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                                                                    EXHIBIT 10.4

                              FLORES & RUCKS, INC.
                         1996 LONG-TERM INCENTIVE PLAN


SECTION 1.   Purpose of the Plan.

The Flores & Rucks, Inc. 1996 Long-Term Incentive Plan (the "Plan") is intended
to promote the interests of Flores & Rucks, Inc., a Delaware corporation (the
"Company"), by encouraging employees of the Company, its subsidiaries and
affiliated entities and Directors (as defined below) to acquire or increase
their equity interest in the Company and to provide a means whereby employees
may develop a sense of proprietorship and personal involvement in the
development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company
thereby advancing the interests of the Company and its stockholders.  The Plan
is also contemplated to enhance the ability of the Company, its subsidiaries
and affiliated entities to attract and retain the services of individuals who
are essential for the growth and profitability of the Company.

SECTION 2.   Definitions.

As used in the Plan, the following terms shall have the meanings set forth
below:

       "Affiliate" shall mean (i) any entity that, directly or through one or
       more intermediaries, is controlled by the Company and (ii) any entity in
       which the Company has a significant equity interest, as determined by
       the Committee.

       "Award" shall mean any Option, Stock Appreciation Right, Restricted
       Stock, Performance Award, Phantom Shares, Bonus Shares or Cash Award.

       "Award Agreement" shall mean any written agreement, contract, or other
       instrument or document evidencing any Award, which may, but need not, be
       executed or acknowledged by a Participant.

       "Board" shall mean the Board of Directors of the Company.

       "Bonus Shares" shall mean an award of Shares granted pursuant to Section
       6(e) of the Plan.

       "Cash Award" shall mean an award payable in cash granted pursuant to
       Section 6(g) of the Plan.
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       "Code" shall mean the Internal Revenue Code of 1986, as amended from
       time to time, and the rules and regulations thereunder.

       "Committee" shall mean the Compensation Committee of the Board.

       "Director" shall mean a member of the Board who is not also an Employee.

       "Employee" shall mean any employee of the Company or an Affiliate.

       "Exchange Act" shall mean the Securities Exchange Act of 1934, as
       amended.

       "Fair Market Value" shall mean, with respect to Shares, the closing
       price of a Share quoted on the Composite Tape, or if the Shares are not
       listed on the New York Stock Exchange, on the principal United States
       securities exchange registered under the Exchange Act on which such
       stock is listed, or if the Shares are not listed on any such stock
       exchange, the last sale price, or if none is reported, the highest
       closing bid quotation on the National Association of Securities Dealers,
       Inc., Automated Quotations System or any successor system then in use on
       the Date of Grant, or if none are available on such day, on the next
       preceding day for which are available, or if no such quotations are
       available, the fair market value on the date of grant of a Share as
       determined in good faith by the Board. In the event the Shares are not
       publicly traded at the time a determination of its fair market value is
       required to be made hereunder, the determination of fair market value
       shall be made in good faith by the Committee.

       "Incentive Stock Option" or "ISO" shall mean an option granted under
       Section 6(a) of the Plan that is intended to qualify as an "incentive
       stock option" under  Section 422 of the Code or any successor provision
       thereto.

       "Non-Qualified Stock Option" or "NQO" shall mean an option granted under
       Sections 6(a) or 6(h) of the Plan that is not intended to be an
       Incentive Stock Option.

       "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
       Option.

       "Participant" shall mean any individual granted an Award under the Plan.

       "Performance Award" shall mean any right granted under Section 6(d) of
       the Plan.

       "Person" shall mean individual, corporation, partnership, association,
       joint-stock company, trust, unincorporated organization, government or
       political subdivision thereof or other entity.





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       "Phantom Shares" shall mean an Award of the right to receive Shares
       issued at the end of a Restricted Period which is granted pursuant to
       Section 6(f) of the Plan.  "Restricted Period" shall mean the period
       established by the Committee with respect to an Award during which the
       Award either remains subject to forfeiture or is not exercisable by the
       Participant.

       "Restricted Stock" shall mean any Share, prior to the lapse of
       restrictions thereon, granted under Sections 6(c) or 6(h) of the Plan.

       "Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
       Exchange Act, or any successor rule or regulation thereto as in effect
       from time to time.

