<PAGE>

                                                                    EXHIBIT 10.1
 
                              AMENDED AND RESTATED
                        1992 PETROCORP STOCK OPTION PLAN


     1.  PURPOSE.  The purpose of the Amended and Restated 1992 PetroCorp Stock
Option Plan (the "Plan") is to provide an additional incentive to eligible key
employees, upon whom rest major responsibilities for the successful operation,
administration, and management of PetroCorp Incorporated, a Texas corporation
(the "Company").  It is recognized that the present and potential contributions
of the key employees are important to the continued success of the Company.  The
Plan is also intended to be used to retain highly qualified persons for the
successful conduct of the business of the Company.  It is intended that these
purposes will be enhanced through the awarding of Stock Options.

     2.  DEFINITIONS.  As used herein the words and phrases below shall have the
following meanings:

         (a) "Board" shall mean the Board of Directors of the Company.

         (b) "Change in Control" shall mean any of the events described in
     Section 8.

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

         (d) "Committee" shall mean the committee, which shall be comprised of
     three members who are disinterested persons as defined under rules and
     regulations promulgated under Section 16(b) of the Exchange Act and who
     shall be members of the Board, appointed by the Board to administer the
     Plan, which Board shall have the power to fill vacancies on the Committee
     arising by resignation, death, removal or otherwise.

         (e) "Common Stock" shall mean the common stock of the Company, $.01
     par value per share, regardless of the series or class.

         (f) "Company" shall mean PetroCorp Incorporated, a Texas corporation.

         (g) "Disability" shall mean the person so affected is unable to engage
     in substantial gainful activity by reason of any medically determinable
     physical or mental impairment which can be expected to result in death or
     which has lasted or can be expected to last for a continuous period of not
     less than 12 months. The Committee's determination as to whether a
     Participant has incurred a Disability shall be final and conclusive as to
     all interested parties.

         (h) "Eligible Employee" shall mean a key employee of the Company as
     determined pursuant to Section 4.

         (i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
     amended.
<PAGE>
 
         (j) "Fair Market Value" shall mean, with respect to a share of Common
     Stock on any date herein specified the amount determined pursuant to the
     formula set forth in Exhibit A or if sales of Common Stock are reported on
     the NASDAQ National Market System, the closing sales price for the Common
     Stock as reported on such system or if the Common Stock is listed on any
     national securities exchange, the closing sales price as reported by such
     exchange on any relevant date for valuation, or, if there is no such sale
     on such date, the applicable price as so reported on the nearest preceding
     date upon which such sale took place.

         (k) "Incentive Stock Option" shall mean a stock option granted by the
     Committee to an Eligible Employee under the Plan which is designated by the
     Committee as an Incentive Stock Option and intended to qualify as an
     Incentive Stock Option under Section 422 of the Code.

         (l) "Liquidation Event" shall mean the decision of the Company's
     shareholders to dissolve the Company.

         (m) "Nonqualified Stock Option" shall mean a stock option granted by
     the Committee to an Eligible Employee under the Plan which is not
     designated by the Committee as an Incentive Stock Option.

         (n) "Participant" shall mean any individual who has received an award
     of a Stock Option and has not exercised the Stock Option and received the
     Common Stock subject to the Stock Option.

         (o) "Plan" shall mean the Amended and Restated 1992 PetroCorp Stock
     Option Plan, as herein set forth and as amended from time to time.

         (p) "Replacement Option" shall mean a Stock Option which is granted to
     replace units granted under the 1989 PetroCorp Equity Interest Plan of
     PetroCorp, a Texas general partnership.

         (q) "Retirement" shall mean the termination of employment from the
     Company constituting retirement as determined by the Committee.

         (r) "Securities Act" shall mean the Securities Act of 1933, as
     amended.

         (s) "Stock Option" shall mean an Incentive Stock Option or
     Nonqualified Stock Option pursuant to which a Participant is eligible to
     acquire Common Stock pursuant to the terms and conditions of the Plan and
     the Stock Option Agreement.

         (t) "Stock Option Agreement" shall mean the agreement described in
     Section 7.

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<PAGE>
 
         (u) "Terminated For Cause" shall mean that a Participant's employment
     is terminated as a result of a breach of his or her written employment
     agreement, if the Participant is subject to a written employment agreement,
     or if the Committee determines that such Participant is being terminated as
     a result of misconduct, dishonesty, disloyalty, disobedience or action that
     might reasonably injure the Company or its business interests or
     reputation.

