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                                                                     EXHIBIT 4.2



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                             NUEVO ENERGY COMPANY

                           1993 STOCK INCENTIVE PLAN
















                                MARCH 30, 1993
                        AS AMENDED AS OF APRIL 12, 1996



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                               TABLE OF CONTENTS
 
 
                                                                          Page
                                                                          ----

ARTICLE I.  GENERAL.......................................................   1
     Section 1.1.  Purpose................................................   1
     Section 1.2.  Administration.........................................   1
     Section 1.3.  Eligibility for Participation..........................   2
     Section 1.4.  Types of Awards Under Plan.............................   2
     Section 1.5.  Aggregate Limitation on Awards.........................   2
     Section 1.6.  Effective Date and Term of Plan........................   3
 
ARTICLE II.  STOCK OPTIONS................................................   3
     Section 2.1.  Award of Stock Options.................................   3
     Section 2.2.  Stock Option Agreements................................   3
     Section 2.3.  Stock Option Price.....................................   4
     Section 2.4.  Term and Exercise......................................   4
     Section 2.5.  Manner of Payment......................................   4
     Section 2.6.  Restrictions on Certain Shares.........................   4
     Section 2.7.  Death, Retirement and Termination of 
                   Employment of Optionee.................................   4
     Section 2.8.  Tax Election...........................................   4
     Section 2.9.  Effect of Exercise.....................................   5
 
ARTICLE III.  INCENTIVE STOCK OPTIONS.....................................   5
     Section 3.1.  Award of Incentive Stock Options.......................   5
     Section 3.2.  Incentive Stock Option Agreements......................   5
     Section 3.3.  Incentive Stock Option Price...........................   5
     Section 3.4.  Term and Exercise......................................   5
     Section 3.5.  Maximum Amount of Incentive Stock Option Grant.........   5
     Section 3.6.  Death of Optionee......................................   6
     Section 3.7.  Retirement or Disability...............................   6
     Section 3.8.  Termination for Other Reasons..........................   6
     Section 3.9.  Applicability of Stock Options Sections................   6
 
ARTICLE IV.  RELOAD OPTIONS...............................................   6
     Section 4.1.  Authorization of Reload Options........................   6
     Section 4.2.  Reload Option Amendment................................   7
     Section 4.3.  Reload Option Price....................................   7
     Section 4.4.  Term and Exercise......................................   7
     Section 4.5.  Termination of Employment..............................   7
     Section 4.6.  Applicability of Stock Options Sections................   7
 
ARTICLE V.  ALTERNATE APPRECIATION RIGHTS.................................   7
     Section 5.1.  Award of Alternate Rights..............................   7
     Section 5.2.  Alternate Rights Agreement.............................   7
     Section 5.3.  Exercise...............................................   7
 

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     Section 5.4.  Amount of Payment......................................   7
     Section 5.5.  Form of Payment........................................   8
     Section 5.6.  Effect of Exercise.....................................   8
     Section 5.7.  Termination of Employment, Retirement, 
                   Death or Disability....................................   8
 
ARTICLE VI.  LIMITED RIGHTS...............................................   8
     Section 6.1.  Award of Limited Rights................................   8
     Section 6.2.  Limited Rights Agreement...............................   8
     Section 6.3.  Exercise Period........................................   8
     Section 6.4.  Amount of Payment......................................   9
     Section 6.5.  Form of Payment........................................   9
     Section 6.6.  Effect of Exercise.....................................   9
     Section 6.7.  Retirement or Disability...............................   9
     Section 6.8.  Death of Optionee or Termination for Other Reasons.....   9
     Section 6.9.  Termination Related to a Change in Control.............   9
 
ARTICLE VII.  AUTOMATIC GRANTS............................................  10
     Section 7.1.  Grant..................................................  10
     Section 7.2.  Other Rights...........................................  10
     Section 7.3.  Applicable Provisions..................................  10
 
ARTICLE VIII.  BONUS STOCK AWARDS.........................................  10
     Section 8.1.  Award of Bonus Stock...................................  10
     Section 8.2.  Stock Bonus Agreements.................................  10
     Section 8.3.  Transfer Restriction...................................  10
 
ARTICLE IX.  MISCELLANEOUS................................................  10
     Section 9.1.  General Restriction....................................  11
     Section 9.2.  Non-Assignability......................................  11
     Section 9.3.  Withholding Taxes......................................  11
     Section 9.4.  Right to Terminate Employment..........................  11
     Section 9.5.  Non-Uniform Determinations.............................  11
     Section 9.6.  Rights as a Shareholder................................  11
     Section 9.7.  Definitions............................................  11
     Section 9.8.  Leaves of Absence......................................  12
     Section 9.9.  Newly Eligible Employees...............................  12
     Section 9.10.  Adjustments...........................................  12
     Section 9.11.  Changes in the Company's Capital Structure............  12
     Section 9.12.  Amendment of the Plan.................................  14



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                             NUEVO ENERGY COMPANY

                             STOCK INCENTIVE PLAN

                              ARTICLE I.  GENERAL

     Section 1.1. Purpose. The purposes of this Stock Incentive Plan (the
"Plan") are to: (1) associate the interests of the management of Nuevo Energy
Company and its subsidiaries and affiliates (collectively referred to as the
"Company") and the management of Torch Energy Advisors Incorporated ("Torch")
and Energy Assets International Corporation ("EAIC") (in their capacity as
managers under that certain management agreement between Torch, EAIC and the
Company) closely with the shareholders to generate an increased incentive to
contribute to the Company's future success and prosperity, thus enhancing the
value of the Company for the benefit of its stockholders; (2) provide management
with a proprietary ownership interest in the Company commensurate with Company
performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels thereby attracting and retaining highly
competent and talented directors and employees; and (4) provide an incentive to
management for continuous employment with the Company.