       "SEC" shall mean the Securities and Exchange Commission, or any
       successor thereto.

       "Shares" or "Common Shares" or "Common Stock" shall mean the common
       stock of the Company, $0.01 par value, and such other securities or
       property as may become the subject of Awards of the Plan.

       "Stock Appreciation Right" or "Right" shall mean any right to receive
       the appreciation of Shares granted under Section 6(b) of the Plan.

       "Substitute Award" shall mean Awards granted in assumption of, or in
       substitution for, outstanding awards previously granted by (i) a company
       acquired by the Company or one or more of its Affiliates, or (ii) a
       company with which the Company or one or more of its Affiliates
       combines.

SECTION 3.  Administration.

The Plan shall be administered by the Committee.  A majority of the Committee
shall constitute a quorum, and the acts of the members of the Committee who are
present at any meeting thereof at which a quorum is present, or acts
unanimously approved by the members of the Committee in writing, shall be the
acts of the Committee.  Subject to the terms of the Plan and applicable law,
and in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to an eligible Employee; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights, or other matters are to
be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled,





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forfeited, or suspended and the method or methods by which Awards may be
settled, exercised canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an
Award shall be deferred either automatically or at the election of the holder
thereof or of the Committee; (vii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, any stockholder and any Employee.

SECTION 4.  Shares Available for Awards.

(a)    Shares Available.  Subject to adjustment as provided in Section 4(c),
the number of Shares with respect to which Awards may be granted under the Plan
shall be 1,000,000. If any Shares covered by an Award granted under the Plan,
or to which such an Award relates, are forfeited, or if an Award otherwise
terminates or is canceled without the delivery of Shares or of other
consideration, then the Shares covered by such Award, or to which such Award
relates, or the number of Shares otherwise counted against the aggregate number
of Shares with respect to which Awards may be granted, to the extent of any
such forfeiture, termination or cancellation, shall again be, or shall become,
to the extent permissible under Rule 16b-3, Shares with respect to which Awards
may be granted.

(b)    Sources of Shares Deliverable Under Awards.  Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

(c)    Adjustments.  In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type
of Shares (or other securities or property) with respect to which Awards may be
granted, (ii) the





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number and type of Shares (or other securities or property) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to any
Award or, if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award; provided, in each case, that with respect to
Awards of Incentive Stock Options and Awards intended to qualify as performance
based compensation under Section 162(m)(4)(C) of the Code, no such adjustment
shall be authorized to the extent that such authority would cause the Plan to
violate Section 422(b)(1) of the Code or would cause such Award to fail to so
qualify under Section 162(m) of the Code, as the case may be, or any successor
provisions thereto; and provided, further, that the number of Shares subject to
any Award denominated in Shares shall always be a whole number.

SECTION 5.   Eligibility.

Other than Awards granted to Directors pursuant to Section 6(h) of the Plan,
any Employee shall be eligible to be designated a Participant.  However, no
Employee may receive Options and/or Stock Appreciation Rights during the term
of the Plan that, in the aggregate, are with respect to more than 33-1/3% of
all Shares that may be made subject to Awards under the Plan.

SECTION 6.   Awards.

(a)    Options.  Subject to the provisions of the Plan, the Committee shall
have the authority to determine the Employees to whom Options shall be granted,
the number of Shares to be covered by each Option, the purchase price therefor
and the conditions and limitations applicable to the exercise of the Option,
including the following terms and conditions and such additional terms and
conditions, as the Committee shall determine, that are not inconsistent with
the provisions of the Plan.

       (i)    Exercise Price.  The purchase price per Share purchasable under
       an Option shall be determined by the Committee at the time each Option
       is granted.

       (ii)   Time and Method of Exercise.  The Committee shall determine the
       time or times at which an Option may be exercised in whole or in part,
       and the method or methods by which, and the form or forms (which may
       include, without limitation, cash, already-owned Shares, outstanding
       Awards, Shares that would otherwise be acquired upon exercise of the
       Option, a "cashless-broker" exercise (through procedures approved by the
       Company), other securities or other property, or any combination
       thereof, having a Fair Market Value on the exercise date equal to the
       relevant exercise price) in which payment of the exercise price with
       respect thereto may be made or deemed to have been made.





