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                                                                   EXHIBIT 10.19


                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (hereinafter called this "Agreement") is
entered into effective as of December 2, 1996 (the "Effective Date"), by and
between MARINER ENERGY, INC. (hereinafter called "Company") and Frank A. Pici
(hereinafter called "Employee").

         WHEREAS, Company desires to employ Employee upon the terms and
conditions set forth herein; and

         WHEREAS, Employee desires to be employed by Company upon the terms and
conditions set forth herein;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:

         1.      Employment.

                 Company hereby employs Employee to serve as Vice President -
                 Finance and Chief Financial Officer of Company.  The permanent
                 place of Employee's employment shall be at a location within a
                 50-mile radius of the central business district of the City of
                 Houston, Texas; provided, however, Employee shall be required
                 to undertake such ordinary and usual travel as is necessary to
                 properly discharge his duties and responsibilities hereunder.
                 Employee hereby accepts such employment, and agrees to serve
                 Company faithfully, diligently and in a good and workmanlike
                 manner.

         2.      Term.

                 The term of employment shall be for a term of one (1) year
                 beginning on the Effective Date (the "initial term"), subject,
                 however, to the provisions of paragraph 3.

         3.      Extension and Termination.

                 3.1      If either Employee or Company elects to terminate
                          this Agreement at the end of the initial term, or at
                          the end of any extended term hereof as hereinafter
                          provided, notice of the election to terminate shall
                          be given to the other party no later than six (6)
                          months before the end of this Agreement.  Except as
                          otherwise provided in paragraph 21.1, if no such
                          six-month notice is given by either party on or
                          before June 2, 1997, the initial term shall be deemed
                          to have been extended for an additional one and
                          one-half (1 1/2) years through June 1, 1999 (the
                          "first extended term"), and thereafter if no such
                          six-month notice is given by either party before the
                          end of the first extended term, or at the end of any
                          subsequent extended





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                          term, the first extended term and any such subsequent
                          extended term of this Agreement, as the case may be,
                          shall be deemed to have been extended for an
                          additional six (6) months.

                 3.2      In the event Company elects to terminate this
                          Agreement as provided in paragraph 3.1 above:

                          3.2.1   Company shall pay to Employee his salary and
                                  other benefits provided elsewhere in this
                                  Agreement for Employee's services rendered to
                                  Company hereunder through the end of such
                                  term or extended term.

                          3.2.2   Company shall pay to Employee, on or before
                                  the last day of his employment hereunder, a
                                  lump sum cash payment equal to six (6)
                                  months' salary at Employee's monthly rate for
                                  the month immediately preceding the month in
                                  which Company elects to terminate this
                                  Agreement.

                          3.2.3   Company shall pay to Employee, on or before
                                  the last day of his employment hereunder, a
                                  lump sum cash payment for all (a) vacation
                                  time carried forward from a previous year in
                                  accordance with paragraph 8, and (b) all
                                  earned and unused vacation time for the then
                                  current year.  Earned vacation time shall,
                                  for the purpose of this paragraph, be
                                  calculated by dividing the number of days in
                                  the calendar year which have transpired by
                                  365, and then multiplying the result by the
                                  number of vacation days to which Employee is
                                  entitled for that year pursuant to paragraph
                                  8.

                          3.2.4   If Employee has a leased automobile, the
                                  lease payments on which are guaranteed by
                                  Company, Employee shall have the option, to
                                  be exercised on or before the last day of his
                                  employment hereunder, of assuming the
                                  remaining lease payments and retaining the
                                  automobile, or assigning the lease agreement
                                  to Company in return for Company's agreement
                                  to assume the remaining lease payments.

                          3.2.5   Interests vested in Employee under paragraph
                                  9 of this Agreement shall be assigned in due
                                  course in compliance with paragraph 9.4.
                                  Company and Employee agree that the promises,
                                  covenants and undertakings of paragraph 9
                                  shall survive the termination of employment
                                  of Employee and shall be binding on all
                                  assigns of Company.

                 3.3      In the event Employee elects to terminate this
                          Agreement as provided in paragraph 3.1 above:





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                          3.3.1   Employee agrees to serve to the end of the
                                  term, or extended term hereof, unless waived
                                  by Company.

                          3.3.2   The provisions of paragraphs 3.2.1, 3.2.3,
                                  3.2.4, and 3.2.5 shall be applicable, but
                                  Employee shall not be entitled to the payment
                                  provided for in paragraph 3.2.2.

                 3.4      Company may at its option consent to a request by
                          Employee to terminate this Agreement at a time other
                          than that stated in paragraph 2, as extended, in
                          which case the date requested by Employee and agreed
                          to by Company will be the end of the term of this
                          Agreement and the provisions of paragraph 3.3 shall
                          be applicable.

                 3.5      Company may terminate this Agreement for "Cause" (as
                          hereinafter defined in this paragraph 3.5) upon
                          written notice of such termination to Employee by
                          Company.  Any termination of this Agreement by
                          Company for Cause shall be effective thirty (30) days
                          after written notice of termination for Cause is
                          given by Company to Employee.  If Company terminates
                          this Agreement for Cause, Company shall have no
                          liability or obligation to Employee thereafter under
                          this Agreement except (i) for the payment of his
                          salary and other benefits through the month of
                          discharge, prorated in the case of salary for the
                          month of discharge on a daily basis to the date of
                          termination, and (ii) that the provisions of
                          paragraph 3.2.5 shall be applicable.  As used in this
                          Agreement, the term "Cause" means (a) Employee is
                          found guilty of, admits in writing facts amounting
                          to, or is held civilly liable for fraud, embezzlement
                          or dishonesty, (b) Employee is convicted of a felony
                          involving a crime of moral turpitude or any other
                          felony if the Board of Directors of the Company in
                          good faith determines that the continued employment
                          of the Employee would be materially detrimental to
                          the Company (in any case which felony through lapse
                          of time or otherwise is not subject to appeal), (c)
                          Employee knowingly discloses trade secrets or
                          confidential Company matters to unauthorized persons,
                          (d) Employee willfully breaches or habitually
                          neglects any duties he is required to perform under
                          the terms of this Agreement and any such breach or
                          neglect is not cured within thirty (30) days after
                          Company has provided Employee with written notice of
                          such breach or neglect, (e) Employee materially
                          breaches any of the other material terms of this
                          Agreement and any such breach is not cured within
                          thirty (30) days after the Company has provided
                          Employee with written notice of such breach, and (f)
                          the occurrence of an action or finding described in
                          paragraph 17, except as otherwise provided in
                          paragraph 17.  The waiver by Company of a breach of
                          any provision of this Agreement by Employee shall not
                          operate or be construed as a waiver of any subsequent
                          breach by Employee.





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                 3.6      In the event Company terminates this Agreement or
                          discharges Employee other than as provided in
                          paragraphs 3.1, 3.4 or 3.5 above, Employee shall be
                          entitled to receive on the date of such termination
                          or discharge:

                          3.6.1   A lump sum cash payment equal to Employee's
                                  salary, at Employee's monthly rate for the
                                  month immediately preceding the month in
                                  which such termination or discharge occurs,
                                  for the unexpired portion of the term or
                                  extended term hereof then in effect.

                          3.6.2   The payments and other benefits provided for
                                  in paragraphs 3.2.2, 3.2.3, 3.2.4 and 3.2.5
                                  hereof.

                 3.7      In the event Employee terminates this Agreement for
                          "Good Reason" (as defined in paragraph 3.9), and
                          prior to such termination Employee has not terminated
                          this Agreement under paragraph 3.1 hereof, Employee
                          shall be entitled to receive from Company on the date
                          of such termination:

                          3.7.1   A lump sum cash payment equal to Employee's
                                  salary, at Employee's monthly rate in effect
                                  at the effective time of such termination
                                  (but prior to giving effect to any reduction
                                  therein which precipitated such termination),
                                  for the unexpired portion of the term or
                                  extended term hereof then in effect.

                          3.7.2   A lump sum cash payment equal to six (6)
                                  months' salary, at Employee's rate in effect
                                  at the time of such termination (but prior to
                                  giving effect to any reduction therein which
                                  precipitated such termination).

                          3.7.3   The payments and other benefits provided for
                            in paragraphs 3.2.3, 3.2.4 and 3.2.5.

                 3.8      Any termination of this Agreement by Employee for
                          Good Reason shall be effective thirty (30) days after
                          written notice of termination for Good Reason is
                          given by Employee to Company

                 3.9      As used in this Agreement, the term "Good Reason"
                          means any one or more of the following events has
                          occurred:

                          3.9.1   The assignment to Employee of any duties
                                  materially inconsistent with Employee's
                                  position (including office, title and
                                  reporting requirements), authority, duties or
                                  responsibilities with Company or any other
                                  action that results in a material diminution
                                  in, or interference with, such position,
                                  authority, duties or responsibilities, and
                                  any such assignment or action is not cured
                                  within thirty (30) days after Employee has
                                  provided Company with written notice of such
                                  assignment or action;





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                          3.9.2   The failure to continue to provide Employee
                                  with office space, related facilities and
                                  support personnel (including, but not limited
                                  to, administrative and secretarial
                                  assistance) (a) that are both commensurate
                                  with Employee's responsibilities to and
                                  position with Company and not materially
                                  dissimilar to the office space, related
                                  facilities and support personnel provided to
                                  other employees of Company having comparable
                                  responsibility to that of Employee or (b)
                                  that are physically located at Company's
                                  principal executive offices, and any such
                                  failure is not cured within thirty (30) days
                                  after Employee has provided Company with
                                  written notice of such failure;

                          3.9.3   Any (a) reduction in Employee's monthly
                                  salary as established in paragraph 5
                                  (including subsequent increases), (b)
                                  reduction in, discontinuance of, or failure
                                  to allow or continue to allow Employee's
                                  participation in, the incentive compensation
                                  program provided under paragraph 9 hereof, or
                                  (c) reduction in, or failure to allow or
                                  continue Employee's participation in, any
                                  employee benefit plan or program (except when
                                  such benefit plan or program is replaced with
                                  another benefit plan, program or arrangement
                                  that provides Employee, in the aggregate,
                                  with reasonably comparable benefits) in which
                                  Employee is participating or is eligible to
                                  participate prior to such reduction or
                                  failure (other than as a result of the
                                  expiration of such plan or program), and any
                                  such reduction, discontinuance or failure is
                                  not cured within thirty (30) days after
                                  Employee has provided Company with written
                                  notice of such reduction or failure;

                          3.9.4   The relocation of Employee's or Company's
                                  principal office and principal place of
                                  Employee's performance of his duties and
                                  responsibilities to a location more than 50
                                  miles outside of the central business
                                  district of the City of Houston, Texas; or

                          3.9.5   A breach of any material provision of this
                                  Agreement by Company (other than any breach
                                  described in paragraphs 3.9.1, 3.9.2, 3.9.3,
                                  and 3.9.4) which is not cured within thirty
                                  (30) days after Employee has provided Company
                                  with written notice of such breach.





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         4.      Confidential Information.

                 4.1      Employee agrees that he will, during the term of this
                          Agreement, and for a period of four (4) years from
                          the date of termination of his employment hereunder,
                          keep secret and confidential and not disclose to any
                          party not a party to this Agreement, land or lease
                          data, geological or geophysical data, well data or
                          any other information which he may receive as a
                          result of the performance of his duties hereunder,
                          except when disclosure is necessary for the
                          performance of his duties to Company hereunder.  This
                          paragraph shall not apply to information that is in
                          the public domain through no action of Employee.

                 4.2      Upon termination of this employment hereunder,
                          Employee shall promptly deliver to Company all
                          written information and documents (whether
                          confidential or not), and all copies thereof,
                          relating to Company's business and activities and
                          which are in the possession of or under the control
                          of Employee.

         5.      Salary; Signing Bonus

                 5.1      As compensation for his services rendered to Company
                          hereunder, Company shall pay to Employee a salary at
                          the rate of $12,166.67 per month.  Employee's salary
                          may be reviewed at such times as may be determined by
                          Company, and Company may at its discretion increase
                          this salary.  Employee's salary shall be paid in two
                          equal monthly installments, payable on the fifteenth
                          and last days of each month (or on the first business
                          day of Company thereafter if any such payment date is
                          not a business day of Company), subject to any and
                          all necessary withholdings and deductions.

                 5.2      Company shall pay Employee a bonus in the amount of
                          $20,000.00 upon the commencement of the initial term
                          of this Agreement.

         6.      Automobile Allowance.

                 Company agrees to pay an automobile allowance of $250.00
                 dollars per month to Employee.  In addition to such monthly
                 allowance, Company shall pay, in accordance with Company
                 policy, for all gasoline, insurance and maintenance required
                 for use of the automobile.

         7.      Business Expenses.

                 Employee is authorized to incur reasonable business expenses
                 in accordance with Company's policies as may be established
                 from time to time for promoting the business of Company,
                 including expenditures for entertainment and travel.  Company
                 shall reimburse Employee from time





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                 to time for all such business expenses in accordance with
                 those policies adopted by Company which include, but are not
                 limited to, the requirement that Employee timely present to
                 Company:

                 7.1      The amount of the expenditure;

                 7.2      The time, place and description of the expense;

                 7.3      The business reason for the expenditure and business
                          benefit derived or expected to be derived therefrom;
                          and

                 7.4      The name and occupation of the person or persons
                          entertained to establish the business relationship
                          with Company.

                 With respect to any reimbursable business expense contemplated
                 above exceeding twenty-five dollars ($25.00), Employee will
                 furnish documentary evidence of such expense to Company.

         8.      Vacation.

                 Employee shall be entitled to an annual vacation leave of
                 twenty (20) days per calendar year at full pay.  The timing
                 and use of such vacation days shall be requested by Employee
                 and approved by Company in accordance with its policy.  Up to
                 five (5) days of unused vacation may be carried over from one
                 calendar year to the next calendar year.  Employee shall not
                 be entitled to receive payment in lieu of unused vacation time
                 except as otherwise provided herein.  With prior approval,
                 vacation may be deferred if business matters keep Employee
                 from taking his normal vacation.

         9.      Incentive Compensation.

                 9.1      Definitions.

                 An "AFFILIATE" of a specified person is any person that,
                 directly or indirectly through one or more intermediaries,
                 controls, is controlled by or is under common control with
                 that specified person.

                 "BENEFICIAL OWNERSHIP" of a security shall be determined in
                 accordance with Rule 13d-3 promulgated under the Securities
                 Exchange Act of 1934.