     3.   ADMINISTRATION OF THE PLAN.  The Plan shall be administered by the
Committee appointed by the Board.  The Committee shall have authority to adopt
rules and regulations for carrying out the Plan, determine the Eligible
Employees, determine the number of Stock Options, if any, to be awarded to each
Eligible Employee, determine whether a Stock Option shall be an Incentive Stock
Option or a Nonqualified Stock Option, determine the exercise price of each
Stock Option, determine the vesting period for Stock Options, determine the
series or class of Common Stock to be subject to the Stock Option, determine the
Fair Market Value, if necessary, of Common Stock, and interpret, construe, and
implement the provisions of the Plan.  Decisions of the Committee shall be
binding on the Company and on all Participants and other interested parties.
The Committee shall hold its meetings at such times and places as it deems
advisable.  All members of the Committee shall constitute a quorum for a
meeting.  All determinations of the Committee shall be made by a majority of its
members attending the meeting.  Furthermore, any decision or determination
reduced to writing and signed by a majority of the members of the Committee
shall be as effective as if it had been made by a majority vote at a meeting
properly called and held.

     4.   ELIGIBLE EMPLOYEES.  Only employees of the Company or any subsidiary
of the Company who are members of a select group of management and highly
compensated employees are Eligible Employees.  As among the Eligible Employees,
the individuals chosen to participate in the Plan shall be those Eligible
Employees as the Committee shall determine from time to time.  No person will be
eligible for the grant of any Incentive Stock Option who owns or would own
immediately before the grant of such Incentive Stock Option, directly or
indirectly, stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company, a subsidiary or a parent
corporation.  This restriction does not apply if, at the time such Incentive
Stock Option is granted, the Incentive Stock Option exercise price is at least
110% of the Fair Market Value on the date of grant and the Incentive Stock
Option by its terms is not exercisable after the expiration of five years from
the date of grant.  For the purpose of this Section 4, the attribution rules of
Section 424(d) of the Code shall apply for the purpose of determining an
Eligible Employee's percentage ownership.

     5.   SHARES OF COMMON STOCK SUBJECT TO THE PLAN.  957,357 shares of Common
Stock shall be available for granting Stock Options under the Plan.  The shares
of Common Stock available under the Plan may consist of shares of any series of
Common Stock provided that the rights of such shares to dividends, to
liquidation proceeds and to share in the appreciation in the value of the
Company shall be not less than the rights of any other series of Common Stock.
If any Stock Option shall expire or terminate for any reason, without being
exercised, shares of Common Stock subject to such Stock Option shall again be
available for

                                       3
<PAGE>
 
grant in connection with grants of subsequent Stock Options, provided that if
any Replacement Option shall expire or terminate for any reason, without being
exercised, shares of Common Stock subject to such Replacement Option shall not
be available for grant in connection with any subsequent Stock Option.

     6.   STOCK OPTION TERMS.

          (a) Exercise Price.  The exercise price per share of Common Stock
     under each Stock Option shall be determined by the Committee; provided,
     however, that such exercise price shall not be less than 100 percent of the
     Fair Market Value per share of such Common Stock on the date the Stock
     Option is granted, as determined by the Committee, except that the exercise
     price for any Replacement Option shall be $5.00 per share of Common Stock.

          (b) Term.  The Committee shall fix the term of each Stock Option which
     shall be not more than ten years from the date of grant.  In the event no
     term is fixed, such term shall be ten years from the date of grant.

          (c) Exercise.  The Committee shall determine the time or times at
     which an Stock Option may be exercised in whole or in part; provided,
     however, that other than as provided in Section 8 or with respect to a
     Replacement Option, in no event shall a Stock Option be exercisable before
     the expiration of six months from the date of its grant or after ten years
     from the date of its grant.  Only the Participant or his guardian (if the
     Participant becomes disabled) or in the event of his death, his legal
     representative or beneficiary, may exercise Stock Options, receive shares
     of Common Stock or otherwise exercise rights under the Plan.

