EXHIBIT 10.126

  STATE OF TEXAS          )
                          )
  COUNTY OF DALLAS        )

                                OPTION AGREEMENT


        THIS OPTION  AGREEMENT is entered into  and shall be  effective as of
  12:01 a.m., May 1, 1995 (hereinafter referred to as the "Effective Date"),
  by  and between READING  & BATES DEVELOPMENT CO.,  a Delaware corporation,
  federal  taxpayer identification no. 73-0797067, whose  mailing address is
  901 Threadneedle, Suite 200, Houston, Texas 77079 ("Assignor") and ENSERCH
  EXPLORATION, INC., a  Texas corporation,  federal taxpayer  identification
  no.  75-2556975, whose  mailing address is  4849 Greenville  Avenue, Suite
  1500, Dallas, Texas 75206 ("Assignee").

        In  consideration  of  the  payment  of  the  sum  of  One   Thousand
  ($1,000.00) Dollars  and  other valuable  consideration, the  receipt  and
  sufficiency of which is hereby acknowledged, Assignor does hereby grant in
  favor of Assignee the option to purchase, upon the  occurrence of a Change
  in Control  of the Company, as  hereinbelow defined, and  on the terms and
  conditions described hereinbelow, the undivided right, title  and interest
  reflected in Exhibit 1, Part (a) hereof, together with  any and all right,
  title and interest which may be hereinafter acquired by Assignor  pursuant
  to  the terms  of the  Operating Agreement,  dated effective  May 1, 1995,
  entered  into by Assignor  and Assignee and third  parties (the "Operating
  Agreement"),   in  and   to  the   following  described   properties  (the
  "Property"):

        (a)   The  oil, gas and  mineral leases described on  Exhibit 1, Part
              (a) (the "Leases"), together with a  like interest with respect
              to  the Leases  in and  to any  and all  (i) mineral interests,
              (ii) overriding or landowners' royalty interests, (iii) surface
              and   subsurface   interests   and   rights,   (iv) beneficial,
              convertible  or  reversionary  interests,  (v) interest  owned,
              claimed  or acquired, or  to be owned, claimed  or acquired, by
              agreement,    (vi) production    payments,    (vii) contractual
              interests owned pursuant to participation agreements, operating
              agreements or  similar agreements, and (viii) any  and all like
              or  unlike  interests,  including   without  limitation   those
              specific items identified  on Exhibit 1, Part (a).   This shall
              include any contractual rights providing for the acquisition or
              earning  of any  of  the  foregoing, and  Assignor's  rights in
              respect of  any  pooled, communitized  or unitized  acreage  of
              which any of  the foregoing  is a part.  (All of  the foregoing
              shall be called collectively the "Leasehold Interests.")

        (b)   Any  and   all  wells,   wellbores,  pipe,   gathering   lines,
              compressors, facilities,  equipment, platforms,  pipelines  and
              any  and  all  other  personal,  real,  movable  and  immovable
              property, fixtures  or equipment  which are located on  or used
              directly  in  connection  with  the  production,  treatment  or
              transportation  of oil  and gas  from the  Leasehold Interests,
              including,  without   limitation,  those   items   specifically
              identified on Exhibit 1, Part (b) (the "Equipment").

        (c)   Any  and  all  easements,  rights-of-way,  and  subsurface  and
              surface rights associated or  used in connection with  any such
              easements  or rights-of-way, which easements, rights-of-way and
              subsurface  and surface  rights have  been obtained for  use in
              connection  with  the  Leasehold   Interests  (the   "Gathering 
              Facilities").

        (d)   To  the  extent  the same  are  assignable  or transferable  by
              Assignor and to the extent and only to the extent that the same
              relate  to   the  ownership  or  operation   of  the  Leasehold
              Interests, the  Gathering  Facilities or  the Equipment  on  or
              after the Effective Date, a like interest in and to all orders,
              contracts,  agreements   (including  without   limitation   all
              operating    agreements,   transportation    agreements,   unit
              agreements,    participation    agreements    and    processing
              agreements),  instruments,  licenses, authorizations,  permits,
              audits,  claims,  liens, suits,  settlements  and demands,  and
              other rights,  privileges, benefits  and powers  conferred upon
              Assignor.