     Section 1.2.  Administration.

          (a) The Plan shall be administered by a Committee of disinterested
     persons appointed by the Board of Directors of Nuevo Energy Company (the
     "Committee"), as constituted from time to time. The Committee shall consist
     of at least two members of the Board of Directors. During the one year
     prior to commencement of service on the Committee, the Committee members
     will not have participated in, and while serving and for one year after
     serving on the Committee, such members shall not be eligible for selection
     as, persons to whom stock may be allocated or to whom stock options or
     stock appreciation rights may be granted under the Plan or any other
     discretionary plan of the Company under which participants are entitled to
     acquire stock, stock options or stock appreciation rights of the Company
     other than the automatic grant of non-discretionary awards as provided in
     Article VII.

          (b) The Committee shall have the authority, in its sole discretion and
     from time to time to:

                  (i)  designate the officers and key employees of the Company,
          its subsidiaries, affiliates and managers eligible to participate in
          the Plan;

                 (ii)  grant awards provided in the Plan in such form and amount
          as the Committee shall determine;

                (iii)  impose such limitations, restrictions and conditions,
          not inconsistent with this Plan, upon any such award as the Committee
          shall deem appropriate; and

                 (iv)  interpret the Plan and any agreement, instrument or other
          document executed in connection with the Plan, adopt, amend and
          rescind rules and regulations relating to the Plan, and make all other
          determinations and take all other action necessary or advisable for
          the implementation and administration of the Plan.



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          (c) Decisions and determinations of the Committee on all matters
     relating to the Plan shall be in its sole discretion and shall be final,
     conclusive and binding upon all persons, including the Company, any
     participant, any stockholder of Nuevo Energy Company and any employee. A
     majority of the members of the Committee may determine its actions and fix
     the time and place of its meetings. No member of the Committee shall be
     liable for any action taken or decision made in good faith relating to the
     Plan or any award thereunder.

     Section 1.3.  Eligibility for Participation.  Participants in the Plan
shall be selected by the Committee from the directors, executive officers and
other key employees of the Company and executive officers and key employees of
Torch and EAIC, in their capacity as managers under the management agreement,
who occupy responsible managerial or professional positions and who have the
capability of making a substantial contribution to the success of the Company.
In making this selection and in determining the form and amount of awards, the
Committee shall consider any factors deemed relevant, including the individual's
functions, responsibilities, value of services to the Company and past and
potential contributions to the Company's profitability and growth.

     Section 1.4.  Types of Awards Under Plan.  Awards under the Plan may be in
the form of any or more of the following:

            (i)  Stock Options, as described in Article II;

           (ii)  Incentive Stock Options, as described in Article III;

          (iii)  Reload Options, as described in Article IV;

           (iv)  Alternate Appreciation Rights, as described in Article V;
                 and/or

            (v)  Limited Rights, as described in Article VI.

Awards under the Plan shall be evidenced by an Award Agreement between the
Company and the recipient of the award, in form and substance satisfactory to
the Committee, and not inconsistent with this Plan.

     Section 1.5.  Aggregate Limitation on Awards.

          (a)    Shares of stock which may be issued under the Plan shall be
     authorized and unissued or treasury shares of Common Stock of Nuevo Energy
     Company ("Common Stock").  The maximum number of shares of Common Stock
     which may be issued under the Plan shall be 2,500,000.

         (b)     For purposes of calculating the maximum number of shares of
     Common Stock which may be issued under the Plan at any time:

                   (i)  all the shares issued (including the shares, if any,
          withheld for tax withholding requirements) under the Plan shall be
          counted when cash is used as full payment for shares issued upon
          exercise of a Stock Option, Incentive Stock Option or Reload Option;



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                  (ii)  only the shares issued (including the shares, if any,
          withheld for tax withholding requirements) as a result of an exercise
          of Alternate Appreciation Rights shall be counted; and

                 (iii)  only the net shares issued (including the shares, if
          any, withheld for tax withholding requirements) shall be counted when
          shares of Common Stock are used as full or partial payment for shares
          issued upon exercise of a Stock Option, Incentive Stock Option or
          Reload Option.

          (c)  In addition to shares of Common Stock actually issued pursuant to
     the exercise of Stock Options, Incentive Stock Options, Reload Options or
     Alternate Appreciation Rights, there shall be deemed to have been issued a
     number of shares equal to the number of shares of Common Stock in respect
     of which Limited Rights (as described in Article VI) shall have been
     exercised.

          (d)  Shares tendered by a participant as payment for shares issued
     upon exercise of a Stock Option, Incentive Stock Option or Reload Option
     shall be available for issuance under the Plan. Any shares of Common Stock
     subject to a Stock Option, Incentive Stock Option or Reload Option which
     for any reason is terminated unexercised or expires shall again be
     available for issuance under the Plan, but shares subject to a Stock
     Option, Incentive Stock Option or Reload Option which are not issued as a
     result of the exercise of Limited Rights shall not again be available for
     issuance under the Plan.