                 A "CHANGE IN CONTROL" shall have occurred if, after the
                 Effective Date:

                                  (i)      Any person or group of affiliated
                          persons (other than Joint Energy Development
                          Investments Limited Partnership ("JEDI") or an
                          affiliate of Enron Corp.) shall become the beneficial
                          owner, directly or indirectly, of 66-2/3 percent or
                          more of the outstanding Voting Stock of Newco unless
                          Newco becomes a subsidiary of an entity which does





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                          not have a beneficial owner, directly or indirectly,
                          of 66 2/3 percent or more of the outstanding Voting
                          Stock of such entity (other than JEDI or an affiliate
                          of Enron Corp.); or

                                  (ii)     Newco shall approve (x) a merger or
                          consolidation of Newco with or into any other person,
                          if as a result any person (other than JEDI or an
                          affiliate of Enron Corp.) shall become the beneficial
                          owner, directly or indirectly, of 66-2/3 percent or
                          more of the outstanding Voting Stock of Newco unless
                          Newco becomes a subsidiary of an entity which does
                          not have a beneficial owner, directly or indirectly,
                          of 66-2/3 percent or more of the outstanding Voting
                          Stock of such entity (other than JEDI or an affiliate
                          of Enron Corp.), (y) any sale, lease, exchange or
                          other transfer of two-thirds or more of the
                          consolidated assets of Newco and its subsidiaries
                          taken as a whole in one transaction or a series of
                          related transactions whether by direct sale of
                          assets, sale of stock of a subsidiary or a merger
                          involving any subsidiary, or (z) the dissolution of
                          Newco; or

                                  (iii)    Recognizing that the events
                          described in this clause and the events described in
                          clause (ii) above may not necessarily be mutually
                          exclusive, any sale, exchange or other transfer of
                          two-thirds or more of the outstanding Voting Stock of
                          the Company or any sale, lease, exchange or other
                          transfer of two-thirds or more of the consolidated
                          assets of the Company and its subsidiaries (if any)
                          taken as a whole in one transaction or a series of
                          related transactions.

                 "COMPANY" means Mariner Energy, Inc., a Delaware corporation.

                 "COMPANY GROUP" means any or all of Company or any of its
                 affiliates, Hardy Oil & Gas plc or any of its affiliates,
                 Joint Energy Development Investments Limited Partnership or
                 any of its affiliates, Enron Capital & Trade Resources Corp.
                 or any of its affiliates, and any and all other persons paying
                 introduction/placement fees to Joint Energy Development
                 Investments Limited Partnership or any of its affiliates or
                 Enron Capital & Trade Resources Corp. or any of its affiliates
                 for access to one or more Working Interests of Company.

                 "COMPANY'S WORKING INTEREST" and "WORKING INTEREST OF COMPANY"
                 mean, with respect to any Prospect, the Working Interest in
                 such Prospect acquired by Company and, for purposes of this
                 paragraph 9, shall include each portion thereof that Company
                 may subsequently transfer to another member of Company Group
                 or to any other person.





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                 "CONTROL" means (a) holding, directly or indirectly, more than
                 50 percent of the outstanding voting securities of a
                 non-individual person, (b) having the right, directly or
                 indirectly, to more than 50 percent of the profits of a
                 non-individual person, (c) having the right, directly or
                 indirectly, to more than 50 percent of the assets of a
                 non-individual person if it is dissolved or (d) having the
                 contractual power to designate more than 50 percent of the
                 directors (or individuals exercising similar functions) of a
                 non-individual person.

                 "DEVELOPMENT ACREAGE" means the acreage within a Prospect
                 covering a known or inferred geologic structure upon which
                 Company and/or its joint working interest owners or a farmee
                 of Company's Working Interest in a Prospect have drilled a
                 well capable of commercial oil and/or gas production.  Such
                 acreage shall be deemed to be Development Acreage from the
                 surface of the earth down through the deepest known productive
                 horizon.  The committee described in paragraph 9.5.1(a),
                 below, shall designate acreage within a Prospect as
                 Development Acreage based upon the most current interpretation
                 available at the time of designation.

                 "EFFECTIVE DATE" means the effective date of this amended and
                 restated Employment Agreement.

                 "EXPLORATION AND DEVELOPMENT COSTS" means, with respect to any
                 Prospect or Prospects, and without duplication, all direct,
                 capital costs actually incurred by Company Group in connection
                 with exploration and development of such Prospect or
                 Prospects, including, without limitation, all costs incurred
                 in preparing for drilling, drilling, testing, completing,
                 equipping (including, without limitation, installation of
                 platforms, facilities and pipelines and dry hole costs) and
                 recompleting wells, all geological and geophysical costs, and
                 all leasehold costs (including bonus, delay rentals and all
                 other costs of acquiring and maintaining in force the leases,
                 or portions thereof or undivided interests therein, included
                 in such Prospects).  Exploration and Development Costs shall
                 not include lease operating expenses or general and
                 administrative expenses of the Company Group.

                 "EXPLORATORY ACREAGE" means the acreage comprising a Prospect
                 which has not been designated by the committee described in
                 paragraph 9.5.1(a), below, as either Development Acreage or a
                 Producing Property Acquisition.  Exploratory Acreage shall not
                 be limited as to depth (except to the extent, if any, to which
                 Company's Working Interest therein is limited as to depth).

                 "FPF/TLP EXPLOITATION PROSPECT" means any Prospect containing
                 a hydrocarbon reservoir which (a) exhibits a sufficient
                 likelihood of such hydrocarbon reservoir being economic, based
                 on commercially producible shows of hydrocarbons in a well
                 drilled within such reservoir, together with other geological
                 and geophysical data and interpretations, such that





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                 Company in its reasonable judgment plans to develop such
                 reservoir, and (b) is reasonably expected by Company to be
                 exploited and/or developed by utilizing a floating production
                 facility and/or a tension leg platform.

                 "FPF/TLP EXPLORATION PROSPECT" means any Prospect (other than
                 an FPF/TLP Exploitation Prospect) with respect to which
                 Company reasonably expects to utilize a floating production
                 facility and/or a tension leg platform in connection with
                 operations to be conducted on such Prospect.

                 "INITIAL WELL" means, with respect to a Prospect, the first
                 well drilled on such Prospect in which Company participates as
                 a Working Interest owner or with respect to which Company
                 retains an overriding royalty or other interest in oil and gas
                 production from such well.

                 "MAJOR PROSPECT" means any FPF/TLP Exploration Prospect,
                 FPF/TLP Exploitation Prospect, Subsea Tieback Exploration
                 Prospect or Subsea Tieback Exploitation Prospect with respect
                 to which the total amount estimated by Company for Exploration
                 and Development Costs to be incurred by Company Group (i.e.,
                 net to Company Group's interest) through the end of the
                 primary development period for the field comprising such
                 Prospect exceeds $30 million.

                 "NET PROFIT SHARE LEASE" means an oil and gas lease which
                 provides for sharing between lessor and lessee of the net
                 profits or net proceeds, as defined in said lease, from the
                 sale of oil and/or gas produced therefrom.

                 "NEWCO" means Mariner Holdings, Inc., a Delaware corporation,
                 or its successors.

                 "OVERRIDING ROYALTY INTEREST" means an interest in gross
                 production of oil and gas under each oil and gas lease (or
                 portion thereof) included within a Prospect, which interest
                 (except as herein otherwise provided) shall be free of all
                 costs of acquisition, exploration, drilling, completing,
                 equipping, operating and developing any oil and gas produced
                 from such lease.

                 A "PARENT" of a specified person is another person that
                 controls such specified person directly or indirectly through
                 one or more intermediaries.

                 "PAYOUT" means, for each Initial Well and each subsequent well
                 drilled on a Prospect, the point in time at which the revenue
                 to Company or its assigns from its interest in oil and gas
                 production from such well (after deduction of Company's or its
                 assigns' prorata part of the burden of (i) all landowners'
                 royalties, overriding royalties, net profits interests,
                 production payments or other burdens upon, measured by or
                 payable out of such production and (ii) all applicable ad
                 valorem, production, severance, sales, gathering, windfall
                 profits excise and similar taxes) equals the sum incurred by
                 or for the account of Company or its assigns





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                 (x) in preparing for drilling, drilling, testing, completing,
                 equipping (including, without limitation, installation of
                 platforms, facilities and pipelines), operating, reworking and
                 recompleting the well, and marketing the production therefrom,
                 and (y) for such well's allocable share of geological and
                 geophysical costs, leasehold costs and other common costs.
                 "Leasehold costs" shall mean payments for bonus, delay
                 rentals, and all other costs of acquiring from the landowners
                 (or, in the case of an acquisition by Company (but not any
                 assignee of Company), from predecessors in title to such
                 leases) and maintaining in force the leases allocated to the
                 well.  Leases "allocated" to a well shall mean the leases or
                 portions thereof or undivided interests therein to which
                 production from a well is attributed, whether on a lease or
                 unit basis.  With respect to each such well, "common costs"
                 shall mean capital costs that are attributable to (a) such
                 Prospect as a whole or (b) such well and one or more other
                 wells (but not all wells) on such Prospect and shall include,
                 without limitation, costs of drilling, plugging and abandoning
                 non-productive wells on such Prospect.  Each such well's
                 allocable share of common costs shall be determined by Company
                 in any manner it deems appropriate from time to time.

                 The expression "2.5 TIMES PAYOUT" means, for each Initial Well
                 and each subsequent well drilled on a Prospect, the point in
                 time at which such revenue to Company or its assigns from its
                 interest in oil and gas production from such well, after such
                 deductions mentioned above, equals the product of 2.5 times
                 the sum incurred by or for the account of Company or its
                 assigns (x) in preparing for drilling, drilling, testing,
                 completing, equipping, operating, reworking and recompleting
                 the well, and marketing the production therefrom, and (y) for
                 such well's allocable share of geological and geophysical
                 costs, leasehold costs and other common costs as mentioned
                 above.

                 A "PERSON" is an individual, a corporation, a trust, a
                 partnership, a limited liability company, an association or
                 any other entity.

                 "PRODUCING PROPERTY ACQUISITION" means a lease or leases, or
                 portions thereof or undivided interests therein, acquired by
                 Company during the term or extended term of this Agreement
                 principally for the value of existing oil and gas production
                 thereon and further development of oil and gas reserves
                 considered proved under such lease or leases at the time of
                 acquisition.  A Producing Property Acquisition shall include
                 acquisition of such leasehold interests even though Company
                 may have previously acquired interests in some or all of the
                 same leases as a Prospect acquisition (i.e., prior to the time
                 such leases were considered to contain proved oil and gas
                 reserves).  Company may in its sole discretion designate a
                 Producing Property Acquisition in whole or in part as a
                 Prospect.





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                 "PROSPECT" means the lease or leases, or portions thereof or
                 undivided interests therein, acquired by Company within the
                 United States and its coastal waters while Employee is
                 employed by Company and during the term or extended term of
                 this Agreement covering lands which in the sole opinion of
                 Company may contain one or more hydrocarbon accumulations
                 capable of being commercially produced.  For purposes of this
                 definition of Prospect, the acquisition of a lease or leases
                 shall mean the acquisition by Company of legal or beneficial
                 rights or interests in a lease or leases, including (without
                 limitation) contractual rights to acquire or earn a lease or
                 leases (whether by farmout agreement or otherwise, and whether
                 such contractual rights are subject to certain conditions such
                 as the drilling or completion of a commercial well, and
                 without regard to the results of the drilling or completion of
                 any such well under such contract).  A Prospect shall not
                 include a prospect acquired by Company by merger or
                 consolidation of Company with or into another entity unless
                 such  prospect is so designated by Company.  A Prospect shall
                 not include a Producing Property Acquisition unless such
                 Prospect is so designated by Company, and shall not include
                 leases included in a Prospect under previous Employee
                 Incentive Compensation Plans.  All Prospects shall be deemed
                 to be without depth limitation unless the Company designates
                 specified depths only at the time said Prospect is initially
                 acquired by Company.  Notwithstanding the date or dates on
                 which leases in a Prospect are actually acquired by Company,
                 solely for purposes of determining the employees of Company
                 who are entitled to receive an Overriding Royalty Interest
                 therein, such leases, or portions thereof or undivided
                 interests therein, shall be deemed to have been acquired by
                 Company as of the date on which Company's management approved
                 such Prospect acquisition.

                 "SUBSEA TIEBACK EXPLOITATION PROSPECT" means any Prospect
                 containing a hydrocarbon reservoir which (a) exhibits a
                 sufficient likelihood of such hydrocarbon reservoir being
                 economic, based on commercially producible shows of
                 hydrocarbons in a well drilled within such reservoir, together
                 with other geological and geophysical data and
                 interpretations, such that Company in its reasonable judgment
                 plans to develop such reservoir, and (b) is reasonably
                 expected by Company to be exploited and/or developed by
                 utilizing a subsea tieback system.

                 "SUBSEA TIEBACK EXPLORATION PROSPECT" means any Prospect
                 (other than a Subsea Tieback Exploitation Prospect) with
                 respect to which Company reasonably expects to utilize a
                 subsea tieback system in connection with operations to be
                 conducted on such Prospect.

                 A "SUBSIDIARY" of a specified person is an entity controlled
                 by such person directly or indirectly through one or more
                 intermediaries.

                 "VOTING STOCK" means shares of capital stock of the specified
                 entity the holders of which are entitled to vote for election
                 of directors thereof.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -12-
<PAGE>   13
                 "WORKING INTEREST" means the leasehold working interest, or
                 undivided interest therein, under an oil and gas lease which
                 obligates the owner thereof to bear his percentage of the
                 costs and expenses relating to the maintenance and development
                 of, and operations relating to, such lease and the well or
                 wells associated therewith.

                 9.2      Employee's Property Interest.

                 Subject to the other provisions of this paragraph 9, Employee
                 shall own, be immediately vested with, and be entitled to
                 receive the benefits of an Overriding Royalty Interest equal
                 to an undivided percentage of Company's Working Interest, more
                 specifically described below, in each well on a Prospect and
                 the lease or leases allocated thereto, as follows:

                           EMPLOYEE: FRANK A. PICI

                         OVERRIDING ROYALTY INTEREST
                                     IN
                       FPF/TLP EXPLORATION PROSPECTS,
                       FPF/TLP EXPLOITATION PROSPECTS,
                    SUBSEA TIEBACK EXPLORATION PROSPECTS
                                     AND
                    SUBSEA TIEBACK EXPLOITATION PROSPECTS

<TABLE>
<CAPTION>

GROUP                  TIME PERIOD          BEFORE PAYOUT        AFTER PAYOUT
-----                  -----------          -------------        ------------
<S>              <C>                        <C>                  <C>
Group XIX        12/2/96 and Thereafter       0.085937             0.343748

</TABLE>


                         OVERRIDING ROYALTY INTEREST
                                     IN
                             ALL OTHER PROSPECTS

<TABLE>
<CAPTION>

GROUP                  TIME PERIOD          BEFORE PAYOUT        AFTER PAYOUT
-----                  -----------          -------------        ------------
<S>              <C>                         <C>                  <C>
Group XIX        12/2/96 and Thereafter       0.09375              0.37500

</TABLE>


                 At 7:00 a.m. on the first day of the month following the month
                 in which Payout of such well occurs, the Overriding Royalty
                 Interest shall increase from the applicable before-Payout
                 percentage to the applicable after-Payout percentage.  Except
                 as herein otherwise expressly provided, references in this
                 paragraph 9 to Employee's "Overriding Royalty Interest" with
                 respect to any Prospect shall mean the applicable
                 before-Payout and after-Payout percentages of Company's
                 Working Interest in such Prospect as set forth above.

                 9.3      Governmental Filings.

                 Company will assist Employee in Filing an 83b Election with
                 the Internal Revenue Service on each Prospect, on a prospect
                 by prospect or lease by lease basis, as the case may be,
                 denoting the transfer to Employee of the Overriding Royalty
                 Interest and stating the value of such interest for the
                 purposes at the time the interest is acquired.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -13-
<PAGE>   14
                 9.4      Assignment of Overriding Royalty Interest.

