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                                EXHIBIT 10.3

                              SEVERANCE AGREEMENT


         AGREEMENT between SEAGULL ENERGY CORPORATION, a Texas corporation (the
"COMPANY"), and BARRY J. GALT ("EXECUTIVE"),

                             W I T N E S S E T H :

         WHEREAS, the Company desires to retain certain key employee personnel
and, accordingly, the Board of Directors of the Company (the "BOARD") has
approved the Company entering into a severance agreement with Executive in
order to encourage his continued service to the Company; and

         WHEREAS,  Executive is prepared to commit such services in return for
specific arrangements with respect to severance compensation and other
benefits;

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the Company and Executive agree as follows:

         1.      DEFINITIONS.

                 (a)      "CHANGE IN DUTIES" shall mean the occurrence, within
two years after the date upon which a Change of Control occurs, of any one or
more of the following:

                          (i)     A significant reduction in the duties of
         Executive from those applicable to him immediately prior to the date
         on which a Change of Control occurs;

                          (ii)    A reduction in Executive's annual salary or
         target opportunity under any applicable bonus or incentive
         compensation plan from that provided to him immediately prior to the
         date on which a Change of Control occurs;

                          (iii)   Receipt of employee benefits (including but
         not limited to medical, dental, life insurance, accidental, death, and
         dismemberment, and long-term disability plans) and perquisites by
         Executive that are materially inconsistent with the employee benefits
         and perquisites provided by the Company to executives with comparable
         duties; or

                          (iv)    A change in the location of Executive's
         principal place of employment by the Company by more than 50 miles
         from the location where he was principally employed immediately prior
         to the date on which a Change of Control occurs.

                 (b)      "CHANGE OF CONTROL" means the occurrence of either of
the following events:

                          (i)     The Company (A) shall not be the surviving
         entity in any merger, consolidation or other reorganization (or
         survives only as a subsidiary of an





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         entity other than a previously wholly-owned subsidiary of the Company)
         or (B) is to be dissolved and liquidated, and as a result of or in
         connection such transaction, the persons who were directors of the
         Company before such transaction shall cease to constitute a majority
         of the Board; or

                          (ii)    Any person or entity, including a "GROUP" as
         contemplated by Section 13(d)(3) of the Securities Exchange Act of
         1934, as amended, acquires or gains ownership or control (including,
         without limitation, power to vote) of 20% or more of the outstanding
         shares of the Company's voting stock (based upon voting power), and as
         a result of or in connection with such transaction, the persons who
         were directors of the Company before such transaction shall cease to
         constitute a majority of the Board.

                 (c)      "CODE" shall mean the Internal Revenue Code of 1986, 
as amended.

                 (d)      "COMPENSATION" shall mean the greater of:

                          (i)     Executive's annual salary plus his Targeted
         EIP Award immediately prior to the date on which a Change of Control
         occurs, or

                          (ii)    Executive's annual salary plus his Targeted
         EIP Award at the time of his Involuntary Termination.

                 (e)      "EIP" shall mean the Seagull Energy Corporation
Executive Incentive Plan or any successor thereto.

                 (f)      "INVOLUNTARY TERMINATION" shall mean any termination
of Executive's employment with the Company which:

                          (i)  does not result from a resignation by Executive
         (other than a resignation pursuant to clause (ii) of this subparagraph
         (f)); or

                          (ii)  results from a resignation by Executive on or
         before the date which is sixty days after the date upon which
         Executive receives notice of a Change in Duties;

provided, however, the term "INVOLUNTARY TERMINATION" shall not include a
Termination for Cause or any termination as a result of death, disability under
circumstances entitling him to benefits under the Company's long-term
disability plan, or Retirement.

                 (g)      "OBJECTIVE EIP AWARD" shall mean, with respect to
Executive, the amount, if any, earned under the objective criterion of the EIP
in effect for the calendar year preceding Executive's Involuntary Termination.

                 (h)      "RETIREMENT" shall mean Executive's resignation on or
after the date he reaches age sixty-five.