          (d) Incentive Stock Options.  Anything in the Plan notwithstanding,
     the aggregate Fair Market Value (determined as of the time the Incentive
     Stock Option is granted) of the shares of Common Stock with respect to
     which Incentive Stock Options are exercisable for the first time by any
     Participant during any single calendar year (under the Plan and any other
     incentive stock option plans of the Company and its subsidiaries or any
     parent corporation) shall not exceed the sum of $100,000 (or such other
     limits as may be required by the Code).

          (e) Method of Exercise.  Stock Options shall be exercised by the
     delivery of written notice to the Company setting forth the number of
     shares of Common Stock with respect to which the Stock Option is to be
     exercised and, subject to the subsequent provisions hereof, the address to
     which the certificates representing shares of the Common Stock issuable
     upon the exercise of such Stock Option shall be mailed.  In order to be
     effective, such written notice shall be accompanied at the time of its
     delivery to the Company by payment of the exercise price of such shares of
     Common Stock, which payment shall be made in cash or by cashier's check,
     certified check, or postal or express money order payable to the order of
     the Company in an amount (in United States

                                       4
<PAGE>
 
     dollars) equal to the exercise price of such shares of Common Stock.  Such
     notice shall be delivered in person to the Secretary of the Company, or
     shall be sent by registered mail, return receipt requested, to the
     Secretary of the Company, in which case, delivery shall be deemed made on
     the date such notice is deposited in the mail.

          (f) Withholding.  Whenever shares of Common Stock are to be issued or
     delivered pursuant to the Plan, the Company shall require the Participant
     to remit to the Company an amount sufficient to satisfy federal, state, and
     local withholding tax requirements prior to the delivery of any certificate
     or certificates for such shares.  With respect to shares received by a
     Participant pursuant to the exercise of an Incentive Stock Option, if such
     Participant disposes of any such shares within two years from the date of
     grant of such option or within one year after the transfer of such shares
     to the Participant, the Company shall have the right to withhold from any
     salary, wages or other compensation payable by the Company to the
     Participant an amount sufficient to satisfy federal, state and local
     withholding tax requirements attributable to such disposition.

          (g) Alternative Payment for Stock.  Alternatively, payment of the
     exercise price may be made, in whole or in part, by delivery of shares of
     Common Stock previously issued to the Participant.  Unless otherwise
     permitted by the Committee, payment of the exercise price with shares of
     Common Stock shall be made only with shares owned by the Participant for at
     least six (6) months.  If payment is made in whole or in part in shares of
     Common Stock owned by the Participant, then the Participant shall deliver
     to the Company, in payment of the option price of the shares of Common
     Stock with respect to which such Stock Option is exercised, (i)
     certificates registered in the name of such Participant representing a
     number of shares of Common Stock legally and beneficially owned by such
     Participant, free of all liens, claims and encumbrances of every kind and
     having a Fair Market Value as of the date of delivery of such notice that
     is not greater than the exercise price of the shares of Common Stock with
     respect to which such Stock Option is to be exercised, such certificates to
     be accompanied by stock powers duly endorsed in blank by the record holder
     of the shares represented by such certificates; and (ii), if the exercise
     price of the shares of Common Stock with respect to which such Stock Option
     is to be exercised exceeds such Fair Market Value, cash or a cashier's
     check, certified check, or postal or express money order payable to the
     order of the Company in an amount (in United States dollars) equal to the
     amount of such excess.

          The Company may extend and maintain, or arrange for the extension and
     maintenance of, financing to any Participant to purchase shares pursuant to
     exercise of a Stock Option and/or to pay withholding taxes on such terms as
     may be approved by the Committee in its sole discretion.  In considering
     the terms for extension or maintenance of credit by the Company, the
     Committee shall, among other factors, consider the cost to the Company of
     any financing extended by the Company.

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<PAGE>
 
          (h) Notification with Respect to Incentive Stock Options.  Any
     Participant who disposes of shares of Common Stock acquired on the exercise
     of an Incentive Stock Option by sale or exchange either (i) within two
     years after the date of the grant of the Incentive Stock Option under which
     the stock was acquired or (ii) within one year after the transfer of such
     shares to such Participant pursuant to exercise shall notify the Company of
     such disposition and of the amount realized and of the adjusted basis in
     such shares.

