SEAGULL ENERGY CORPORATION

                             1983 STOCK OPTION PLAN
                                   (RESTATED)

I.  History and Purpose of the Plan

     The Seagull  Energy  Corporation  1983 Stock  Option  Plan(the  "Plan") was
originally  adopted by Seagull  Energy  Corporation,  a Texas  corporation  (the
"Company"),  on December  30,1983 and was  approved by the  shareholders  of the
Company on May15,  1984. The Plan is intended to provide a means whereby certain
employees  of  the  Company  and  its   subsidiaries  may  develop  a  sense  of
proprietorship and personal involvement in the development and financial success
of the  Company,  and to  encourage  them to remain  with and devote  their best
efforts to the business of the Company,  thereby  advancing the interests of the
Company  and its  shareholders.  Accordingly,  the  Company may grant to certain
employees  the option  ("Option")to  purchase  shares of the common stock of the
Company("Stock"),  as hereinafter set forth.  Options granted under the Plan may
be either incentive stock options,  within the meaning of section 422A(b) of the
Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  ("Incentive  Stock
Options")  or  options  which do not  constitute  Incentive  Stock  Options.  On
September  20, 1988,  the Company  restated the Plan in the form of this Seagull
Energy  Corporation  1983  Stock  Option   Plan(Restated)  for  the  purpose  of
incorporating  certain  amendments  previously  adopted with respect to the Plan
into the  text of the Plan and for  purposes  of  amending  the Plan in  certain
respects. The terms and provisions of this restatement of the Plan are effective
only with  respect to Options  granted  from and after  September  20,  1988 and
Options  granted  prior to such date shall  continue to be governed by the terms
and provisions of the Plan (and amendments thereto) as ineffect on September 20,
1988.

II.  Administration

     The  Plan  shall  be  administered  by  the  Compensation   Committee  (the
"Committee") of the Board of Directors of the Company (the "Board").  Members of
the  Committee  shall not be eligible,  and shall not have been  eligible at any
time within one year prior to their appointment to the Committee, to participate
in the Plan or in any other  stock,  stock option or stock  appreciation  rights
plan  of the  Company  or any of its  affiliates  ("Company  Stock  Plan").  The
Committee  shall have sole  authority  to select the  individuals  who are to be
granted Options from among those eligible  hereunder and to establish the number
of shares which may be issued under each Option.  The Committee is authorized to
interpret  the Plan and may from time to time adopt such rules and  regulations,
consistent  with the  provisions of the Plan, as it may deem  advisable to carry
out the Plan. All decisions  made by the Committee in selecting the  individuals
to whom Options shall be granted, in establishing the number of shares which may
beissued under each Option and in construing the provisions  ofthe Plan shall be
final.

III.  Option Agreements

     Each Option  shall be evidenced by an Option  Agreement  and shall  contain
such terms and conditions,  and may be exercisable  for such periods,  as may be
approved by the Committee.  The terms and  conditions of the  respective  Option
Agreements need not be identical.  Specifically, an Option Agreement may provide
for the surrender of the right to purchase shares under the Option in return for
a  payment  in cash or shares of Stock or a  combination  of cash and  shares of
Stock equal in value to the excess of the fair  market  value of the shares with
respect to which the right to  purchase  is  surrendered  over the option  price
therefor  ("Stock  Appreciation  Rights"),  on such terms and  conditions as the
Committee in its sole discretion may prescribe;  provided,  that with respect to
Stock Appreciation  Rights granted to employees who are subject to Section 16 of
the  Securities  Exchange  Act of 1934 (the "1934  Act"),  except as provided in
Subparagraph  VIII(c) hereof,  the Committee shall retain final authority (i) to
determine whether an optionee shall be permitted, or (ii) to approve an election
by an  optionee,  to  receive  cash in  full  or  partial  settlement  of  Stock
Appreciation Rights.  Moreover,  an Option Agreement may provide for the payment
of the option price,  in whole or in part, by the delivery of a number of shares
of Stock  (plus cash if  necessary)  having a fair  market  value  equal to such
option price.  Finally, an Option Agreement may provide for cashless exercise by
permitting an Optionee to withhold from shares of Stock acquirable upon exercise
of such Option  shares of Stock equal in value to all or a specified  portion of
the Option Price;  all on such terms and subject to such  conditions as shall be
established from time to time by the Committee. For all purposes under the Plan,
the fair market value of a share of Stock on a particular date shall be equal to
the closing price of the Stock on the New York Stock Exchange  Composite Tape on
that date, or if no prices are reported on that date,on the last  preceding date
on which such  prices of the Stock are so  reported.  Each Option and all rights
granted  thereunder shall not be transferable  other than by will or the laws of
descent  and  distribution,  and  shall be  exercisable  during  the  optionee's
lifetime   only  by  the   optionee   or  the   optionee's   guardian  or  legal
representative.