                 Except as otherwise expressly provided in paragraphs 9.4.8 and
                 9.4.9, Employee shall not be entitled to obtain recordable
                 assignments of his interest under this paragraph 9 until his
                 completion of three years of employment by Company and, except
                 as otherwise expressly provided herein, Employee shall forfeit
                 ownership of such interest if Employee's employment is
                 terminated by Company pursuant to paragraph 3.5 or by Employee
                 without Good Reason as defined in paragraph 3.9, prior to the
                 completion of such three years of employment.  Upon completion
                 of three years of employment of Employee by Company,
                 Employee's ownership of interests theretofore or thereafter
                 transferred to him pursuant to this Agreement will no longer
                 be subject to forfeiture, and  assignments will be made in
                 accordance with this paragraph 9.4.  Subject to the other
                 provisions of this paragraph 9, Employee shall be entitled to
                 the revenue arising from his Overriding Royalty Interest
                 whether or not he is entitled to a recordable assignment.
                 Subject to the foregoing provisions of this paragraph 9.4 and
                 to the provisions of paragraph 9.5, as soon as practicable
                 after the end of each calendar quarter during the term or
                 extended term of this Agreement, Employee shall be entitled to
                 receive recordable assignments of his Overriding Royalty
                 Interest in a lease or leases (or portions thereof) acquired
                 by Company in a Prospect during such calendar quarter.  If
                 Employee's employment is terminated by Company pursuant to
                 paragraph 3.5 or by Employee without Good Reason as defined in
                 paragraph 3.9, during any such calendar quarter, Employee
                 shall not be entitled to receive recordable assignments that
                 would otherwise have been due under this paragraph in respect
                 of any lease or leases (or portions thereof) acquired by
                 Company in a Prospect during such calendar quarter or
                 thereafter (and Employee shall not own, be vested with or be
                 entitled to receive the benefits of any Overriding Royalty
                 Interest that would have been granted by such recordable
                 assignments) unless the termination is at the end of the term
                 or extended term of this Agreement.  As soon as practicable
                 after the end of each such calendar quarter, Company shall
                 provide Employee with the following:

                          (a)     A recordable assignment of his Overriding
                                  Royalty Interest in the leases (or portions
                                  thereof) acquired by Company in each Prospect
                                  during such calendar quarter.

                          (b)     A plat outlining the geographical limits of
                                  each such Prospect.  Company shall review
                                  each Prospect plat each calendar quarter in
                                  light of drilling activity on or near the
                                  Prospect, and expand the plat boundary if new
                                  leases are acquired which Company believes to
                                  contain a prospective hydrocarbon
                                  accumulation that is located on the same
                                  geological feature as such Prospect.
                                  Employee shall be entitled to his Overriding
                                  Royalty Interest in any lease acquired by
                                  Company within the Prospect plat boundary





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -14-
<PAGE>   15
                                  (and, to the extent provided in paragraph
                                  9.7.2, in any renewal, extension or new lease
                                  within the Prospect plat boundary) for as
                                  long as such lease within the boundary
                                  remains in effect.

                 9.4.1    Upon execution and delivery of such recordable
                          assignment to Employee, Company shall record the
                          assignment.

                 9.4.2    If, prior to the drilling of the Initial Well on a
                          Prospect or thereafter, Company believes in good
                          faith that there is a substantial likelihood that it
                          may be necessary to exercise its discretion under
                          paragraph 9.5 with respect to adjustment of
                          Employee's Overriding Royalty Interest in leases
                          included within such Prospect, Company may defer
                          delivery of a recordable assignment of Employee's
                          Overriding Royalty Interest pending a determination
                          under paragraph 9.5.

                 9.4.3    Upon request by Company, Employee agrees to execute
                          and deliver any and all transfer orders, division
                          orders and other documents as may be necessary or
                          appropriate to cause all revenue attributable to his
                          interest in a well to be paid to Company on his
                          behalf until delivery by Company to Employee of a
                          recordable assignment of his interest in such well
                          pursuant to this paragraph 9.  In such event, Company
                          agrees promptly to process such funds and pay all
                          funds due Employee at the same time third parties are
                          paid revenue distributions from such well by Company.
                          After an assignment is delivered to Employee, Company
                          shall promptly give appropriate notice to the
                          disbursing entities in order to facilitate direct
                          payment to Employee of all revenue attributable to
                          his interest in such well.

                 9.4.4.   Subject to the last sentence of this paragraph 9.4.4,
                          Company or its assigns shall quarterly perform Payout
                          calculations on each well which has not reached
                          Payout in every Prospect so that payments to Employee
                          may be made on a proper before payout/after payout
                          basis on each well in every Prospect.  Company or its
                          assigns shall prepare a quarterly Payout statement
                          for each well within each Prospect and shall provide
                          Employee a copy of said quarterly Payout statements
                          within ninety (90) days following the end of the
                          quarter.  If Company or its assigns fails to provide
                          said quarterly Payout statements for any such well(s)
                          to at least five (5) employees (whether or not such
                          employees include the Employee) who are entitled to
                          receive an Overriding Royalty Interest in such
                          well(s) pursuant to this Agreement and/or other
                          employment agreements with Company for a period of
                          four (4) consecutive quarters, any such employee
                          (including without limitation, the Employee) may give
                          Company written notice of said failure.  If Company
                          or its assigns does not provide the overdue quarterly





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -15-
<PAGE>   16
                          Payout statements to each employee entitled to same
                          within thirty (30) days following receipt of such
                          notice, all wells within such Prospect which had
                          previously been considered before Payout pursuant to
                          paragraph 9.2 shall be deemed to be after Payout
                          pursuant to paragraph 9.2 as of the first day of the
                          month following the month in which the earliest
                          delinquent quarterly Payout statement should have
                          been provided.  When Payout status is reached on a
                          well, Company or its assigns shall deliver notice of
                          such event to Employee, the operator of such well and
                          each purchaser of production from such well and
                          Company or its assigns shall direct such operator or
                          purchaser of production (as appropriate) to disburse
                          future revenues attributable to Employee's and
                          Company's respective interests in such well on an
                          after-Payout basis.  Notwithstanding the foregoing,
                          if Employee's Overriding Royalty Interest in any such
                          well is adjusted pursuant to any provisions of this
                          paragraph 9 so as to be the same percentage before
                          and after Payout of such well, then the provisions of
                          this paragraph 9.4.4 shall no longer apply from and
                          after the date of such adjustment.

                 9.4.5    Should Employee be married or divorced at such time
                          as Employee earns the right to have an Overriding
                          Royalty Interest assigned to him hereunder, Company
                          shall have no obligation to make assignments to
                          Employee's spouse/or former spouse.  Any division of
                          community property shall be the responsibility of
                          Employee.

                 9.4.6    All interests assigned by Company to Employee shall
                          be subject to the terms, conditions and provisions of
                          (a) any joint operating agreement at any time
                          theretofore or thereafter entered into by Company or
                          its assigns with other Working Interest owners
                          covering any of the leases affected by the Overriding
                          Royalty Interest herein provided for, and (b) any
                          farm-out or other agreements under which Company
                          acquires or may acquire its interest in the leases;
                          including, particularly, by way of illustration and
                          not by way of limitation, (i) any provision of an
                          applicable farm-out agreement requiring reduction of
                          Company's interest in the leases after "payout" of an
                          earning well or wells thereunder, in which event
                          Employee's Overriding Royalty in such leases shall be
                          proportionately reduced, and (ii) any provision
                          requiring forfeiture of interest for
                          nonparticipation, recoupment of multiple recovery
                          costs and the like to the extent that Company would
                          forfeit its Working Interest for nonparticipation
                          either forever or until recoupment of drilling and/or
                          operating costs by the third parties electing to
                          participate, or such other like reason; and in the
                          event any such provisions come into effect,
                          Employee's Overriding Royalty in such leases shall be
                          suspended until such time, if ever, as such multiple
                          recovery of costs by the participating leasehold
                          owners has been recovered or such other cause for
                          suspension is removed and such Working Interest of
                          Company is reinstated, at which time Employee's
                          Overriding Royalty shall be so reinstated.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -16-
<PAGE>   17
                          All interests assigned by Company to Employee shall
                          be subject to the terms, conditions and provisions of
                          the leases, any assignments and/or subleases thereof
                          theretofore made or agreed to be made by Company, and
                          any amendments or modifications of the leases,
                          theretofore or thereafter made, and Employee agrees
                          that any such amendments or modifications may be made
                          without the consent or joinder of Employee.

                 9.4.7    Company or its assigns shall not have the right to
                          sell, assign, farmout, convey or otherwise encumber
                          Employee's Overriding Royalty Interest, except as
                          otherwise provided in this paragraph 9.

                          9.4.8(a)         Except as otherwise provided in the
                                           fifth sentence of paragraph 9.4, and
                                           notwithstanding anything (other than
                                           such fifth sentence of paragraph
                                           9.4) contained herein to the
                                           contrary, if, after the Effective
                                           Date and during the term or extended
                                           term hereof, there shall have been a
                                           Change in Control, then Employee
                                           shall be entitled to receive
                                           recordable assignments of his
                                           Overriding Royalty Interest,
                                           adjusted in the manner described
                                           hereinbelow, in any lease or leases
                                           (or portions thereof or undivided
                                           interests therein) theretofore
                                           acquired by Company and not yet
                                           assigned during the term or extended
                                           term hereof and, upon subsequent
                                           acquisition by Company, in any lease
                                           or leases (or portions thereof or
                                           undivided interests therein)
                                           thereafter acquired by Company, in
                                           all Prospects acquired by Company
                                           prior to such Change in Control
                                           (without regard to whether or not
                                           Employee has then completed three
                                           years of employment by Company).
                                           Said Overriding Royalty Interest
                                           shall be assigned in the following
                                           manner:

                                           Employee's after-Payout interest
                                           shall be reduced to one-half of
                                           Employee's after-Payout interest
                                           stated in paragraph 9.2 (as such
                                           after-Payout interest stated in
                                           paragraph 9.2 may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9) and
                                           Employee's before-Payout interest
                                           shall be increased to twice
                                           Employee's before-Payout interest
                                           stated in paragraph 9.2 (as such
                                           before-Payout interest stated in
                                           paragraph 9.2 may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9) with
                                           the result that Employee's interests
                                           before and after Payout shall be
                                           equal.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -17-
<PAGE>   18
                          9.4.8(b)         Except as otherwise provided in the
                                           fifth sentence of paragraph 9.4, and
                                           notwithstanding anything (other than
                                           such fifth sentence of paragraph
                                           9.4) contained herein to the
                                           contrary, if, after the Effective
                                           Date and during the term or extended
                                           term hereof, the Company's Working
                                           Interest in any Prospect is sold,
                                           transferred or conveyed to the
                                           holder of any indebtedness of the
                                           Company or of Newco or of any parent
                                           or subsidiary of the Company or
                                           Newco, or to any unaffiliated third
                                           party, by or pursuant to a
                                           foreclosure of any mortgage or other
                                           security interest therein securing
                                           such indebtedness or any part
                                           thereof or by transfer or conveyance
                                           in lieu of such foreclosure, then
                                           Employee shall be entitled to
                                           receive, prior to the consummation
                                           of such sale, transfer or
                                           conveyance, a recordable assignment
                                           of his Overriding Royalty Interest,
                                           adjusted in the manner described in
                                           paragraph 9.4.8(a), in any lease or
                                           leases (or portions thereof or
                                           undivided interests therein)
                                           theretofore acquired by Company and
                                           not yet assigned during the term or
                                           extended term hereof and, upon
                                           subsequent acquisition by Company,
                                           in any lease or leases (or portions
                                           thereof or undivided interests
                                           therein) thereafter acquired by
                                           Company, in all Prospects acquired
                                           by Company prior to such sale,
                                           transfer or conveyance (without
                                           regard to whether or not Employee
                                           has then completed three years of
                                           employment by Company).

                 9.4.9    Except as otherwise provided in the fifth sentence of
                          paragraph 9.4, and notwithstanding anything (other
                          than such fifth sentence of paragraph 9.4) contained
                          herein to the contrary, if, during the term or
                          extended term hereof, all or substantially all of the
                          Company's Working Interests in all or substantially
                          all Exploratory Acreage then owned by the Company are
                          sold, transferred or conveyed to an unaffiliated
                          third party, then Employee shall be entitled to
                          receive, prior to the consummation of such sale,
                          transfer or conveyance, recordable assignments of his
                          Overriding Royalty Interest, adjusted in the manner
                          described in paragraph 9.4.8(a), in all leases (or
                          portions thereof or undivided interests therein) that
                          cover and include such Exploratory Acreage not yet
                          assigned during the term or extended term hereof
                          (without regard to whether or not Employee has then
                          completed three years of employment by Company).





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -18-
<PAGE>   19
                 9.5      Retained Company Discretion

                 9.5.1    Employee and Company recognize that in instances
                          where all or a portion of Company's Working Interest
                          in a lease or leases will be sold or farmed out to
                          unaffiliated third parties, Employee's Overriding
                          Royalty Interest might in some circumstances have a
                          negative effect on the marketability of Company's
                          Working Interest to third parties.  In such cases,
                          Company will in good faith attempt to transfer
                          Company's Working Interest subject to Employee's
                          Overriding Royalty Interest provided for in this
                          paragraph 9; provided, however, if, in Company's good
                          faith judgment, Company's Working Interest cannot be
                          sold or farmed out subject to Employee's Overriding
                          Royalty Interest, Company may elect to adjust
                          Employee's Overriding Royalty Interest as hereinafter
                          provided.

                          9.5.1(a)         The Board of Directors of Company
                                           shall designate a committee of not
                                           less than three individual persons
                                           employed by Company, at least half
                                           of whom has been granted an employee
                                           Overriding Royalty Interest by
                                           Company, to exercise discretion on
                                           behalf of Company in reducing or
                                           modifying, pursuant to this
                                           paragraph 9.5.1 only, the Overriding
                                           Royalty Interests provided for in
                                           this paragraph 9; provided, however,
                                           that the Board of Directors of the
                                           Company shall have the right to
                                           designate a non-voting member of
                                           such committee, who may be a
                                           director of the Company or
                                           otherwise, and such member shall
                                           have the right to participate in all
                                           meetings of such committee (and
                                           shall receive reasonable advance
                                           notice of any such meetings) and
                                           shall be entitled to the same
                                           information as is available to the
                                           other members of the committee.
                                           Such committee shall make all
                                           decisions under this paragraph 9.5.1
                                           subject to obtaining the approval of
                                           the Board of Directors of Company
                                           where such approval is required
                                           under the provisions of this
                                           paragraph 9.5.1.  Any decision made
                                           by the committee shall require the
                                           approval of a majority of the
                                           members of the committee.  Any
                                           change to this paragraph 9.5.1(a)
                                           shall require the approval of the
                                           Board of Directors of the Company
                                           and a majority of the Management
                                           Directors (as that term is defined
                                           in the Stockholders' Agreement dated
                                           April 2, 1996, between Enron Capital
                                           & Trade Resources Corp., Newco and
                                           certain employees of and consultants
                                           to the Company, as it may be amended
                                           from time to time) who became
                                           stockholders pursuant to Section B.1
                                           of that agreement.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -19-
<PAGE>   20
                          9.5.1(b)         With respect to any Prospect on
                                           which no initial Well has been
                                           drilled and no assignments of
                                           Overriding Royalty Interests have
                                           been made to Employee, the committee
                                           may modify or reduce the Overriding
                                           Royalty Interest of Employee in
                                           leases included within such Prospect
                                           in any manner necessary in the good
                                           faith judgment of the committee to
                                           make an interest in such Prospect
                                           saleable to any person not in
                                           Company Group; provided, however, in
                                           connection with any sale by Company
                                           of an interest in such Prospect to
                                           any such person, Employee's
                                           Overriding Royalty Interest shall be
                                           reduced to zero unless the committee
                                           recommends a lesser reduction and
                                           such recommendation is approved by
                                           the Board of Directors of Company.
                                           Such modification or reduction shall
                                           apply only to the interest sold to
                                           such a person, and shall not affect
                                           the interest retained by the
                                           Company.  Any reduction or exercise
                                           of discretion by Company under this
                                           paragraph shall be applied
                                           proportionately to all participants
                                           who are entitled to receive from
                                           Company an Overriding Royalty
                                           Interest in leases included within
                                           such Prospect.