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       (iii)  Incentive Stock Options.  The terms of any Incentive Stock Option
       granted under the Plan shall comply in all respects with the provisions
       of Section 422 of the Code, or any successor provision, and any
       regulations promulgated thereunder.  Incentive Stock Options may be
       granted only to employees of the Company and its subsidiaries, within
       the meaning of Section 424(f) of the Code.

(b)    Stock Appreciation Rights.  Subject to the provisions of the Plan, the
Committee shall have the authority to determine the Employees to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by
each Stock Appreciation Right Award, the grant price thereof and the conditions
and limitations applicable to the exercise thereof.  A Stock Appreciation Right
may be granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award.  A Stock Appreciation Right
granted in tandem with or in addition to another Award may be granted either at
the same time as such other Award or at a later time.

       (i)    Grant Price.  The grant price of a Stock Appreciation Right shall
       be determined by the Committee on the date of grant.

       (ii)   Other Terms and Conditions.  Subject to the terms of the Plan and
       any applicable Award Agreement, the Committee shall determine, at or
       after the grant of a Stock Appreciation Right, the term, methods of
       exercise, methods of settlement, and any other terms and conditions of
       any Stock Appreciation Right.  Any such determination by the Committee
       may be changed by the Committee from time to time and may govern the
       exercise of Stock Appreciation Rights granted or exercised prior to such
       determination as well as Stock Appreciation Rights granted or exercised
       thereafter.  The Committee may impose such conditions or restrictions on
       the exercise of any Stock Appreciation Right as it shall deem
       appropriate.

(c)    Restricted Stock.  Subject to the provisions of the Plan, the Committee
shall have the authority to determine the Employees to whom Restricted Stock
shall be granted, the number of Shares of Restricted Stock to be granted to
each such Participant, the duration of the Restricted Period during which, and
the conditions, including performance criteria, if any, under which, the
Restricted Stock may be forfeited to the Company, and the other terms and
conditions of such Awards.

       (i)    Dividends.  Dividends paid on Restricted Stock may be paid
       directly to the Participant, may be subject to risk of forfeiture and/or
       transfer restrictions during any period established by the Committee or
       sequestered and held in a bookkeeping cash account (with or without
       interest) or reinvested on an immediate or deferred basis in additional
       shares of Common Stock, which credit or shares may be subject to the
       same





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       restrictions as the underlying Award or such other restrictions, all as
       determined by the Committee in its discretion.

       (ii)   Registration.  Any Restricted Stock may be evidenced in such
       manner as the Committee shall deem appropriate, including, without
       limitation, book-entry registration or issuance of a stock certificate
       or certificates.  In the event any stock certificate is issued in
       respect of Restricted Stock granted under the Plan, such certificate
       shall be registered in the name of the Participant and shall bear an
       appropriate legend referring to the terms, conditions, and restrictions
       applicable to such Restricted Stock.

       (iii)  Forfeiture and Restrictions Lapse.  Except as otherwise
       determined by the Committee or the terms of the Award that granted the
       Restricted Stock, upon termination of a Participant's employment (as
       determined under criteria established by the Committee) for any reason
       during the applicable Restricted Period, all Restricted Stock shall be
       forfeited by the Participant and re-acquired by the Company.  The
       Committee may, when it finds that a waiver would be in the best
       interests of the Company and not cause such Award, if it is intended to
       qualify as performance based compensation under Section 162(m) of the
       Code, to fail to so qualify under Section 162(m) of the Code, waive in
       whole or in part any or all remaining restrictions with respect to such
       Participant's Restricted Stock.  Unrestricted Shares, evidenced in such
       manner as the Committee shall deem appropriate, shall be issued to the
       holder of Restricted Stock promptly after the applicable restrictions
       have lapsed or otherwise been satisfied.

       (iv)   Transfer Restrictions.  During the Restricted Period, Restricted
       Stock will be subject to the limitations on transfer as provided in
       Section 6(i)(iii).

(d)    Performance Awards.  The Committee shall have the authority to determine
the Employees who shall receive a Performance Award, which shall be denominated
as a cash amount at the time of grant and confer on the Participant the right
to receive payment of such Award, in whole or in part, upon the achievement of
such performance goals during such performance periods as the Committee shall
establish with respect to the Award.