IV. Eligibility of Optionee

     Options may be granted only to individuals who are key employees (including
officers and directors who are also key  employees) of the Company or any parent
or subsidiary corporation (as defined in section 425 of the Code) of the Company
at the time the Option is granted. Options may be granted to the same individual
on more than one  occasion.  No  Incentive  Stock  Option shall be granted to an
individual  if, at the time the Option is granted,  such  individual  owns stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the  Company or of its  parent or  subsidiary  corporation,  within the
meaning of section  422A(b)(6) of the Code, unless (i)at the time such Option is
granted the option  price is at least 110% of the fair market value of the Stock
subject to the Option and (ii)such Option by its terms is not exercisable  after
the  expiration  of five  years from the date of grant.  To the extent  that the
aggregate fair market value  (determined  at the time the  respective  Incentive
Stock Option is granted) of stock with respect to which  Incentive Stock Options
granted after 1986 are  exercisable  for the first time by an individual  during
any calendar year under all incentive  stock option plans of the Company and its
parent and  subsidiary  corporations  exceeds  $100,000,  such  Incentive  Stock
Options  shall be treated as options  which do not  constitute  Incentive  Stock
Options. The Committee shall determine, in accordance with applicable provisions
of the Code, Treasury Regulations and other administrative pronouncements, which
of an optionee's  Incentive  Stock Options will not constitute  Incentive  Stock
Options  because  of such  limitation  and shall  notify  the  optionee  of such
determination as soon as practicable after such determination.

V.  Shares Subject to the Plan

     The aggregate  number of shares which may be issued under  Options  granted
under the Plan shall not exceed 300,000 shares of Stock. Such shares may consist
of authorized but unissued shares of Stock or previously  issued shares of Stock
reacquired  by the Company.  Any of such shares which remain  unissued and which
are not subject to outstanding Options atthe termination of the Plan shall cease
to be subject to the Plan, but, until termination of the Plan, the Company shall
at all  times  make  available  a  sufficient  number  of  shares  to  meet  the
requirements of the Plan. Should any Option here under expire or terminate prior
to its exercise in full, the shares theretofore subject to such Option may again
be subject to an Option granted under the Plan.  The aggregate  number of shares
which may be issued  under the Plan shall be subject to  adjustment  in the same
manner as provided  in  Paragraph  VIII  hereof with  respect to shares of Stock
subject  to  Options  then  outstanding.  Exercise  of an Option in any  manner,
including an exercise  involving a Stock  Appreciation  Right, shall result in a
decrease in the number of shares of Stock  which may  thereafter  be  available,
both for purposes of the Plan and for sale to any one individual,  by the number
of shares as to which the Option is exercised. Separate stock certificates shall
be issued by the Company for those shares  acquired  pursuant to the exercise of
an Incentive Stock Option and for those shares acquired pursuant to the exercise
of any Option which does not constitute an Incentive Stock Option.

VI.  Option Price

     The purchase price of Stock issued under each Option shall be determined by
the Committee, but in the case of an Incentive Stock Option, such purchase price
shall not be less than the fair market  value of Stock  subject to the Option on
the date the Option is granted.

VII.  Term of Plan

     The Plan became  effective upon December 30, 1983, the date of its adoption
by the Board.  Except with  respect to Options then  outstanding,  if not sooner
terminated  under the provisions of Paragraph IX, the Plan shall  terminate upon
and no further  Options shall be granted after the  expiration  often years from
the date of its adoption by the Board.

VIII.  Recapitalization or Reorganization

     (a) The existence of the Plan and the Options  granted  hereunder shall not
affect  in any way the right or power of the  Board or the  shareholders  of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital  structure or its business,  any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting  Stock orthe rights  thereof,  the  dissolution  or liquidation of the
Company or any sale, lease,  exchange or other disposition of all or any part of
its assets or business or any other corporate act or proceeding.

     (b) The shares with  respect to which  Options may be granted are shares of
Stock as presently constituted,  but if,and whenever, prior to the expiration of
an Option  theretofore  granted,  the  Company  shall  effect a  subdivision  or
consolidation  of shares of Stock or the  payment of a stock  dividend  on Stock
without receipt of consideration  by the Company,  the number of shares of Stock
with respect to which such Option may thereafter be exercised (i)in the event of
an  increase  in the  number  of  outstanding  shares  shall be  proportionately
increased,  and the purchase price per share shall be  proportionately  reduced,
and (ii)in the event of a reduction in the number of outstanding shares shall be
proportionately   reduced,   and  the   purchase   price  per  share   shall  be
proportionately increased.