                          9.5.1(c)         With respect to any Prospect on
                                           which the Initial Well has been
                                           drilled and which Prospect has not
                                           been determined by Company to be
                                           capable of producing oil and/or gas,
                                           should Company desire to sell all or
                                           any portion of its Working Interest
                                           in such Prospect to unaffiliated
                                           third parties, the committee may
                                           adjust the Overriding Royalty
                                           Interest of Employee in leases
                                           included within such Prospect in the
                                           following manner:





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -20-
<PAGE>   21
                                           Employee's after-Payout interest
                                           shall be reduced to one-half of
                                           Employee's after-Payout interest
                                           stated in paragraph 9.2 (as such
                                           after-Payout interest stated in
                                           paragraph 9.2 may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9) and
                                           Employee's before-Payout interest
                                           shall be increased to twice
                                           Employee's before-Payout interest
                                           stated in paragraph 9.2 (as such
                                           before-Payout interest stated in
                                           paragraph 9.2 may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9),
                                           with the result that Employee's
                                           interests before and after Payout
                                           shall be equal.

                                           Such adjustment shall apply only to
                                           the interest sold to unaffiliated
                                           third parties, and shall not affect
                                           the interest retained by Company.
                                           Any exercise of discretion by
                                           Company under this paragraph shall
                                           be applied in like manner to all
                                           participants who are entitled to
                                           receive from Company an Overriding
                                           Royalty Interest in leases included
                                           within such Prospect.

                                           Notwithstanding anything contained
                                           herein to the contrary, if, after
                                           the Effective Date and during the
                                           term or extended term hereof, there
                                           shall have been a Change in Control,
                                           then neither Company nor the person
                                           acquiring the control shall have any
                                           right to make the adjustment
                                           described above in this paragraph
                                           9.5.1(c).

                                           Notwithstanding anything contained
                                           herein to the contrary, if, after
                                           the Effective Date and during the
                                           term or extended term hereof, the
                                           Company's Working Interest in any
                                           Prospect is sold, transferred or
                                           conveyed to the holder of any
                                           indebtedness of the Company or of
                                           Newco or of any parent or subsidiary
                                           of the Company or Newco, or to any
                                           unaffiliated third party, by or
                                           pursuant to a foreclosure of any
                                           mortgage or other security interest
                                           therein securing such indebtedness
                                           or any part thereof or by transfer
                                           or conveyance in lieu of such
                                           foreclosure, then such holder or
                                           other third party shall not have any
                                           right to make the adjustment
                                           described above in this paragraph
                                           9.5.1.(c).





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -21-
<PAGE>   22
                          9.5.1(d)         With respect to any Prospect which
                                           has not been determined by Company
                                           to be capable of producing oil
                                           and/or gas, and regardless of
                                           whether or not the Initial Well has
                                           been drilled thereon, should Company
                                           desire to farmout all or any portion
                                           of its Working Interest in such
                                           Prospect to unaffiliated third
                                           parties, the committee shall (unless
                                           the committee recommends otherwise
                                           and the Board of Directors approves
                                           such recommendation) adjust the
                                           Overriding Royalty Interest of
                                           Employee in leases included within
                                           such Prospect in the following
                                           manner:

                                           Employee's Overriding Royalty
                                           Interest shall be calculated by
                                           multiplying Employee's percentage
                                           interests stated in paragraph 9.2
                                           above (as such interests may have
                                           previously been reduced pursuant to
                                           other provisions of this paragraph
                                           9) by Company's overriding royalty
                                           interest set forth in the particular
                                           farmout agreement for said Prospect,
                                           for and during the period of time in
                                           which Company receives such
                                           overriding royalty interest.

                                           To the extent, if any, that
                                           Company's overriding royalty
                                           interest set forth in such farmout
                                           agreement converts to a Working
                                           Interest in such Prospect (whether
                                           by election of Company or
                                           otherwise), then, from and after
                                           such conversion, Employee's
                                           Overriding Royalty Interest shall be
                                           based upon such Working Interest of
                                           Company pursuant to paragraph 9.2
                                           above; provided, however, if
                                           pursuant to such farmout agreement,
                                           only a portion of Company's
                                           overriding royalty interest converts
                                           to a Working Interest and Company
                                           retains, following such conversion,
                                           some overriding royalty interest in
                                           addition to such Working Interest,
                                           Employee shall be entitled to
                                           receive, as part of Employee's
                                           Overriding Royalty Interest based
                                           upon Company's Working Interest, an
                                           interest equal to the percentage
                                           stated in paragraph 9.2 above (as
                                           such interest may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9)
                                           multiplied by Company's retained
                                           overriding royalty interest.

                                           Such adjustment shall apply only to
                                           the interest farmed out to
                                           unaffiliated third parties, and
                                           shall not affect the interest
                                           retained by Company. Any exercise of
                                           discretion by Company under this
                                           paragraph shall





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -22-
<PAGE>   23
                                           be applied in like manner to all
                                           participants who are entitled to
                                           receive from Company an Overriding
                                           Royalty Interest in leases included
                                           within such Prospect.

                                           With respect to each well drilled on
                                           the Prospect by a farmee of
                                           Company's Working Interest and
                                           solely for the purpose of this
                                           paragraph 9.5.1 (d), Payout shall be
                                           defined as the point in time at
                                           which the revenue to Company from
                                           its interest in oil and gas
                                           production from such well (after
                                           deduction of Company's prorata part
                                           of the burden of (i) all landowners'
                                           royalties, overriding royalties, net
                                           profits interests, production
                                           payments or other burdens upon,
                                           measured by or payable out of such
                                           production and (ii) all applicable
                                           ad valorem, production, severance,
                                           sales, gathering, windfall profits
                                           excise and similar taxes) equals the
                                           sum incurred by or for the account
                                           of Company (x) in preparing for
                                           drilling, drilling, testing,
                                           completing, equipping (including,
                                           without limitation, installation of
                                           platforms, facilities and
                                           pipelines), operating, reworking and
                                           recompleting the well, and marketing
                                           the production therefrom, and (y)
                                           for such well's allocable share of
                                           geological and geophysical costs,
                                           leasehold costs, all other costs of
                                           acquiring and maintaining in force
                                           the leases allocated to the well and
                                           other common costs.  Leases
                                           "allocated" to a well and "common
                                           costs" shall have the respective
                                           meanings ascribed thereto in the
                                           definition of "Payout" set forth in
                                           paragraph 9.1.

                                           Notwithstanding anything contained
                                           herein to the contrary, if, after
                                           the Effective Date and during the
                                           term or extended term hereof, there
                                           has been a Change in Control, then
                                           neither Company nor the person
                                           acquiring the control shall have any
                                           right to make the adjustment
                                           described above in this paragraph
                                           9.5.1(d).

                                           Notwithstanding anything contained
                                           herein to the contrary, if, after
                                           the Effective Date and during the
                                           term or extended term hereof, the
                                           Company's Working Interest in any
                                           Prospect is sold, transferred or
                                           conveyed to the holder of any
                                           indebtedness of the Company or of
                                           Newco or of any parent or subsidiary
                                           of the Company or Newco, or to any
                                           unaffiliated third party, by or
                                           pursuant to a foreclosure of any
                                           mortgage or other security interest
                                           therein securing





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -23-
<PAGE>   24
                                           such indebtedness or any part
                                           thereof or by transfer or conveyance
                                           in lieu of such foreclosure, then
                                           such holder or other third party
                                           shall not have any right to make the
                                           adjustment described above in this
                                           paragraph 9.5.1.(d).

                          9.5.1(e)         With respect to any Prospect on
                                           which the Initial Well has been
                                           drilled and which Prospect has been
                                           determined by Company to be capable
                                           of producing oil and/or gas, should
                                           Company desire to sell or farmout
                                           all or any portion of its Working
                                           Interest in such Prospect to
                                           unaffiliated third parties, the
                                           committee shall categorize
                                           geographical areas of the leases
                                           comprising the Prospect into
                                           Development Acreage and Exploratory
                                           Acreage.

                                           Any sale or farmout of the Company's
                                           Working Interest in any such
                                           Development Acreage will be made
                                           subject to Employee's Overriding
                                           Royalty Interest provided for in
                                           paragraph 9.2 hereinabove (as such
                                           interest may have previously been
                                           adjusted pursuant to other
                                           provisions of this paragraph 9);
                                           provided, however, with respect to
                                           each well drilled on the Prospect by
                                           a purchaser or farmee or their
                                           assigns of Company's Working
                                           Interest, and solely for the purpose
                                           of this paragraph 9.5.1(e), Payout
                                           shall be defined as the point in
                                           time at which the revenue to
                                           purchaser or farmee or their assigns
                                           from its or their interest purchased
                                           or farmed in from Company in oil
                                           and/or gas production from such well
                                           (after deduction of purchaser's or
                                           farmee's prorata part of the burden
                                           of (i) all landowners' royalties,
                                           overriding royalties, net profits
                                           interests, production payments or
                                           other burdens upon, measured by or
                                           payable out of such production and
                                           (ii) all applicable ad valorem,
                                           production, severance, sales,
                                           gathering, windfall profits excise
                                           and similar taxes) equals the sum
                                           incurred by or for the account of
                                           purchaser or farmee or their assigns
                                           in preparing for drilling, drilling,
                                           testing, completing, equipping,
                                           operating, reworking and
                                           recompleting the well, and marketing
                                           the production therefrom.

                                           With respect to the Company's
                                           Working Interest in Exploratory
                                           Acreage to be sold by Company, the
                                           committee may adjust the Overriding
                                           Royalty Interest of Employee in the
                                           following manner:





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -24-
<PAGE>   25
                                           Employee's after-Payout interest
                                           shall be reduced to one-half of
                                           Employee's after-Payout interest
                                           stated in paragraph 9.2 (as such
                                           after-Payout interest stated in
                                           paragraph 9.2 may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9) and
                                           Employee's before-Payout interest
                                           shall be increased to twice
                                           Employee's before-Payout interest
                                           stated in paragraph 9.2 (as such
                                           before-Payout interest stated in
                                           paragraph 9.2 may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9),
                                           with the result that Employee's
                                           interests before and after Payout
                                           shall be equal.

                                           With respect to the Company's
                                           Working Interest in Exploratory
                                           Acreage to be farmed out by Company,
                                           the committee shall (unless the
                                           committee recommends otherwise and
                                           the Board of Directors approves such
                                           recommendation) adjust the
                                           Overriding Royalty Interest of
                                           Employee in the following manner:

                                           Employee's Overriding Royalty
                                           Interest shall be calculated by
                                           multiplying Employee's percentage
                                           interests stated in paragraph 9.2
                                           above (as such interests stated in
                                           paragraph 9.2 may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9) by
                                           Company's overriding royalty
                                           interest set forth in the particular
                                           farmout agreement for said Prospect,
                                           for and during the period of time in
                                           which Company receives such
                                           overriding royalty interest.

                                           To the extent, if any, that
                                           Company's overriding royalty
                                           interest set forth in such farmout
                                           agreement converts to a Working
                                           Interest in such Prospect (whether
                                           by election of Company or
                                           otherwise), then, from and after
                                           such conversion, Employee's
                                           Overriding Royalty Interest shall be
                                           based upon such Working Interest of
                                           Company pursuant to paragraph 9.2
                                           above; provided, however, if
                                           pursuant to such farmout agreement,
                                           only a portion of Company's
                                           overriding royalty interest converts
                                           to a Working Interest and Company
                                           retains, following such conversion,
                                           some overriding royalty interest in
                                           addition to such Working Interest,
                                           Employee shall be





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -25-
<PAGE>   26
                                           entitled to receive, as part of
                                           Employee's Overriding Royalty
                                           Interest and in addition to such
                                           Overriding Royalty Interest based
                                           upon Company's Working Interest, an
                                           interest equal to the percentage
                                           stated in paragraph 9.2 above (as
                                           such interest may have previously
                                           been reduced pursuant to other
                                           provisions of this paragraph 9)
                                           multiplied by Company's retained
                                           overriding royalty interest.

                                           Such adjustment shall apply only to
                                           the interest sold or farmed out to
                                           unaffiliated third parties, and
                                           shall not affect the interest
                                           retained by Company.  Any exercise
                                           of discretion by Company under this
                                           paragraph shall be applied in like
                                           manner to all participants who are
                                           entitled to receive from Company an
                                           Overriding Royalty Interest in
                                           leases included within such
                                           Prospect.

                                           Notwithstanding anything contained
                                           herein to the contrary, if, after
                                           the Effective Date and during the
                                           term or extended term hereof, there
                                           shall have been a Change in Control,
                                           then neither Company nor the person
                                           acquiring the control shall have any
                                           right to make the adjustment
                                           described above in this paragraph
                                           9.5.1(e).

                                           Notwithstanding anything contained
                                           herein to the contrary, if, after
                                           the Effective Date and during the
                                           term or extended term hereof, the
                                           Company's Working Interest in any
                                           Prospect is sold, transferred or
                                           conveyed to the holder of any
                                           indebtedness of the Company or of
                                           Newco or of any parent or subsidiary
                                           of the Company or Newco, or to any
                                           unaffiliated third party, by or
                                           pursuant to a foreclosure of any
                                           mortgage or other security interest
                                           therein securing such indebtedness
                                           or any part thereof or by transfer
                                           or conveyance in lieu of such
                                           foreclosure, then such holder or
                                           other third party shall not have any
                                           right to make the adjustment
                                           described above in this paragraph
                                           9.5.1.(e).





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -26-
<PAGE>   27
                                           If any of the events set forth in
                                           the two immediately preceding
                                           sentences hereof should occur, such
                                           that the adjustment described above
                                           in this paragraph 9.5.1(e) with
                                           respect to the Overriding Royalty
                                           Interest of Employee in leases in
                                           such Exploratory Acreage is
                                           precluded from occurring as provided
                                           above, then, with respect to each
                                           well drilled on such Exploratory
                                           Acreage by a purchaser or farmee or
                                           their assigns of Company's Working
                                           Interest, and solely for purposes of
                                           this paragraph 9.5.1(e), Payout
                                           shall be defined as set forth above
                                           in this paragraph 9.5.1(e).