       (i)    Terms and Conditions.  Subject to the terms of the Plan and any
       applicable Award Agreement, the Committee shall determine the
       performance goals to be achieved during any performance period, the
       length of any performance period, the amount of any Performance Award
       and the amount of any payment or transfer to be made pursuant to any
       Performance Award.

       (ii)   Payment of Performance Awards.  Performance Awards may be paid
       (in cash and/or in Shares, in the sole discretion of the Committee) in a
       lump sum or in





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       installments following the close of the performance period, in
       accordance with procedures established by the Committee with respect to
       such Award.

(e)    Bonus Shares.  The Committee shall have the authority, in its
discretion, to grant Bonus Shares to eligible Employees.  Each Bonus Share
shall constitute a transfer of an unrestricted Share to the Participant,
without other payment therefor, as additional compensation for the
Participant's services to the Company.

(f)    Phantom Shares.  The Committee shall have the authority to grant Awards
of Phantom Shares to eligible Employees upon such terms and conditions as the
Committee may determine.

       (i)    Terms and Conditions.  Each Phantom Share Award shall constitute
       an agreement by the Company to issue or transfer a specified number of
       Shares or pay an amount of cash equal to a specified number of Shares,
       or a combination thereof to the Participant in the future, subject to
       the fulfillment during the Restricted Period of such conditions,
       including performance objectives, if any, as the Committee may specify
       at the date of grant.  During the Restricted Period, the Participant
       shall not have any right to transfer any rights under the subject Award,
       shall not have any rights of ownership in the Phantom Shares and shall
       not have any right to vote such shares.

       (ii)   Dividends.  Any Phantom Share award may provide that any or all
       dividends or other distributions paid on Shares during the Restricted
       Period be credited in a cash bookkeeping account (without interest) or
       that equivalent additional Phantom Shares be awarded, which account or
       shares may be subject to the same restrictions as the underlying Award
       or such other restrictions as the Committee may determine.

(g)    Cash Awards.  The Committee shall have the authority to determine the
Employees to whom Cash Awards shall be granted, the amount, and the terms or
conditions, if any, as additional compensation for the Employee's services to
the Company or its Affiliates.  A Cash Award may be granted (simultaneously or
subsequently) separately or in tandem with another Award and may entitle a
Participant to receive a specified amount of cash from the Company upon such
other Award becoming taxable to the Participant, which cash amount may be based
on a formula relating to the anticipated taxable income associated with such
other Award and the payment of the Cash Award.

(h)    Granting of Options to Directors.  Each Non-employee Director who is
elected or appointed to the Board for the first time after the effective date
of the Plan shall receive, as of the date of his or her election or appointment
and without the exercise of the discretion of any person or persons, a Non-
Qualified Stock Option exercisable for 2,000 Shares (subject to adjustment in
the same manner as provided in Section 7 hereof with respect to Shares subject
to Options then





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outstanding).  As of the date of the annual meeting of the stockholders of the
Company ("Annual Meeting") in each year that the Plan is in effect, each
Director who is in office immediately after such meeting and who is not then
entitled to receive an Option pursuant to the preceding provisions of this
Section 6(h) shall receive, without the exercise of the discretion of any
person or persons, a Non-Qualified Stock Option exercisable for 2,000 Shares
(subject to adjustment in the same manner as provided in Section 7 hereof with
respect to shares of Stock subject to Options then outstanding).

       (i)    Other Terms and Conditions.  The following provisions are
       applicable to Options granted pursuant to this Section 6(h):

       A.     Subject to the following provisions, an Option granted pursuant
       to Section 6(h) shall become exercisable for 33 1/3% of the Shares
       covered thereby on the first Annual Meeting following the date of grant,
       and thereafter, for an additional 33 1/3% of the Shares covered thereby
       on each of the second and third Annual Meetings following the date of
       grant.

       B.     The purchase price of a Share covered under an Option granted
       under this Section 6(h) shall be the Fair Market Value of a Share on the
       date of grant.