     7.   STOCK OPTION AGREEMENT.  The Stock Options awarded to an Eligible
Employee shall be evidenced by a separate written agreement (the "Stock Option
Agreement") which shall be subject to the terms and provisions of the Plan, and
which shall be signed by the Participant and by the President or a Vice-
President of the Company, other than the Participant, in the name of and on
behalf of the Company.  The Stock Option Agreement shall contain such provisions
as the Committee in its discretion deems advisable.  In the event of any
inconsistency or conflict between the terms of the Plan and a Stock Option
Agreement, the terms of the Plan shall govern.

     8.   ACCELERATION OF VESTING.  In the event of a Change in Control or a
Liquidation Event, all Stock Options then outstanding shall become vested and
immediately and fully exercisable, notwithstanding any provision in the Plan or
the Stock Option Agreement.

     For purposes of this Section 8, a "Change in Control" shall be deemed to
have occurred at such time as:

          (a) any "person" (as such term is used in Sections 13(d) and Schedule
     14(d)(2) of the Exchange Act), other than L.S. Holding Company, a Delaware
     corporation (or any other entity all of the outstanding voting securities
     of which are owned directly or indirectly by CIGNA Corporation, a Delaware
     corporation), or Park Avenue Exploration Corporation, an Oklahoma
     corporation (or any other entity all of the outstanding voting securities
     of which are owned directly or indirectly by USF&G Corporation, a Maryland
     corporation), is or becomes, directly or indirectly, the "beneficial owner"
     (as defined in Rule 13d-3 under the Exchange Act) of securities
     representing 30% or more of the combined voting power (excluding any shares
     deemed beneficially owned by such person because of the power to vote or
     dispose of securities being shared with any of the aforementioned entities)
     of the then outstanding voting securities of the Company or any successor
     of the Company for election of directors; or

          (b) the shareholders of the Company approve any merger or
     consolidation to which the Company is a party as a result of which the
     persons who were shareholders of the Company immediately prior to the
     effective date of the merger or consolidation (excluding, however, any
     shares held by any party to such merger or consolidation and their
     affiliates) shall have beneficial ownership of less than 50% of the
     combined voting power of the outstanding voting securities of the surviving
     corporation for election of

                                       6
<PAGE>
 
     directors of the surviving corporation immediately following the effective
     date of such merger of consolidation; or

          (c) the shareholders of the Company approve any sale or other
     disposition of 50% or more of the assets or earning power of the Company.

     With respect to any Participant for whom the acceleration of vesting of
Stock Options would result in the imposition of the excise tax imposed by
Section 4999 of the Code, the number of Stock Options for which accelerated
vesting shall be permitted shall only be that number of Stock Options the
accelerated vesting for which would not result in the imposition of the excise
tax imposed by Section 4999 of the Code.  If acceleration of vesting of all the
unvested Stock Options of a Participant is not permitted by the preceding
sentence, the Participant shall designate from among his unvested Stock Options
which Stock Options shall not be subject to accelerated vesting.

     9.   TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT.

          (a) Termination of Employment.  If a Participant's employment is
     terminated for any reason whatsoever other than death, Disability or
     Retirement, with respect to any Stock Option granted pursuant to the Plan
     outstanding at the time, unless otherwise established by the Committee, no
     further vesting shall occur and the Participant shall be entitled to
     exercise his or her rights with respect to the portion of the Stock Option
     vested as of the date of termination for a period expiring on the earlier
     of (i) the expiration date set forth in the Stock Option Agreement or (ii)
     thirty (30) calendar days after such termination date and, thereafter, the
     Stock Option and the Participant's rights thereunder shall be completely
     terminated; provided, however, that if a Participant is Terminated for
     Cause, such Participant's right to exercise the vested portion of his or
     her Stock Option shall terminate as of 12:01 a.m. on the date of
     termination of employment.

          (b) Retirement.  Unless otherwise approved by the Committee, upon the
     Retirement of a Participant:

               (i) any nonvested portion of any outstanding Stock Option shall
          immediately terminate and no further vesting shall occur; and

               (ii) any vested Stock Option shall expire on the earlier of (A)
          the expiration date set forth in the Stock Option Agreement with
          respect to such Stock Option; or (B) the expiration of one year after
          the date of Retirement.

          (c) Death or Disability.  Upon termination of employment as a result
     of death or Disability:

               (i)  all outstanding grants of Stock Option shall immediately and
          fully vest notwithstanding the original vesting schedule; and

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<PAGE>
 
               (ii) any vested Stock Option (including those vested pursuant to
          Section 9(c)(i)) shall expire upon the earlier of (A) the expiration
          date set forth in the Stock Option Agreement with respect to such
          Stock Option or (B) the first anniversary of such termination of
          employment as a result of death or Disability.