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                 (i)      "SEVERANCE AMOUNT" shall mean an amount equal to 2.99
times Executive's Compensation, reduced by the present value of any salary
continuation or severance payments payable to Executive under any other Company
plan, policy or agreement, other than a "plan" within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended.  Such
present value shall be determined using the rate of interest referred to in
Paragraph 4 hereof as of the last day of Executive's employment with the
Company.

                 (j)      "TARGETED EIP AWARD" shall mean Executive's Incentive
Target as set forth under the EIP in effect for the year with respect to which
such award is being determined, if any, or for the last preceding year in which
an EIP was in effect, expressed as a dollar amount based on such Executive's
annual salary for such year.

                 (k)      "TERMINATION FOR CAUSE" shall mean termination of
Executive's employment by the Company (or its subsidiaries) by reason of
Executive's (i) gross negligence in the performance of his duties, (ii) willful
and continued failure to perform his duties, (iii) willful engagement in
conduct which is materially injurious to the Company or its subsidiaries
(monetarily or otherwise) or (iv) conviction of a felony or a misdemeanor
involving moral turpitude.

                 (l)      "WELFARE BENEFIT COVERAGES" shall mean the medical,
dental, life insurance, accidental death and dismemberment and long-term
disability coverages provided by the Company to its active employees.

         2.      SERVICES.  Executive agrees that he will render services to
the Company (as well as any subsidiary thereof or successor thereto) during the
period of his employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same time,
efforts and dedication to his duties as heretofore devoted.

         3.      SEVERANCE BENEFITS.  If Executive's employment by the Company
or any subsidiary thereof or successor thereto shall be subject to an
Involuntary Termination which occurs within two years after the date upon which
a Change of Control occurs, then Executive shall be entitled to receive, as
additional compensation for services rendered to the Company (including its
subsidiaries), the following severance benefits:

                 (a)      A lump sum cash payment in an amount equal to
Executive's Severance Amount.

                 (b)      A lump sum cash payment in an amount equal to the
remaining portion of any award to Executive under any prior years' EIP.
Further, if Executive's Involuntary Termination occurs on or after the date an
award has been earned under the EIP, but prior to the date such award is paid,
Executive shall receive an additional lump sum cash payment in an amount equal
to two times his Objective EIP Award.

                 (c)      Executive shall be entitled to continue the Welfare
Benefit Coverages for himself and, where applicable, his eligible dependents
following his Involuntary





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Termination for up to thirty-six months, as long as Executive continues either
to pay the premiums paid by active employees of the Company for such coverages
or to pay the actual (nonsubsidized) cost of such coverages for which the
Company does not subsidize for active employees.  Such benefit rights shall
apply only to those Welfare Benefit Coverages which the Company has in effect
from time to time for active employees, and the applicable payments shall
adjust as premiums for active employees of the Company or actual costs,
whichever is applicable, change.  Welfare Benefit Coverage(s) shall immediately
end upon Executive's obtainment of new employment and eligibility for similar
Welfare Benefit Coverage(s) (with Executive being obligated hereunder to
promptly report such eligibility to the Company).  Nothing herein shall be
deemed to adversely affect in any way the additional rights, after
consideration of this extension period, of Executive and his eligible
dependents to health care continuation coverage as required pursuant to Part 6
of Title I of the Employee Retirement Income Security Act of 1974, as amended.

                 (d)      Executive shall be entitled to receive out-placement
services in connection with obtaining new employment up to a maximum cost of
$6,000.

                 (e)      The severance benefits payable under this Agreement
shall be paid to an Executive on or before the fifth day after the last day of
Executive's employment with the Company.  Any severance benefits paid pursuant
to this Paragraph will be deemed to be a severance payment and not compensation
for purposes of determining benefits under the Company's qualified plans and
shall be subject to any required tax withholding.

