## **Exhibit 10.14**

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## **DESCRIPTION OF 2005 BONUSPROGRAM FOR EXECUTIVE OFFICERS**

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Under the Company’s bonus program, the annual bonusof the executive officers is determined by recommendation of the CompensationCommittee, after reviewing recommendations of the Chairman and Chief ExecutiveOfficer, which is then submitted for approval by the full Board.  Theamount of bonus that may be earned is based on a targeted percentage of theexecutive officer’s annual salary, subject to a maximum-targeted percentage.Subject to adjustment by the Board of Directors, the bonuses of the executiveofficers for 2005 are based 80% on achievement of the Company’s performanceobjectives as established by the Compensation Committee and 20% on achievementof the individual’s performance objectives. The Company’s overall performanceobjectives are measured by certain operational and financial objectives. The operational objectives for the Company for 2005 consisted of targetedannual increases in reserves (weighted 40%) and production (weighted 30%),competitive finding and development costs (“F&D”) (weighted 15%), leaseoperating expense (“LOE”) (weighted 7.5%) and general and administrative costs(“G&A”) (weighted 7.5%), as compared with those projected in the Company’sannual budget for the applicable period. Both the LOE and G&A measures are calculatedon the unit-of-production basis with targets set by the Compensation Committee.In addition, the F&D objective, weighted at 15%, is calculated as athree-year moving average using a unit-of-production basis, and is determinedwithout including any F&D costs associated with acquisitions. This is theonly category of the performance objectives where acquisitions are excluded. Thefinancial goals for the Company for 2005 were: (1) to ensure that funds wereavailable to execute the Company’s overall recommended case capital spendingprogram as projected in its 2005 annual budget and plan (the “Recommended Case”)while maintaining a prudent financial structure with a debt-to-total capitalratio of less than 30%, subject to adjustment due to acquisitions; (2) to fundthe Recommended Case, excluding acquisitions, from internal cash flow ratherthan taking on more debt; and (3) building pre-tax cash flow from ourexploration and production activities to a level sufficient to provide thenecessary funds to conduct a program that will provide consistent physical(reserve and production) and fiscal (cash flow and net income) growth for theCompany.

 

Individual performance is assessed by a performance managementprocess based on mutually defined expectations for each employee, includingexecutive officers. The process includes individual appraisal components thatare both objective and subjective. The objective components includequantifiable objectives and the subjective performance components include rolesand accountabilities, performance attributes and behaviors. Individualperformance of the executive officers, except the Chief Executive Officer, isfirst assessed by the Chief Executive Officer, who makes recommendations to theCompensation Committee for its consideration.  Bonus opportunities for2005 for Mr. Long ranged from 0% to 80% of base salary, for Mr. Tugwell from 0%to 80% of base salary, and for Mr. Elias from 0% to 100% of his base salarysubject to the achievement of specific objective and subjective performancecriteria established mutually between the Compensation Committee and Mr. Eliason an annual basis. Bonus awards, if any, to be paid for 2005 performance arenot determined as of the date of this Form 10-K and will be reported in theProxy Statement for the 2006 Annual Meeting. Under thebonus program, the 2005 bonuses will be paid in cash. All bonuses are subjectto the final approval of the Board of Directors.

 

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