     10.  REQUIREMENTS OF LAW.  The Company shall not be required to sell or
issue any shares of Common Stock under any Stock Option if the issuance of such
shares shall constitute a violation by the Participant or the Company of any
provision of any law, statute, or regulation of any governmental authority
whether it be Federal or State.  Specifically, in connection with the Securities
Act, upon exercise of any Stock Option, unless a registration statement under
the Securities Act is in effect with respect to the shares of Common Stock
covered by such Stock Option, the Company shall not be required to issue such
shares unless the Committee has received evidence satisfactory to it to the
effect that the holder of such Stock Option is acquiring such shares of Common
Stock for investment and not with a view to the distribution thereof, and that
such shares of Common Stock may otherwise be issued without registration under
the Securities Act or State securities laws.  Any determination in this
connection by the Committee shall be final, binding and conclusive.  The Company
may, but shall in no event be obligated to, register any securities covered
hereby pursuant to the Securities Act.  The Company shall not be obligated to
take any affirmative action in order to cause the exercise of a Stock Option, or
the issuance of shares pursuant thereto, to comply with any law or regulation of
any governmental authority.

     11.  CHANGE IN STOCK AND ADJUSTMENTS.  Except as provided in Section 8, in
the event the outstanding shares of the Common Stock, as constituted from time
to time, shall be changed as a result of a change in capitalization of the
Company or a combination, merger, or reorganization of the Company into or with
any other corporation or any other transaction with similar effects, there then
shall be substituted (at no additional cost to any Participant) for each share
of Common Stock theretofore subject, or which may become subject, to issuance or
transfer under the Plan, the number and kind of shares of Common Stock or other
securities or other property into which each outstanding share of Common Stock
shall be changed or for which each such share shall be exchanged and the
Committee may make other equitable adjustments which it deems to be warranted at
no additional cost to any Participant but subject to any required stockholder
approval.

     In the event of any change in applicable laws or any change in
circumstances which results in or would result in any dilution of the rights
granted under the Plan, or which otherwise warrants equitable adjustment because
it interferes with the intended operation of the Plan, then, if the Committee
shall, in its sole discretion, determine that such change equitably requires an
adjustment in the number or kind of shares of stock or other securities or other
property theretofore subject, or which may become subject, to issuance or
transfer under the Plan or in the terms and conditions of outstanding Stock
Options, such adjustment shall be made in accordance with such determination,
subject to any required shareholder approval.  Such adjustments may include
changes with respect to (i) the aggregate number of shares that may be

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<PAGE>
 
issued under the Plan, (ii) the number of shares subject to Stock Options and
(iii) the exercise price per share for outstanding Stock Options.

     12.  NO RIGHTS AS STOCKHOLDER.  A holder of a Stock Option shall have no
rights as a stockholder with respect to any shares of Common Stock until the
issuance of a stock certificate for such shares.  Except as otherwise provided
in Section 11, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities, or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued.

     13.  NO EFFECT ON EMPLOYMENT RELATIONSHIP.  Participation in the Plan shall
not confer upon any employee any right to continue in the employ of the Company
or interfere in any way with the right of the Company to terminate any
employee's employment at any time.

     14.  NO FUND ESTABLISHED.  It is not intended that awards under this Plan
be set aside in a trust which would qualify as an employee's trust within the
meaning of sections 401 or 402 of the Internal Revenue Code of 1986, as amended,
or in any other type of trust, fund, or separate account.  The rights of any
Participant and any person claiming under such Participant shall not rise above
or exceed those of an unsecured creditor of the Company.

     15.  NO ASSIGNMENT OR ALIENATION OF BENEFITS.  Except as contemplated by
Section 6(c) of the Plan, no right or benefit under this Plan shall be subject
to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge,
and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or
charge the same shall be void, except for any transfer pursuant to the
Participant's will or under the laws of descent and distribution.  No right or
benefit hereunder shall in any manner be liable for or subject to any debts,
contracts, liabilities, or torts of the person entitled to such benefits.