                 9.5.2    Within sixty (60) days after the end of each fiscal
                          year of Company, Company may in its sole discretion
                          elect to reduce the Overriding Royalty Interest set
                          forth in paragraph 9.2 with respect to Prospects
                          subject to this Agreement that were acquired by
                          Company during such fiscal year (which election, if
                          timely made as above provided, shall be effective as
                          of the beginning of such fiscal year) based on actual
                          Exploration and Development Costs incurred by Company
                          Group during such fiscal year in respect of all
                          Prospects subject to this Agreement, as follows (with
                          linear interpolation between indicated levels of
                          costs):

<TABLE>
<CAPTION>

               Total E & D
               Costs Level                    Permitted Reduction
               -----------                    -------------------
           <S>                                <C>
            under $35 million                  no reduction
            $70 million                        25.00%
            $105 million                       33.33%
            $140 million                       38.33%
            $175 million                       41.67%
            over $175 million                  **

</TABLE>

         **Permitted Reduction shall be determined in the sole discretion of
           Company.

                          The total Exploration and Development Costs levels
                          and resultant ranges and escalation increments
                          provided for above are "Base Year" figures for fiscal
                          year 1996-1997, and shall be adjusted annually on a
                          compound basis beginning with the fiscal year
                          commencing April 1, 1997, according to the then
                          current Council of Petroleum Accountants Societies'
                          (COPAS) adjustment rate (based upon the percentage
                          increase or decrease in the average weekly earnings
                          of Crude Petroleum and Gas Production Workers as of
                          April 1 as published by the United States Department
                          of Labor, Bureau of Labor Statistics).





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -27-
<PAGE>   28
                          The "Permitted Reduction" shall mean the percentage
                          by which Employee's Overriding Royalty Interest (both
                          before and after Payout) may be adjusted downward.
                          Each such adjustment shall determine Employee's
                          Overriding Royalty Interest for the fiscal year in
                          question, and shall be uniform on Prospects acquired
                          during that period (subject to paragraphs 9.5.1 and
                          9.5.3).  Without limiting the foregoing, a Permitted
                          Reduction shall apply to any Major Prospect subject
                          to this Agreement that was acquired by Company during
                          such fiscal year, whether or not an adjustment of
                          Employee's Overriding Royalty Interest in such Major
                          Prospect shall have been made pursuant to paragraph
                          9.5.3.

                          All leases acquired in those Prospects, whether
                          during the same fiscal year or thereafter, shall be
                          subject to the same Employee's Overriding Royalty
                          Interest established at the time the Prospect was
                          acquired, subject, however, to adjustment as provided
                          for in this paragraph 9.  A Permitted Reduction in
                          Employee's Overriding Royalty Interest for a
                          particular fiscal year, however, shall not operate to
                          reduce Employee's Overriding Royalty Interest stated
                          in paragraph 9.2 in respect of any Prospects acquired
                          by Company in any subsequent fiscal year during the
                          term or extended term hereof.

                          9.5.2(a)         Notwithstanding the foregoing
                                           provisions of this paragraph 9.5.2,
                                           with respect to any FPF/TLP
                                           Exploitation Prospects acquired by
                                           Company during a fiscal year of
                                           Company for which Company's estimate
                                           of Exploration and Development Costs
                                           incurred or to be incurred by
                                           Company Group in respect of all
                                           FPF/TLP Exploitation Prospects
                                           acquired in such fiscal year exceeds
                                           $30 million through the end of the
                                           respective primary development
                                           periods for the fields comprising
                                           such FPF/TLP Exploitation Prospects
                                           (which periods, solely for purposes
                                           of the adjustment provided for in
                                           this paragraph, shall not exceed
                                           five (5) years), an alternative
                                           calculation will be made prior to
                                           determining the applicable
                                           "Permitted Reduction" of Employee's
                                           Overriding Royalty Interest with
                                           respect to such FPF/TLP Exploitation
                                           Prospects.  Such alternative
                                           calculation shall be based upon the
                                           assumptions that the total
                                           Exploration and Development Costs to
                                           be incurred by Company Group in
                                           respect of all such FPF/TLP
                                           Exploitation Prospects will be
                                           incurred over a two (2) year period
                                           and that such Exploration and
                                           Development Costs will be in
                                           addition to a "base level" of $70
                                           million in Exploration and
                                           Development Costs to be incurred by
                                           Company





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -28-
<PAGE>   29
                                           Group exclusive of the identified
                                           FPF/TLP Exploitation Prospects. Such
                                           alternative Exploration and
                                           Development Costs level (the
                                           "alternative E & D Costs level")
                                           shall be determined as follows:

                                           The alternative E & D Costs level
                                           shall be the sum of:

                                           (i)    One-half of Company's estimate
                                                  of Exploration and
                                                  Development Costs incurred or
                                                  to be incurred by Company
                                                  Group through the end of the
                                                  respective primary
                                                  development periods in
                                                  respect of all FPF/TLP
                                                  Exploitation Prospects
                                                  acquired in such fiscal year,
                                                  plus

                                           (ii)    $70 million.

                                           The Overriding Royalty Interest set
                                           forth in paragraph 9.2 with respect
                                           to such FPF/TLP Exploitation
                                           Prospects (both before and after
                                           Payout) may, in Company's sole
                                           discretion, be reduced by the
                                           greater of (x) the "Permitted
                                           Reduction" percentage set forth in
                                           the table above in this paragraph
                                           for the actual "Total E & D Costs
                                           Level" for such fiscal year and (y)
                                           the "Permitted Reduction" percentage
                                           set forth in the table above that
                                           would be applicable if the "Total E
                                           & D Costs Level" for such fiscal
                                           year were equal to such "alternative
                                           E & D Costs level".

                                           If the Overriding Royalty Interest
                                           set forth in paragraph 9.2 with
                                           respect to such FPF/TLP Exploitation
                                           Prospects, when reduced pursuant to
                                           the foregoing provisions of this
                                           paragraph, exceeds two-thirds of the
                                           Overriding Royalty Interest set
                                           forth in paragraph 9.2, Company may,
                                           in its sole discretion, further
                                           reduce such Overriding Royalty
                                           Interest to an interest equal to
                                           two- thirds (before and after
                                           Payout, respectively) of such
                                           Overriding Royalty Interest set
                                           forth in paragraph 9.2.  Further, if
                                           the Overriding Royalty Interest set
                                           forth in paragraph 9.2 with respect
                                           to any such FPF/TLP Exploitation
                                           Prospect, when reduced to such
                                           two-thirds level pursuant to the
                                           foregoing provisions of this
                                           paragraph, exceeds the Overriding
                                           Royalty Interest in such Prospect
                                           that would result from multiplying
                                           the Overriding Royalty Interest
                                           percentage set forth in paragraph
                                           9.2 times a Working Interest
                                           percentage of 50% of 8/8ths, Company
                                           may, in its sole discretion, further
                                           reduce such Overriding Royalty
                                           Interest set forth in





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -29-
<PAGE>   30
                                           paragraph 9.2 with respect to such
                                           FPF/TLP Exploitation Prospect to a
                                           percentage (before and after Payout,
                                           respectively) that, when multiplied
                                           times Company's Working Interest in
                                           such FPF/TLP Exploitation Prospect,
                                           would equal the Overriding Royalty
                                           Interest percentage (before and
                                           after Payout, respectively) set
                                           forth in paragraph 9.2 times a
                                           Working Interest percentage of 50%
                                           of 8/8ths.

                          9.5.2(b)         Notwithstanding the foregoing
                                           provisions of this paragraph 9.5.2,
                                           with respect to any Subsea Tieback
                                           Exploitation Prospects acquired by
                                           Company during such fiscal year, if
                                           the Overriding Royalty Interest set
                                           forth in paragraph 9.2 with respect
                                           to such Subsea Tieback Exploitation
                                           Prospects, when reduced pursuant to
                                           the foregoing provisions of this
                                           paragraph, exceeds the Overriding
                                           Royalty Interest in such Prospect
                                           that would result from multiplying
                                           the Overriding Royalty Interest
                                           percentage set forth in paragraph
                                           9.2 times a Working Interest
                                           percentage of 50% of 8/8ths, Company
                                           may, in its sole discretion, further
                                           reduce such Overriding Royalty
                                           Interest set forth in paragraph 9.2
                                           with respect to such Subsea Tieback
                                           Exploitation Prospect to a
                                           percentage (before and after Payout,
                                           respectively) that, when multiplied
                                           times Company's Working Interest in
                                           such Subsea Tieback Exploitation
                                           Prospect, would equal the Overriding
                                           Royalty Interest percentage (before
                                           and after Payout, respectively) set
                                           forth in paragraph 9.2 times a
                                           Working Interest percentage of 50%
                                           of 8/8ths.

                          9.5.2(c)         Notwithstanding the foregoing
                                           provisions of this paragraph 9.5.2,
                                           with respect to any FPF/TLP
                                           Exploration Prospects acquired by
                                           Company during such fiscal year, if
                                           the Overriding Royalty Interest set
                                           forth in paragraph 9.2 with respect
                                           to any such FPF/TLP Exploration
                                           Prospects, when reduced pursuant to
                                           the foregoing provisions of this
                                           paragraph, exceeds two-thirds of the
                                           Overriding Royalty Interest set
                                           forth in paragraph 9.2, Company may,
                                           in its sole discretion, further
                                           reduce such Overriding Royalty
                                           Interest to an interest equal to
                                           two-thirds (before and after Payout,
                                           respectively) of such Overriding
                                           Royalty Interest set forth in
                                           paragraph 9.2.  Further, if the
                                           Overriding Royalty Interest set
                                           forth in paragraph 9.2 with respect
                                           to any such FPF/TLP Exploration
                                           Prospect, when reduced to such
                                           two-thirds level pursuant to the
                                           foregoing





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -30-
<PAGE>   31
                                           provisions of this paragraph,
                                           exceeds the Overriding Royalty
                                           Interest in such Prospect that would
                                           result from multiplying the
                                           Overriding Royalty Interest
                                           percentage set forth in paragraph
                                           9.2 times a Working Interest
                                           percentage of 50% of 8/8ths, Company
                                           may, in its sole discretion, further
                                           reduce such Overriding Royalty
                                           Interest set forth in paragraph 9.2
                                           with respect to such FPF/TLP
                                           Exploration Prospect to a percentage
                                           (before and after Payout,
                                           respectively) that, when multiplied
                                           times Company's Working Interest in
                                           such FPF/TLP Exploration Prospect,
                                           would equal the Overriding Royalty
                                           Interest percentage (before and
                                           after Payout, respectively) set
                                           forth in paragraph 9.2 times a
                                           Working Interest percentage of 50%
                                           of 8/8ths.

                          9.5.2(d)         Notwithstanding the foregoing
                                           provisions of this paragraph 9.5.2,
                                           with respect to any Subsea Tieback
                                           Exploration Prospects acquired by
                                           Company during such fiscal year, if
                                           the Overriding Royalty Interest set
                                           forth in paragraph 9.2 with respect
                                           to any such Subsea Tieback
                                           Exploration Prospects, when reduced
                                           pursuant to the foregoing provisions
                                           of this paragraph, exceeds the
                                           Overriding Royalty Interest in such
                                           Prospect that would result from
                                           multiplying the Overriding Royalty
                                           Interest percentage set forth in
                                           paragraph 9.2 times a Working
                                           Interest percentage of 50% of
                                           8/8ths, Company may, in its sole
                                           discretion, further reduce such
                                           Overriding Royalty Interest set
                                           forth in paragraph 9.2 with respect
                                           to such Subsea Tieback Exploration
                                           Prospect to a percentage (before and
                                           after Payout, respectively) that,
                                           when multiplied times Company's
                                           Working Interest in such Subsea
                                           Tieback Exploration Prospect, would
                                           equal the Overriding Royalty
                                           Interest percentage (before and
                                           after Payout, respectively) set
                                           forth in paragraph 9.2 times a
                                           Working Interest percentage of 50%
                                           of 8/8ths.

                 9.5.3    With respect to any Major Prospect, Company may in
                          its sole discretion elect to adjust the Overriding
                          Royalty Interest set forth in paragraph 9.2,
                          effective as of the date of Company's acquisition of
                          such Major Prospect, as follows:





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -31-
<PAGE>   32
                          Employee's before-Payout interest shall be reduced
                          by the following formula:

                          original before-Payout interest    reduced before-
                          -------------------------------  = Payout interest
                                       X
                                      ---
                                       Y

                          where "X" equals the total amount estimated by
                          Company for Exploration and Development Costs to be
                          incurred by Company Group in respect of such Major
                          Prospect through the end of the primary development
                          period for the field comprising such Major Prospect
                          (which period, solely for purposes of such adjustment
                          calculation, shall not exceed five (5) years), and

                          where "Y" equals $30 million.

                          Employee's after-Payout interest shall be increased
                          by adding thereto the full amount of the percentage
                          interest so deducted from Employee's before-Payout
                          interest until 2.5 times Payout is reached, at which
                          time Employee's after-Payout interest shall be
                          reduced by subtracting therefrom the same percentage
                          interest that was previously added thereto pursuant
                          to this sentence.

                          Such election may be made by Company whether or not
                          Employee's Overriding Royalty Interest in such Major
                          Prospect shall have been reduced pursuant to
                          paragraph 9.5.2.  In the case of any such prior
                          reduction pursuant to paragraph 9.5.2, the term
                          "original before-Payout interest" as used above in
                          this paragraph shall refer to Employee's
                          before-Payout interest as previously reduced pursuant
                          to paragraph 9.5.2.

                 9.5.4    Notwithstanding anything contained herein to the
                          contrary, after an assignment is delivered to
                          Employee with respect to a Prospect pursuant to
                          paragraph 9.4, Company or its assigns may no longer
                          reduce or modify Employee's Overriding Royalty
                          Interest on any well in such Prospect without written
                          consent of Employee, except pursuant to paragraphs
                          9.5.1(c), 9.5.1(d), 9.5.1(e), 9.5.2 and 9.5.3 in the
                          case only of assignments other than those delivered
                          pursuant to paragraphs 9.4.8(a), 9.4.8(b) and 9.4.9.

                 9.5.5    In no event may any party other than Company reduce
                          or modify Employee's Overriding Royalty Interest
                          without written consent of Employee.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -32-
<PAGE>   33
                 9.5.6    Company shall give Employee written notice of any
                          adjustment made to Employee's Overriding Royalty
                          Interest pursuant to the provisions of paragraphs
                          9.5.1(b), 9.5.1(c), 9.5.1(d), 9.5.1(e), 9.5.2 and
                          9.5.3 within one hundred twenty (120) days following
                          such adjustment.

                 9.5.7    Upon request by Company, Employee shall execute and
                          deliver to Company such reassignments, transfer
                          orders, division orders, releases and other documents
                          deemed by Company to be necessary or appropriate to
                          evidence any modification, reduction or other
                          adjustment pursuant to this paragraph 9.5.

                 9.6      Company's Preferential Right to Purchase.

                 If at any time during the term or extended term of this
                 Agreement, or if within one (1) year from the expiration of
                 this Agreement, Employee receives and desires to accept an
                 offer for the purchase of a part or all of Employee's
                 Overriding Royalty Interest assigned pursuant to this
                 paragraph 9 (the portion or all of such Overriding Royalty
                 Interest covered by such offer to purchase being herein
                 sometimes called the "Offered Interest"), from a prospective
                 third party purchaser who is ready, willing and able to
                 purchase the same, then Employee shall have the right to sell
                 such Offered Interest, but only after complying with the
                 following terms and provisions:

                 9.6.1    The offer shall first be reduced to writing and
                          signed by Employee and the offeror.  Employee shall
                          give Company written notice of his receipt of, and
                          his desire to accept, such written offer, together
                          with a copy of such written offer signed by the
                          prospective third party purchaser and containing all
                          of the terms and conditions of such offer.  The date
                          such written notice is given to Company is herein
                          sometimes called the "Original Date."

                 9.6.2    Company shall thereafter have an option to purchase
                          the Offered Interest upon the same terms set forth in
                          said offer, which option may be exercised by written
                          notice thereof given to Employee within ten (10) days
                          after the Original Date.