       C.     To the extent that the right to exercise an Option has accrued
       and is in effect, the Option may be exercised in full at one time or in
       part from time to time by giving written notice, signed by the optionee
       exercising the Option, to the Company, stating the number of Shares with
       respect to which the Option is being exercised, accompanied by payment
       in full for such Shares, which payment may be in cash, already-owned
       Shares, a "cashless-broker" exercise (through procedures approved by the
       Company), or any combination thereof, having a Fair Market Value on the
       exercise date equal to the relevant exercise price in which payment of
       the exercise price with respect thereto may be made or deemed to have
       been made; provided however, that (i) no Option shall be exercisable
       after ten (10) years from the date on which it was granted, and (ii)
       there shall be no such exercise at any one time for fewer than one
       hundred (100) Shares or for all of the remaining Shares then purchasable
       by the optionee exercising the Option, if fewer than one hundred (100)
       Shares.

       D.     Each Option shall expire ten (10) years from the date of grant
       thereof, subject to earlier termination as follows:  Options, to the
       extent exercisable as of the date a Director optionee ceases to serve as
       a director of the Company, must be exercised within three (3) months of
       such date unless such event results from death, disability or
       retirement, in which case all outstanding Options held by such Director
       may be exercised in full by the optionee, the optionee's legal
       representative, heir or devisee, as the case may be, within





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       two (2) years from the date of death, disability or retirement;
       provided, however, that no such event shall extend the normal expiration
       date of such Options.  Options not exercisable on termination as
       provided above shall be automatically canceled on termination.

       E.     Upon exercise of the Option, delivery of a certificate for fully
       paid and nonassessable Shares shall be made at the corporate office of
       the Company to the optionee exercising the Option either at such time
       during ordinary business hours after fifteen (15) days but not more than
       thirty (30) days from the date of receipt of the notice by the Company
       as shall be designated in such notice, or at such time, place and manner
       as may be agreed upon by the Company and the optionee exercising the
       Option.

       (ii)   Number of Available Shares.  In the event that the number of
       Shares available for grants under the Plan is insufficient to make all
       grants provided for in this Section 6(h) hereby made on the applicable
       date, then all Directors who are entitled to a grant on such date shall
       share ratably in the number of Shares then available for grant under the
       Plan, and shall have no right to receive a grant with respect to the
       deficiencies in the number of available Shares and the grants under this
       Section 6(h) shall terminate.

(i)    General.

       (i)    Awards May Be Granted Separately or Together.  Awards to
       Employees may, in the discretion of the Committee, be granted either
       alone or in addition to, in tandem with, or in substitution for any
       other Award granted under the Plan or any award granted under any other
       plan of the Company or any Affiliate.  Awards granted in addition to or
       in tandem with other Awards or awards granted under any other plan of
       the Company or any Affiliate may be granted either at the same time as
       or at a different time from the grant of such other Awards or awards.

       (ii)   Forms of Payment by Company Under Awards.  Subject to the terms
       of the Plan and of any applicable Award Agreement, payments or transfers
       to be made by the Company or an Affiliate upon the grant, exercise or
       payment of an Award may be made in such form or forms as the Committee
       shall determine, including, without limitation, cash, Shares, other
       securities, other Awards or other property, or any combination thereof,
       and may be made in a single payment or transfer, in installments, or on
       a deferred basis, in each case in accordance with rules and procedures
       established by the Committee.  Such rules and procedures may include,
       without limitation, provisions for the payment or crediting of
       reasonable interest on installment or deferred payments.





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       (iii)  Limits on Transfer of Awards.

       (A)    Each Award, and each right under any Award, shall be exercisable
       only by the Participant during the Participant's lifetime, or, if
       permissible under applicable law, by the Participant's guardian or legal
       representative or by a transferee receiving such Award pursuant to a
       qualified domestic relations order (a "QDRO") as determined by the
       Committee.

       (B)    No Award and no right under any such Award may be assigned,
       alienated, pledged, attached, sold or otherwise transferred or
       encumbered by a Participant otherwise than by will or by the laws of
       descent and distribution (or, in the case of Restricted Stock, to the
       Company) or pursuant to a QDRO and any such purported assignment,
       alienation, pledge, attachment, sale, transfer or encumbrance shall be
       void and unenforceable against the Company or any Affiliate.

       (C)    Notwithstanding anything in the Plan to the contrary, to the
       extent specifically provided by the Committee with respect to a grant,
       an Award other than an Incentive Stock Option may be transferred to
       immediate family members or related family trusts, limited partnerships
       or similar entities or on such terms and conditions as the Committee may
       establish.