     16.  LIABILITY AND INDEMNIFICATION OF COMMITTEE.  No member of the
Committee shall be liable for any act or omission of any other member of the
Committee or for any act or omission on his own part, including but not limited
to the exercise of any power or discretion given to him under the Plan, except
those resulting from his own gross negligence or willful misconduct.  The
Company shall indemnify each present and future member of the Committee against,
and each member of the Committee shall be entitled without further act on his
part to indemnity from the Company for all expenses (including the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation) reasonably incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved by reason of his being or having been a member of the Committee,
whether or not he continues to be a member of the Committee at the time of
incurring such expenses; provided, however, that such indemnity shall not
include any expense incurred by any such member of the Committee (a) in respect
of matters as to which he shall be finally adjudged in any such action, suit, or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of his duty as such member of the Committee, or (b) in respect of
matters in which any settlement is effected in an amount in excess of the amount
approved

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<PAGE>
 
by the Company on the advice of its legal counsel; and provided further, that no
right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee unless, within
30 days after institution of any such action, suit, or proceeding, he shall have
offered the Company, in writing, the opportunity to handle and defend same at
its own expense.  This indemnity expressly includes any claims arising out of or
based upon the negligence of the member of the Committee.  The foregoing right
of indemnification shall inure to the benefit of the heirs, executors, or
administrators of each such member of the Committee and shall be in addition to
all other rights to which such member of the Committee may be entitled as a
matter of law, contract, or otherwise.

     17.  GENDER, TENSE AND HEADINGS.  Whenever the context requires such, words
of the masculine gender used herein shall include the feminine and neuter, and
words used in the singular shall include the plural.  Section headings as used
herein are inserted solely for convenience and reference and constitute no part
of the construction of this Plan.

     18.  AMENDMENT AND TERMINATION.  The Plan may be amended or terminated at
any time by the Board.  The Plan, however, shall not be amended, without prior
approval of the holders of at least a majority of the outstanding shares of
Common Stock, (a) to materially increase the number of shares which may be
issued or transferred to Eligible Employees under the Plan, (b) to materially
modify the eligibility requirements of the Plan, (c) to materially increase the
benefits accruing to participants under the Plan or (d) to cause the Plan to not
comply with the rules and regulations promulgated under Section 16(b) of the
Exchange Act.  No amendment or termination may adversely affect any vested right
of a Participant without the written consent of such Participant.

     19.  NO GUARANTEE OF TAX CONSEQUENCES.  Neither the Company nor the
Committee makes any commitment or guarantee that any federal, state or local tax
treatment will apply or be available to any person participating or eligible to
participate hereunder.

     20.  SEVERABILITY.  In the event that any provision of this Plan shall be
held illegal, invalid or unenforceable for any reason, such provision shall be
fully severable, but shall not affect the remaining provisions of the Plan, and
the Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had never been included herein.

     21.  GOVERNING LAW.  The provisions of the Plan shall be construed,
administered, and governed by the laws of the State of Texas, without giving
effect to principles of conflicts of laws, and, to the extent applicable, the
laws of the United States.

     22.  EFFECTIVE DATE.  The Plan shall be effective as of October 1, 1992 and
shall continue in effect until the expiration of its term or its earlier
termination by the Board pursuant to Section 18.

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<PAGE>
 
                                                                       EXHIBIT A


                               VALUATION FORMULA
                               -----------------
                                      FOR
                                      ---
                               FAIR MARKET VALUE
                               -----------------

     With respect to the determination of the Fair Market Value of any Common
Stock, the Fair Market Value shall be determined with reference to the Company's
net assets on the December 31 immediately preceding the determination date
divided by the number of shares of Common Stock outstanding on such December 31.
The value of the Company's net assets shall be computed pursuant to the
following formula:

     1)   Oil and gas properties shall be valued at the value determined in
accordance with Regulation S-X promulgated by the Securities and Exchange
Commission, as in effect on the effective date of the Plan ("SEC Value") and
then adjusted to reflect the multiple at which the shares of stock of publicly
traded energy companies similar to the Company sell relative to the SEC Value of
their assets, provided the adjustment upward or downward shall not exceed 25% of
the SEC value.  The determination of the Committee as to this adjustment shall
be final and binding on the Company, the Participant and all other interested
parties.

     2)   Marketable securities shall be valued at their fair market value.

     3)   All other assets and liabilities shall be reflected at their net book
value as determined in accordance with generally accepted accounting principles.

                                       11