        Assignor  and Assignee  have heretofore entered  into a  Purchase and
  Sale  Agreement, dated  October  18,  1995 with  Assignor, as  Buyer,  and
  Assignee,  as  Seller,  covering   the  Leases  (the  "Purchase  and  Sale
  Agreement")  and  the  Operating  Agreement   covering  the  Leases.    In
  connection  with  the  obligations  set  forth in  the  Purchase  and Sale
  Agreement and  Operating Agreement, Assignor and Assignee  do hereby agree
  that  this Option Agreement  shall be irrevocable until  the occurrence of
  (i) ten (10) years from  the date hereof; or (ii) the termination date  of
  the  Operating Agreement,  as provided  in Article  26  thereof, whichever
  occurs first.

       For purposes of  this Option Agreement, a  "Change in Control  of the
  Company" shall mean a change in control of a nature that would be required
  to be reported in response to Item 1(a) of the Current Report on Form 8-K,
  as  in effect on the  date hereof, pursuant to  Section 13 or 15(d) of the
  Securities Exchange Act of 1934, as amended ("Exchange Act") or would have
  been required to be so reported but for the fact that  such event had been
  "previously reported" as that term is defined in Rule 12b-2  of Regulation
  12B  of the Exchange Act; provided that, without limitation, such a change
  in  control shall  be deemed  to  have occurred  if  (a) any Person  is or
  becomes the beneficial owner (as  defined in Rule 13d-3 under the Exchange
  Act), directly or  indirectly, of  securities of the  Company representing
  40% or more of the combined voting power of the Company's then outstanding
  securities   ordinarily  (apart   from   rights  accruing   under  special
  circumstances) having the right to vote at elections of directors ("Voting
  Securities"), or (b) individuals who constitute the Board on the Effective
  Date hereof (the "Incumbent Board") cease  for any reason to constitute at
  least a  majority thereof,  provided that any person  becoming a  director
  subsequent to the  date hereof whose election, or nomination  for election
  by the Company's shareholders,  was approved by a vote of at  least three-
  quarters of  the  directors comprising  the  Incumbent  Board  (either  by
  specific vote  or by  approval of  the proxy  statement of  the Company in
  which such person is named as a nominee for director, without objection to
  such nomination) shall be, for purposes of this clause  (b), considered as
  though  such  person  were  a  member  of the  Incumbent  Board,  or (c) a
  recapitalization of the Company occurs which results in either a  decrease
  by 33% or more  in the aggregate percentage ownership of Voting Securities
  held by Independent Shareholders (on a primary basis or on a fully diluted
  basis after giving effect to the exercise  of stock options and  warrants)
  or an increase in the aggregate percentage ownership of Voting  Securities
  held  by non-Independent Shareholders  (on a  primary basis or on  a fully
  diluted basis  after giving  effect to the  exercise of  stock options and
  warrants) to greater  than 50%.   For purposes  of this  Option Agreement,
  "Company" shall  be deemed to  mean Assignor  and the  parent of  Assignor
  and/or any  other entity  controlling a majority  of the  voting stock  of
  Assignor.   Furthermore, for  purposes of this Option  Agreement, the term
  "Person" shall mean and include any individual,  corporation, partnership,
  group, association  or other  "person," as  such term  is used  in Section
  14(d) of the  Exchange Act, other than  the Company,  a  subsidiary of the
  Company or  any employee  benefit plan(s) sponsored or  maintained by  the
  Company or any subsidiary  thereof, and the term "Independent Shareholder"
  shall  mean any  shareholder  of  the Company  except any  employee(s)  or
  director(s)  of the Company  or any employee benefit  plan(s) sponsored or
  maintained by the Company or any subsidiary thereof.  For purposes of this
  Option Agreement, a "change in control of the Company" shall not be deemed
  to occur solely as the result  of a spin-off or other distribution of  the
  outstanding stock of the Buyer  (or assignee or transferee of the Buyer to
  which  Seller has consented  under the  provisions of Article 8.14  of the
  Operating   Agreement,  hereinafter   a   "permitted  assignee")   to  the
  stockholders of the ultimate  parent corporation controlling a majority of
  the voting stock of Buyer or any permitted assignee. 

