Gastar Exploration Ltd. 2002 Stock Option Plan as amended.



 Exhibit 10.1 
  
 STOCK OPTION PLAN 
 DATED FEBRUARY 14, 2004 
  
 1.
Purpose 
  
 The purpose of the Stock Option Plan
(the “Plan”) of Gastar Exploration Ltd. (the “Corporation”), a corporation governed by the Business Corporations Act (Alberta), is to advance the interests of the Corporation by encouraging the directors, officers,
employees and consultants of the Corporation, and of its subsidiaries and affiliates, to acquire shares in the Corporation, thereby increasing their proprietary interest in the Corporation, encouraging them to remain associated with the Corporation
and furnishing them with additional incentive in their efforts on behalf of the Corporation in the conduct of its affairs. 
  
 2. Administration 
  
 The Plan shall be administered by the Board of Directors of the Corporation or by a special committee of the directors appointed from time to time by the
Board of Directors of the Corporation pursuant to rules of procedure fixed by the Board of Directors (such committee or, if no such committee is appointed, the Board of Directors of the Corporation is hereinafter referred to as the
“Board”). A majority of the Board shall constitute a quorum, and the acts of a majority of the directors present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the directors.

  
 Subject to the provisions of the Plan, the Board shall have
authority to construe and interpret the Plan and all option agreements entered into thereunder, to define the terms used in the Plan and in all option agreements entered into thereunder, to prescribe, amend and rescind rules and regulations relating
to the Plan and to make all other determinations necessary or advisable for the administration of the Plan. All determinations and interpretations made by the Board shall be binding and conclusive on all participants in the Plan and on their legal
personal representatives and beneficiaries. 
  
 Each option
granted hereunder may be evidenced by an agreement in writing, signed on behalf of the Corporation and by the optionee, in such form as the Board shall approve. Each such agreement shall recite that it is subject to the provisions of this Plan.

  
 3. Stock Exchange Rules

  
 All options granted pursuant to this Plan shall be subject to
rules and policies of any stock exchange or exchanges on which the Common Shares of the Corporation are then listed and any other regulatory body having jurisdiction hereinafter (collectively referred to as, the “Exchange”). 
  
 4. Shares Subject to Plan 
  
 Subject to adjustment as provided in Section 15 hereof, the shares to
be offered under the Plan shall consist of shares of the Corporation’s authorized but unissued Common Shares. The aggregate number of shares issuable upon the exercise of all options granted under the Plan shall not exceed 25,000,000 Common
Shares (which amount is exclusive of stock options granted prior to the implementation of the Plan). If any option granted hereunder shall expire or terminate for any reason in accordance with the terms of the Plan without being exercised, the
unpurchased shares subject thereto shall again be available for the purpose of this Plan. 







 5. Maintenance of Sufficient Capital 
  
 The Corporation shall at all times during the term of the Plan reserve and
keep available such numbers of shares as will be sufficient to satisfy the requirements of the Plan. 
  
 6. Eligibility and Participation 
  

Directors, officers, consultants, and employees of the Corporation or its subsidiaries, and employees of a person or company which provides management
services (excluding investor relations services) to the Corporation or its subsidiaries (“Management Company Employees”) shall be eligible for selection to participate in the Plan (such persons hereinafter collectively referred to as
“Participants”). Subject to compliance with applicable requirements of the Exchange, Participants may elect to hold options granted to them in an incorporated entity wholly owned by them and such entity shall be bound by the Plan in the
same manner as if the options were held by the Participant. 
  
 Subject to the terms hereof, the Board shall determine to whom options shall be granted, the terms and provisions of the respective option agreements, the time or times at which such options shall be granted and vested, and the number of
shares to be subject to each option. In the case of employees or consultants of the Corporation or Management Company Employees, the option agreements to which they are party must contain a representation of the Corporation that such employee,
consultant or Management Company Employee, as the case may be, is a bona fide employee, consultant or Management Company Employee of the Corporation or its subsidiaries. 
  
 An individual who has been granted an option may, if he is otherwise eligible, and if permitted under the policies of the
Exchange, be granted an additional option or options if the Board shall so determine. 
  