       (iv)   Term of Awards.  The term of each Award (other than pursuant to
       Section 6(h)) shall be for such period as may be determined by the
       Committee; provided, that in no event shall the term of any Award exceed
       a period of ten (10) years from the date of its grant.

       (v)    Share Certificates.  All certificates for Shares or other
       securities of the Company or any Affiliate delivered under the Plan
       pursuant to any Award or the exercise thereof shall be subject to such
       stop transfer orders and other restrictions as the Committee may deem
       advisable under the Plan or the rules, regulations, and other
       requirements of the SEC, any stock exchange upon which such Shares or
       other securities are then listed, and any applicable Federal or state
       laws, and the Committee may cause a legend or legends to be put on any
       such certificates to make appropriate reference to such restrictions.

       (vi)   Consideration for Grants.  Awards may be granted for no cash
       consideration or for such consideration as the Committee determines
       including, without limitation, such minimal cash consideration as may be
       required by applicable law.

       (vii)  Delivery of Shares or other Securities and Payment by Participant
       of Consideration.  No Shares or other securities shall be delivered
       pursuant to any Award





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       until payment in full of any amount required to be paid pursuant to the
       Plan or the applicable Award Agreement is received by the Company.  Such
       payment may be made by such method or methods and in such form or forms
       as the Committee shall determine, including, without limitation, cash,
       Shares, other securities, other Awards or other property, withholding of
       Shares, cashless exercise with simultaneous sale, or any combination
       thereof; provided that the combined value, as determined by the
       Committee, of all cash and cash equivalents and the Fair Market Value of
       any such Shares or other property so tendered to the Company, as of the
       date of such tender, is at least equal to the full amount required to be
       paid pursuant to the Plan or the applicable Award Agreement to the
       Company.

       (viii) Performance Criteria and Payment Limits.  The Committee shall
       establish performance goals applicable to those Awards (other than
       Options and Rights) the payment of which is intended by the Committee to
       qualify as "performance-based compensation" as described in Section
       162(m)(4)(C) of the Code.  Until changed by the Committee, the
       performance goals shall be based upon the attainment of such target
       levels of net income, cash flows, reserve additions or revisions,
       acquisitions, total capitalization, total or comparative shareholder
       return, assets, exploration successes, production volumes, findings and
       development costs, costs reductions and savings, reportable incidents in
       safety or environmental matters, return on equity, profit margin or
       sales, and/or earnings per share as may be specified by the Committee.
       Which factor or factors to be used with respect to any grant, and the
       weight to be accorded thereto if more than one factor is used, shall be
       determined by the Committee at the time of grant.  The maximum amount of
       compensation that may be paid to any Participant with respect to any
       single Performance Award or Cash Award in any calendar year shall be
       $1.5 million.  With respect to any Restricted Stock Award, Phantom Stock
       Award, or Cash Award granted in tandem with, and expressed as a
       percentage of, a Share-denominated Award, which is intended to qualify
       as "performance-based compensation", the maximum payment to any
       Participant with respect to such Award in any calendar year shall be an
       amount (in cash and/or in Shares) equal to the Fair Market Value of the
       number of Shares subject to such Award.

SECTION 7.   Amendment and Termination.

Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:

       (a)    Amendments to the Plan.  The Board may amend, alter, suspend,
       discontinue, or terminate the Plan without the consent of any
       stockholder, Participant, other holder or beneficiary of an Award, or
       other Person; provided, however, notwithstanding any other





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<PAGE>   13
       provision of the Plan or any Award Agreement, without the approval of
       the stockholders of the Company no such amendment, alteration,
       suspension, discontinuation, or termination shall be made that would
       increase the total number of Shares available for Awards under the Plan,
       except as provided in Section 4(c) of the Plan.

       (b)    Amendments to Awards.  The Committee may waive any conditions or
       rights under, amend any terms of, or alter any Award theretofore granted
       (other than Awards granted under Section 6(h)), provided no change,
       other than pursuant to Section 7(c), in any Award shall reduce the
       benefit to Participant without the consent of such Participant.
       Notwithstanding the foregoing, with respect to any Award intended to
       qualify as performance-based compensation under Section 162(m) of the
       Code, no adjustment shall be authorized to the extent such adjustment
       would cause the Award to fail to so qualify.