        Upon the occurrence of  a Change in Control of the  Company, Assignor
  shall  give written  notice to  Assignee of  such occurrence  and Assignee
  shall have  sixty (60) days from  receipt of such  notice within  which to
  elect  to acquire  this  interest.   If  Assignee  elects to  acquire  the
  Property, written notice will be sent to Assignor  prior to the expiration
  of ten (10) business days following the expiration of the aforenoted sixty
  (60) day period.

        The  consideration for this  conveyance shall be the  sum of (i) that
  portion  of  the Purchase  Price,  as defined  in  the  Purchase and  Sale
  Agreement,  heretofore paid by  Assignor to Assignee, less  and except any
  interest paid, and (ii) actual out-of-pocket expenditures made by Assignor
  with respect  to the  Property which  were incurred  and paid by  Assignor
  ("Purchase Price").  The Purchase Price shall be paid in cash  at the time
  of the passing of the act of sale, which shall occur at the offices of the
  Assignee  within   ten  (10)  business  days   of  Assignor's  receipt  of
  notification of Assignee's election to purchase.

        Assignor shall convey the Property to Assignee, free and clear of any
  and all liens, mortgages, claims, overriding royalty interests, production
  payments or other burdens which may have been created by, through or under
  Assignor.

        Any  notice provided  or  permitted  to be  given under  this  Option
  Agreement shall be in writing,  and may be served by personal delivery, by
  depositing  same in  the mail,  addressed  to the  party  to be  notified,
  postage  prepaid,  and registered  or  certified  with  a  return  receipt
  requested or  by facsimile transmission.  Notice deposited in  the mail in
  the manner  hereinabove described shall be  deemed to have been  given and
  received  on the  date of  the delivery  as shown  on the  return receipt.
  Notice served in  any other manner shall be deemed  to have been given and
  received  only  in and  when  actually received  by  the  addressee.   For
  purposes of notice, the addresses of the parties shall be as follows:

           Assignor's Mailing Address:

           Reading & Bates Development Co.
           901 Threadneedle, Suite 200
           Houston, Texas 77079
           Attention:  Wayne K. Hillin, Esq.
           Telephone:  (713) 496-5000
           Fax:  (713) 496-0285

           Assignee's Mailing Address:

           Enserch Exploration, Inc.
           4849 Greenville Avenue, Suite 1200
           Dallas, Texas 75206
           Attention:  James K. Teringo, Jr., Esq.
           Telephone:  (214) 987-6651
           Fax:  (214) 987-6475

  Each party shall have the right, upon giving ten (10) days prior notice to
  the other in the  manner hereinabove provided,  to change its address  for
  purposes of notice.

        IN WITNESS WHEREOF, this Assignment is executed in multiple originals
  and  in the  presence of  the undersigned  witnesses on  this 18th  day of
  October, 1995, but to be effective as of the Effective Date.


  WITNESSES:                               ASSIGNOR:

                                           READING & BATES DEVELOPMENT CO.


  _____________________________________    By:_______________________________
                                              D. C. Toalson
  Name:________________________________       President
        (Please Print)       


  ______________________________________

  Name:_________________________________
        (Please Print)


                                            ASSIGNEE:

                                            ENSERCH EXPLORATION, INC.