                 9.6.3    If the Offered Interest is not purchased by Company
                          pursuant to the foregoing provisions of this
                          paragraph, then Employee shall have the right to sell
                          the Offered Interest to the prospective third party
                          purchaser named in such offer, provided that such
                          sale is consummated within thirty (30) days from the
                          expiration date of the option of Company created
                          hereby and provided that such sale is made in strict
                          conformity with the terms of such offer.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -33-
<PAGE>   34
                 9.6.4    If, however, such sale of the Offered Interest does
                          not occur within such thirty-day period for the price
                          and upon the terms set forth in such offer, then any
                          sale of part or all of such Offered Interest
                          thereafter shall again be subject to the option to
                          purchase granted to Company under this paragraph 9.6.

                 9.6.5    If Employee elects to take title to an Overriding
                          Royalty Interest in a legal entity other than himself
                          (which he may do only with Company's consent), such
                          entity shall take title subject to all of the terms
                          and conditions of this Agreement.

                 9.7      Additional Provisions Affecting Overriding Royalty
                          Interest.

                 In addition to the other provisions of this paragraph 9,
                 Employee's Overriding Royalty Interest shall be subject to the
                 following:

                 9.7.1    Notwithstanding anything to the contrary contained
                          herein, Employee shall not have the right to take in
                          kind or separately dispose of the production of oil
                          and gas attributable to his Overriding Royalty
                          Interest.

                 9.7.2    Employee's Overriding Royalty Interest shall also
                          apply to the production of oil and gas under the
                          terms and provisions of any renewal, extension or new
                          lease, to the extent such renewal, extension or new
                          lease covers all or any portion of any lands covered
                          by the expired lease which was subject to Employee's
                          Overriding Royalty Interest or is within the Prospect
                          plat, and provided, however, that any such renewal,
                          extension or new lease shall have been acquired by or
                          for the benefit of Company, either prior to or within
                          one (1) year after the expiration of the expired
                          lease.

                 9.7.3    Except as otherwise provided in this paragraph 9, in
                          no event shall Employee ever be liable or responsible
                          in any way for payment of any part of any
                          exploration, drilling or production costs or
                          liabilities incurred by Company or its assigns or
                          other lessees attributable to the lease or leases in
                          a Prospect or to the production therefrom, it being
                          the intent of the parties that Employee's Overriding
                          Royalty Interest shall constitute a non-participating
                          royalty interest for all purposes.

                 9.7.4    Company will conduct and carry on the development,
                          maintenance and operation of any lease subject to
                          Employee's Overriding Royalty Interest in a manner
                          which it deems in its sole judgment to be reasonable
                          and prudent and in accordance with good oil and gas
                          field practices, and it will drill such wells as it
                          deems proper in its sole judgment from time to time
                          in order to protect such lease from drainage;
                          provided,  however, (a) nothing herein contained





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -34-
<PAGE>   35
                          shall obligate Company to conduct any drilling
                          operations whatsoever upon such lease, or to continue
                          to operate any well or to operate or maintain in
                          force or attempt to maintain in force such lease by
                          payment of delay rentals, compensatory royalties or
                          other payments or by the drilling of any wells upon
                          said lease, or in any other manner, and the extent
                          and duration of all operations, as well as the
                          preservation of each of such leases by delay rental
                          payments or otherwise, shall be solely at the will of
                          Company, and (b) Company shall have the right at any
                          time to surrender, abandon or otherwise terminate any
                          such lease in whole or in part without liability to
                          Employee.

                 9.7.5    Company shall have the right to sell all production
                          attributable to Employee's Overriding Royalty
                          Interest on the same basis upon which the production
                          attributable to Company's interest in the same
                          production is sold, and shall account to Employee on
                          that basis.  In no event shall Employee be entitled
                          to receive payments for production attributable to
                          his Overriding Royalty Interest calculated on a basis
                          higher than that upon which Company's interest in the
                          same production is calculated or computed on a higher
                          price than that payable to Company on account of
                          production attributable to its interest, and in no
                          event shall Employee be entitled to receive payments
                          on amounts suspended by purchasers of the production
                          pending determination of the authorized price by
                          governmental entities.  However, if Company sells any
                          such production to an affiliate of Company, the price
                          therefor shall not be less than would have been
                          reasonably obtainable in a sale to a non-affiliated
                          purchaser.

                 9.7.6    There shall be deducted from the production, before
                          Employee's Overriding Royalty Interest is computed,
                          any production lost in the production from the
                          leases, or any lands pooled therewith, or used for
                          drilling, operating, development or production or in
                          plant operations (including gas injection, secondary
                          recovery, pressure maintenance, repressuring, cycling
                          operations, plant fuel or shrinkage) conducted for
                          the purpose of producing or processing production
                          from lands covered by the leases or from any lands
                          pooled with the leases.

                 9.7.7    Company shall have the right and option, but not the
                          obligation, to process gas produced and saved from
                          the leases.  If Company elects to process or have
                          processed, such gas in a gas processing plant or
                          other facility, whether or not owned by Company, then
                          in such event Employee shall be paid his percentage
                          share provided for herein of the proceeds of sale of
                          all gasoline or other liquid hydrocarbons or other
                          products manufactured or extracted from such gas as a
                          result of such processing (collectively, the
                          "Products"), less the costs of extraction or
                          manufacture (which may consist of





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -35-
<PAGE>   36
                          a portion of the Products).  Company shall also pay
                          to Employee the same percentage share of the proceeds
                          of sale of all residue gas sold by Company, less
                          expenses incurred by Company in transporting any such
                          gas to point of delivery and for dehydration and/or
                          compression of gas at or prior to such delivery and
                          other expenses and fees typically borne by royalty
                          owners (excluding expenses or fees for capital
                          projects funded by Company to the extent such
                          expenses or fees have been included in the Payout
                          calculation for the well from which such gas is
                          produced).

                 9.7.8    Employee's Overriding Royalty Interest shall bear its
                          proportionate share of all other costs of marketing
                          and transporting production from the leases or from
                          any lands pooled therewith which are typically borne
                          by royalty owners (excluding expenses or fees for
                          capital projects funded by Company to the extent such
                          expenses or fees have been included in the Payout
                          calculation for the well from which such production
                          is produced).

                 9.7.9    Employee's Overriding Royalty Interest shall also
                          bear its share of all ad valorem, production,
                          severance, sales, gathering and other taxes typically
                          borne by royalty owners (whether state, federal or
                          otherwise) assessed or levied on or in connection
                          with the Overriding Royalty Interest or the
                          production from the leases.

                 9.7.10   Company or its assigns shall have the right and
                          power, without any approval by Employee, to pool or
                          unitize any lease which is subject to Employee's
                          Overriding Royalty Interest, and to alter, change,
                          amend or terminate any pooling or unitization
                          agreements heretofore or hereafter entered into, as
                          to all or any part of a Prospect, as to any one or
                          more of the formations or horizons thereunder, upon
                          such terms and provisions as Company shall in its
                          sole discretion determine.  If and whenever through
                          the exercise of such right and power, or pursuant to
                          any law now existing or hereafter enacted, or any
                          rule, regulation or order of any governmental body
                          now or hereafter promulgated, any of the leases of
                          Company are pooled or unitized in any manner,
                          Employee's Overriding Royalty Interest shall also be
                          pooled and unitized, and in such event Employee's
                          Overriding Royalty shall only be paid on that portion
                          of the production from the unit or units so pooled,
                          which is attributable to said leases under and by
                          virtue of the pooling and unitization.

                 9.7.11   Company may withhold payment to Employee of any funds
                          attributable to Employee's Overriding Royalty
                          Interest which Company, in its sole discretion, deems
                          to be subject to a risk of refund or recoupment
                          pursuant to any rule, regulation or order of any
                          governmental authority or any adverse claims by third
                          parties.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
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<PAGE>   37
                          During such suspense period, Employee shall
                          not be entitled to interest on sums so withheld.

                 9.7.12   In the event Company's Working Interest in any lease
                          in which Employee is entitled to an Overriding
                          Royalty Interest covers less than all of the full and
                          entire undivided interest in and to the land
                          described therein, and in and to all the oil and gas
                          rights relating thereto, then in that event the
                          Overriding Royalty Interest as to that portion of the
                          leased premises in which Company's Working Interest
                          in such lease does not cover such full and entire
                          undivided interest shall be reduced proportionately
                          (i.e., in the proportion that the undivided interest
                          in and to said land and oil and gas rights covered by
                          such lease bears to such full and entire undivided
                          interest).

                 9.7.13   Notwithstanding anything contained in this paragraph
                          9 to the contrary, Employee's Overriding Royalty
                          Interest in any Net Profit Share Lease ("NPSL") shall
                          be reduced at the same time and in the same
                          percentage as Company's net revenue interest in said
                          NPSL is reduced pursuant to the provisions of said
                          NPSL.

                 9.7.14   Company and Employee further undertake and agree
                          promptly to execute and deliver, upon request of
                          either party, all assignments, reassignments,
                          transfer orders, division orders, releases and any
                          other documents as may be necessary to implement this
                          paragraph 9 or otherwise to more fully assure to each
                          party the rights and interests of such party provided
                          for in this paragraph 9.

         10.     Insurance.

                 10.1     Employee shall be eligible for participation in such
                          insurance programs as Company shall institute from
                          time to time covering medical and dental expenses and
                          such life and accidental death and dismemberment
                          insurance programs as Company shall institute from
                          time to time.  Payment of premiums for such coverages
                          shall be in accordance with Company policy covering
                          all employees as may be established from time to time
                          by Company.  Employee shall also be eligible for
                          participation in such retirement, pension, deferred
                          compensation and other benefit programs the Company
                          shall initiate from time to time.

         11.     Outside Activities.

                 During the term or extended term of this Agreement, Employee
                 shall devote all of his working time, energy and talents to
                 the due discharge and performance of his duties hereunder, at
                 the direction and subject to the control of Company, and shall
                 perform such services and duties as shall reasonably be
                 required from him from time to time by Company.





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                                      -37-
<PAGE>   38
                 Employee agrees that he will not knowingly become involved in
                 a conflict of interest with Company or its subsidiaries, or
                 upon discovery thereof, allow such a conflict to continue.
                 Moreover, Employee agrees to provide Company a statement of
                 all other directorships Employee holds, with a brief
                 description of the business activities of each organization.
                 This statement shall be provided on or before December 31 of
                 each year.  If, in the opinion of Company, a conflict of
                 interest exists between Company (and its affiliates) and the
                 organization in which the Employee holds a directorship,
                 Company can require Employee to resign the outside
                 directorship.

         12.     Right to Invest.

                 Nothing in this Agreement is intended or shall be construed to
                 limit Employee's right (i) to engage in passive personal
                 investments, including, but not limited to, holding as an
                 investment not more than five percent (5%) of any class of the
                 issued and outstanding and publicly traded (on a recognized
                 national or regional securities exchange or in the
                 over-the-counter market) capital stock or other securities of
                 any corporation or other entity that conducts activities that
                 compete with the business of Company or any affiliate of
                 Company; or (ii) to invest, individually or with others, in
                 oil and gas prospects, subject, however, in the case of oil
                 and gas prospects to the following conditions:

                 12.1     Company must have first had the right and opportunity
                          to purchase all of the interest in any prospect made
                          available to Employee, even if this would preclude
                          Employee's participation.

                 12.2     Company must have made known its election either to
                          participate in less than the full interest made
                          available to Employee and have no desire to acquire
                          an additional interest, or declined to participate at
                          all in the prospect.  If Company elects to
                          participate in less than the full interest made
                          available to Employee, Employee may invest in the
                          portion of such interest not acquired by Company.

                 12.3     Employee must purchase his interest in the oil and
                          gas prospect on terms which are no more favorable
                          than those made available to Company.

         13.     Disability During Employment.

                 If Employee shall become unable to perform his duties by
                 reason of disability, he shall be entitled to receive, in
                 addition to any insurance benefits he may receive, all of his
                 salary for the first one (1) month of his disability, and
                 one-half (1/2) of his salary for the next three (3) months of
                 disability.  Periods of disability shall not be cumulative so
                 long as they are separated by at least ninety (90) days of
                 continuous service.





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -38-
<PAGE>   39
                 The term "disability" shall mean disability which, in the
                 opinion of a doctor satisfactory to Company, renders Employee
                 unable to perform his duties hereunder as evidenced by such
                 doctor's certificate.  The date disability commences shall be
                 the date Employee first absents himself from work during a
                 continuous period of disability.

         14.     Merger or Acquisition.

                 In the event Company should be acquired by or merged into
                 another company, by signature of Company's authorized
                 representatives, Company hereby agrees that this Employment
                 Agreement shall be binding upon Company, its successors and
                 assigns, and shall be disclosed to any party considering
                 merger with, or acquisition of, Company.

         15.     Arbitration.

                 15.1     If a dispute arises out of or related to this
                          Agreement and the dispute cannot be settled through
                          direct discussions, Company and Employee agree that
                          they shall first endeavor to settle the dispute in an
                          amicable fashion.  If such efforts fail to resolve
                          the dispute, the dispute shall, except as otherwise
                          provided in paragraph 19, be resolved as follows:

                          15.1.1  Except as provided in paragraph 15.1.2 below,
                                  any and all claims, demands, cause of action,
                                  disputes, controversies, and other matters in
                                  question arising out of or relating to this
                                  Agreement, any provision hereof, the alleged
                                  breach thereof, or in any way relating to the
                                  subject matter of this Agreement, involving
                                  Company, Employee, and/or their respective
                                  representatives, even though some or all of
                                  such claims allegedly are extracontractual in
                                  nature, whether such claims sound in
                                  contract, tort, or otherwise, at law or in
                                  equity, under state or federal law, whether
                                  provided by statute or the common law, for
                                  damages or any other relief, shall be
                                  resolved by binding arbitration pursuant to
                                  the Federal Arbitration Act in accordance
                                  with the Commercial Arbitration Rules then in
                                  effect with the American Arbitration
                                  Association (the "AAA").  The arbitration
                                  proceeding shall be conducted in Houston,
                                  Texas.  The arbitration may be initiated by
                                  either party by providing to the other a
                                  written notice of arbitration specifying the
                                  claims, and the parties shall thereafter
                                  endeavor to agree on an arbitrator.  If
                                  within thirty (30) days of the notice of
                                  initiation of the arbitration procedure, the
                                  parties are unable to agree on an arbitrator,
                                  the party requesting arbitration shall file





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -39-
<PAGE>   40
                                  a request with the AAA that the Houston,
                                  Texas office of the AAA provide a list of
                                  potential arbitrators to both parties.  The
                                  parties shall thereafter have sixty (60) days
                                  to select an arbitrator from such list, with
                                  such selection to be by mutual agreement.  If
                                  the parties fail to select an arbitrator
                                  within such time by mutual agreement, then
                                  either party may request that the Chief Judge
                                  of the U.S. District Court for the Southern
                                  District of Texas appoint an arbitrator, and
                                  any such appointment shall be binding.  The
                                  arbitrator, utilizing the Commercial
                                  Arbitration Rules of the American Arbitration
                                  Association, shall within 120 days of his or
                                  her selection, resolve all disputes between
                                  the parties.  There shall be no transcript of
                                  the hearings before the arbitrator.  The
                                  arbitrator's decision shall be in writing,
                                  but shall be as brief as possible.  The
                                  arbitrator shall not assign the reasons for
                                  his or her decision.  The arbitrator's
                                  decision shall be final and non-appealable to
                                  the maximum extent permitted by law.
                                  Judgment upon any award rendered in any such
                                  arbitration proceeding may be entered by any
                                  federal or state court having jurisdiction.
                                  This agreement to arbitrate shall be
                                  enforceable in either federal or state court.
                                  The enforcement of this agreement to
                                  arbitrate and all procedural aspects of this
                                  agreement to arbitrate, including but not
                                  limited to, the construction and
                                  interpretation of this agreement to
                                  arbitrate, the issues subject to arbitration
                                  (i.e., arbitrability), the scope of the
                                  arbitrable issues, allegations of waiver,
                                  delay or defenses to arbitrability, and the
                                  rules governing the conduct of the
                                  arbitration, shall be governed by and
                                  construed pursuant to the Federal Arbitration
                                  Act and shall be decided by the arbitrator.
                                  In deciding the substance of any such claims,
                                  the arbitrator shall apply the substantive
                                  laws of the State of Texas (excluding Texas
                                  choice-of-law principles that might call for
                                  the application of some other State's law);
                                  provided, however, it is expressly agreed
                                  that the arbitrator shall have no authority
                                  to award treble, exemplary, or punitive
                                  damages under any circumstances regardless of
                                  whether such damages may be available under
                                  Texas law, the parties hereby waiving their
                                  right, if any, to recover treble, exemplary,
                                  or punitive damages in connection with any
                                  such claims.