       (c)    Adjustment of Awards Upon the Occurrence of Certain Unusual or
       Nonrecurring Events.  The Committee is hereby authorized to make
       adjustments in the terms and conditions of, and the criteria included
       in, Awards in recognition of unusual or nonrecurring events (including,
       without limitation, the events described in Section 4(c) of the Plan)
       affecting the Company, any Affiliate, or the financial statements of the
       Company or any Affiliate, or of changes in applicable laws, regulations,
       or accounting principles, whenever the Committee determines that such
       adjustments are appropriate in order to prevent dilution or enlargement
       of the benefits or potential benefits intended to be made available
       under the Plan.  Notwithstanding the foregoing, with respect to any
       Award intended to qualify as performance-based compensation under
       Section 162(m) of the Code, no adjustment shall be authorized to the
       extent such adjustment would cause the Award to fail to so qualify.

SECTION 8.   Change in Control.

Notwithstanding any other  provision of this Plan to the contrary, in the event
of a Change in Control of the Company, all outstanding Awards granted more than
six months prior to the date of the Change in Control automatically shall
become fully vested on such Change in Control, all restrictions, if any, with
respect to such Awards shall lapse, and all performance criteria, if any, with
respect to such Awards shall be deemed to have been met in full.  For purposes
of this Plan, a "Change in Control" shall be deemed to occur:

       (i)    if any person, other than James C. Flores, William W. Rucks, IV
       or their affiliates (as such term is used in sections 13(d) and 14(d)(2)
       of the Exchange Act), is or becomes the "beneficial owner" (as defined
       in Rule 13d-3 of the Exchange Act), directly or indirectly, of
       securities of the Company representing 25% or more of the combined
       voting power of the Company's then outstanding securities,





                                      -13-
<PAGE>   14
       (ii)   upon the first purchase of the Company's common stock pursuant to
       a tender or exchange offer (other than a tender or exchange offer made
       by the Company),

       (iii)  upon the approval by the Company's stockholders of a merger or
       consolidation, a sale or disposition of all or substantially all of the
       Company's assets or a plan of liquidation or dissolution of the Company,
       or

       (iv)   if, during any period of two consecutive years, individuals who
       at the beginning of such period constitute the Board cease for any
       reason to constitute at least a majority thereof, unless the election or
       nomination for the election by the Company's stockholders of each new
       director was approved by a vote of at least two-thirds of the directors
       then still in office who were directors at the beginning of the period.

SECTION 9.   General Provisions.

(a)    No Rights to Awards.  No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards.  The terms and conditions of Awards need not be the same with
respect to each recipient.

(b)    Withholding.  The Company or any Affiliate is authorized to withhold
from any Award, from any payment due or transfer made under any Award or under
the Plan or from any compensation or other amount owing to a Participant the
amount (in cash, Shares, other securities, Shares that would otherwise be
issued pursuant to such Award, other Awards or other property) of any
applicable taxes payable in respect of an Award, its exercise, the lapse of
restrictions thereon, or any payment or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for the payment of such taxes.

(c)    No Right to Employment.  The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate.  Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.

(d)    Governing Law.  The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable Federal law.





                                      -14-
<PAGE>   15
(e)    Severability.  If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without , in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

(f)    Other Laws.  The Committee may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it
determines that the issuance of transfer or such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary
in connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary.

(g)    No Trust or Fund Created.  Neither the Plan nor the Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person.  To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any general unsecured creditor of the
Company or any Affiliate.

(h)    No Fractional Shares.  No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights
thereto shall be cancelled, terminated, or otherwise eliminated.

(i)    Headings.  Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference.  Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.


SECTION 10.   Effective Date of the Plan.

The Plan shall be effective as of the date of its approval by the Board,
provided the Plan is subsequently approved by the stockholders of the Company
within 12 months thereafter.





                                      -15-
<PAGE>   16
SECTION 11.   Term of the Plan.

No Award shall be granted under the Plan ten (10) years after November 6, 2006.
However, unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award theretofore granted may, and the authority of the
Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, extend beyond such date.





                                      -16-