 7. Exercise Price 
  

	 	(a)	The exercise price of the shares subject to each option shall be determined by the Board, subject to applicable Exchange approval, at the time any option is granted. In no event
shall such price be lower than the price permitted by the Exchange. 

  

	 	(b)	Once the exercise price has been determined by the Board, accepted by the Exchange and the option has been granted, the exercise price of an option may only be reduced, in the case
of options held by insiders of the Corporation (as defined by the Exchange), if disinterested shareholder approval is obtained at a meeting of the shareholders of the Corporation. 

  
 8. Number of Optioned Shares 
  
 The number of shares subject to an option granted to any one Participant
shall be determined by the Board, but no one Participant shall be granted an option which exceeds the maximum number permitted by the Exchange. 
  
 9. Duration of Option 
  
 Each option and all rights thereunder shall be expressed to expire on the date set out in the option agreement and shall be subject to earlier termination
as provided in Sections 11 and 12. 
  

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 10. Option Period, Consideration and Payment 
  

	 	(a)	The option period shall be a period of time fixed by the Board not to exceed the maximum period of time permitted by the Exchange, provided that the option period shall be reduced
with respect to any option as provided in Sections 11 and 12 covering cessation as a director, officer, consultant, employee or Management Company Employee of the Corporation or its subsidiaries, or death of the Participant.


  

	 	(b)	Subject to the policies of the Exchange, an option shall vest and may be exercised (in each case to the nearest full share) during the option period: 

  

	 	(i)	in the circumstance where the number of shares reserved for issuance by the Board pursuant to the exercise of options granted is less than or equal to 10% of the number of issued
and outstanding shares of the Corporation, in such manner as the Board may determine; 

  

	 	(ii)	in the circumstance where the Corporation is a Tier 2 Issuer, as defined in the policies of the Canadian Venture Exchange Inc., and the number of shares reserved for issuance by the
Board pursuant to the exercise of options granted is greater than 10% of the issued and outstanding shares of the Corporation, in accordance with a vesting schedule which shall be established by the Board and which shall be acceptable to the
Exchange. 

  

	 	(c)	Options which have vested, may be exercised in whole or in part at any time and from time to time during the option period. To the extent required by the Exchange, no options may be
exercised under this Plan until this Plan has been approved by a resolution duly passed by the shareholders of the Corporation. 

  

	 	(d)	Except as set forth in Sections 11 and 12, no option may be exercised unless the Participant is at the time of such exercise a director, officer, consultant, or employee of the
Corporation or any of its subsidiaries, or a Management Company Employee of the Corporation or any of its subsidiaries. 

  

	 	(e)	Subject to Section 10 (f), the exercise of any option will be contingent upon receipt by the Corporation at its head office of a written notice of exercise, specifying the
number of Common Shares with respect to which the option is being exercised, accompanied by cash payment, certified cheque or bank draft for the full purchase price of such Common Shares with respect to which the option is exercised. No Participant
or his legal representatives, legatees or distributees will be, or will be deemed to be, a holder of any shares subject to an option under this Plan, unless and until the certificates for such shares are issued to him or them under the terms of the
Plan. 

  

	 	(f)	The Board, may, in it’s sole discretion, determine that option agreements entered into hereunder, provide for options to be exercised on a cashless basis (“Cashless
Basis”); whereby the Corporation issues the optionee the number of Common Shares equal to the stock options exercised, less the number of stock options which, when multiplied by the market price, equals the aggregate exercise price for all the
Common Shares then exercised. 

  
 11. Ceasing To Be a Director, Officer, Consultant or Employee 
  
 If a Participant shall cease to be a director, officer, consultant, employee of the Corporation or its subsidiaries, or a Management Company Employee for any reason (other than death), he may exercise his option to
the extent that he was entitled to exercise it at the date of such cessation, but only within 90 days after his ceasing to be a director, officer, consultant, employee or a Management Company Employee, unless such Participant was engaged in investor
relations activities in which case, only within 30 days after the cessation of his services to the Corporation. 
  

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 Nothing contained in the Plan, nor in any option granted pursuant to the Plan, shall as such confer upon
any Participant any right with respect to continuance as a director, officer, consultant, employee or Management Company Employee of the Corporation or of any of its subsidiaries or affiliates. 
  