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<PAGE>   41
                          15.1.2  Notwithstanding the agreement to arbitrate
                                  contained in paragraph 15.1.1 above, in the
                                  event that either party wishes to seek a
                                  temporary restraining order, a preliminary or
                                  temporary injunction, or other injunctive
                                  relief in connection with any or all such
                                  claims, demands, cause of action, disputes,
                                  controversies, and other matters in question
                                  arising out of or relating to this Agreement,
                                  any provision hereof, the alleged breach
                                  thereof, or in any way relating to the
                                  subject matter of this Agreement, involving
                                  Company, Employee, and/or their respective
                                  representatives, including disputes arising
                                  out of a breach or alleged breach of
                                  paragraph 4 or 16, even though some or all of
                                  such claims allegedly are extra-contractual
                                  in nature, whether such claims sound in
                                  contract, tort, or otherwise, at law or in
                                  equity, under state or federal law, whether
                                  provided by statute or the common law, for
                                  damages or any other relief, each party shall
                                  have the right to pursue such injunctive
                                  relief in court, rather than by arbitration.
                                  The parties agree that such action for a
                                  temporary restraining order, a preliminary or
                                  temporary injunction, or other injunctive
                                  relief will be brought in the State or
                                  federal courts residing in Houston, Harris
                                  County, Texas.

                 15.2     The Company shall pay all costs and expenses of
                          Company and Employee (including, but not limited to,
                          attorneys' fees, the fees of the arbitrator and the
                          AAA and any other related costs) for any arbitration
                          proceeding or legal action; provided, however, that
                          if in any such arbitration proceeding or legal
                          action, the arbitrator or court, respectively,
                          determines that Employee has prosecuted or defended
                          any issue in such proceeding or action in bad faith,
                          the arbitrator or court, respectively, may allocate
                          the portion of such costs and expenses relating to
                          such issue between the parties in any other manner
                          deemed fair, equitable and reasonable by the
                          arbitrator or court, respectively.

         16.     Noncompetition Obligations.

                 16.1     As part of the consideration for the compensation and
                          benefits to be paid to Employee hereunder, and as an
                          additional incentive for Company to enter into this
                          Agreement, Company and Employee agree to the
                          non-competition obligations hereunder.  Employee will
                          not, directly or indirectly for Employee or for
                          others:





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                                      -41-
<PAGE>   42
                          16.1.1  in any geographic area or market where
                                  Company or any of its subsidiaries are
                                  conducting any business as of the date of
                                  termination of the employment relationship or
                                  have during the previous twelve months
                                  conducted such business, engage in any
                                  business competitive with any such business;
                                  or

                          16.1.2  in any geographic area or market where
                                  Employee knew Company contemplated entering
                                  any business as of the date of termination of
                                  the employment relationship, but only if
                                  Company had, as of such date, invested
                                  significant resources toward entering into
                                  such business in such geographic area or
                                  market, engage in any business competitive
                                  with any such business;

                          16.1.3  render advice or services to, or otherwise
                                  assist, any other person, association, or
                                  entity who is engaged, directly or
                                  indirectly, in any business competitive with
                                  Company's business within the parameters
                                  described in paragraphs 16.1.1 and 16.1.2
                                  above with respect to such competitive
                                  business; or

                          16.1.4  induce any employee of Company or any of its
                                  subsidiaries to terminate his or her
                                  employment with Company or its subsidiaries,
                                  or hire or assist in the hiring of any such
                                  employee by any person, association, or
                                  entity not affiliated with Company.

                          These non-competition obligations shall commence upon
                          the date of execution of this Agreement and extend
                          until the earlier of (a) the expiration of the term
                          of this Agreement (or any extended term) or (b) six
                          (6) months after termination of the employment
                          relationship; provided, however, that notwithstanding
                          anything contained in this paragraph 16 to the
                          contrary, such obligations shall only apply after the
                          termination of employment if the termination of
                          employment results from termination for Cause by
                          Company under paragraph 3.5 or voluntary termination
                          without Good Reason by Employee (it being understood
                          and agreed that termination of this Agreement by
                          Employee under paragraph 3.1 shall not, for purposes
                          of this paragraph 16, constitute voluntary
                          termination without Good Reason by Employee).

                 16.2     Employee understands that the foregoing restrictions
                          may limit Employee's ability to engage in certain
                          businesses anywhere in the world during the period
                          provided for above, but acknowledges that Employee
                          will receive sufficiently high renumeration and other
                          benefits under this Agreement to justify such
                          restriction.  Employee





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -42-
<PAGE>   43
                          acknowledges that money damages would not be
                          sufficient remedy for any breach of this Article by
                          Employee, and Company shall be entitled to enforce
                          the provisions of this Agreement and/or to specific
                          performances and injunctive relief as remedies for
                          such breach or any threatened breach.  Such remedies
                          shall not be deemed the exclusive remedies for a
                          breach of this Article, but shall be in addition to
                          all remedies available at law or in equity to
                          Company, including, without limitation, the recovery
                          of damages from Employee and Employee's agents
                          involved in such breach and remedies available to
                          Company pursuant to other agreements with Employee.

                 16.3     It is expressly understood and agreed that Company
                          and Employee consider the restrictions contained in
                          this paragraph 16 to be reasonable and necessary.
                          Nevertheless, if any of the aforesaid restrictions
                          are found by a court having jurisdiction to be
                          unreasonable, or overly broad as to geographic area
                          or time, or otherwise unenforceable, the parties
                          intend for the restrictions therein set forth to be
                          modified by such courts so as to be reasonable and
                          enforceable and, as so modified by the court, to be
                          fully enforced.

         17.     Foreign Corrupt Practices Act.

                 Employee shall at all times comply with the United States
                 Foreign Corrupt Practices Act, generally codified in 15 USC 78
                 (FCPA), as the FCPA may hereafter be amended, and/or its
                 successor statutes.  If Employee pleads guilty to or nolo
                 contendere or admits civil or criminal liability under the
                 FCPA, or if a court finds that Employee committed an action
                 resulting in any Company entity having civil or criminal
                 liability or responsibility under the FCPA with knowledge of
                 the activities giving rise to such liability or knowledge of
                 facts from which Employee should have reasonably inferred the
                 activities giving rise to liability had occurred or were
                 likely to occur, such action or finding shall constitute Cause
                 for termination by Company under paragraph 3.5 of this
                 Agreement unless Company's Board of Directors determines that
                 the actions found to be in violation of the FCPA were taken in
                 good faith and in compliance with all applicable policies of
                 Company.

         18.     Survival.

                 The provisions of paragraphs 4 and 16 shall survive any
                 termination of the employment relationship and/or of this
                 Agreement for the periods stated therein.  The provisions of
                 paragraph 15 relating to arbitration shall survive any
                 termination of the employment relationship between Employee
                 and Company and the termination of this Agreement.  Amounts,
                 compensation, rights and benefits which Employee is entitled
                 to receive or have accrued to Employee under this Agreement or
                 under





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -43-
<PAGE>   44
                 any plan, program, arrangement, agreement or policy of or with
                 Company or any of its affiliates before, at or subsequent to
                 the termination of the employment relationship between
                 Employee and Company or the termination of this Agreement
                 shall not be superseded and shall survive any such
                 termination.

         19.     Certain Additional Payments by Company.

                 19.1     Anything in this Agreement to the contrary
                          notwithstanding, in the event it shall be determined
                          that any payment or distribution by Company or any of
                          its affiliates to or for the benefit of Employee,
                          whether paid or payable or distributed or
                          distributable pursuant to the terms of this Agreement
                          or otherwise (any such payments or distributions
                          being individually referred to herein as a "Payment,"
                          and any two or more of such payments or distributions
                          being referred to herein as "Payments"), would be
                          subject to the excise tax imposed by Section 4999 of
                          the Internal Revenue Code of 1986, as amended (the
                          "Code") (such excise tax, together with any interest
                          thereon, any penalties, additions to tax, or
                          additional amounts with respect to such excise tax,
                          and any interest in respect of such penalties,
                          additions to tax or additional amounts, being
                          collectively referred herein to as the "Excise Tax"),
                          then Employee shall be entitled to receive an
                          additional payment or payments (individually referred
                          to herein as a "Gross-Up Payment" and any two or more
                          of such additional payments being referred to herein
                          as "Gross-Up Payments") in an amount such that after
                          payment by Employee of all taxes (as defined in
                          paragraph 19.11) imposed upon the Gross-Up Payment,
                          Employee retains an amount of such Gross-Up Payment
                          equal to the Excise Tax imposed upon the Payments.

                 19.2     Subject to the provisions of paragraph 19.3 through
                          19.11, any determination (individually, a
                          "Determination") required to be made under this
                          paragraph 19, including whether a Gross-Up Payment is
                          required and the amount of such Gross-Up Payment,
                          shall initially be made, at Company's expense, by
                          nationally recognized tax counsel mutually acceptable
                          to Company and Employee ("Tax Counsel").  Tax Counsel
                          shall provide detailed supporting legal authorities,
                          calculations, and documentation both to Company and
                          Employee within 15 business days of the termination
                          of Employee's employment, if applicable, or such
                          other time or times as is reasonably requested by
                          Company or Employee.  If Tax Counsel makes the
                          initial Determination that no Excise Tax is payable
                          by Employee with respect to a Payment or Payments, it
                          shall furnish Employee with an opinion reasonably
                          acceptable to Employee that no Excise Tax will be
                          imposed with respect to any such Payment or Payments.
                          Employee shall have the right to dispute any
                          Determination (a "Dispute") within 15 business days
                          after delivery of Tax Counsel's opinion with respect
                          to such Determination.  The





EMPLOYMENT AGREEMENT -- FRANK A. PICI
                                      -44-
<PAGE>   45
                          Gross-Up Payment, if any, as determined pursuant to
                          such Determination shall be paid by Company to
                          Employee within five business days of Employee's
                          receipt of such Determination.  The existence of a
                          Dispute shall not in any way affect Employee's right
                          to receive the Gross-Up Payment in accordance with
                          such Determination.  If there is no Dispute, such
                          Determination shall be binding, final and conclusive
                          upon Company and Employee, subject in all respects,
                          however, to the provisions of paragraph 19.3 through
                          19.11 below.  As a result of the uncertainty in the
                          application of Sections 4999 and 280G of the Code, it
                          is possible that Gross-Up Payments (or portions
                          thereof) which will not have been made by Company
                          should have been made ("Underpayment"), and if upon
                          any reasonable written request from Employee or
                          Company to Tax Counsel, or upon Tax Counsel's own
                          initiative, Tax Counsel, at Company's expense,
                          thereafter determines that Employee is required to
                          make a payment of any Excise Tax or any additional
                          Excise Tax, as the case may be, Tax Counsel shall, at
                          Company's expense, determine the amount of the
                          Underpayment that has occurred and any such
                          Underpayment shall be promptly paid by Company to
                          Employee.

                 19.3     Company shall defend, hold harmless, and indemnify
                          Employee on a fully grossed-up after tax basis from
                          and against any and all claims, losses, liabilities,
                          obligations, damages, impositions, assessments,
                          demands, judgements, settlements, costs and expenses
                          (including reasonable attorneys', accountants', and
                          experts' fees and expenses) with respect to any tax
                          liability of Employee resulting from any Final
                          Determination (as defined in paragraph 19.10) that
                          any Payment is subject to the Excise Tax.

                 19.4     If a party hereto receives any written or oral
                          communication with respect to any question,
                          adjustment, assessment or pending or threatened
                          audit, examination, investigation or administrative,
                          court or other proceeding which, if pursued
                          successfully, could result in or give rise to a claim
                          by Employee against Company under this paragraph 19
                          ("Claim"), including, but not limited to, a claim for
                          indemnification of Employee by Company under
                          paragraph 19.3, then such party shall promptly notify
                          the other party hereto in writing of such Claim ("Tax
                          Claim Notice").

                 19.5     If a Claim is asserted against Employee ("Employee
                          Claim"), Employee shall take or cause to be taken
                          such action in connection with contesting such
                          Employee Claim as Company shall reasonably request in
                          writing from time to time, including the retention of
                          counsel and experts as are reasonably designated by
                          Company (it being understood and agreed by the
                          parties hereto that the terms of any such retention
                          shall expressly provide that Company shall be solely
                          responsible for the payment of any and all fees and





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<PAGE>   46
                          disbursements of such counsel and any experts) and
                          the execution of powers of attorney, provided that:

                          19.5.1  within 30 calendar days after Company
                                  receives or delivers, as the case may be, the
                                  Tax Claim Notice relating to such Employee
                                  Claim (or such earlier date that any payment
                                  of the taxes claimed is due from Employee,
                                  but in no event sooner than five calendar
                                  days after Company receives or delivers such
                                  Tax Claim Notice), Company shall have
                                  notified Employee in writing ("Election
                                  Notice") that Company does not dispute its
                                  obligations (including, but not limited to,
                                  its indemnity obligations) under this
                                  Agreement and that Company elects to contest,
                                  and to control the defense or prosecution of,
                                  such Employee Claim at Company's sole risk
                                  and sole cost and expense; and

                          19.5.2  Company shall have advanced to Employee on an
                                  interest-free basis, the total amount of the
                                  tax claimed in order for Employee, at
                                  Company's request, to pay or cause to be paid
                                  the tax claimed, file a claim for refund of
                                  such tax and, subject to the provisions of
                                  the last sentence of paragraph 19.7, sue for
                                  a refund of such tax if such claim for refund
                                  is disallowed by the appropriate taxing
                                  authority (it being understood and agreed by
                                  the parties hereto that Company shall only be
                                  entitled to sue for a refund and Company
                                  shall not be entitled to initiate any
                                  proceeding in, for example, United States Tax
                                  Court) and shall indemnify and hold Employee
                                  harmless, on a fully grossed-up after tax
                                  basis, from any tax imposed with respect to
                                  such advance or with respect to any imputed
                                  income with respect to such advance; and

                          19.5.3  Company shall reimburse Employee for any and
                                  all costs and expenses resulting from any
                                  such request by Company and shall indemnify
                                  and hold Employee harmless, on fully
                                  grossed-up after-tax basis, from any tax
                                  imposed as a result of such reimbursement.

