    140.00                     14.00
           0.704                      80.00                    200.00                     20.00

</TABLE>

               (1) Considers   cost   of   all  reserve   additions,   including
               acquisitions.

               (2) If subsequent  events over the course of the performance year
               invalidate any of the basic  assumptions  in the Operating  Plan,
               then the original  Operating Plan  projections will be revised to
               conform the Operating Plan  assumptions  to reality.  The initial
               production   replacement  cost   performance   criteria  for  the
               Incentive  Plan  shown  in  Column  1 will  then be  adjusted  by
               applying  the  percentages  shown  in  Column  2 to  the  revised
               Operating Plan projection of production replacement cost.

               (3) If  after  the  actual  production  replacement  cost for the
               performance year are determined, it falls within the ranges shown
               in Column 1, the exact incentive award percentages from Columns 3
               and 4 will be calculated by interpolation.


<PAGE>



               Company Stock Performance Assessment - 20%

               The performance  award will be based upon the difference  between
               the  Company's  average  stock  price  ("Average  Price") for the
               calendar year  preceding  performance  year and the Average Price
               for the  performance  year. The Average Price for each respective
               year will be determined by dividing the number of trading days in
               the year  into the sum of the  respective  closing  prices of the
               Company's stock for each such trading day. The percentage  change
               in the Average  Price from the previous  year to the  performance
               year is calculated.  Then the same comparison is made for each of
               the peer group  companies  (1), which are listed in the Company's
               Total Shareholder  Return Graphs in the proxy statement,  and the
               Company is ranked  accordingly.  The  performance  award for this
               component will then be calculated as follows:


<TABLE>
<CAPTION>

             Column 1                          Column 2                           Column 3
             --------                          --------                           --------

            Change In                        Percentage of                   Percentage of Total
          Average Price                      Target Award                       Target Award
        Relative to Peers                     Earned (2)                         Earned (2)

<S>                                          <C>                             <C>                      

         25th percentile                          0.00                               0.00
         40th percentile                         40.00                              8.00
         50th percentile                         80.00                              16.00
         55th percentile                        100.00                              20.00
         60th percentile                        120.00                              24.00
         70th percentile                        160.00                              32.00
         80th percentile                        200.00                              40.00

</TABLE>

               (1) The peer group companies are: Anadarko Petroleum Corporation,
               Apache  Corporation,  Burlington  Resources Inc., Enron Oil & Gas
               Company,  Enserch Exploration,  Inc., Equitable Resources,  Inc.,
               The  Louisiana  Land & Exploration  Company,  Mesa,  Inc.,  Noble
               Affiliates,  Inc.,  Nuevo Energy  Company,  Oryx Energy  Company,
               Parker & Parsley Petroleum Company, Pogo Producing Company, Sante
               Fe Energy  Resources,  Inc., Union Pacific  Resources Group Inc.,
               United Meridian Corporation and Vastar Resources Inc.

               (2) If after the actual  percentile is determined it falls within
               the  ranges  shown  in  Column  1,  the  exact   incentive  award
               percentages   for  Columns  2  and  3  will  be   calculated   by
               interpolation.


<PAGE>



II.      Discretionary Individual Performance Assessment - 40%

         The discretionary  individual performance assessment will be determined
         informally  and  subjectively  on  the  participant's   individual  job
         performance,  based  primarily  on the extent to which  individual  and
         collective  goals and  objectives  established  at the beginning of the
         year are achieved.

         At year-end,  the Chief Executive  Officer will counsel with his direct
         reports in completing  discretionary  performance  assessments for each
         participant  and recommend  specific  awards,  which will be subject to
         final  approval by the  Compensation  Committee  and  ultimately by the
         Board of Directors.


         Total Plan Payout Potential:

                  Maximum potential is 200%
                  Target goal is 100%
                  Minimum potential is 0%