 12. Death of Participant 
  
 In the event of the death of a Participant, the option previously granted to
him shall be exercisable only within the one (1) year after such death and then only: 
  

	 	(a)	by the person or persons to whom the Participant’s rights under the option shall pass by the Participant’s will or the laws of descent and distribution; and


  

	 	(b)	if and to the extent that he was entitled to exercise the Option at the date of his death. 

  
 13. Rights of Optionee 
  
 No person entitled to exercise any option granted under the Plan shall have any of the rights or privileges of a shareholder
of the Corporation in respect of any shares issuable upon exercise of such option until certificates representing such shares shall have been issued and delivered. 
  
 14. Proceeds from Sale of Shares 
  
 The proceeds from sale of shares issued upon the exercise of options shall
be added to the general funds of the Corporation and shall thereafter be used from time to time for such corporate purposes as the Board may determine. 
  
 15. Adjustments 
  
 If the outstanding shares of the Corporation are increased, decreased, changed into or exchanged for a different number or kind of shares of securities of
the Corporation through re-organization, merger, re-capitalization, re-classification, stock dividend, subdivision or consolidation, an appropriate and proportionate adjustment shall be made by the Board in its discretion in the number or kind of
shares optioned and the exercise price per share, as regards previously granted and unexercised options or portions thereof, and as regards options which may be granted subsequent to any such change in the Corporation’s capital. 
  
 Upon the liquidation or dissolution of the Corporation or upon a
re-organization, merger or consolidation of the Corporation with one or more corporations as a result of which the Corporation is not the surviving corporation, or upon the sale of substantially all of the property or more than eighty
(80%) percent of the then outstanding shares of the Corporation to another corporation, the Plan shall terminate, and any options theretofore granted hereunder shall terminate unless provision is made in writing in connection with such
transaction for the continuance of the Plan and for the assumption of options theretofore granted, or the substitution for such options of new options covering the shares of a successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to number and kind of shares and exercise prices, in which event the Plan and options theretofore granted shall continue in the manner and upon the terms so provided. If the Plan and unexercised options shall terminate
pursuant to the foregoing sentence, the shares subject to all options granted shall immediately vest and all Participants then entitled to exercise an unexercised portion of options then outstanding shall have the right at such time immediately
prior to consummation of the event which results in the termination of the Plan as the Corporation shall designate, to exercise their options to the full extent not theretofore exercised. 
  
 Adjustments under this Section shall be made by the Board whose determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive. No fractional share shall be required to be issued under the Plan on any such adjustment. 
  

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 16. Transferability 
  
 All benefits, rights and options accruing to any Participant in accordance
with the terms and conditions of the Plan shall not be transferrable or assignable unless specifically provided herein or the extent, if any, permitted by the Exchange. During the lifetime of a Participant any benefits, rights and options may only
be exercised by the Participant. 
  
 17.
Amendment and Termination of Plan 
  
 Subject to
applicable approval of the Exchange, the Board may, at any time, suspend or terminate the Plan. Subject to applicable approval of the Exchange, the Board may also at any time amend or revise the terms of the Plan, Provided that no such amendment or
revision shall alter the terms of any options theretofore granted under the Plan. 
  
 18. Necessary Approvals 
  
 The ability of a Participant to exercise options and the obligation of the Corporation to issue and deliver shares in accordance with the Plan is subject
to any approvals which may be required from shareholders of the Corporation and any regulatory authority or stock exchange having jurisdiction over the securities of the Corporation. If any shares cannot be issued to any Participant for whatever
reason, the obligation of the Corporation to issue such shares shall terminate and any option exercise price paid to the Corporation will be returned to the Participant. 
  
 19. Effective Date of Plan 
  
 The Plan has been adopted by the Board of the Corporation subject to the approval of the Exchange and, if so approved, the
Plan shall become effective upon such approvals being obtained. 
  
 20. Interpretation 
  
 The Plan will be governed by and construed in accordance with the laws of the Province of Alberta. 
  
 MADE by the Board of Directors of the Corporation as evidenced by the signature of the following director duly authorized in that behalf effective February 14, 2004. 
  

			
	GASTAR EXPLORATION LTD.
		
	 Per:
	 	/S/    THOM
ROBINSON        
	 	 	Thom Robinson, Chairman


  

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