     (c)  If  the  Company   recapitalizes  or  otherwise  changes  its  capital
structure,  thereafter  upon any exercise of an Option  theretofore  granted the
optionee shall be entitled to purchase under such Option,  in lieu of the number
of shares of Stock as to which such Option shall then be exercisable, the number
and class of shares of stock and  securities  to which the  optionee  would have
been  entitled  pursuant to the terms of the  recapitalization  if,  immediately
prior to such  recapitalization,  the  optionee had been the holder of record of
the number of shares of Stock as to which such  Option is then  exercisable.  If
(i) the Company shall not be the surviving entity in any merger or consolidation
(or  survivesonly  as a subsidiary  of an entity other than a previously  wholly
owned subsidiary of the Company), (ii) the Company sells, leases or exchanges or
agrees to sell, lease or exchange all or substantially  all of its assets to any
other person or entity  (other than a  wholly-owned  subsidiary of the Company),
(iii) the Company is to be dissolved and liquidated,  (iv) any person or entity,
including  a  "group"  as  contemplated  by  Section  13(d)(3)  of the 1934 Act,
acquires or gains ownership or control (including,  without limitation, power to
vote) of more than 40% of the outstanding shares of Stock, or (v) as a result of
or in connection  with a contested  election of directors,  the persons who were
directors  of the Company  before such  election  shall  cease to  constitute  a
majority of the Board  (each such event is  referred  to herein as a  "Corporate
Change"),  then, upon the occurrence of any such Corporate  Change,  each Option
then  outstanding  shall become  fully  exercisable  and  effective as of a date
(selected  by the  Committee)  within  (a) ten days  after the  approval  by the
shareholders  of the  Company  of such  merger,  consolidation,  sale,  lease or
exchange of assets or  dissolution  or such  election of directors or (b) thirty
days of such change of control,  the  Committee,  acting in its sole  discretion
without the consent or approval of any optionee, shall effect one or more of the
following alternatives, which may vary among individual optionees: (1) establish
a limited  period of time on or before a  specified  date  (before or after such
Corporate  Change) fixed by the Committee during which such outstanding  Options
may be exercised,  after which  specified date all  unexercised  Options and all
rights of  optionees  thereunder  shall  terminate,  (2) require  the  mandatory
surrender to the Company by selected optionees of some or all of the outstanding
Options  held by such  optionees  as of a  date,before  or after such  Corporate
Change,   specified  by  theCommittee,   in  which  event  the  Committee  shall
thereuponcancel such Options and pay to each optionee an amount ofcash per share
equal to the  excess of the  amount  calculatedin  Subparagraph  (d) below  (the
"Change of Control Value") ofthe shares subject to such Option over the exercise
price(s)under such Options for such shares, (3) make such adjustmentsto  Options
then  outstanding as the Committee  deems  appropriate to reflect such Corporate
Change  (provided,   however,  thatthe  Committee  may  determine  in  its  sole
discretion  that  noadjustment  is  necessary to Options  then  outstanding)  or
(4)provide that thereafter  upon any exercise of an Option  theretofore  granted
the optionee  shall be entitled to  purchaseunder  such  Option,  in lieu of the
number of shares of Stockas to which such Option shall then be exercisable,  the
numberand class of shares of stock or other  securities or propertyto  which the
optionee  would have been  entitled  pursuant  tothe terms of the  agreement  of
merger,  consolidation or saleof assets and dissolution if, immediately prior to
suchmerger, consolidation or sale of assets and dissolution theoptionee had been
the holder of record of the number  ofshares of Stock as to which such Option is
then exercisable.

     (d) For the purposes of clause (2) in Subparagraph (c)above, the "Change of
Control  Value" shall equal the amount  determined in clause (i), (ii) or (iii),
whichever  is  applicable,  as  follows:  (i) the per  share  price  offered  to
shareholders of the Company in any such merger, consolidation, sale of assets or
dissolution transaction,  (ii) the price pershare offered to shareholders of the
Company in any tender offer or exchange  offer whereby a Corporate  Change takes
place, or (iii) if such Corporate  Change occurs other than pursuant to a tender
or exchange offer, the fair market value per share of the shares into which such
Options being surrendered are exercisable,  as determined by the Committee as of
the  date  determined  by the  Committee  to be the  date  of  cancellation  and
surrender  of such  Options.  In the event  that the  consideration  offered  to
shareholders  of the Company in any transaction  described in this  Subparagraph
(d) or  Subparagraph  (c) above  consists  of  anything  other  than  cash,  the
Committee  shall  determine  the fair  cash  equivalent  of the  portion  of the
consideration  offered which is other than cash. (e) Any adjustment provided for
in   Subparagraphs   (b)  or  (c)  above  shall  be  subject  to  any   required
shareholderaction.

     (f) Except as herein before expressly provided, the issuance by the Company
of shares of stock of any class or securities  convertible  into shares of stock
of any class, for cash, property,  labor or services, upon direct sale, upon the
exercise of rights or warrants to  subscribe  therefor,  or upon  conversion  of
shares or  obligations  of the  Company  convertible  into such  shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no  adjustment  by reason  thereof  shall be made with respect to, the number of
shares of Stock subject to Options theretofore granted or the purchase price per
share.

IX.  Amendment or Termination of the Plan

     The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options have not  theretofore  been  granted.  The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time;  provided,  that no change in any Option  theretofore  granted may be made
which  would  impair  the  rights of  theoptionee  without  the  consent of such
optionee;  and provided,  further, that the Board may not make any alteration or
amendment which would materially  increase the benefits accruing to participants
under the Plan,  increase  the  aggregate  number of shares  which may be issued
pursuant to the provisions of the Plan, change the class of individuals eligible
to receive  Options  under the Plan or extend the term of the Plan,  without the
approval of the shareholders of the Company.