     Section 1.6.  Effective Date and Term of Plan.

          (a)  The Plan shall become effective on the date approved by the
     holders of a majority of the shares of Common Stock present in person or by
     proxy and entitled to vote at the 1993 Annual Meeting of shareholders of
     Nuevo Energy Company.

          (b)  No awards shall be made under the Plan after the tenth
     anniversary of the effective date of this Plan; provided, however, that the
     Plan and all awards made under the Plan prior to such date shall remain in
     effect until such awards have been satisfied or terminated in accordance
     with the Plan and the terms of such awards.

                          ARTICLE II.  STOCK OPTIONS

     Section 2.1.  Award of Stock Options.  The Committee may from time to time,
and subject to the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, grant to any participant in the Plan one or more
options to purchase for cash or shares the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is granted
shall mean the date selected by the Committee as of which the Committee allots a
specific number of shares to a participant pursuant to the Plan.

     Section 2.2.  Stock Option Agreements.  The grant of a Stock Option shall
be evidenced by a written Award Agreement, executed by the Company and the
holder of a Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Stock Option evidenced thereby, and in such form as
the Committee may from time to time determine.




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     Section 2.3.  Stock Option Price.  The option price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be an amount
selected by the Committee and shall be 100% or more of the fair market value of
a share of Common Stock on the date the Stock Option is granted.

     Section 2.4.  Term and Exercise.  A Stock Option shall not be exercisable
prior to six months from the date of its grant and unless a shorter period is
provided by the Committee or by another Section of this Plan, may be exercised
during a period of ten years from the date of grant thereof (the "Option
Term").  No Stock Option shall be exercisable after the expiration of its
option term.

     Section 2.5.  Manner of Payment.  Each Award Agreement providing for Stock
Options shall set forth the procedure governing the exercise of the Stock Option
granted thereunder, and shall provide that, upon such exercise in respect of any
shares of Common Stock subject thereto, the Optionee shall pay to the Company,
in full, the option price for such shares with cash or with previously owned
Common Stock.

     Section 2.6.  Restrictions on Certain Shares.  As soon as practicable after
receipt of payment, the Company shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock.  The Optionee shall become a
shareholder of the Company with respect to Common Stock represented by share
certificates so issued and as such shall be fully entitled to receive dividends,
to vote and to exercise all other rights of a shareholder.

     Section 2.7.  Death, Retirement and Termination of Employment of Optionee.
Unless otherwise provided in an Award Agreement or otherwise agreed to by the
Committee:

          (a)  Upon the death of the Optionee, any rights to the extent
     exercisable on the date of death may be exercised by the Optionee's estate,
     or by a person who acquires the right to exercise such Stock Option by
     bequest or inheritance or by reason of the death of the Optionee, provided
     that such exercise occurs within both the remaining effective term of the
     Stock Option and one year after the Optionee's death.  The provisions of
     this Section shall apply notwithstanding the fact that the Optionee's
     employment may have terminated prior to death, but only to the extent of
     any rights exercisable on the date of death.

          (b)  Upon termination of the Optionee's employment by reason of
     retirement or permanent disability (as each is determined by the
     Committee), the Optionee may, within 36 months from the date of
     termination, exercise any Stock Options to the extent such options are
     exercisable during such 36-month period.

          (c)  Except as provided in Subsections (a) and (b) of this Section
     2.7, or except as otherwise determined by the Committee, all Stock Options
     shall terminate immediately upon the termination of the Optionee's
     employment.

     Section 2.8.  Tax Election.  Recipients of Stock Options who are persons
described in Section 16(a) of the Securities Exchange Act of 1934 ("Section
16(a) Option Holders") at the time of exercise of an option may elect, in lieu
of paying to the Company an amount required to be withheld under applicable tax
laws in connection with the exercise of a Stock Option in whole or in part, to
have the Company withhold shares of Common Stock having a fair market value
equal to the amount required to be withheld.  Such election may not be made
prior to six months following the grant of the Stock Option, except in the event
of a Section 16(a) Option Holder's death or disability.  The election may be
made at the time the Stock Option is exercised by



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notifying the Company of the election, specifying the amount of such withholding
and the date on which the number of shares to be withheld is to be determined
("Tax Date"), which shall be either (i) the date the Stock Option is exercised
or (ii) a date six months after the Stock Option is exercised; provided,
however, the Tax Date shall not be the exercise date unless the Stock Option is
exercised during the ten-day period beginning on the third day following the
release of the Company's quarterly or annual statement of revenues and earnings.
The number of shares of Common Stock to be withheld to satisfy the tax
obligation shall be the amount of such tax liability divided by the fair market
value of the Common Stock on the Tax Date (or if not a business day, on the next
closest business day).  If the Tax Date is not the exercise date, the Company
may issue the full number of shares of Common Stock to which the Section 16(a)
Option Holder is entitled, and such option holder shall be obligated to tender
to the Company on the Tax Date a number of such shares necessary to satisfy the
withholding obligation.  Certificates representing such shares of Common Stock
shall bear a legend describing such Section 16(a) Option Holders obligation
hereunder.