         4.      INTEREST ON LATE BENEFIT PAYMENTS.  If any payment provided
for in Paragraph 3(a) or 3(b) hereof is not made when due, the Company shall
pay to Executive interest on the amount payable from the date that such payment
should have been made under such paragraph until such payment is made, which
interest shall be calculated at the prime or base rate of interest announced by
Texas Commerce Bank N.A. (or any successor thereto) at its principal office in
Houston, Texas and shall change when and as any such change in such prime or
base rate shall be announced by such bank.

         5.      CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.  Notwithstanding
anything in this Agreement to the contrary, if the severance benefits provided
for in Paragraph 3, together with any other payments which Executive has the
right to receive from the Company, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), the severance benefits provided
hereunder shall be either (a) reduced (but not below zero) so that the present
value of such total amounts received by Executive from the Company will be one
dollar ($1.00) less than three times Executive's base amount (as defined in
Section 280G of the Code) and so that no portion of such amounts received by
Executive shall be subject to the excise tax imposed by Section 4999 of the
Code or (b) paid in full, whichever produces the better net after-tax position
to Executive (taking into account any applicable excise tax under Section 4999
of the Code and any applicable income tax).  The Company and Executive shall
make an initial determination as to whether a reduction is required and, if so
required, the amount of any such reduction.  Executive shall notify the Company
immediately in writing of any claim by the Internal Revenue Service which, if
successful, would require the Company to make a reduction (or a further
reduction in





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excess of that, if any, initially determined by the Company and Executive)
within five days of the receipt of such claim.  The Company shall notify
Executive in writing at least five days prior to the due date of any response
required with respect to such claim if it plans to contest the claim.  If the
Company decides to contest such claim, Executive shall cooperate fully with the
Company in such action; provided, however, the Company shall bear and pay
directly or indirectly all costs and expenses (including additional interest
and penalties) incurred in connection with such action.  If, as a result of the
Company's action with respect to a claim, the amount of the reduction is found
to have been in excess of the correct reduction amount, the Company shall
promptly pay to Executive the difference between such amounts with respect to
such claim.

         6.      GENERAL.

                 (a)      TERM.  The effective date of this Agreement is March
17, 1995.  Within sixty days from and after the expiration of two years after
said effective date and within sixty days after each successive two-year period
of time thereafter that this Agreement is in effect, the Company shall have the
right to review this Agreement, and in its sole discretion either continue and
extend this Agreement, terminate this Agreement, and/or offer Executive a
different agreement.  The Board (excluding any member of the Board who is
covered by this Agreement or by a similar agreement with the Company) will vote
on whether to so extend, terminate, and/or offer Executive a different
agreement and will notify Executive of such action within said sixty-day time
period mentioned above.  This Agreement shall remain in effect until so
terminated and/or modified by the Company.  Failure of the Board to take any
action within said sixty days shall be considered as an extension of this
Agreement for an additional two-year period of time.  Notwithstanding anything
to the contrary contained in this "SUNSET PROVISION," it is agreed that if a
Change of Control occurs while this Agreement is in effect, then this Agreement
shall not be subject to termination or modification under this "SUNSET
PROVISION," and shall remain in force for a period of two years after such
Change of Control, and if within said two years the contingency factors occur
which would entitle Executive to the benefits as provided herein, this
Agreement shall remain in effect in accordance with its terms.  If, within such
two years after a Change of Control, the contingency factors that would entitle
Executive to said benefits do not occur, thereupon this two-year "SUNSET
PROVISION" shall again be applicable with the sixty-day time period for Board
action to thereafter commence at the expiration of said two years after such
Change of Control and on each two-year anniversary date thereafter.

                 (b)      INDEMNIFICATION.  If Executive shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by
Executive or the Company to enforce or interpret any provision contained
herein, the Company, to the fullest extent permitted by applicable law, hereby
indemnifies Executive for his reasonable attorneys' fees and disbursements
incurred in such litigation and hereby agrees (i) to pay in full all such fees
and disbursements and (ii) to pay prejudgment interest on any money judgment
obtained by Executive from the earliest date that payment to him should have
been made under this Agreement until such judgment shall have been paid in
full, which interest shall be calculated at the prime or base rate of interest
announced by Texas Commerce Bank





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N.A. (or any successor thereto) at its principal office in Houston, Texas, and
shall change when and as any such change in such prime or base rate shall be
announced by such bank.