  _______________________________________   By:______________________________
                                               R. L. Kincheloe
  Name:    James K. Teringo, Jr.               Senior Vice President
                                               Offshore and International

  _______________________________________

  Name:__________________________________
        (Please Print)


  STATE OF TEXAS

  COUNTY OF DALLAS

        BEFORE ME, the undersigned authority, duly commissioned and qualified
  within  and  for  the  State  and County  aforesaid,  personally  came and
  appeared:

        D. C. TOALSON, to me personally known to be the  person whose name is
  subscribed to the  foregoing instrument, who declared  and acknowledged to
  me, notary, in  the presence of the undersigned competent  witnesses, that
  he  executed  the  above  and foregoing  instrument  in  his  capacity  as
  President of Reading  & Bates Development Co., a Delaware  corporation, on
  behalf  of  said  corporation  with full  authority,  and  that  the  said
  instrument  is the  free act  and deed  of the  said corporation,  and was
  executed for the uses, purposes and benefits therein expressed.

        THUS  DONE, READ AND SIGNED in the State and County aforesaid, in the
  presence         of         _________________________________          and
  ____________________________,  competent  witnesses, on  the  18th  day of
  October, 1995.

  WITNESSES:


  __________________________________    ___________________________________
                                        D. C. Toalson


  __________________________________


  ___________________________________
  Notary Public
  in and for State of Texas
  My Commission expires:______________



  STATE OF TEXAS

  COUNTY OF DALLAS

        BEFORE ME, the undersigned authority, duly commissioned and qualified
  within  and  for  the  State  and County  aforesaid,  personally  came and
  appeared:

        R. L. KINCHELOE, to  me personally known to be the person  whose name
  is subscribed to  the foregoing instrument, who  declared and acknowledged
  to me,  notary, in  the presence of the  undersigned competent  witnesses,
  that  he executed the  above and  foregoing instrument in his  capacity as
  Senior Vice President, Offshore and International of  Enserch Exploration,
  Inc.,  a  Texas  corporation,  on  behalf of  said  corporation  with full
  authority, and  that the said instrument  is the free act and  deed of the
  said corporation,  and was  executed for the uses,  purposes and  benefits
  therein expressed.

        THUS DONE, READ AND SIGNED in the State and  County aforesaid, in the
  presence  of  James   K.  Teringo,  Jr.  and  ___________________________,
  competent witnesses, on the 18th day of October, 1995.

  WITNESSES:


  ___________________________________  _________________________________
  James K. Teringo, Jr.                R. L. Kincheloe


  __________________________________




                 ______________________________________________
                 Notary Public
                 in and for State of Texas
                 My Commission expires:______________



                         EXHIBIT 1 TO OPTION AGREEMENT

                                    PART (a)
                              LEASEHOLD INTERESTS

  1.    LEASE  OCS-G 8504.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer  Continental Shelf Lands Act made and effective as of
        June 1, 1986, by and between the United States of America, as Lessor,
        and Placid Oil Company, et al., as  Lessees, bearing Serial No. OCS-G
        8504  covering  all   of  Block  209,  Green   Canyon,  OCS  Official
        Protraction Diagram, NG 15-3.

              Working Interest            13.333333%
              Net Revenue Interest        11.616868%

  2.    LEASE  OCS-G 7049.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf  Lands Act made and effective as of
        June 1, 1984, by and between the United States of America, as Lessor,
        and Placid Oil Company, et al., as Lessees, bearing  Serial No. OCS-G
        7049  covering  all  of   Block  254,  Green  Canyon,  OCS   Official
        Protraction Diagram, NG 15-3.

              Working Interest            20.000000%
              Net Revenue Interest        17.3506665%

  3.    LEASE  OCS-G 8010.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act  made and effective as of
        July 1, 1985, by and between the United States of America, as Lessor,
        and Placid Oil Company, et al., as Lessees, bearing Serial No.  OCS-G
        8010   covering  all  of  Block  298,   Green  Canyon,  OCS  Official
        Protraction Diagram, NG 15-3.