     Section 2.9.  Effect of Exercise.  The exercise of any Stock Option shall
cancel that number of related Alternate Appreciation Rights and/or Limited
Rights, if any, which is equal to the number of shares of Common Stock purchased
pursuant to said option unless otherwise agreed by the Committee in an Award
Agreement or otherwise.

                     ARTICLE III.  INCENTIVE STOCK OPTIONS

     Section 3.1.  Award of Incentive Stock Options.  The Committee may, from
time to time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any participant in the Plan
one or more "incentive stock options" (intended to qualify as such under the
provisions of section 422 of the Internal Revenue Code of 1986, as amended
("Incentive Stock Options") to purchase for cash or shares the number of shares
of Common Stock allotted by the Committee. The date an Incentive Stock Option is
granted shall mean the date selected by the Committee as of which the Committee
allots a specific number of shares to a participant pursuant to the Plan.
Notwithstanding the foregoing, Incentive Stock Options shall not be granted to
any owner of 10% or more of the total combined voting power of the Company and
its subsidiaries.

     Section 3.2.  Incentive Stock Option Agreements.  The grant of an Incentive
Stock Option shall be evidenced by a written Award Agreement, executed by the
Company and the holder of an Incentive Stock Option (the "Optionee"), stating
the number of shares of Common Stock subject to the Incentive Stock Option
evidenced thereby, and in such form as the Committee may from time to time
determine.

     Section 3.3.  Incentive Stock Option Price.  The option price per share of
Common Stock deliverable upon the exercise of an Incentive Stock Option shall be
100% of the fair market value of a share of Common Stock on the date the
Incentive Stock Option is granted.

     Section 3.4.  Term and Exercise.  Each Incentive Stock Option shall be
fully exercisable six months from the date of its grant and unless a shorter
period is provided by the Committee or another Section of this Plan, may be
exercised during a period of ten years from the date of grant thereof (the
"Option Term"). No Incentive Stock Option shall be exercisable after the
expiration of its Option Term.

     Section 3.5.  Maximum Amount of Incentive Stock Option Grant.  The
aggregate fair market value (determined on the date the option is granted) of
Common Stock with respect to which Incentive Stock



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Options first become exercisable by an Optionee during in any calendar year
(under all plans of the Optionee's employer corporations and their parent and
subsidiary corporations) shall not exceed $100,000.

     Section 3.6.  Death of Optionee.

          (a) Upon the death of the Optionee, any Incentive Stock Option
     exercisable on the date of death may be exercised by the Optionee's estate
     or by a person who acquires the right to exercise such Incentive Stock
     Option by bequest or inheritance or by reason of the death of the Optionee,
     provided that such exercise occurs within both the remaining option term of
     the Incentive Stock Option and one year after the Optionee's death.

          (b) The provisions of this Section shall apply notwithstanding the
     fact that the Optionee's employment may have terminated prior to death, but
     only to the extent of any Incentive Stock Options exercisable on the date
     of death.

     Section 3.7.  Retirement or Disability.  Upon the termination of the
Optionee's employment by reason of permanent disability or retirement (as each
is determined by the Committee), the Optionee may, within 36 months from the
date of such termination of employment, exercise any Incentive Stock Options to
the extent such Incentive Stock Options were exercisable at the date of such
termination of employment.  Notwithstanding the foregoing, the tax treatment
available pursuant to Section 422 of the Internal Revenue Code of 1986 upon the
exercise of an Incentive Stock Option will not be available to an Optionee who
exercises any Incentive Stock Options more than (i) 12 months after the date of
termination of employment due to permanent disability or (ii) three months after
the date of termination of employment due to retirement.

     Section 3.8.  Termination for Other Reasons.  Except as provided in
Sections 3.6 and 3.7 or except as otherwise determined by the Committee, all
Incentive Stock Options shall terminate immediately upon the termination of the
Optionee's employment.

     Section 3.9.  Applicability of Stock Options Sections.  Sections 2.5,
Manner of Payment; 2.6, Restrictions on Certain Shares; and 2.9, Effect of
Exercise, applicable to Stock Options, shall apply equally to Incentive Stock
Options.  Said Sections are incorporated by reference in this Article III as
though fully set forth herein.

                          ARTICLE IV.  RELOAD OPTIONS

     Section 4.1.  Authorization of Reload Options.  Concurrently with or
subsequent to the award of Stock Options and/or the award of Incentive Stock
Options to any participant in the Plan, the Committee may authorize reload
options ("Reload Options") to purchase for cash or shares a number of shares
of Common Stock.  The number of Reload Options shall equal (i) the number of
shares of Common Stock used to pay the exercise price of the underlying Stock
Options or Incentive Stock Options and (ii) to the extent authorized by the
Committee, the number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of the underlying Stock Options
or Incentive Stock Options.  The grant of a Reload Option will become effective
upon the exercise of underlying Stock Options, Incentive Stock Options or Reload
Options through the use of shares of Common Stock.  Notwithstanding the fact
that the underlying option may be an Incentive Stock Option, a Reload Option is
not intended to qualify as an "incentive stock option" under Section 422 of
the Internal Revenue Code of 1986.




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     Section 4.2.  Reload Option Amendment.  Each Award Agreement shall state
whether the Committee has authorized Reload Options with respect to the Stock
Options and/or Incentive Stock Options covered by such Agreement.  Upon the
exercise of an underlying Stock Option, Incentive Stock Option or other Reload
Option, the Reload Option will be evidenced by an amendment to the underlying
Award Agreement in such form as the Committee shall approve.