                 19.6     Subject to the provisions of paragraph 19.5 hereof,
                          Company shall have the right to defend or prosecute,
                          at the sole cost, expense and risk of Company, such
                          Employee Claim by all appropriate proceedings, which
                          proceedings shall be defended or prosecuted
                          diligently by Company to a Final Determination;
                          provided, however, that (i) Company shall not,
                          without Employee's prior written consent, enter into
                          any compromise or settlement of such





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<PAGE>   47
                          Employee Claim that would adversely affect Employee,
                          (ii) any request from Company to Employee regarding
                          any extension of the statute of limitations relating
                          to assessment, payment, or collection of taxes for
                          the taxable year of Employee with respect to which
                          the contested issues involved in, and amount of, the
                          Employee Claim relate is limited solely to such
                          contested issues and amount, and (iii) Company's
                          control of any contest or proceeding shall be limited
                          to issues with respect to the Employee Claim and
                          Employee shall be entitled to settle or contest, in
                          his sole and absolute discretion, any other issue
                          raised by the Internal Revenue Service or any other
                          taxing authority.  So long as Company is diligently
                          defending or prosecuting such Employee Claim,
                          Employee shall provide or cause to be provided to
                          Company any information reasonably requested by
                          Company that relates to such Employee Claim, and
                          shall otherwise cooperate with Company and its
                          representatives in good faith in order to contest
                          effectively such Employee Claim.  Company shall keep
                          Employee informed of all developments and events
                          relating to any such Employee Claim (including,
                          without limitation, providing to Employee copies of
                          all written materials pertaining to any such Employee
                          Claim), and Employee or his authorized
                          representatives shall be entitled, at Employee's
                          expense, to participate in all conferences, meetings
                          and proceedings relating to any such Employee Claim.

                 19.7     If, after actual receipt by Employee of an amount of
                          a tax claimed (pursuant to an Employee Claim) that
                          has been advanced by Company pursuant to paragraph
                          19.5.2 hereof, the extent of the liability of Company
                          hereunder with respect to such tax claimed has been
                          established by a Final Determination, Employee shall
                          promptly pay or cause to be paid to Company any
                          refund actually received by, or actually credited to,
                          Employee with respect to such tax (together with any
                          interest paid or credited thereon by the taxing
                          authority and any recovery of legal fees from such
                          taxing authority related thereto), except to the
                          extent that any amounts are then due and payable by
                          Company to Employee, whether under the provisions of
                          this Agreement or otherwise.  If, after the receipt
                          by Employee of an amount advanced by Company pursuant
                          to paragraph 19.5.2, a determination is made by the
                          Internal Revenue Service or other appropriate taxing
                          authority that Employee shall not be entitled to any
                          refund with respect to such tax claimed and Company
                          does not notify Employee in writing of its intent to
                          contest such denial of refund prior to the expiration
                          of 30 days after such determination, then such
                          advance shall be forgiven and shall not be required
                          to be repaid and the amount of such advance shall
                          offset, to the extent thereof, the amount of any
                          Gross-Up Payments and other payments required to be
                          paid hereunder.





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                 19.8     With respect to any Employee Claim, if Company fails
                          to deliver an Election Notice to Employee within the
                          period provided in paragraph 19.5.1 hereof or, after
                          delivery of such Election Notice, Company fails to
                          comply with the provisions of paragraph 19.5.2,
                          19.5.3 or 19.6 hereof, then Employee shall at any
                          time thereafter have the right (but not the
                          obligation), at his election and in his sole and
                          absolute discretion, to defend or prosecute, at the
                          sole cost, expense and risk of Company, such Employee
                          Claim.  Employee shall have full control of such
                          defense or prosecution and such proceedings,
                          including any settlement or compromise thereof.  If
                          requested by Employee, Company shall cooperate, and
                          shall cause its affiliates to cooperate, in good
                          faith with Employee and his authorized
                          representatives in order to contest effectively such
                          Employee Claim.  Company may attend, but not
                          participate in or control, any defense, prosecution,
                          settlement or compromise of any Employee Claim
                          controlled by Employee pursuant to this paragraph
                          19.8 and shall bear its own costs and expenses with
                          respect thereto.  In the case of any Employee Claim
                          that is defended or prosecuted by Employee, Employee
                          shall, from time to time, be entitled to current
                          payment, on a fully grossed-up after tax basis, from
                          Company with respect to costs and expenses incurred
                          by Employee in connection with such defense or
                          prosecution.

                 19.9     In the case of any Employee Claim that is defended or
                          prosecuted to a Final Determination pursuant to the
                          terms of this paragraph 19.9, Company shall pay, on a
                          fully grossed-up after tax basis, to Employee in
                          immediately available funds the full amount of any
                          taxes arising or resulting from or incurred in
                          connection with such Employee Claim that have not
                          theretofore been paid by Company to Employee,
                          together with the costs and expenses, on a fully
                          grossed-up after tax basis, incurred in connection
                          therewith that have not theretofore been paid by
                          Company to Employee, within ten calendar days after
                          such Final Determination.  In the case of any
                          Employee Claim not covered by the preceding sentence,
                          Company shall pay, on a fully grossed-up after tax
                          basis, to Employee in immediately available funds the
                          full amount of any taxes arising or resulting from or
                          incurred in connection with such Employee Claim at
                          least ten calendar days before the date payment of
                          such taxes is due from Employee, except where payment
                          of such taxes is sooner required under the provisions
                          of this paragraph 19.9, in which case payment of such
                          taxes (and payment, on a fully grossed-up after tax
                          basis, of any costs and expenses required to be paid
                          under this paragraph 19.9 shall be made within the
                          time and in the manner otherwise provided in this
                          paragraph 19.9.

                 19.10    For purposes of this Agreement, the term "Final
                          Determination" shall mean (A) a decision, judgment,
                          decree or other order by a court or other tribunal
                          with appropriate jurisdiction, which has





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<PAGE>   49
                          become final and non-appealable; (B) a final and
                          binding settlement or compromise with an
                          administrative agency with appropriate jurisdiction,
                          including, but not limited to, a closing agreement
                          under Section 7121 of the Code; (C) any disallowance
                          of a claim for refund or credit in respect to an
                          overpayment of tax unless a suit is filed on a timely
                          basis; or (D) any final disposition by reason of the
                          expiration of all applicable statutes of limitations.

                 19.11    For purposes of this Agreement, the terms "tax" and
                          "taxes" mean any and all taxes of any kind whatsoever
                          (including, but not limited to, any and all Excise
                          Taxes, income taxes, and employment taxes), together
                          with any interest thereon, any  penalties, additions
                          to tax, or additional amounts with respect to such
                          taxes and any interest in respect of such penalties,
                          additions to tax, or additional amounts.

         20.     No Obligation to Mitigate.

                 Employee shall not be required to mitigate the amount of any
                 payment or other benefit required to be paid to Employee
                 pursuant to this Agreement, whether by seeking other
                 employment or otherwise; nor shall the amount of any such
                 payment or other benefit be reduced on account of any
                 compensation earned by Employee as a result of employment by
                 another person or entity.

         21.     Stock Purchase and Related Loan.

                 21.1     If (a) on or before June 2, 1997, no notice of an
                          election to terminate this Agreement under paragraph
                          3.1 has been given by either party, and (b) before
                          June 3, 1997, neither Company nor Employee has
                          otherwise terminated this Agreement or Employee's
                          employment with Company, then Company shall, or shall
                          cause Mariner Holdings, Inc. to, grant Employee the
                          opportunity to purchase from Mariner Holdings, Inc.
                          (the "stock purchase") no less than the number of
                          shares of the common stock of Mariner Holdings Inc.
                          ("Parent Common Stock") specified in a written notice
                          delivered by Company to Employee on or before June
                          16, 1997 (the "Minimum Share Specification"), and no
                          more than 1,706 shares of Parent Common Stock (the
                          "Maximum Share Specification"), at a price of $100.00
                          per share which shall be paid in cash.  Employee's
                          right to purchase such shares of Parent Common Stock
                          may be exercised any time after June 16, 1997, and
                          before June 30, 1997, by (x) the execution and
                          delivery by Employee to Company of written notice in
                          the form attached hereto as Exhibit A (the "Notice")
                          specifying the number of shares of Parent Common
                          Stock to be purchased by Employee, which number of
                          shares shall be no less than the Minimum Share
                          Specification and no more than the Maximum Share
                          Specification, (y) simultaneously with the execution
                          and delivery of the Notice,





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                          the execution and delivery by Employee and his
                          spouse, if any, to Company of an Addendum Agreement
                          in the form attached hereto as Exhibit B ("Addendum
                          Agreement"), and (z) the payment in cash within five
                          (5) days after such deliveries of the total purchase
                          price for such shares; provided, however, that
                          notwithstanding anything contained in this Agreement
                          to the contrary, in the event Employee does not, on
                          or before June 30, 1997, exercise his right to
                          purchase, and within five (5) days thereafter
                          purchase for cash, all in the manner provided in this
                          sentence, a number of shares of Parent Common Stock
                          equal to at least the Minimum Share Specification,
                          the initial term shall in no event be deemed to have
                          been extended for an additional one and one-half (1
                          1/2) years through June 1, 1999, and the initial term
                          and the term of Employee's employment under this
                          Agreement shall expire on December 1, 1997.

                 21.2     In connection with the stock purchase, Employee shall
                          be entitled to receive a loan from Company for the
                          purpose of funding all or a portion of the stock
                          purchase.  The terms and conditions with regard to
                          such loan shall be evidenced by a Promissory Note and
                          a Security Agreement substantially in the forms
                          attached hereto as Exhibit C and Exhibit D,
                          respectively, which are incorporated herein by
                          reference and their terms and conditions shall be
                          considered a part of this Agreement.

         22.     Stock Options.  As soon as practicable after Employee's
                 purchase, if any, of Parent Common Stock pursuant to paragraph
                 21, Company shall, or shall cause Mariner Holdings Inc. to,
                 grant to Employee stock options for shares of Parent Common
                 Stock pursuant to the Mariner Holdings Inc. 1996 Stock Option
                 Plan.  The number of shares of Parent Common Stock that
                 Employee shall be entitled to purchase pursuant to such
                 options shall be the number of shares of Parent Common Stock
                 purchased by Employee pursuant to paragraph 21 multiplied by
                 3.57; any fractional number of shares shall be rounded to the
                 nearest whole number as follows:  a fraction of .50 or more
                 shall be rounded upward to the next whole number, and a
                 fraction of less than .50 shall be rounded down to the next
                 whole number.  To the fullest extent possible, the options
                 granted to Employee shall be incentive stock options, and
                 otherwise shall be non- qualified stock options.  The terms,
                 conditions and restrictions with regard to such stock options
                 shall be evidenced by an Incentive Stock Option Agreement (as
                 to the qualified stock options) and a Nonstatutory Stock
                 Option Agreement (as to be nonqualified stock options),
                 substantially in the forms attached hereto as Exhibit E and
                 Exhibit F, respectively, which shall be incorporated by
                 reference and their terms, conditions and restrictions shall
                 be considered a part of this Agreement.





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         23.     Acceleration Upon the Occurrence of an Initial Public
                 Offering.  The provisions of paragraphs 21 and 22
                 notwithstanding, Employee's right to purchase shares of Parent
                 Common Stock under paragraph 21 shall become immediately
                 exercisable in full in the manner provided in paragraph 21,
                 but without regard to the requirements relating to the Minimum
                 Share Specification, and upon the exercise of such right to
                 purchase Parent Common Stock, Employee shall immediately
                 become entitled to be granted options to purchase shares of
                 Parent Common Stock under and in accordance with paragraph 22,
                 upon the occurrence on or before June 2, 1997, of an "Initial
                 Public Offering" (as such term is defined in D.2(d) of the
                 Stockholders' Agreement, dated April 2, 1996, between Enron
                 Capital & Trade Resources Corp., Mystery Acquisition, Inc.
                 (now know as Mariner Holdings, Inc.) and certain other
                 parties).

         24.     Stockholders' Agreement to Apply to Shares.  No transfer or
                 issuance to Employee of any shares of Parent Common Stock
                 shall be effected unless Employee shall have simultaneously
                 with or prior to such transfer or issuance entered into an
                 Addendum Agreement with Mariner Holdings, Inc.

         25.     Miscellaneous.

                 25.1     This Agreement shall not be modified or amended
                          except in writing and signed by Company and Employee.
                          This Agreement shall be binding upon the heirs,
                          administrators, or executors and the successors and
                          assigns of each party to this Agreement.

                 25.2     The rights and benefits of Employee under the
                          Agreement are personal to him and shall not be
                          assigned or transferred without the prior written
                          consent of Company.  Subject to the foregoing, this
                          Agreement shall be binding upon and inure to the
                          benefit of the parties hereto and their respective
                          heirs, personal representatives, successors and
                          assigns.

                 25.3     All titles or headings of sections or paragraphs or
                          other divisions of this Agreement are only for the
                          convenience of the parties and shall not be construed
                          to have any effect or meaning with respect to the
                          other content of such sections or paragraphs or other
                          divisions, such content being controlling as to the
                          agreement between the parties hereto.

                 25.4     This Agreement is made and will be performed under,
                          and shall be governed by and construed in accordance
                          with, the law of the State of Texas.





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                 25.5     EMPLOYEE AFFIRMS AND ATTESTS BY HIS SIGNATURE TO THIS
                          AGREEMENT THAT HE HAS READ THIS AGREEMENT BEFORE
                          SIGNING IT AND THAT HE FULLY UNDERSTANDS ITS
                          PURPOSES, TERMS AND PROVISIONS, WHICH HE HEREBY
                          EXPRESSLY ACKNOWLEDGED TO BE REASONABLE IN ALL
                          RESPECTS.  EMPLOYEE FURTHER ACKNOWLEDGES RECEIPT OF
                          ONE COPY OF THIS AGREEMENT.

                 25.6     Notices contemplated under this Agreement shall be
                          directed to the following address:

                          If to Company:

                                  Mariner Energy, Inc.
                                  580 Westlake Boulevard, Suite 1300
                                  Houston, Texas  77079

                                  Attention:  President and Chief Executive
                                              Officer

                          If to Employee:

                                  Frank A. Pici
                                  6306 Wagner Way
                                  Sugar Land, Texas  77479

                          Company and Employee may change the above addresses
                          for notice purposes by notifying the other in
                          writing.

                 25.7     The Company may withhold from any amounts payable
                          under this Agreement such federal, state, or local
                          taxes as shall be required to be withheld pursuant to
                          any applicable law or regulation.

                 25.8     Except as otherwise expressly provided herein,
                          nothing contained in this Agreement shall limit or
                          otherwise affect any rights or benefits which are
                          vested in, accrued to, or earned by Employee, or for
                          which Employee is entitled to, prior to the Effective
                          Date whether under the Employment Agreement or
                          otherwise.





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                                      -52-
<PAGE>   53
         Executed as of the Effective Date in duplicate originals at Houston,
Texas.


                                    COMPANY:

                                    MARINER ENERGY, INC.


                                    By: /s/ ROBERT E. HENDERSON
                                       --------------------------------
                                        Printed Name:  Robert E. Henderson
                                        Printed Title: President and CEO


                                    EMPLOYEE:


                                       /s/  FRANK A. PICI
                                       --------------------------------
                                            Frank A. Pici





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