              Working Interest             20.00000%
              Net Revenue Interest         17.35066%

  4.    LEASE  OCS-G 8012.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and  effective as of
        July 1, 1985, by and between the United States of America, as Lessor,
        and Placid  Oil Company, et al., as Lessees, bearing Serial No. OCS-G
        8012  covering  all   of  Block  342,  Green   Canyon,  OCS  Official
        Protraction Diagram, NG 15-3.

              Working Interest               20.00000%
              Net Revenue Interest           17.35066%

  5.    LEASE  OCS-G 8876.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and effective as  of
        June 1, 1987, by and between the United States of America, as Lessor,
        and  Hunt Petroleum  Corporation, et al., as  Lessees, bearing Serial
        No. OCS-G 8876 covering all of  Block 297, Green Canyon, OCS Official
        Protraction Diagram, NG 15-3.

              Working Interest                20.000000%
              Net Revenue Interest            16.833333%

  6.    LEASE OCS-G 13171.  That certain Oil and Gas Lease of Submerged Lands
        under  the Outer Continental Shelf Lands Act made and effective as of
        May 1, 1991, by and between the United States  of America, as Lessor,
        and  Exxon Corporation,  as Lessees,  bearing Serial No.  OCS-G 13171
        covering all  of Block  341, Green  Canyon, OCS  Official Protraction
        Diagram, NG 15-3.

              Working Interest                20.000000%
              Net Revenue Interest            17.500000%

  7.    LEASE OCS-G 13696.  That certain Oil and Gas Lease of Submerged Lands
        under the Outer  Continental Shelf Lands Act made and effective as of
        July 1, 1992, by and between the United States of America, as Lessor,
        and Exxon  Corporation, as Lessees,  bearing Serial  No. OCS-G  13696
        covering all  of Block  210, Green Canyon,  OCS Official  Protraction
        Diagram, NG 15-3.

              Working Interest                20.000000%
              Net Revenue Interest            17.500000%

  8.    LEASE OCS-G 8000.  That  certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf  Lands Act made and effective as of
        July 1, 1985, by and between the United States of America, as Lessor,
        and Placid Oil Company, et al., as Lessees, bearing  Serial No. OCS-G
        8000  covering  all  of   Block  213,  Green  Canyon,   OCS  Official
        Protraction Diagram, NG 15-3.

              Working Interest                 20.00000%
              Net Revenue Interest             17.35066%

  9.    LEASE OCS-G 8006.  That  certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act  made and effective as of
        July 1, 1985, by and between the United States of America, as Lessor,
        and Placid Oil Company, et al., as Lessees, bearing Serial No.  OCS-G
        8006  covering   all  of  Block  258,   Green  Canyon,  OCS  Official
        Protraction Diagram, NG 15-3.

              Working Interest                    20.00000%
              Net Revenue Interest                17.35066%

  10.   LEASE OCS-G 8005.  That  certain Oil and Gas Lease of Submerged Lands
        under the Outer Continental Shelf Lands Act made and  effective as of
        July 1, 1985, by and between the United States of America, as Lessor,
        and Amerada Hess, et al.,  as Lessees, bearing Serial No. OCS-G  8005
        covering all  of Block  253, Green Canyon,  OCS Official  Protraction
        Diagram, NG 15-3.

              Working Interest                  20.000000%
              Net Revenue Interest              16.500000%



                                    PART (b)
                                   EQUIPMENT

  1.    WELLS:
                              WORKING               REVENUE
                              INTEREST              INTEREST

     A. OCS-G 7049 #3         20.00000%             17.350665%
     B. OCS-G 7049 #4         20.00000%             17.350665%
     C. 0CS-G 7049 #4ST1      20.00000%             17.350665%
     D. OCS-G 7049 #5         20.00000%             17.350665%

  2.    TEMPLATE:

     That  certain three  well  drilling  template acquired,  inter  alia, by
     Seller for  use in  connection with the  drilling of the  OCS-G 7049  #5
     Well.