     Section 4.3.  Reload Option Price.  The option price per share of Common
Stock deliverable upon the exercise of a Reload Option shall be the fair market
value of a share of Common Stock on the date the grant of the Reload Option
becomes effective.

     Section 4.4.  Term and Exercise.  Each Reload Option is fully exercisable
six months from the effective date of grant.  The term of each Reload Option
shall be equal to the remaining option term of the underlying Stock Option
and/or Incentive Stock Option.

     Section 4.5.  Termination of Employment.  Unless otherwise determined by
the Committee in an Award Agreement or otherwise, no additional Reload Options
shall be granted to Optionees when Stock Options, Incentive Stock Options and/or
Reload Options are exercised pursuant to the terms of this Plan following
termination of the Optionee's employment.

     Section 4.6.  Applicability of Stock Options Sections.  Sections 2.5,
Manner of Payment; 2.6 Restrictions on Certain Shares; 2.7, Death, Retirement
and Termination of Employment of Optionee; 2.8, Tax Elections; and 2.9, Effect
of Exercise, applicable to Stock Options, shall apply equally to Reload Options.
Such Sections are incorporated by reference in this Article IV as though fully
set forth herein.

                   ARTICLE V.  ALTERNATE APPRECIATION RIGHTS

     Section 5.1.  Award of Alternate Rights.  Concurrently with or subsequent
to the award of any Stock Option, Incentive Stock Option or Reload Option to
purchase one or more shares of Common Stock, the Committee may, subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, award to the Optionee with respect to each share of Common Stock
covered by an Option, a related alternate appreciation right ("Alternate
Right"), permitting the Optionee to be paid the appreciation on the option in
lieu of exercising the option.

     Section 5.2.  Alternate Rights Agreement.  Alternate Rights shall be
evidenced by written Award Agreements in such form as the Committee may from
time to time determine.

     Section 5.3.  Exercise.  An Optionee who has been granted Alternate Rights
may, from time to time, in lieu of the exercise of an equal number of options,
elect to exercise one or more Alternate Rights and thereby become entitled to
receive from the Company payment in Common Stock of the number of shares
determined pursuant to Sections 5.4 and 5.5.  Alternate Rights shall be
exercisable only to the same extent and subject to the same conditions as the
options related thereto are exercisable, as provided in this Plan.  The
Committee may, in its discretion, prescribe additional conditions to the
exercise of any Alternate Rights.

     Section 5.4.  Amount of Payment.  The amount of payment to which an
Optionee shall be entitled upon the exercise of each Alternate Right shall be
equal to 100% of the amount, if any, by which the fair market value of a share
of Common Stock on the exercise date exceeds the option price per share on the




                                      -7-
<PAGE>
 
option related to said Alternate Right.  An Option Holder may elect to withhold
shares of Common Stock issued under this Section to pay taxes as described in
Section 2.8.

     Section 5.5.  Form of Payment.  The number of shares to be paid shall be
determined by dividing the amount of payment determined pursuant to Section 5.4
by the fair market value of a share of Common Stock on the exercise date of such
Alternate Rights.  As soon as practicable after exercise, the Company shall
deliver to the Optionee a certificate or certificates for such shares of Common
Stock.

     Section 5.6.  Effect of Exercise.  Unless otherwise provided in an Award
Agreement or agreed to by the Committee, the exercise of any Alternate Rights
shall cancel an equal number of Stock Options, Incentive Stock Options, Reload
Options and Limited Rights, if any, related to said Alternate Rights.

     Section 5.7.  Termination of Employment, Retirement, Death or Disability.
Unless otherwise provided in an Award Agreement or agreed to by the Committee:

          (a)  Upon termination of the Optionee's employment (including
     employment as a director of the Company after an Optionee terminates
     employment as an officer or key employee of the Company) by reason of
     permanent disability or retirement (as each is determined by the
     Committee), the Optionee may, within six months from the date of such
     termination, exercise any Alternate Rights to the extent the related option
     is exercisable during such six-month period.

          (b)  Except as provided in Section 5.7(a), all Alternate Rights shall
     terminate upon the termination of the Optionee's employment or upon the
     death of the Optionee.

                          ARTICLE VI.  LIMITED RIGHTS

     Section 6.1.  Award of Limited Rights.  Concurrently with or subsequent to
the award of any Stock Option, Incentive Stock Option, Reload Option or
Alternate Right, the Committee may, subject to the provisions of the Plan and
such other terms and conditions as the Committee may prescribe, award to the
Optionee with respect to each share of Common Stock covered by an Option, a
related limited right permitting the Optionee, during a specified limited time
period, to be paid the appreciation on the option in lieu of exercising the
option ("Limited Right").

     Section 6.2.  Limited Rights Agreement.  Limited Rights granted under the
Plan shall be evidenced by written Award Agreements in such form as the
Committee may from time to time determine.

     Section 6.3.  Exercise Period.  Limited Rights are exercisable in full for
a period of seven months following the date of a Change in Control of Nuevo
Energy Company (the "Exercise Period"); provided, however, that Limited Rights
may not be exercised under any circumstances until the expiration of the six-
month period following the date of grant.