                 (c)      PAYMENT OBLIGATIONS ABSOLUTE.  The Company's
obligation to pay (or cause one of its subsidiaries to pay) Executive the
amounts and to make the arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company (including its subsidiaries) may have against him or
anyone else.  All amounts payable by the Company (including its subsidiaries
hereunder) shall be paid without notice or demand.  Executive shall not be
obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Agreement, and, except as
provided in Paragraph 3(c) hereof, the obtaining of any such other employment
shall in no event effect any reduction of the Company's obligations to make (or
cause to be made) the payments and arrangements required to be made under this
Agreement.

                 (d)      SUCCESSORS.  This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company, by merger
or otherwise.  This Agreement shall also be binding upon and inure to the
benefit of Executive and his estate.  If Executive shall die prior to full
payment of amounts due pursuant to this Agreement, such amounts shall be
payable pursuant to the terms of this Agreement to his estate.

                 (e)      SEVERABILITY.  Any provision in this Agreement which
is prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

                 (f)      NON-ALIENATION.  Executive shall not have any right
to pledge, hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.

                 (g)      NOTICES.  Any notices or other communications
provided for in this Agreement shall be sufficient if in writing.  In the case
of Executive, such notices or communications shall be effectively delivered if
hand delivered to Executive at his principal place of employment or if sent by
registered or certified mail to Executive at the last address he has filed with
the Company.  In the case of the Company, such notices or communications shall
be effectively delivered if sent by registered or certified mail to the Company
at its principal executive offices.

                 (h)      CONTROLLING LAW.  This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas.  Further,
Executive agrees that any legal proceeding to enforce the provisions of this
Agreement shall be brought in Houston, Harris County, Texas, and hereby waives
his right to any pleas regarding subject matter or personal jurisdiction and
venue.





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                 (i)      RELEASE.  As a condition to the receipt of any
benefit under Paragraph 3 hereof, Executive shall first execute a release, in
the form established by the Company, releasing the Company, its shareholders,
partners, officers, directors, employees and agents from any and all claims and
from any and all causes of action of any kind or character, including but not
limited to all claims or causes of action arising out of Executive's employment
with the Company or the termination of such employment.

                 (j)      FULL SETTLEMENT.  If Executive is entitled to and
receives the benefits provided hereunder, performance of the obligations of the
Company hereunder will constitute full settlement of all claims that Executive
might otherwise assert against the Company on account of his termination of
employment.

                 (k)      UNFUNDED OBLIGATION.  The obligation to pay amounts
under this Agreement is an unfunded obligation of the Company (including its
subsidiaries), and no such obligation shall create a trust or be deemed to be
secured by any pledge or encumbrance on any property of the Company (including
its subsidiaries).

                 (l)      NOT A CONTRACT OF EMPLOYMENT.  This Agreement shall
not be deemed to constitute a contract of employment, nor shall any provision
hereof affect (a) the right of the Company (or its subsidiaries) to discharge
Executive at will or (b) the terms and conditions of any other agreement
between the Company and Executive except as provided herein.

                 (m)      NUMBER AND GENDER.  Wherever appropriate herein,
words used in the singular shall include the plural and the plural shall
include the singular.  The masculine gender where appearing herein shall be
deemed to include the feminine gender.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the 23rd day of March, 1995.


                                  "EXECUTIVE"



                                  /s/ BARRY J. GALT     


                                   "COMPANY"

                                   SEAGULL ENERGY CORPORATION



                                   BY:  /s/    ROBERT W. SHOWER
                                        NAME:  Robert W. Shower
                                        TITLE: Exec. VP & CFO






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