     As used in the Plan, a "Change in Control" shall be deemed to have
occurred if

          (a)  individuals who were directors of Nuevo Energy Company
     immediately prior to a Control Transaction shall cease, within one year of
     such Control Transaction, to constitute a majority of the Board of
     Directors of Nuevo Energy Company (or of the Board of Directors of any
     successor to Nuevo Energy Company or to all or substantially all of its
     assets), or


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<PAGE>
 
          (b)  any entity, person or Group other than Nuevo Energy Company or a
     subsidiary of Nuevo Energy Company acquires shares of Nuevo Energy Company
     in a transaction or series of transactions that result in such entity,
     person or Group directly or indirectly owning beneficially fifty-one
     percent or more of the outstanding shares.

     As used herein, "Control Transaction" shall be (i) any tender offer for or
acquisition of capital stock of Nuevo Energy Company, (ii) any merger,
consolidation, or sale of all or substantially all of the assets of Nuevo Energy
Company which has been approved by the shareholders, (iii) any contested
election of directors of Nuevo Energy Company or (iv) any combination of the
foregoing which results in a change in voting power sufficient to elect a
majority of the Board of Directors of Nuevo Energy Company. As used herein,
"Group" shall mean persons who act in concert as described in Sections 13(d)(3)
and/or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

     Section 6.4.  Amount of Payment.  The amount of payment to which an
Optionee shall be entitled upon the exercise of each Limited Right shall be
equal to 100% of the amount, if any, which is equal to the difference between
the option price per share of Common Stock covered by the related option and the
Market Price of a share of such Common Stock.  Market Price is defined to be the
greater of (i) the highest price per share of the Company's Common Stock paid in
connection with the Change in Control and (ii) the highest price per share of
the Company's Common Stock reflected in the consolidated trading tables of the
Wall Street Journal (presently the NYSE - Composite Transactions) during the 60-
day period prior to the Change in Control.

     Section 6.5.  Form of Payment.  Payment of the amount to which an Optionee
is entitled upon the exercise of Limited Rights, as determined pursuant to
Section 6.4, shall be made solely in cash.

     Section 6.6.  Effect of Exercise.  If Limited Rights are exercised, the
Stock Options, Incentive Stock Options, Reload Options and Alternate Rights, if
any, related to such Limited Rights shall cease to be exercisable to the extent
of the number of shares with respect to which the Limited Rights were exercised.
Upon the exercise or termination of the Stock Options, Incentive Stock Options,
Reload Options and Alternate Rights, if any, related to such Limited Rights, the
Limited Rights granted with respect thereto terminate to the extent of the
number of shares as to which the related options and Alternate Rights were
exercised or terminated.

     Section 6.7.  Retirement or Disability.  Upon termination of the Optionee's
employment (including employment as a director of this Company after an Optionee
terminates employment as an officer of key employee of this Company) by reason
of permanent disability or retirement (as each is determined by the Committee),
the Optionee may, within six months from the date of termination, exercise any
Limited Right to the extent the related option is exercisable during such six-
month period.

     Section 6.8.  Death of Optionee or Termination for Other Reasons.  Except
as provided in Sections 6.7 and 6.9, or except as otherwise determined by the
Committee, all Limited Rights granted under the Plan shall terminate upon the
termination of the Optionee's employment or upon the death of the Optionee.

     Section 6.9.  Termination Related to a Change in Control.  The requirement
that an Optionee be terminated by reason of retirement or permanent disability
or be employed by the Company at the time of exercise pursuant to Sections 6.7
and 6.8 respectively, is waived during the Exercise Period as to an Optionee who
(i) was employed by the Company at the time of the Change in Control and (ii) is
subsequently



                                      -9-
<PAGE>
 
terminated by the Company other than for just cause or who voluntarily
terminates if such termination was the result of a good faith determination by
the Optionee that as a result of the Change in Control he is unable to discharge
effectively his present duties or the duties of the position which he occupied
just prior to the Change in Control. As used herein "just cause" shall mean
willful misconduct or dishonesty or conviction of or failure to contest
prosecution for a felony, or excessive absenteeism unrelated to illness.

                        ARTICLE VII.  AUTOMATIC GRANTS

     Section 7.1.  Grant.  Each director who is not an employee of the Company,
its subsidiaries, affiliates and managers ("Non-Employee Director") shall on
the date on which he or she is initially elected or appointed a director of
Nuevo Energy Company, be granted a Stock Option to purchase 7,500 shares of
Common Stock for the fair market price on the date of such grant, for an Option
Term of ten years.  Thereafter, on the first business day following the Annual
Meeting of Stockholders of each subsequent year in which the Non-Employee
Director is still serving as a director (whether or not such Non-Employee
Director's term has been continuous), he or she shall automatically be granted a
Stock Option to purchase an additional 7,500 shares of Common Stock for the fair
market price on the date of such grant for an Option Term of ten years.

     Section 7.2.  Other Rights.  Each Stock Option granted pursuant to Section
7.1 shall also include the automatic grant of a Reload Option, an Alternate
Right and a Limited Right.

     Section 7.3.  Applicable Provisions.  The provisions of Section 2.7(a)
relating to the death of the Non-Employee Director and Section 2.9 relating to
the effect of exercise of the Stock Options shall apply to options granted under
Section 7.1 and the Committee may not agree to the contrary in an Award
Agreement or otherwise.  The provisions of Subsections 2.7(b) and (c) relating
to disability and other termination of employment shall not apply to options
granted under Section 7.1, and the failure of a Non-Employee Director to be re-
elected as a director of Nuevo Energy Company shall not effect the options or
rights granted under this Section.

                       ARTICLE VIII.  BONUS STOCK AWARDS

     Section 8.1.  Award of Bonus Stock.  The Committee may from time to time,
and subject to the provisions of this Plan and such other terms and conditions
as the Committee may prescribe, grant to any participant in the Plan shares of
Common Stock ("Stock Bonus").

     Section 8.2.  Stock Bonus Agreements.  The grant of a Stock Bonus shall be
evidenced by a written Award Agreement, executed by the Company and the
recipient of a Stock Bonus, in such form as the Committee may from time to time
determine, providing for the terms of such grant, including any vesting
schedule, restrictions on the transfer of such Common Stock or other matters.

     Section 8.3.  Transfer Restriction.  Any Award Agreement providing for the
issuance of Bonus Stock to any person who, at the time of grant, is a person
described in Section 16(a) under the Securities Exchange Act of 1934 shall
provide that such Common Stock cannot be resold for a period of six months
following the grant of such Bonus Stock.




                                     -10-
<PAGE>
 
                          ARTICLE IX.  MISCELLANEOUS

          Section 9.1.  General Restriction.  Each award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or Federal law, or (ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the grantee of an award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the granting of such award or the issue or purchase
of shares of Common Stock thereunder, such award may not be consummated in whole
or in part unless such listing, registration, qualification, consent, approval
or agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.

          Section 9.2.  Non-Assignability.  No award under the Plan shall be
assignable or transferable by the recipient thereof, except by will or by the
laws of descent and distribution.  During the life of the recipient, such award
shall be exercisable only by such person or by such person's guardian or legal
representative.

          Section 9.3.  Withholding Taxes.  Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the Company an amount
sufficient to satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares.  Alternatively, the Company may issue or transfer such shares of the
Company net of the number of shares sufficient to satisfy the withholding tax
requirements.  For withholding tax purposes, the shares of Common Stock shall be
valued on the date the withholding obligation is incurred.

          Section 9.4.  Right to Terminate Employment.  Nothing in the Plan or
in any agreement entered into pursuant to the Plan shall confer upon any
participant the right to continue in the employment of the Company or effect any
right which the Company may have to terminate the employment of such
participant.

          Section 9.5.  Non-Uniform Determinations.  The Committee's
determinations under the Plan (including without limitation determinations of
the persons to receive awards, the form, amount and timing of such awards, the
terms and provisions of such awards and the agreements evidencing same) need not
be uniform and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, whether or not such persons are
similarly situated.

          Section 9.6.  Rights as a Shareholder.  The recipient of any award
under the Plan shall have no rights as a shareholder with respect thereto unless
and until certificates for shares of Common Stock are issued to him.

          Section 9.7.  Definitions.  In this Plan the following definitions
shall apply:

          (a)  "Subsidiary" means any corporation of which, at the time more
     than 50% of the shares entitled to vote generally in an election of
     directors are owned directly or indirectly by the Nuevo Energy Company or
     any subsidiary thereof.

          (b)  "Affiliate" means any person or entity which directly, or
     indirectly through one or more intermediaries, controls, is controlled by,
     or is under common control with Nuevo Energy Company.



                                     -11-
<PAGE>
 
          (c)  "Fair market value" as of any date and in respect or any share of
     Common Stock means the closing price on such date or on the next business
     day, if such date is not a business day, of a share of Common Stock
     reflected in the consolidated trading tables of The Wall Street Journal
     (presently the NYSE - Composite Transactions) or any other publication
     selected by the Committee, provided that, if shares of Common Stock shall
     not have been traded on the New York Stock Exchange for more than 10 days
     immediately preceding such date or if deemed appropriate by the Committee
     for any other reason, the fair market value of shares of Common Stock shall
     be as determined by the Committee in such other manner as it may deem
     appropriate.  In no event shall the fair market value of any share of
     Common Stock be less than its par value.

          (d)  "Option" means Stock Option, Incentive Stock Option or Reload
     Option.

          (e)  "Option price" means the purchase price per share of Common
     Stock deliverable upon the exercise of a Stock Option, Incentive Stock
     Option or Reload Option.

     Section 9.8.  Leaves of Absence.  The Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by the recipient of any award.
Without limiting the generality of the foregoing, the Committee shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute a termination of employment within the meaning of the Plan and (ii)
the impact, if any, of any such leave of absence on awards under the Plan
theretofore made to any recipient who takes such leave of absence.

     Section 9.9.  Newly Eligible Employees.  The Committee shall be entitled to
make such rules, regulations, determinations and awards as it deems appropriate
in respect of any employee who becomes eligible to participate in the Plan or
any portion thereof after the commencement of an award or incentive period.

     Section 9.10.  Adjustments.  In any event of any change in the outstanding
Common Stock by reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like,
the Committee may appropriately adjust the number of shares of Common Stock
which may be issued under the Plan, the number of shares of Common Stock subject
to Options theretofore granted under the Plan, and any and all other matters
deemed appropriate by the Committee.

     Section 9.11.  Changes in the Company's Capital Structure.

          (a)  The existence of outstanding Options, Alternative Appreciation
     Rights or Limited Rights shall not affect in any way the right or power of
     the Company or its stockholders to make or authorize any or all
     adjustments, recapitalizations, reorganizations or other changes in the
     Company's capital structure or its business, or any merger or consolidation
     of the Company, or any issue of bonds, debentures, preferred or prior
     preference stock ahead of or affecting the Common Stock or the rights
     thereof, or the dissolution or liquidation of the Company, or any sale or
     transfer of all or any part of its assets or business, or any other
     corporate act or proceeding, whether of a similar character or otherwise.

          (b) If, while there are outstanding Options, the Company shall effect
     a subdivision or consolidation of shares or other increase or reduction of
     the number of shares of the Common Stock outstanding without receiving
     compensation therefor in money, services or property, then (a) in the



                                     -12-
<PAGE>
 
     event of an increase in the number of such shares outstanding, the number
     of shares of Common Stock then subject to Options hereunder shall be
     proportionately increased; and (b) in the event of a decrease in the number
     of such shares outstanding the number of shares then available for Option
     hereunder shall be proportionately decreased.

          (c)  After a merger of one or more corporations into the Company, or
     after a consolidation of the Company and one or more corporations in which
     the Company shall be the surviving corporation, each holder of an
     outstanding Option shall, at no additional cost, be entitled upon exercise
     of such Option to receive (subject to any required action by stockholders)
     in lieu of the number of shares as to which such Option shall then be so
     exercisable, the number and class of shares of stock or other securities to
     which such holder would have been entitled to receive pursuant to the terms
     of the agreement of merger or consolidation if, immediately prior to such
     merger or consolidation, such holder had been the holder of record of a
     number of shares of the Company equal to the number of shares as to which
     such Option had been exercisable.

          (d)  If the Company is merged into or consolidated with another
     corporation or other entity under circumstances where the Company is not
     the surviving corporation, or if the Company sells or otherwise disposes of
     substantially all of its assets to another corporation or other entity
     while unexercised Options remain outstanding, then the Committee may direct
     that any of the following shall occur:

                  (i) If the successor entity is willing to assume the
          obligation to deliver shares of stock or other securities after the
          effective date of the merger, consolidation or sale of assets, as the
          case may be, each holder of an outstanding Option shall be entitled to
          receive, upon the exercise of such Option and payment of the option
          price, in lieu of shares of Common Stock, such shares of stock or
          other securities as the holder of such Option would have been entitled
          to receive had such Option been exercised immediately prior to the
          consummation of such merger, consolidation or sale, and any related
          Alternate Right and Limited Right associated with such Option shall
          apply as nearly as practicable to the shares of stock or other
          securities purchasable upon exercise of the Option following such
          merger, consolidation or sale of assets.

                 (ii) The Committee may waive any limitations set forth in or
          imposed pursuant to this Plan or any Award Agreement with respect to
          such Option and any related Alternate Right or Limited Option such
          that such Option and related Alternate Right and Limited Right shall
          become exercisable prior to the record or effective date of such
          merger, consolidation or sale of assets.

                (iii) The Committee may cancel all outstanding Options and
          Alternate Rights (but not Limited Rights)  as of the effective date of
          any such merger, consolidation or sale of assets provided that prior
          notice of such cancellation shall be given to each holder of an Option
          at least 30 days prior to the effective date of such merger,
          consolidation or sale of assets, and each holder of an Option shall
          have the right to exercise such Option or any related Appreciation
          Right in full during a period of not less than 30 days prior to the
          effective date of such merger, consolidation or sale of assets.  No
          action taken by the Committee under this subsection shall have the
          effect of terminating, and nothing in this subsection shall permit the
          Committee to terminate, any Limited Right held by an Optionee.



                                     -13-
<PAGE>
 
          (e)  Except as herein provided, the issuance by the Company of Common
     Stock or any other shares of capital stock or securities convertible into
     shares of capital stock, for cash, property, labor done or other
     consideration, shall not affect, and no adjustment by reason thereof shall
     be made with respect to, the number or price of shares of Common Stock then
     subject to outstanding Options.

     Section 9.12.  Amendment of the Plan.

          (a)  The Committee may, without further action by the shareholders and
     without receiving further consideration from the participants, amend this
     Plan or condition or modify awards under this Plan in response to changes
     in securities or other laws or rules, regulations or regulatory
     interpretations thereof applicable to this Plan or to comply with stock
     exchange rules or requirements.

          (b)  The Committee may at any time and from time to time terminate or
     modify or amend the Plan in any respect, except that without shareholder
     approval the Committee may not (i) increase the maximum number of shares of
     Common Stock which may be issued under the Plan (other than increases
     pursuant to Section 9.10), (ii) extend the period during which any award
     may be granted or exercised, (iii) extend the term of the Plan or (iv)
     change the employees or class of employees eligible to participate in the
     Plan.  The termination or any modification or amendment of the Plan, except
     as provided in subsection (a), shall not, without the consent of a
     participant, affect his or her rights under an award previously granted to
     him or her.

          (c)  Notwithstanding Sections 9.12(a) and (b), the provisions of
     Article VII of the Plan may not be amended more than once every six months,
     other than to comport with changes in the Internal Revenue Code, the
     Employee Retirement Income Security Act, or the rules thereunder.



                                     -14-